5.Plant and equipment


			Computer
	Furniture		hardware								Production
	and		and				Leasehold		Right-of-		tooling and
	equipment		software		Vehicles		Improvements		use assets		molds		Total

Cost:
December 31, 2018		494,487		133,403		388,049		384,341		—		4,549,948		5,950,228
Additions		73,691		139,863		—		129,327		—		3,310,971		3,653,852
Adoption of IFRS 16		—		—		—		—		2,061,469		—		2,061,469
Disposals		—		(2,150)		—		—		—		—		(2,150)
December 31, 2019		568,178		271,116		388,049		513,668		2,061,469		7,860,919		11,663,399
Additions		21,003		223,063		73,791		64,701		364,575		2,218,032		2,965,165
Disposals		—		—		(13,884)		(36,110)		—		—		(49,994)
Lease termination and derecognition1,2		—		—		—		—		(463,879)		—		(463,879)
Foreign exchange difference		2,573		124		—		7,594		(46,124)		—		(35,833)
September 30, 2020		591,754		494,303		447,956		549,853		1,916,041		10,078,951		14,078,858

Amortization:
December 31, 2018		230,798		65,689		215,251		114,724		—		—		626,462
Additions		77,975		65,600		117,326		121,951		664,797		—		1,047,649
Disposals		—		(1,254)		—		—		—		—		(1,254)
December 31, 2019		308,773		130,035		332,577		236,675		664,797		—		1,672,857
Additions		64,331		78,431		46,123		108,502		388,437		331,261		1,017,085
Disposals		—		—		(9,659)		(29,430)		—		—		(39,089)
Lease termination and derecognition1,2		—		—		—		—		(260,443)		—		(260,443)
Foreign exchange difference		472		16		—		2,913		12,229		—		15,630
September 30, 2020		373,576		208,482		369,041		318,660		805,020		331,261		2,406,040

Net book value:
At December 31, 2019		259,405		141,081		55,472		276,993		1,396,672		7,860,919		9,990,542
September 30, 2020		218,178		285,821		78,915		231,193		1,111,021		9,747,690		11,672,818

1 The Company entered into a sublease agreement for its office space in Los Angeles, USA, with effect from February 1, 2020. As a result of the sublease, the Company derecognized the right-of-use asset relating to the head lease with cost of $319,365 and accumulated amortization of $161,565 (see Note 6 for further information on the net investment in sublease).

2 The Company terminated one of its warehouse leases on January 31, 2020. As a result of the termination, the Company derecognized the right-of-use asset of the warehouse with cost of $144,514 and accumulated amortization of $98,878 (see Note 9 for further information on the termination of the lease)

On September 18, 2017, the Company entered into a manufacturing agreement with Chongqing Zongshen Automobile Co., Ltd. (“Zongshen”). Under the agreement, the Company agrees to reimburse Zongshen for the cost of prototype tooling and molds estimated to be CNY ¥9.5 million ($1.8 million), which was payable on or before March 18, 2018, subject to a 10% holdback, and mass production tooling and molds estimated to be CNY ¥29 million ($5.5 million), which shall be payable 50% when Zongshen commences manufacturing the tooling and molds, 40% when Zongshen completes manufacturing the tooling and molds, and 10% upon delivery to the Company of the first production vehicle.

As at September 30, 2020, the Company has commenced commercial production and delivered the first production vehicle. Therefore, the Company has paid 100% of the prototype tooling and molds with actual cost of CNY ¥10.1 million ($2.1 million) and 79% of the mass production tooling and molds with actual cost of CNY ¥40 million ($8.0 million). The unpaid amount of mass production tooling and molds is included in accrued liabilities as at September 30, 2020. As assessed by the Company, the prototype tooling and molds can be adapted for use in mass production.

The prototype and mass production tooling and molds are estimated to be used for 3 years to produce the Generation 3 SOLO EVs. The existing production tooling and molds will be depreciated on a straight line basis over a 3 year period as the assets were custom built for the production of the Generation 3 SOLO EVs and will be retired at the end of the production run. The Company estimates that the residual value of the assets will be minimal at the end of the 3 year period. During the three and nine months ended September 30, 2020, $331,261 ($Nil - three and nine months ended September 30, 2019) was charged to amortization expenses. No amounts were allocated to inventory or charged to cost of goods sold during the period as the Generation 3 SOLO EVs completed as at September 30, 2020 are intended to be used as marketing vehicles for customers to test drive. The Company doesn't intend to sell these marketing vehicles to customers in future periods.

On October 16, 2017, the then CEO of the Company (“Pledgor”) entered into a Share Pledge Agreement (“Share Pledge”) to guarantee the payment by the Company for the cost of the prototype tooling and molds estimated to be CNY ¥9.5 million ($1.8 million) to Zongshen through the pledge of 400,000 common shares of the Company. The Company approved its obligations under the Share Pledge and had agreed to reimburse the Pledgor on a one for one basis for any pledged shares realized by Zongshen. As at September 30, 2020, the Company has paid 100% of the cost of the prototype tooling and molds and, accordingly, the Share Pledge has been terminated.