(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the registrant’s common stock as of ~~July 26, 2019~~August 3, 2020 was ~~72,893,251.~~73,596,960.

This Quarterly Report on Form 10-Q (“Quarterly Report”) contains “forward-looking statements” that involve substantial risks and uncertainties. Forward-looking statements relate to future events or our future financial performance or condition and involve known and unknown risks, uncertainties and other factors that could cause our actual results, levels of activity, performance or achievement to differ materially from those expressed or implied by these forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “should,” “will” and “would” or the negatives of these terms or other comparable terminology.

You should not place undue reliance on forward-looking statements. The cautionary statements set forth in this Quarterly Report, including in “Risk Factors” and elsewhere, identify important factors which you should consider in evaluating our forward-looking statements. These factors include, among other things:

You should read this Quarterly Report and the documents that we reference elsewhere in this Quarterly Report completely and with the understanding that our actual results may differ materially from what we expect as expressed or implied by our forward-looking statements. Factors that may cause or contribute to such differences include, but are not limited to, those discussed in greater detail, particularly in Part I, Item 2 (Management’s Discussion and Analysis of Financial Condition and Results of Operations) and in Part II, Item 1A (Risk Factors) of this Quarterly Report. In light of the significant risks and uncertainties to which our forward-looking statements are subject, you should not place undue reliance on or regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified timeframe, or at all. These forward-looking statements represent our estimates and assumptions only as of the date of this Quarterly Report regardless of the time of delivery of this Quarterly Report. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this Quarterly Report.

Unless expressly indicated or the context requires otherwise, references in this Quarterly Report to “ADOMANI,” the “Company,” “we,” “our,” and “us” refer to ADOMANI, Inc. and our consolidated subsidiaries, unless the context indicates otherwise.

	June 30,			December 31,			June 30,			December 31,
	2019			2018			2020			2019
ASSETS
Current assets:
Cash and cash equivalents	$	2,797		$	3,759		$	884		$	4,432
Marketable securities		5,055			3,949			—			2,771
Accounts receivable		2,667			997			9			661
Notes receivable, net		331			300			—			40
Inventory, net								431			494
Prepaid expenses								945			1,197
Other current assets		1,763			1,175			81			41
Total current assets		12,613			10,180			2,350			9,636
Property and equipment, net		145			150			122			112
Other non-current assets		468			503			783			569
Total assets	$	13,226		$	10,833		$	3,255		$	10,317
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	2,467		$	342		$	610		$	418
Accrued liabilities		855			968			732			649
Notes payable, net								115			—
Line of credit		4,300			1,700			—			5,820
Total current liabilities		7,622			3,010			1,457			6,887
Long-term liabilities
Notes payable, net								297			—
Other non-current liabilities		183			219			305			148
Total liabilities		7,805			3,229			2,059			7,035
Commitments and contingencies
Stockholders' equity:
Preferred stock, 5,000,000 authorized $0.00001 par value, none issued and outstanding as of June 30, 2019 and December 31, 2018		—			—
Common stock, 350,000,000 authorized $0.00001 par value, 72,876,186 and 72,732,292 issued and outstanding as of June 30, 2019 and December 31, 2018, respectively		1			1
Preferred stock, 5,000,000 authorized $0.00001 par value, none issued and outstanding as of June 30, 2020 and December 31, 2019								—			—
Common stock, 350,000,000 authorized $0.00001 par value, 73,508,069 and 73,125,538 issued and outstanding as of June 30, 2020 and December 31, 2019, respectively								1			1
Additional paid-in capital		62,188			61,628			62,746			62,459
Accumulated deficit		(56,768	)		(54,025	)		(61,551	)		(59,178	)
Total stockholders' equity		5,421			7,604			1,196			3,282
Total liabilities and stockholders' equity	$	13,226		$	10,833		$	3,255		$	10,317

	Three Months Ended						Six Months Ended						For the Three Months Ended						For the Six Months Ended
	June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018			June 30, 2020			June 30, 2019			June 30, 2020			June 30, 2019
Sales	$	4,388		$	744		$	4,808		$	1,208		$	130		$	4,388		$	413		$	4,808
Cost of sales		4,063			722			4,454			1,201			83			4,063			163			4,454
Gross profit		325			22			354			7			47			325			250			354
Operating expenses
General and administrative		1,461			3,869			2,858			7,787			1,102			1,461			2,532			2,858
Consulting		77			48			154			95			58			77			102			154
Research and development		103			440			148			596			—			103			—			148
Total operating expenses, net		1,641			4,357			3,160			8,478			1,160			1,641			2,634			3,160
Loss from operations		(1,316	)		(4,335	)		(2,806	)		(8,471	)		(1,113	)		(1,316	)		(2,384	)		(2,806	)

Other income:
Interest income, net		2			52			28			105			7			2			15			28
Other income		20			99			35			108
Other income (expense)														1			20			(4	)		35
Total other income		22			151			63			213			8			22			11			63

Loss before income taxes		(1,294	)		(4,184	)		(2,743	)		(8,258	)		(1,105	)		(1,294	)		(2,373	)		(2,743	)
Income tax expense		—			—			—			(3	)		—			—			—			—
Net loss	$	(1,294	)	$	(4,184	)	$	(2,743	)	$	(8,261	)	$	(1,105	)	$	(1,294	)	$	(2,373	)	$	(2,743	)

Net loss per share to common stockholders:
Basic and diluted	$	(0.02	)	$	(0.06	)	$	(0.04	)	$	(0.12	)	$	(0.02	)	$	(0.02	)	$	(0.03	)	$	(0.04	)

Weighted shares used in the computation of net loss per share:
Basic and diluted		72,860,560			72,009,958			72,829,372			71,692,209			73,387,815			72,860,560			73,289,623			72,829,372

					Additional												Additional
	Common Stock				Paid-In		Accumulated			Stockholders'			Common Stock				Paid-In		Accumulated			Stockholders'
	Shares		Amount		Capital		Deficit			Equity			Shares		Amount		Capital		Deficit			Equity
Balance, March 31, 2018		71,737,597	$	1	$	58,083	$	(47,054	)	$	11,030
Stock based compensation				—		2,780		—			2,780
Common stock issued for stock options exercised		765,779		—		77		—			77
Net loss				—		—		(4,184	)		(4,184	)
Balance, June 30, 2018		72,503,376	$	1	$	60,940	$	(51,238	)	$	9,703
Stock based compensation				—		317		—			317
Common stock issued for stock options exercised		228,916		—		22		—			22
Net loss				—		—		(1,481	)		(1,481	)
Balance, September 30, 2018		72,732,292	$	1	$	61,279	$	(52,719	)	$	8,561
Stock based compensation				—		349		—			349
Net loss				—		—		(1,306	)		(1,306	)
Balance, December 31, 2018		72,732,292	$	1	$	61,628	$	(54,025	)	$	7,604			72,732,292	$	1	$	61,628	$	(54,025	)	$	7,604
Common stock issued for services		30,161		—		10		—			10			30,161		—		10		—			10
Stock based compensation				—		253		—			253			—		—		253		—			253
Common stock issued for stock options exercised		71,084		—		7		—			7			71,084		—		7		—			7
Net loss				—		—		(1,449	)		(1,449	)				—		—		(1,449	)		(1,449	)
Balance, March 31, 2019		72,833,537	$	1	$	61,898	$	(55,474	)	$	6,425			72,833,537	$	1	$	61,898	$	(55,474	)	$	6,425
Common stock issued for services		42,649		—		15		—			15			42,649		—		15		—			15
Stock based compensation						275					275			—		—		275		—			275
Net loss				—		—		(1,294	)		(1,294	)		—		—		—		(1,294	)		(1,294	)
Balance, June 30, 2019		72,876,186	$	1	$	62,188	$	(56,768	)	$	5,421			72,876,186	$	1	$	62,188	$	(56,768	)	$	5,421
Common stock issued for services														107,854		—		15		—			15
Stock based compensation														—		—		202		—			202
Net loss														—		—		—		(1,218	)		(1,218	)
Balance, September 30, 2019														72,984,040	$	1	$	62,405	$	(57,986	)	$	4,420
Common stock issued for services														141,498		—		15					15
Stock based compensation																—		39					39
Net loss																—			$	(1,192	)		(1,192	)
Balance, December 31, 2019														73,125,538	$	1	$	62,459	$	(59,178	)	$	3,282
Common stock issued for services														104,824		—		15					15
Stock based compensation																—		200					200
Net loss																—			$	(1,268	)		(1,268	)
Balance, March 31, 2020														73,230,362	$	1	$	62,674	$	(60,446	)	$	2,229
Common stock issued for services														277,707		—		26					26
Stock based compensation																—		46					46
Net loss																—			$	(1,105	)		(1,105	)
Balance, June 30, 2020														73,508,069	$	1	$	62,746	$	(61,551	)	$	1,196

	Six Months Ended						Six Months Ended
	June 30, 2019			June 30, 2018			June 30, 2020			June 30, 2019
Cash flows from operating activities:
Net loss	$	(2,743	)	$	(8,261	)	$	(2,373	)	$	(2,743	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		23			16			24			23
Stock based compensation expense		528			5,744			246			528
Common stock issued for services		25			—			41			25
Loss on write-down of property and equipment		—			385
Write-down of inventory		—			15
Provision for bad debt								100			—
Changes in assets and liabilities:
Accounts receivable								653			(1,670	)
Notes receivable								(12	)		—
Inventory		—			210			63			—
Accounts receivable		(1,670	)		(1,199	)
Prepaid expenses								252			—
Other current assets		(587	)		(2,094	)		(41	)		(587	)
Other non-current assets		35			36			(283	)		35
Accounts payable		2,124			577			191			2,124
Accrued liabilities		(114	)		290			85			(114	)
Other non-current liabilities		(35	)		(35	)		156			(35	)
Net cash used in operating activities		(2,414	)		(4,316	)		(898	)		(2,414	)

Cash flows from investing activities:
Purchase of property and equipment, net		(11	)		(67	)		(11	)		(11	)
Investment in note receivable, net		(38	)		—			—			(38	)
Investment in marketable securities, net		(1,106	)		—
Net cash used in investing activities		(1,155	)		(67	)
Net sales (purchases) of marketable securities								2,770			(1,106	)
Net cash provided by (used in) investing activities								2,759			(1,155	)

Cash flows from financing activities:
Proceeds from issuance of common stock		—			11,000
Principal repayments of debt		—			(2,149	)
Advances on line of credit		3,400			1,800			150			3,400
Principal repayments on line of credit		(800	)		—			(5,970	)		(800	)
Proceeds from SBA loans								411			—
Proceeds from exercise of stock options		7			77			—			7
Payments for deferred offering costs		—			(1,121	)
Net cash provided by financing activities		2,607			9,607
Net cash provided by (used in) financing activities								(5,409	)		2,607

Net change in cash and cash equivalents		(962	)		5,224			(3,548	)		(962	)
Cash and cash equivalents at the beginning of the period		3,759			2,446			4,432			3,759
Cash and cash equivalents at the end of the period	$	2,797		$	7,670		$	884		$	2,797

Supplemental cash flow disclosures:
Cash paid for interest expense	$	51		$	8		$	32		$	51
Cash paid for income taxes	$	—		$	—		$	—		$	—
Non-cash transactions:
Assets received offsetting notes receivable							$	22		$	—
Equipment transferred against note receivable	$	7		$			$	—		$	7
Deferred offering costs reclassified to equity	$	—		$	76

ADOMANI, Inc. (“we”, “us”, “our” or the “Company”) ~~designs and causes to be designed~~is a provider of new purpose-built zero-emission electric vehicles focused on total cost of ownership. We are also a provider of advanced zero-emission electric ~~and hybrid~~ drivetrain systems for integration in new ~~school~~ buses and medium to heavy-duty commercial fleet vehicles. The Company also ~~designs and causes to be designed~~provides re-power conversion kits to replace conventional drivetrain systems for combustion powered vehicles with zero-emission electric ~~or hybrid~~ drivetrain systems. The ~~Company is also a provider of new zero-emission electric~~Company’s vehicles and ~~hybrid vehicles focused on total cost of ownership. The Company’s~~ drivetrain systems ~~and vehicles~~ are designed to help fleet operators unlock the benefits of green technology and address the challenges of local, state and federal regulatory compliance and traditional-fuel price cost instability.

Basis of Presentation—The consolidated financial statements and related disclosures as of June 30, ~~2019~~2020 and for the fiscal periods ended June 30, ~~2019~~2020 and ~~2018~~2019 are unaudited, pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. In our opinion, these unaudited financial statements include all adjustments (consisting only of normal recurring adjustments) necessary for the fair statement of the results for the interim periods. These unaudited financial statements should be read in conjunction with our audited financial statements for the years ended December 31, ~~2018~~2019 and ~~2017~~2018 included in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2018.~~2019. The results of operations for the fiscal ~~periods~~period ended June 30, ~~2019~~2020 are not necessarily indicative of the results to be expected for the full year.

Going Concern— As of June 30, 2020, we had cash and cash equivalents of $883,949. We do not believe that our existing cash and cash equivalents and short-term investments will be sufficient to fund our operations during the next eighteen months unless we are able to resolve the California Air Resources Board’s Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project (“HVIP”) funding issues created by the HVIP staff in the near-term or we are able to mitigate the impact of certain anti-dilution and other rights contained in our outstanding warrants that have, to date, restricted our ability to raise additional debt or equity capital on terms that are acceptable to us. Such determination that our present capital resources will likely not be sufficient to fund our planned operations for the eighteen months following the date of this Quarterly Report raises substantial doubt about our ability to continue as a going concern.

In the event we are unable to resolve the HVIP funding issues in the near-term and successfully execute our business plan, we will likely need additional capital to continue our operations and support the increased working capital requirements associated with the fulfillment of purchase orders.

The sale of additional equity securities in the future could result in additional dilution to our stockholders and those securities may have rights senior to those of our common stock. In particular, the warrants issued and sold in our January 2018 public offering include anti-dilution rights, which provide that if, at any time the warrants are outstanding, we issue or are deemed to have issued any shares of common stock or securities that are convertible into or exchangeable for shares of common stock (except for certain exempt issuances, including the issuance of certain stock options, shares of common stock upon the exercise of securities outstanding prior to January 2018 and securities issued in connection with certain acquisitions or strategic transactions) for consideration less than the then current exercise price of the warrants, which is currently $4.50 per share and subject to adjustment pursuant to the terms thereof, the exercise price of such warrants is automatically reduced to the price per share of such new issuance. Further, simultaneously with any adjustment to the exercise price of such warrants, the number of shares of common stock that may be purchased upon exercise of such warrants will be increased or decreased proportionately, such that after such adjustment the aggregate exercise price payable thereunder for the adjusted number of shares of common stock underlying such warrants will be the same as the aggregate exercise price in effect immediately prior to such adjustment. To the extent that we issue or are or deemed to have issued securities for consideration that is substantially less than the exercise price of the warrants issued in our January 2018 public offering, holders of our common stock will experience dilution, which may be substantial and which could lower the

market price of our securities. Further, the potential application of such anti-dilution rights has, to date, restricted our ability to obtain additional financing on terms that are acceptable to us. In the event that we are unable to mitigate the impact of such anti-dilution rights and raise additional capital to finance our operations and continue to support our growth initiatives, we may not be able to continue as a going concern and may be forced to curtail all of our activities and, ultimately, cease our operations.

Principles of Consolidation—The accompanying financial statements reflect the consolidation of the individual financial statements of ADOMANI, Inc., ADOMANI California, Inc., Adomani (Nantong) Automotive Technology Co. Ltd., ADOMANI ZEV Sales, Inc., formerly known as School Bus Sales of California, Inc., ~~and~~ Zero Emission Truck and Bus Sales of Arizona, Inc., and ZEV Resources, Inc. All significant intercompany accounts and transactions have been eliminated.

Use of Estimates—The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Fair Value of Financial Instruments—The carrying values of our financial instruments, including cash, notes receivable and accounts payable approximate their fair value due to the short-term nature of these financial instruments. Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) No. 820, “Fair Value Measurement” defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. It also establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

Level 3: Unobservable inputs that are supported by little or no market data and that require the reporting entity to develop its own assumptions.

The Company does not have any assets or liabilities that are required to be measured and recorded at fair value on a recurring basis.

Revenue Recognition—The Company recognizes revenue from the sales of ~~advanced~~zero-emission electric vehicles; from the sales of zero-emission electric drivetrain systems for fleet ~~vehicles~~vehicles; and from contracting to provide related engineering and, effective February 2020, vehicle maintenance and inspection services. ~~In May 2014, the FASB issued new accounting guidance,~~The Company recognizes revenue in accordance with ASC Topic 606, “Revenue from Contracts with Customers”, ~~to clarify the principles for recognizing revenue and to develop a common revenue standard for GAAP. The amendments in this guidance state that~~which requires an entity ~~should~~to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ~~This new guidance requires enhanced disclosures to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue that is recognized.~~

(2) ~~determine~~Determine if multiple performance obligations ~~exist,~~ exist.

(4) ~~allocate~~Allocate the transaction price to the respective ~~obligation,~~obligation; and,

(5) ~~recognize~~Recognize the revenue as the obligation is satisfied. ~~Contracts under~~

As part of the termination agreement with Blue Bird, ~~supply agreement, which was terminated effective as of May 31, 2019, and work performed~~the Company is to be paid $5,000 for each electric drivetrain Blue Bird ordered from Cummins Corporation ~~under~~during the period of June 1, 2019 through September 30, 2019. This agreement is a ~~U.S. Department of Energy (“DOE”) grant awarded to~~single performance obligation with the Company recognizing revenue upon notification from Blue Bird ~~Corporation, were single-performance obligations and, therefore, required no allocation of the transaction price.~~that delivery has been made to its customer. The ~~Company’s participation in the DOE grant ended on May 31, 2019. Prior to such termination, the Company recognized revenue when product is shipped or is billed~~final customer delivery by ~~its third-party supplier for work performed under the DOE grant. Additionally, the Company recorded revenue for these sales at gross, rather than net, as the Company was the principal obligor to~~ Blue Bird ~~Corporation for both the supply agreement and the statement of work for the DOE grant, and, prior~~was made in April, 2020; thus, no additional revenue will be recorded by ADOMANI related to the termination agreement.

Product revenue also includes the sale of ~~such agreements, assumed~~electric trucks and cargo vans. These sales represent a single performance obligation with revenue recognition occurring at the ~~risk~~time title transfers. Transfer of title occurs when the customer has accepted the van and signed the appropriate documentation acknowledging receipt.

The Company is the recipient of a purchase order issued from GerWeiss EV USA LLC (“GerWeiss”) to produce all-electric tricycles (“e-trikes”), or all-electric light weight commercial vehicles. The Company has agreed to provide deposits to GerWeiss to fund the procurement of the supplies and assembly of the tricycles. The purchase order represents a single performance obligation with the Company recognizing revenue upon notification that the assembled units have been completed by GerWeiss. Upon the recording of revenue, the corresponding deposits are recorded as cost of goods sold.

Other revenue includes, effective February 2020, performing basic vehicle maintenance and detailing, as well as safety inspections for ~~non-performance, or non-compliance, related to any work performed by its subcontractor~~.compliance with United States Department of Transportation guidelines. These sales represent a single performance obligation with revenue recognition occurring at the time services are invoiced.

Cash and Cash Equivalents— The Company considers all highly liquid investments purchased with an original or remaining maturity of three months or less to be cash equivalents.

Marketable Securities—The Company invests in short-term, highly liquid, marketable securities, such as U.S. Treasury notes, U.S. Treasury bonds, and other government-backed securities. The Company classifies these marketable securities as held-to-maturity, as the intent is not to liquidate them prior to the respective stated maturity date.

Accounts Receivable and Allowance for Doubtful Accounts—The Company establishes an allowance for bad debts through a review of several factors including historical collection experience, current aging status of the customer accounts, and financial condition of its customers. The Company does not generally require collateral for its accounts receivable. The Company had trade accounts receivable of ~~$2,666,841~~$8,500 and ~~$996,621~~$661,352 as of June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively. AsBecause the ~~entire~~ trade accounts receivable balance ~~relates~~as of June 30, 2020 is immaterial, and because all but $15,000 of the trade accounts receivable balance as of December 31, 2019, respectively, related to ~~one customer, which~~two California government agencies, and was paid to ADOMANI during the ~~Company believes to be credit-worthy and, consequently, there is very little chance of default,~~three months ended June 30, 2020, no allowance has been recorded relative to the trade accounts receivable balance as of June 30, ~~2019.~~2020 and December 31, 2019, respectively.

Notes Receivables— The Company also had ~~other receivables~~notes receivable of ~~$314,340~~$823,848 and ~~$143,734~~$834,491 as of June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively. The Company provided an allowance for ~~other receivables~~notes receivable of ~~$20,000~~$571,000 and ~~$70,000~~$471,000 as of June 30, ~~2019~~2020 and December 31, ~~2018, respectively. $50,000~~2019, respectively (see Note 4 below).

Inventory and Inventory Valuation Allowance— The Company records inventory at the lower of ~~other receivables was written off against the allowance for the six months ended~~cost or market, and uses a First In, First Out (“FIFO”) accounting valuation methodology. The Company had inventory on hand of $431,470 and $494,158 as of June 30, 2020 and December 31, 2019, respectively. The Company provided no inventory allowance as ~~it was determined to be uncollectable.~~of June 30, 2020 and December 31, 2019, respectively.

Inventory Deposits―The Company records all inventory deposits as prepaid assets. Upon completion of production, and acceptance by the Company, deposits are reclassified to either inventory or cost of goods, depending on whether a sale of the product has occurred. The Company had inventory deposits of ~~$988,956~~$801,204 and ~~$882,050~~$935,204 as of June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively.

Net Loss Per Share—Basic net loss per share is calculated by dividing the Company’s net loss applicable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share is calculated by dividing the Company’s net loss applicable to common stockholders by the diluted weighted average number of shares of common stock outstanding during the period. The diluted

weighted average number of shares of common stock outstanding is the basic weighted number of shares of common stock adjusted for any potentially dilutive debt or equity securities. As of June 30, 2020, the Company had 13,904,436 and 7,556,323 stock options and stock warrants outstanding, respectively .

Concentration of Credit Risk—The Company has credit risks related to cash and cash equivalents on deposit with a federally insured bank, as at times it exceeds the $250,000 maximum amount insured by the Federal Deposit Insurance Corporation.

Impairment of Long-Lived Assets—Long-lived assets, including property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company evaluates these assets to determine potential impairment by comparing the carrying amount to the undiscounted estimated future cash flows of the related assets. If the estimated undiscounted cash flows are less than the carrying value of the assets, the assets are written down to their fair value. There was no impairment of long-lived assets, or property and equipment, as of June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively.

Research and Development—Costs incurred in connection with the development of new products and manufacturing methods are charged to operating expenses as incurred. Research and development costs were ~~$102,656~~$0 and ~~$440,433 for the three months ended June 30, 2019 and 2018, respectively, and~~ $147,656 ~~and $596,367~~ for the six months ended June 30, ~~2019~~2020 and ~~2018,~~2019, respectively.

Stock-Based Compensation—The Company accounts for employee stock-based compensation in accordance with the guidance of FASB ASC Topic 718, “Compensation-Stock Compensation”, which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. The fair value of the equity instrument is charged directly to compensation expense and credited to additional paid-in capital over the period during which services are rendered. Additionally, in June 2018 the FASB issued Accounting Standards Update (“ASU”) No. 2018-07, which simplified several aspects of accounting for nonemployee share-based payment transactions by expanding the scope of ASC Topic 718. The guidance is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2018. The Company has implemented this change beginning in 2019, although it has minimal impact on its financial statements.

Property and Equipment— Property and equipment are stated at cost, less accumulated depreciation and amortization. The Company provides for depreciation using the straight-line method over the estimated useful lives of the assets, which range from three to five years, except leasehold improvements, which are being amortized over the life of the lease term. Property and equipment qualify for capitalization if the purchase price exceeds $2,000. Major repairs and replacements, which extend the useful lives of equipment, are capitalized and depreciated over the estimated useful lives of the property. All other maintenance and repairs are expensed as incurred.

Leases—The Company accounts for leases as required by ASC Topic 842. The guidance requires companies to recognize leased assets and liabilities on the balance sheet and to disclose key information regarding leasing arrangements.

Recent Accounting Pronouncements— Management has considered all recent accounting pronouncements issued, but not effective, and does not believe that they will have a significant impact on the Company’s financial statements.

~~In June 2019,~~On February 3, 2020, the Company purchased substantially all of the assets of Ebus, Inc.~~, or Ebus, transferred property,~~ (“Ebus”) at a foreclosure sale via a credit bid (see Note 4). In March 2020, the Company obtained possession of certain of these assets, with an estimated fair-market value of approximately $7,000, to the Company in exchange for a corresponding reduction of the amounts due and payable under the terms of a promissory note issued to the Company (see Note 4). The property transferred to the Company has$22,440. These assets have been recorded as ~~“Vehicles”~~“Machinery & equipment” on the schedule below.

Components of property and equipment, net, consist of the following as of June 30, ~~2019~~2020 and December 31, ~~2018:~~2019:

	June 30,			December 31,			June 30			December 31,
	2019			2018			2020			2019
Furniture and fixtures	$	41,799		$	41,799		$	41,799		$	41,799
Leasehold improvements		23,338			23,338			35,042			23,338
Computers		58,082			53,704			59,668			59,667
Machinery & equipment								22,440			—
Vehicles		74,299			67,299			72,299			72,299
Test/Demo vehicles		38,332			31,728			15,784			15,784
Total property and equipment	$	235,850		$	217,868		$	247,032		$	212,887
Less accumulated depreciation		(91,131	)		(67,777	)		(124,734	)		(101,044	)
Net property and equipment	$	144,719		$	150,091		$	122,298		$	111,843

Depreciation expense was ~~$11,678~~$12,174 and ~~$8,236~~$11,678 for the three months ended June 30, ~~2019~~2020 and ~~2018,~~2019, respectively, and ~~$23,354~~$23,690 and ~~$16,473~~$23,354 for the six months ended June 30, ~~2019~~2020 and ~~2018,~~2019, respectively.

On ~~June 29, 2017,~~February 3, 2020, the Company loaned $500,000 to Ebus, an unaffiliated third party with engineering expertise in the electric bus technology industry, with whom the Company, at that time, expected it might seek an alliance at some future date, in order to provide it with working capital. The stated interest rate is 9% per annum, with interest payments due monthly beginning on July 31, 2017. The note is secured byacquired substantially all of the assets of Ebus in a foreclosure sale through a credit bid in the ~~borrower and was scheduled~~amount of $582,000, representing the amount then owed by Ebus to ~~mature~~the Company on ~~December 31, 2017. In February 2018,~~its note receivable. Following the ~~parties~~ ~~amended~~Company’s successful credit bid at the foreclosure sale, Ebus’s obligations under the note ~~to extend the maturity date of the note to June 30, 2018, and in June 2018, the parties agreed to further~~ ~~amend the note to extend~~ ~~the maturity date of the note until September 30, 2018. The note, as amended, is subject to an extension fee of $35,000, which was due no later than the September 30, 2018 maturity date.~~ ~~In addition, per~~ the terms of the note, as amended, the borrower was obligated to make past due interest payments in the aggregate amount of $18,750 on or before July 6, 2018. The Company received such past due interest payments on July 6, 2018. All subsequent interest payments prior to the September 30, 2018 maturity were ~~made.~~ ~~Ebus~~ ~~failed to pay the $500,000~~ ~~along with an unpaid extension fee~~ ~~of $35,000, by the September 30, 2018 maturity date,~~extinguished and the Company ~~considers the note~~was entitled to ~~be in default. The Company notified the borrower in writing~~take possession of ~~such default on October 1, 2018. The Company recorded a $200,000 allowance as bad debt expense against the note based on preliminary determination~~substantially all of ~~recoverability from~~ the assets ~~owned by~~of Ebus. In ~~October 2018,~~March 2020, the Company ~~accrued an additional fee~~obtained possession of ~~$15,000 and late fees on~~certain of the ~~extension fee~~ ~~in the amount of~~ $1,750. The Company accrued interest at the default rate, which is the stated rate of interest plus 2%, in accordance with the note, through March 31, 2019. Total interest accrued for the six months ended June 30, 2019 was $13,749. In May 2019, the Company entered into a facility-sharing agreement with ~~Ebus~~ ~~(see Note 9). In June 2019,~~ ~~Ebus~~ ~~transferred vehicles,~~assets with an estimated fair market value of approximately ~~$7,000, to the Company in exchange for a corresponding reduction in the amount due on the note~~$22,440 (see Note 3). However, the Company has not been able to take possession of the rest of the assets. On April 13, 2020, the Company commenced an action in Los Angeles Superior Court against Ebus and certain of its insiders and affiliates seeking to recover the remainder of the assets and related damages (see Note 10). On April 13, 2020, the Company commenced an action in Los Angeles Superior Court against Ebus and certain of its insiders and affiliates seeking to recover the remainder of the assets and related damages (see Note 10). In June 2020, the Company recorded an additional $100,000 allowance as bad debt expense against the amount receivable based on a revised assessment of recoverability from the assets obtained. The Company continues to evaluate several paths to obtaining the remaining assets that were purchased from Ebus at the foreclosure sale.

The Company loaned $200,000 pursuant to a secured promissory note to an unaffiliated third party in the energy storage technology industry in September 2018. The stated interest rate under the note is 9% per annum and any unpaid interest will become part of the principal balance after one year and will compound accordingly. The amount outstanding under the note will automatically convert into preferred stock of the borrower in connection with a financing that results in aggregate gross proceeds to the borrower of at least $500,000. Additionally, the Company may optionally convert into preferred stock of the borrower any or all of the amount outstanding under the note at any time. The note is secured by substantially all of the assets of the borrower and is scheduled to mature on December 31, 2020 unless conversion of the note occurs prior to that date. ~~The note is included as a non-current asset on the consolidated balance sheet as of June 30, 2019.~~ In May 2019, the Company loaned an additional $38,000 pursuant to a secured promissory note to the same unaffiliated third party. The note carries the same terms and conditions as the initial note, but is scheduled to mature on March 31, 2020. The total unpaid principal and accrued interest, as of December 31, 2019, was $39,995. During September through December 2019, accrued interest totaling $23,496 on the original $200,000 note, ~~is reported~~that had accrued between September 2018 and December 2019, was reclassified to principal. In December 2019, the Company recorded a $100,000 allowance as bad debt expense against the original $200,000 note based on a preliminary assessment of collectability. Although the original note matures on December 31, 2020, due to the uncertain timing of collection, the principal and unpaid interest of $223,496 remain classified as a ~~current~~non-current asset on the consolidated balance sheet as of December 31, 2019. The additional $38,000, which was scheduled to mature on March 31, 2020, was unpaid as of that date. The Company originally agreed to provide the third party until June 30, ~~2019.~~

~~Effective May 2, 2018,~~2020 for the note to be repaid, as the third party had contracted financing to be funded by that date, which would, in part, be used to repay the note. However, while a term sheet between the third party and their lender was signed prior to June 30, 2020, the third party revealed to the Company ~~secured a line~~that loan funding will not occur until sometime in Q3 2020 and, as such, repayment of ~~credit from Morgan Stanley Private Bank, National Association (“Morgan Stanley”). Borrowings under~~ the ~~line~~note will

occur at that time. Between March 31, 2020 and the date of ~~credit bear~~repayment of the note, interest will accrue at ~~30-day LIBOR~~the stated rate of 9% plus ~~2.0%. There is no maturity date for~~ the ~~line, but Morgan Stanley may at any time,~~default rate of 4%, as prescribed in ~~its sole discretion and without cause, demand~~the note. Though the Company ~~immediately repay any~~feels comfortable that the principal and ~~all outstanding obligations under the line~~accrued, but unpaid, interest will be repaid during Q3 2020, as a conservative measure, existing amounts have been reclassified as a non-current asset, and no additional allowance has been recorded. The total principal and unpaid interest of ~~credit in whole or in part. The line is secured by the cash~~both of these notes was $275,988 and ~~cash equivalents maintained by the Company in its Morgan Stanley accounts, which was approximately $7.7 million~~$263,491 as of June 30, 2020 and December 31, 2019, of which $2.6 million is classified on our balance sheet as cash and cash equivalents, and $5.1 million as marketable securities as of June 30, 2019. Borrowings under the line may not exceed 95% of such cash, cash equivalents, and marketable securities balances, subject to a maximum of $7 million. Such borrowing threshold, however, is subject to change at Morgan Stanley’s discretion and depends upon the holdings in the Company’s accounts, the maturity dates of the securities in the accounts and the credit quality of the underlying insurers. respectively.

As of ~~June 30,~~December 31, 2019, the principal amount outstanding under ~~this~~the Morgan Stanley line of credit was approximately ~~$4.3~~$5.8 million, and the undrawn borrowing availability was ~~$2.7 million.~~

~~6. Common Stock~~$820,948. On February 3, 2020, the Company sold marketable securities and paid off the balance, including accrued interest, of the line of credit.

On ~~January 9, 2018,~~May 6, 2020, the Company ~~consummated~~received $261,244 in loan funding from the ~~closing~~Paycheck Protection Program (the “PPP”) established pursuant to the recently enacted Coronavirus Aid, Relief, and Economic Security Act of 2020 (the “CARES Act”) and administered by the U.S. Small Business Administration (“SBA”). The unsecured loan (the “PPP Loan”) is evidenced by a ~~follow-on offering~~promissory note of ~~units, each consisting~~the Company, dated May 3, 2020 (the “Note”) in the principal amount of ~~one share~~$261,244 with Wells Fargo Bank, N.A. (the “Bank”), the lender. The PPP provides for loans to qualifying businesses for amounts up to 2.5 times of ~~common stock~~the average monthly payroll expenses of the qualifying business. The loans and ~~a warrant to purchase 1.5 shares~~accrued interest are forgivable after eight weeks, or, if elected by the Company, twenty-four weeks, in either case, as long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. The amount of common stock at an exercise price of $4.50. The Company sold an aggregate of 3,666,667 units for aggregate gross proceeds of approximately $11.0 million. Net proceeds received after deducting commissions, expenses and fees of approximately $1.2 million amounted to approximately $9.8 million.loan forgiveness will be reduced if the borrower terminates employees or reduces salaries during the eight-week or twenty-four week period, as applicable. Under the terms of the ~~underwriting agreement executed~~Note and the PPP, interest accrues on the outstanding principal at the rate of 1.0% per annum. The term of the Note is two years, though it may be payable sooner in connection with an event of default under the ~~follow-on offering,~~Note. To the extent the loan amount is not forgiven under the PPP, the Company ~~issued~~will be obligated to ~~Boustead Securities, LLC~~make equal monthly payments of principal and ~~Roth Capital Partners, LLC warrants~~interest beginning on November 1, 2020 through the maturity date of May 3, 2022. The Company intends to ~~purchase an aggregate of 256,667 shares of common stock. The warrants to purchase 256,667 shares of common stock were valued using~~file its forgiveness application during August 2020, and it is the ~~Black-Scholes option-pricing model, resulting in a fair market value of $598,737. The assumptions used in the valuation~~Company’s belief that, at that time, they will have satisfied all requirements for full forgiveness of the ~~warrants issued to Boustead Securities, LLC~~loan. The Company anticipates the net amount forgiven will be $251,244, which is the principal amount of $261,244, less $10,000 that was advanced as part of the Company’s application for the EIDL loan (see below). Any EIDL advance must be repaid as part of the PPP loan forgiveness process. As of June 30, 2020, the principal and ~~Roth Capital Partners, LLC included~~accrued interest on this note is $261,680, of which $115,331 and $146,349 is reflected on the ~~term of five years, the exercise price of $3.75 per share, volatility of 92.20%~~consolidated unaudited balance sheets as current and ~~a risk-free interest rate of 2.13%. The fair value of these warrants was recorded as offering costs and netted against additional paid-in capital during the three months ended March 31, 2018.~~long-term liabilities, respectively.

~~During January and February 2019, certain non-employees exercised options to purchase an aggregate of 71,084 shares of common stock, for which~~On May 20, 2020, the Company received ~~aggregate gross proceeds~~$150,000 in loan funding from the U.S. SBA under the Economic Injury Disaster Loan (“EIDL”) program administered by the SBA, which program was expanded pursuant to the recently enacted CARES Act. The EIDL is evidenced by a promissory note, dated May 17, 2020 (the “Note”) in the original principal amount of ~~$7,108 (see~~$150,000 with the SBA, the lender. Under the terms of the Note, ~~8).~~interest accrues on the outstanding principal at the rate of 3.75% per annum. The term of the Note is thirty years, though it may be payable sooner upon an event of default under the Note. Under the Note, the Company will be obligated to make equal monthly payments of principal and interest beginning on May 17, 2021 through the maturity date of May 17, 2051. The Note may be prepaid in part or in full, at any time, without penalty. As of June 30, 2020, the principal and accrued interest on this note is $150,939, of which $0 and $150,939 is reflected on the consolidated unaudited balance sheets as current and long-term liabilities, respectively.

Effective ~~February~~January 1, ~~2019,~~2020, the Company ~~hired~~renewed its agreement with a consultant to provide sales and marketing expertise. The consultant is to be paid ~~$7,500~~$8,200 per month, consisting of ~~$2,500~~$3,200 in cash and $5,000 of common stock. The number of shares of common stock to be issued is determined by the Company’s closing stock price on the last market day of the respective preceding month. ~~As of~~For the six months ended June 30, 2020 and 2019, the Company ~~had~~ issued 266,420 and 72,810 shares of common stock to the consultant, respectively. As of June 30, 2020, the Company has issued a total of 588,582 shares of common stock to the consultant. On July 1, 2020 and August 1, 2020, the Company issued 21,844 and 19,739 shares of common stock to the consultant, respectively, and, as of August 1, 2020, the Company has issued a total of 630,165 shares of common stock to the consultant (see Note 12).

Effective March 31, 2020, the Company hired a consultant with expertise in the public funding process for the State of California. The consultant is to be paid $5,000 per month in common stock, and is entitled to a $9,000 bonus should the Company receive public funding appropriate to it completing $2 million in transactions as of June 30, 2020. The number of shares of common stock to be issued is determined by the Company’s closing stock price on the last market day of the respective preceding month. Additionally, the consultant is entitled to 1% of the non-publicly funded portion of transactions completed during the term of the agreement and for the six months following. The agreement expired on June 30, 2020. On July 1, 2020, the Company issued 21,844 shares of common stock, and, as of that date, the Company has issued a total of 129,677 shares of common stock to the consultant.

Effective May 21, 2020, the Company hired a consultant with expertise in marketing and public relations strategy. The consultant is to be paid $2,500 per month in common stock. The number of shares of common stock to be issued is determined by the average of the Company’s closing stock price for respective preceding month. For the six months ended June 30, 2020 and 2019, the Company issued 8,278 and 0 shares of common stock to the consultant, respectively. As of June 30, 2020, the Company has issued a total of 8,278 shares of common stock to the consultant. On July 1, 2020 and August 1, 2020, the Company issued 16,743, and 8,721 shares of common stock to the consultant, respectively and, as of August 1, 2020, the Company has issued a total of 33,742 shares of common stock to the consultant (see Note 12).

As of June 30, ~~2019,~~2020, the Company has issued warrants to purchase an aggregate of 7,556,323 shares of common stock. The Company’s ~~stock~~ warrant activity for the six months ended June 30, ~~2019~~2020 is summarized as follows:

Weighted

Weighted

Average

Average

Number of

Exercise

Remaining

Shares

Price

Contractual Life (years)

Outstanding at December 31, 2018

7,556,323

$
4.45

3.8

Granted

$
—

Forfeited

Outstanding at June 30, 2019

7,556,323

$
4.45

3.3

Exercisable at June 30, 2019

7,556,323

$
4.45

3.3

			Weighted		Weighted
			Average		Average
	Number of		Exercise		Remaining
	Shares		Price		Contractual Life (years)
Outstanding at December 31, 2019		7,556,323	$	4.45		2.8
Granted		—	$	—
Forfeited		—		—
Outstanding at June 30, 2020		7,556,323	$	4.45		2.3

Exercisable at June 30, 2020		7,556,323	$	4.45		2.3

Effective January 2, 2020, the Company entered into consulting agreement with Suneel Sawant under which Mr. Sawant will perform certain services for the Company, including, among other things, services related to the establishment, maintenance, and management of a network for the sale its zero-emission vehicles and related products and services to customers located in India. As full compensation for the services to be provided by Mr. Sawant under the agreement, the Company agreed to grant Mr. Sawant options to purchase up to 2,000,000 shares of the Company’s common stock, all fully vested and exercisable on the grant date. One million of the shares subject to these options have an exercise price of $0.50 per share and will expire if not exercised on or before December 31, 2020, and the remaining 1,000,000 shares subject to the options have an exercise price of $1.00 per share and will

expire if not exercised on or before December 31, 2021. The options were valued using the Black-Scholes option-pricing model, resulting in fair market values of $76,299 and $86,099 for the options expiring on December 31, 2020 and 2021, respectively. The assumptions used in the valuation of the options expiring on December 31, 2020 included an expected term of one year, volatility of 172.40%, and a risk-free interest rate of 1.56%. The assumptions used in the valuation of the options expiring on December 31, 2021 included an expected term of two years, volatility of 155%, and a risk-free interest rate of 1.58%. Because these options were fully vested and exercisable as of the grant date, the combined fair market value of $162,398 was recorded as stock based compensation expense during the period ending March 31, 2020. Should the Company’s agreement with Mr. Sawant be terminated for any reason, any unexercised options shall be forfeited.

On March 6, 2018, Edward R. Monfort ceased serving as the Company’s Chief Technology Officer. Upon Mr. Monfort’s separation from service, the Company’s board of directors suspended Mr. Monfort’s outstanding options. Although such options ~~remain~~remained outstanding, they were unexercisable as of ~~June 30, 2019 and through the date of this Quarterly Report.~~December 31, 2019. As of ~~June 30,~~December 31, 2019, outstanding options to purchase an aggregate of 14,297,902 shares of common stock ~~are~~were attributable to Mr. Monfort.

~~During~~ Effective as of January ~~and February 2019, certain non-employees exercised~~29, 2020, all such options ~~to purchase an aggregate of 71,084 shares of common stock, for which~~were cancelled by the Company ~~received aggregate gross proceeds~~in connection with the settlement of ~~$7,108 (see Note 6).~~Mr. Monfort’s claims against the Company.

Effective February 1, 2019, the Company engaged a consultant to provide sales and marketing expertise. The Company agreed to pay such consultant $7,500 per month, consisting of $2,500 in cash and $5,000 of common stock. As of June 30, 2019, the Company had issued 72,810 shares of common stock to the consultant (see Note 6).

In ~~April 2019,~~May 2020, the Company’s board of directors granted to certain employees and directors options to purchase an aggregate of ~~1,095,000~~2,235,000 shares of common stock pursuant to the Company’s 2017 Equity Incentive Plan. The options are for a contractual term of 10 years, vest over a three-year period, with one-third of the options vesting on the one-year anniversary of the grant date and the remainder vesting in equal monthly installments thereafter, subject to a grantee’s continuous service to the Company through each such vesting ~~date~~.date. The exercise price for these options is ~~$0.45~~$0.12 per share. The options were valued using the Black-Scholes option-pricing model, resulting in a fair market value of ~~$205,118.~~$204,933. The assumptions used in the valuation included an expected term of 5.75 years, volatility of ~~58.68%~~147.50% and a risk-free interest rate of ~~2.41%~~0.50%.

Stock option activity for the six months ended June 30, ~~2019~~2020 is as follows:

						Weighted							Weighted
				Weighted		Average					Weighted		Average
				Average		Remaining					Average		Remaining
	Number of Shares			Exercise Price		Contractual Life (years)		Number of Shares			Exercise Price		Contractual Life (years)
Outstanding at December 31, 2018		24,728,422		$	0.15		2.6
Outstanding at December 31, 2019									25,617,338		$	0.16		1.9
Granted		1,095,000		$	0.45				4,235,000		$	0.42
Exercised		(71,084	)	$	0.10				—		$	—
Canceled/Forfeited		(135,000	)	$	1.31				(15,947,902	)	$	0.14
Outstanding at June 30, 2019		25,617,338		$	0.16		2.4
Outstanding at June 30, 2020									13,904,436		$	0.26		3.6

Exercisable at June 30, 2019		9,735,291		$	0.13		2.6
Exercisable at June 30, 2020									10,935,545		$	0.27		2.0

Stock-based compensation expense was ~~approximately~~$46,093 and $274,646 ~~and $2.8 million~~ for the three months ended June 30, ~~2019~~2020 and ~~2018~~2019 respectively, and ~~approximately~~$246,433 and $527,542 ~~and $5.7 million~~ for the six months ended June 30, ~~2019~~2020 and ~~2018,~~2020, respectively, and is included in general and administrative expense in the accompanying unaudited consolidated statements of operations. As of June 30, ~~2019,~~2020, the Company expects to recognize approximately ~~$501,323~~$373,412 of stock-based compensation expense for the non-vested portion of outstanding options over a weighted-average period of ~~1.7~~2.2 years.

As of June 30, ~~2019, the Company’s~~2020, outstanding options have an intrinsic value of approximately $4.6 million, which includes the suspended options to purchase an aggregate of 14,297,902 shares of common stock that are attributable to Mr. Monfort. Intrinsic value is approximately $2.8 million if the options to purchase shares of common stock attributable to Mr. Monfort are excluded from the calculation.$1.3 million.

In ~~2016,~~January 2020, the Company ~~signed a~~renewed its lease for office space in Los Altos, California, ~~to serve~~which serves as office space for its Northern California operations. ~~The~~This lease ~~expired on February 28, 2018 and the Company executed a new 10-month lease in March 2018. The total amount due under the lease was $4,730 and the lease period was from March 1, 2018 through~~expires December 31, ~~2018. The Company has signed a one-year lease renewal, expiring on December 31, 2019. The~~2020, and the total amount due under the renewal is ~~$5,676.~~$6,432

In February 2017, the Company signed a lease for storage space in Stockton, California to serve as a location to store vehicles and other equipment utilized for marketing and trade-show purposes. The lease is on a month-to-month basis and can be terminated by either party with 30-days’ notice. The total amount due monthly is $1,000.

In October 2017, the Company signed a non-cancellable lease for its corporate office space in Corona, California, to serve as its corporate headquarters. The lease is for a period of 65 months, terminating February 28, 2023. The base rent for the term of the lease is $568,912. The total amount due monthly is $7,600 at commencement and will escalate to $10,560 by its conclusion. Additionally, the lease includes five months in which no rent payment is due.

In ~~May~~December 2019, the Company ~~entered into~~signed a ~~facility-sharing arrangement with Ebus~~lease for ~~its premises~~warehouse space in ~~Downey,~~Corona, California. The ~~agreement requires the Company to reimburse Ebus monthly~~ facility ~~costs of approximately $10,600 in exchange for shared use of the site. The~~ ~~additional space~~ will be used to conduct research and development activity, stage materials, assemble and/or manufacture vehicles, perform pre-delivery inspections, test demo vehicles, and securely store vehicles, equipment, parts and finished ~~inventory.~~ vehicle inventories. The lease is for a period of 36 months, commencing on January 1, 2020, and terminating on December 31, 2022. The base rent for the term of the lease is $495,720, with $265 due per month for fire sprinkler alarm monitoring and landscape maintenance. The base rent amount due monthly is $13,108 at commencement and will escalate to $13,906 by its conclusion.

On February 4, 2020, the Company signed a sublease agreement with Masters Transportation, Inc. (“Masters”) for Masters to occupy a portion of the Corona, California, facility that the Company occupied effective January 1, 2020 (see above). The effective date of the Masters’ sublease is February 1, 2020, and it expires when the Company’s lease on ~~a month-to-month basis~~the Corona, California facility expires on December 31, 2022. Under the sublease, Masters is obligated to pay the Company monthly rent payments in an amount equal to $6,000 at commencement and ~~is cancelable~~thereafter escalating to $6,365 by ~~either party with 10-days’ notice.~~its conclusion.

In ~~2015,~~November 2019, the Company ~~entered into a contract~~renewed its agreement with THINKP3 to provide services with the goal of securing federal grant assistance for development of the Company’s zero-emission and hybrid transportation solutions for school bus, commercial, government and utility fleets. The ~~initial term of this contract was December 1, 2015 through~~agreement expires on November 30, 2016. On November 21, 2016, the parties renewed the agreement through November 30, 2017. On November 7, 2017, the Company renewed the agreement through November 30, 2018. On November 30, 2018, the Company renewed the agreement through November 30, 2019.2020. Fees for these services are $8,000 per month. Due to the COVID-19 pandemic, effective March 1, 2020, it was mutually agreed that the fee for services would be reduced to $4,000 per month until both parties agree it should be restored. The contract can be terminated by either party with 30-days’ advance notice.

Effective September 16, 2019, the Company renewed its employment agreement with James L. Reynolds, its Chief Executive Officer. The term of the renewed employment agreement is five years, with an annual base salary of $294,000. The agreement includes an annual car allowance of $18,000.

In June 2019, the Company entered into an agreement with Renmark Financial Communications USA, Inc. to provide investor relations services. Fees for these services are $6,500 per month. Due to the COVID-19 pandemic, effective March 1, 2020, it was mutually agreed that the fee for services would be reduced to $3,250 per month through July 2020.

Effective January 1, 2017, the Company entered into an employment agreement with Michael Menerey, its Chief Financial Officer. The term of the employment agreement is five years and the agreement provides for an annual base salary of $200,000. Effective January 1, 2020, Mr. Menerey’s annual base salary was increased to $215,000.

The following table summarizes the Company’s future minimum payments under contractual commitments, excluding debt, as of June 30, ~~2019:~~2020:

	Payments due by period										Payments due by period
	Total		Less than one year		1 - 3 years		4 - 5 years		More than 5 years		Total		Less than one year		1 - 3 years		4 - 5 years		More than 5 years
Operating lease obligations	$	444,426	$	119,466	$	241,344	$	83,616	$	—	$	563,658	$	212,994	$	350,664	$	—	$	—
Employment contracts		546,000		246,000		300,000		—		—		1,622,500		527,000		731,500		364,000		—
Total	$	990,426	$	365,466	$	541,344	$	83,616	$	—	$	2,186,158	$	739,994	$	1,082,164	$	364,000	$	—

On August 2, 2018, Edward R. Monfort, our former Chief Technology Officer and former director, filed a complaint, captioned Edward R. Monfort v. ADOMANI, Inc., et al., Case No.: 18CV332757, in the Superior Court of the State of California for the County of Santa Clara, against us and certain of our executive officers, alleging that we and the other defendants (i) breached the terms of certain common stock subscription agreements to which Mr. Monfort is a party, (ii) fraudulently deprived Mr. Monfort of certain purported equity in the Company and (iii) fraudulently induced Mr. Monfort to execute a release of claims in connection with his June 2016 employment agreement. Mr. Monfort seeks unspecified monetary damages, declaratory relief regarding the extent of his equity ownership in the Company and other relief. On August 24, 2018, we filed a notice of removal pursuant to which we removed the case to the United States District Court for the Northern District of California. On September 24, 2018, Mr. Monfort filed a motion for remand, seeking to remand the proceeding from the United States District Court for the Northern District of California back to the Superior Court of the State of California for the County of Santa Clara. On January 8, 2019, the United States District Court for the Northern District of California denied the motion for remand. On February 7, 2019, we answered Mr. Monfort’s complaint and filed counterclaims against Mr. Monfort alleging counterclaims for: (i) breach of contract; (ii) declaratory judgment; (iii) breach of fiduciary duty; (iv) wrongful dilution; and (v) conversion. On March 26, 2019, Mr. Monfort filed an amended complaint, which was substantially similar, but which added as an additional defendant Dennis R. Di Ricco and corrected certain non-substantive typographical errors. We filed a substantially similar answer with the same counterclaims and, pursuant to a contractual indemnification arrangement, we have assumed the Defense of Mr. Di Ricco. We believe that Mr. Monfort’s lawsuit is without merit and intend to vigorously defend the action.

On August 23, 2018, a purported class action lawsuit captioned M.D. Ariful Mollik v. ADOMANI, Inc. et al., Case No. RIC 1817493, was filed in the Superior Court of the State of California for the County of Riverside against us, certain of our executive officers (together, the “Company Defendants”), Edward R. Monfort, our former Chief Technology Officer and former director, and the two underwriters of our offering of common stock under Regulation A in June 2017. This complaint alleges that documents related to our offering of common stock under Regulation A in June 2017 contained materially false and misleading statements and that all defendants violated Section 12(a)(2) of the Securities Act, ~~of 1933, as amended (the “Securities Act”),~~ and that we and the individual defendants violated Section 15 of the Securities Act, in connection therewith. The plaintiff seeks on behalf of himself and all class members: (i) certification of a class under California substantive law and procedure; (ii) compensatory damages and interest in an amount to be proven at trial; (iii) reasonable costs and expenses incurred in this action, including counsel fees and expert fees; (iv) awarding of rescission or rescissionary damages; and (v) equitable relief at the discretion of the Court. ~~On November 9, 2018, in response to a demurrer filed by defendant Network 1 Financial Securities, Plaintiff~~Plaintiff’s counsel has subsequently filed a first amended complaint, which was substantially similar to the original complaint but refined certain allegations regarding the alleged material omissions that form the basis of the complaint. Defendants demurred to the first amended complaint. The court heard defendants’ demurrers to the first amended complaint on January 30, 2019. At this hearing the court granted plaintiff leave to file a second amended complaint. Plaintiff filed a second amended complaint, ~~on January 31, 2019. The second~~and a third amended complaint. Plaintiff Mollik was replaced by putative class representatives Alan K. Brooks and Electric Drivetrains, LLC. Alan K. Brooks was subsequently dropped as a putative class representative.

On October 25, 2019, we answered the third amended complaint, ~~attempts to substitute in two putative class plaintiffs. Defendants jointly demurred~~generally denying the allegations and asserting affirmative defenses. On November 5, 2019, Network 1 and Boustead Securities (together the “Underwriters”) filed a cross-complaint against the Company seeking indemnification under the terms of the underwriting agreement the Company and the Underwriters entered for the Company’s initial public offering (the “Underwriting Agreement”). On December 10, 2019, the Company filed its answer to the ~~second~~Underwriters’ cross-complaint, generally denying the allegations and asserting affirmative defenses. Also on this date, the Company filed a cross-complaint against the Underwriters seeking indemnification under the terms of the Underwriting Agreement. On January 14, 2020, Mr. Monfort filed a cross-complaint against the Underwriters seeking indemnification under the terms of the Underwriting Agreement. On January 15, 2020, Mr. Monfort filed a cross-complaint against the Company seeking indemnification under the terms of the Company’s Amended and Restated Bylaws and Section 145 of the Delaware General Corporation Law. On February 18, 2020 we filed an answer to Mr. Monfort’s cross-complaint, generally denying the allegations and asserting affirmative defenses.

On April 6, 2020, the Company Defendants, Mr. Monfort, and Plaintiff Electric Drivetrains engaged in mediation. The Underwriters declined to participate in the mediation. The mediation did not result in settlement. On April 16, 2020, Electric Drivetrains requested that defendants stipulate to Electric Drivetrains’ filing a fourth amended complaint. Defendants declined to stipulate to the fourth amended complaint, leading Electric Drivetrains to file a motion to amend the complaint. A hearing on March 4, 2019. On May 7, 2019, the Court held a hearing and tentatively issued a ruling indicating that the Second Amended Complaint should be dismissed, without prejudice. A subsequent written order confirmed the dismissal, without prejudice. On June 29, 2019, Plaintiffs filed their Third Amended Complaint, seeking to address the issues raised in the Court’s oral ruling. Defendants will be filing a Joint demurrer on July 29, 2019,this motion and a ~~hearing on that demurrer is scheduled~~status conference are set for August ~~29, 2019.~~12, 2020. We believe that the purported class action lawsuit is without merit and intend to vigorously defend the action.

contract claim and alleging five additional claims for (i) violations of Cal. Corp. Code Section 25401, (ii) fraud, (iii) negligent misrepresentation, (iv) elder abuse, and (v) unfair competition. We answered the FAC on November 12, 2019, generally denying the allegations in the FAC and asserting affirmative defenses. On January 9, 2020, the Underwriter filed a notice of related case, notifying the court of Mollik v. ADOMANI, et al., described above. On January 31, 2020, the Underwriter filed a motion to stay proceedings. The court heard the motion to stay on May 21, 2020 and took the matter under submission. The court subsequently issued a written order denying the motion to stay. A case management conference is scheduled in this matter for September 15, 2020. We believe that the lawsuit is without merit and intend to vigorously defend the action.

On April 13, 2020, the Company filed a complaint against Ebus, Inc., Anders B. Eklov and Carol J. Eklov, Case No. 20ST-CV14275, in the Superior Court of California for the County of Los Angeles seeking to recover the remainder of the assets acquired by the Company through a credit bid in the amount of $582,000 at a foreclosure sale initiated by the Company following Ebus’s default in its obligations to the Company under a related promissory note. The complaint, among other things, seeks possession of the remainder of the assets and alleges that Ebus and the other defendants improperly converted or used certain of the assets. The Company continues to vigorously pursue such action and continues to evaluate several paths to obtaining the remaining assets that were purchased from Ebus at the foreclosure sale.

As of June 30, 2020, the Company is a party to four operating leases. All of these leases are office or warehouse leases. As disclosed in Note 2, the Company accounts for leases as required by ASC Topic 842. The Company has elected to apply the short-term lease exception to all leases of one year or less. As of June 30, 2020, this exception applies to the Stockton, California lease, which is month-to-month, and the Los Altos, California lease, which is for a term of one year. In applying the guidance in ASC 842, the Company has determined that all current leases should be classified as operating leases.

During the six months ended June 30, 2020, the Company entered into an operating lease for warehouse space in Corona, California (see Note 9). As required by ASC 842, in conjunction with this lease, the Company recognized an operating liability of $382,742 with a corresponding Right-Of-Use (“ROU”) asset of the same amounts based on the present value of the minimum rental payments of such leases. The discount rate used for this lease is the Company’s estimated borrowing rate of 14%. The ROU asset had a balance of $502,224 and $218,504 as of June 30, 2020 and December 31, 2019, respectively, which is included in other non-current assets in the consolidated balance sheets. Current liabilities relating to the ROU asset were $198,076 and $70,492 as of June 30, 2020 and December 31, 2019, respectively, and non-current liabilities relating to the ROU asset were $304,148 and $148,012 as of June 30, 2020 and December 31, 2019, respectively, and are included in accrued liabilities and other non-current liabilities in the unaudited consolidated balance sheets. Cash paid for amounts included in operating lease liabilities was $107,560 and $46,184 for the six months ended June 30, 2020 and 2019, respectively. As of June 30, 2020, the Company’s operating leases had a weighted-average remaining lease term of 2.5 years.

On July 1, 2020 and August 1, 2020, the Company issued a total of 88,891 shares of its common stock to consultants engaged by the Company as partial consideration for such consultant’s services (see Note 6).

ITEM 2. MANAGEMENT’S ~~DISCUSSIO~~NDISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and the results of operations should be read in conjunction with the unaudited consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q (“Quarterly Report”). This discussion contains forward-looking statements that are subject to known and unknown risks, uncertainties, and other factors that may cause our actual results to differ materially from those expressed or implied by such forward-looking statements. These risks, uncertainties, and other factors include, among others, those identified under the “Cautionary Statement Regarding Forward-Looking Statements” above, and elsewhere in this Quarterly Report, particularly in Part II, Item 1A “Risk Factors,” below.

We ~~design and cause to be designed advanced~~are a provider of new purpose-built zero-emission electric and hybrid drivetrain systems for integration in new school buses and medium to heavy-duty commercial fleet vehicles. We also design and cause to be designed re-power conversion kits to replace conventional drivetrain systems for combustion powered vehicles ~~with zero-emission electric or hybrid drivetrain systems. We expect to expand our product offerings to include the sale~~focused on total cost of ~~zero-emission systems in~~ownership. The vehicles are manufactured by outside, original equipment manufacturer (“OEM”) partners located in China, Malaysia and the Philippines that can be marketed, sold, warrantied and serviced through our developing distribution and service network.

~~Our~~ We also are a provider of advanced zero-emission electric drivetrain systems ~~can include options~~ for ~~telemetrics for remote monitoring, electric power-export~~integration in new buses and ~~various levels of grid-connectivity. Our zero-emission systems may~~medium to heavy-duty commercial fleet vehicles. We also grow to include automated charging infrastructure and “intelligent” stationary energy storage that enables fast vehicle charging, emergency back-up facility power, and access to the developing, grid-connected opportunities for the aggregate power available from groups of large battery packs.

~~In addition to providing the zero-emission electric and hybrid drivetrain systems and~~provide re-power conversion kits ~~mentioned above, we are also a provider of new~~to replace conventional drivetrain systems for combustion powered vehicles with zero-emission electric ~~and hybrid~~drivetrain systems. Our vehicles ~~focused on total cost of ownership. Our~~and drivetrain systems ~~and vehicles~~ are designed to help fleet operators unlock the benefits of ~~green~~ technology that reduces greenhouse gases (“GHG”),nitrous oxide (“NOx”), particulate matter (“PM”) and other pollutants, as well as to address the challenges of local, state and federal regulatory compliance and traditional-fuel price cost instability.

For the three months ended June 30, ~~2019~~2020 and ~~2018,~~2019, our net losses were ~~$1.3~~$1.1 million and ~~$4.2~~$1.3 million, respectively, and ~~$2.7~~$2.4 million and ~~$8.3~~$2.7 million for the six months ended June 30, ~~2019~~2020 and ~~2018,~~2019, respectively.

We believe that the growth and future success of our business depend on various opportunities, challenges and other factors, including the following:

Availability of government subsidies, rebates and economic incentives. We believe that the availability of government subsidies, rebates, and economic incentives is currently a critical factor considered by our customers when purchasing our zero-emission systems or converting their existing vehicles to zero-emission-electric or hybrids, and that our growth depends in large part on the availability and amounts of these subsidies and economic incentives. In particular, our business and operating results have been and continue to be significantly affected by our inability to resolve the California HVIP funding backlog created by the program’s staff that has to-date prevented us and our customers from accessing the funds, creating a significant delay in our ability to deliver products and to obtain new orders. We are working with the California Air Resources Board and the HVIP to resolve the administrative issues and have hired an experienced lobbyist to supplement our efforts.

New customers. We are competing with other companies and technologies to help fleet managers and their districts/companies more efficiently and cost-effectively manage their fleet operations. Once these fleet managers have decided they want to buy from us, we still face challenges helping them obtain financing options to reduce the cost barriers to purchasing. We may also encounter customers with inadequate electrical services at their facilities that may delay their ability to purchase from us.

13Dependence on external sources of financing of our operations. We have historically depended on external sources for capital to finance our operations. Our ability to raise additional capital on terms that are acceptable to us will depend, in large part, on our ability mitigate the impact of certain anti-dilution rights contained in our outstanding warrants that have, to date, restricted our ability to obtain such funding. In the event that we are unable to raise additional capital necessary to finance our operations and continue to support our growth initiatives, our business and results of operations would be significantly and adversely affected.

Investment in growth. We plan to continue to invest for long-term growth. We anticipate that our operating expenses will increase in the foreseeable future as we invest in research and development to enhance our zero-emission electric vehicles and systems; design, develop and manufacture our ~~drivetrain systems and~~ commercial fleet vehicles and their components; increase our sales and marketing to acquire new customers; and increase our general and administrative functions to support our growing operations. We believe that these investments will contribute to our long-term growth, although they will adversely affect our results of operations in the near term. In addition, the timing of these investments can result in fluctuations in our annual and quarterly operating results.

Zero-emission electric ~~and hybrid drivetrain~~vehicle experience.Our dealer and service network is not currently completely established, although we do have certain agreements in place. One issue they may have, and we may encounter, is finding appropriately trained technicians with zero-emission ~~electric and hybrid drivetrain systems and~~ electric fleet vehicle experience. Our performance will depend on having a robust dealer and service network, which will require appropriately trained technicians to be successful. Because vehicles that utilize our technology are based on a different technology platform than traditional internal combustion engines, individuals with sufficient training in zero-emission electric ~~and hybrid~~ vehicles may not be available to hire, and we may need to expend significant time and expense training the employees we do hire. If we are not able to attract, assimilate, train or retain additional highly qualified personnel in the future, or do so cost-effectively, our performance would be significantly and adversely affected.

Market growth. We believe the market for all-electric ~~and hybrid~~ solutions for alternative fuel technology, specifically all-electric ~~and hybrid~~ vehicles, will continue to grow as more purchases of new zero-emission vehicles and as more conversions of existing fleet vehicles to zero-emission vehicles are made. However, unless the costs to produce such vehicles decrease dramatically, purchases of our products will continue to depend in large part on financing subsidies from government agencies. We cannot be assured of the continued availability, or the amounts of such assistance to our ~~customers.~~customers, or our ability to access such funds.

Sales revenue growth from additional products. We seek to add to our product offerings additional zero-emission vehicles of all sizes manufactured by outside OEM partners, to be marketed, sold, warrantied and serviced through our developing distribution and service network, as well as add other ancillary products discussed elsewhere in this report.

Sales revenue growth from additional geographic markets. We believe that growth opportunities for our products exist internationally, as well. Our future performance will depend in part upon the growth of these additional markets. Accordingly, our business and operating results will be significantly affected by our ability to timely enter and effectively address these emerging markets and the speed with which and extent to which demand for our products in these markets grows.

Third-party contractors, suppliers and manufacturers. We rely upon third parties to supply us with raw materials, parts, components and services in adequate quantity in a timely manner and at reasonable prices, quality levels, and volumes acceptable to us. Significant outbreaks of contagious diseases such as COVID-19, and other adverse public health developments, could have a material impact on our business, financial condition and results of operations. As of April 2020, the outbreak of COVID-19 has led to numerous confirmed cases worldwide, including in the Unites States. In addition to those who have been directly affected, millions more have been affected by governmental efforts around the world to slow the spread of the outbreak. Accordingly, our future performance will depend in part upon our ability to respond and adapt to unexpected legal and regulatory changes resulting from the ongoing COVID-19 pandemic, such as shelter-in-place orders, travel, social distancing and quarantine policies, boycotts, curtailment of trade, and other business restrictions affecting our ability to assemble and sell our products, and provide our services.

COVID-19 pandemic. Our ability to respond and adapt to unexpected legal and regulatory changes resulting from the ongoing COVID-19 pandemic, such as shelter-in-place orders, travel, social distancing and quarantine policies, boycotts, curtailment of trade, and other business restrictions affecting our ability to assemble and sell our products, and provide our services. In May 2020, we were awarded both an EIDL and a PPP loan, both administered by the SBA, as provided for under the CARES Act, and discussed in Note 5 to our unaudited consolidated financial statements included in this Quarterly Report.

Sales are recognized from the sales of ~~advanced~~new, purpose-built zero-emission electric ~~and hybrid~~vehicles; zero-emission electric drivetrain systems for fleet ~~vehicles, from~~vehicles; the sale and/or installation of ~~new, purpose-built~~re-power conversion kits to replace conventional drivetrain systems in combustion powered vehicles with zero-emission electric ~~or hybrid vehicles,~~drivetrain systems; and from contracting to provide engineering services. The Company also began providing vehicle maintenance and safety inspection services. Sales are recognized in accordance with ~~ASC~~Accounting Standards Codification (“ASC”) Topic 606, as discussed in Note 2 to our unaudited consolidated financial statements included in this Quarterly Report.

Cost of sales includes those costs related to the development, manufacture, and distribution of our products. Specifically, we include in cost of sales each of the following: material costs (including commodity costs); freight costs; labor and other costs related to the development and manufacture of our products; and other associated costs. Cost of sales for long-term contracts are recognized proportionate to the prescribed gross profit of each contract. Cost of sales also includes costs related to the valuation of inventory due to impairment, obsolescence, or shrinkage.

Selling, general and administrative expenses include all corporate and administrative functions that support our company, including personnel-related expense and stock-based compensation costs; costs related to investor relations activities; warranty costs, including product recall and customer satisfaction program costs; consulting costs; marketing-related expenses; and other expenses that cannot be included in cost of sales.

These expenses are related to our consulting and research and development activity.

Other income/expenses include non-operating income and expenses, including interest income and expense.

We account for income taxes in accordance with ~~FASB~~Financial Accounting Standards Board (“FASB”) ASC ~~Topic~~ 740 “Income Taxes,” which requires the recognition of deferred income tax assets and liabilities for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under FASB ASC ~~Topic~~ 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that we will not realize tax assets through future operations. Because we have incurred only losses to this point, no provision for income taxes has been made.

The following discussion compares operating data for the three and six months ended June 30, ~~2019~~2020 to the corresponding periods ended June 30, ~~2018:~~2019:

Sales, which were severely impacted by the HVIP-created administrative delays that effectively denied us access to funding, were $129,590 and $4.4 million ~~and $744,450~~ for the three months ended June 30, ~~2019~~2020 and ~~2018,~~2019, respectively, and ~~$4.8 million~~$413,047 and ~~$1.2~~$4.8 million for the six months ended June 30, ~~2019~~2020 and ~~2018,~~2019, respectively. Sales for the three and six months ended June 30, ~~2019~~2020 consisted of ~~products and services~~cargo vans sold to SnowCap Community Charities in June and to the City of Orlando Florida in January, fees due us relating to the Blue Bird ~~Corporation~~termination agreement, as discussed in Note 2 to

our unaudited consolidated financial statements included in this Quarterly Report, and ~~work performed under a DOE grant awarded to Blue Bird Corporation for which we were selected to provide products~~maintenance and ~~services. Effective as of May~~ 30, 2019, the three-year supply agreement we entered into with EDI, a subsidiary of Cummins, in October 2017, pursuant to which EDI agreed to build for us, on an exclusive basis, zero-emission electric drivetrain systems for sale to Blue Bird Corporation for installation in its Type C and D school bus product lines, was terminated by Cummins. In light of the termination of the supply agreement with EDI, the Company and Blue Bird Corporation mutually agreed to terminate the Company’s supply agreement with Blue Bird Corporation, effective as of May 31, 2019, and, as a result, the Company’s participation in the DOE grant ended on May 31, 2019.inspection services provided.

Cost of sales were $83,076 and $4.1 million ~~and $722,450~~ for the three months ended June 30, ~~2019~~2020 and ~~2018,~~2019, respectively, and ~~$4.5 million~~$162,826 and ~~$1.2~~$4.5 million for the six months ended June 30, ~~2019~~2020 and ~~2018,~~2019, respectively. Cost of sales for the three and six months ended June 30, ~~2019~~2020 consisted of the costs related to ~~products~~the sale of the cargo vans to SnowCap Community Charities and to the City of Orlando, and for maintenance and inspection services ~~sold to Blue Bird Corporation, and work performed under the DOE grant discussed in “Sales” above.~~provided.

General and administrative expenses were ~~$1.5~~approximately $1.1 million and ~~$3.9~~$1.5 million for the three months ended June 30, ~~2019~~2020 and ~~June 30, 2018, respectively.~~2019. This ~~$2.4 million~~ decrease was primarily ~~related~~due to ~~a $2.5 million decrease~~decreases in ~~non-cash~~ stock-based compensation expense, ~~in 2019 related to items previously disclosed in 2018. This decrease was partially offset by increases in~~ legal and professional fees, and ~~insurance~~investor relations expenses. ~~The second quarter 2019 general~~General and administrative expenses for the three months ended June 30, 2020 include approximately ~~$301,000~~$158,267 in non-cash charges, including ~~$275,000~~$100,000 in bad debt expense, and $46,093 in stock-based compensation ~~expense~~.expense.

General and administrative expenses were ~~$2.9~~$2.5 million and ~~$7.8~~$2.9 million for the six months ended June 30, ~~2019~~2020 and ~~June 30, 2018,~~2019, respectively. This ~~$4.9 million~~ decrease was primarily related to ~~a $5.2 million decrease~~decreases in ~~non-cash~~ stock-based compensation ~~expense in 2019 related to items previously disclosed in 2018. This decrease was partially offset by increases in legal, professional~~ and ~~insurance~~investor relations expenses. ~~The six month 2019 general~~General and administrative expenses for the six months ended June 30, 2020 include approximately ~~$576,000~~$370,123 in non-cash charges, including ~~$528,000~~$246,433 in stock-based compensation expense, and $100,000 in bad debt expense.

Consulting expenses were ~~$77,491~~$57,995 and ~~$47,817~~$77,491 for the three months ended June 30, ~~2019~~2020 and ~~2018,~~2019, respectively, and ~~$154,128~~$101,698 and ~~$94,998~~$154,128 for the six months ended June 30, 2020 and 2019, respectively. These decreases are primarily a result of the absence of grant application and ~~2018, respectively. This increase is due~~tax credit consulting expenses incurred in 2019 that were not incurred in 2020. Consulting expenses include non-cash charges of $40,750 and $25,000 for the six months ended June 30, 2020 and 2019, respectively (see Note 6 to ~~an increase~~our unaudited consolidated financial statements included in ~~sales and marketing consulting-related activity in the current-year period.~~this Quarterly Report).

Research and development expenses were ~~$102,656~~$0 and ~~$440,433~~$102,656 for the three months ended June 30, ~~2019~~2020 and ~~2018,~~2019, respectively, and ~~$147,656~~$0 and ~~$596,367~~$147,656 for the six months ended June 30, ~~2019~~2020 and ~~2018,~~2019, respectively. These decreases are primarily ~~due~~attributable to ~~the timing of~~ certain supply chain expenditures for research and development activity. in 2019.

From our incorporation in 2012 until the completion of our offerings of common stock under Regulation A in June 2017 and units in January 2018, we financed our operations and capital expenditures through issuing equity capital, convertible notes and notes payable.

As of June 30, ~~2019,~~2020, we had cash and cash equivalents of ~~$2.8 million, and short-term liquid marketable securities of $5.1 million.~~$883,949. We do not believe that our existing cash and cash equivalents and short-term investments will be sufficient to fund our operations during the next eighteen months unless we are able to resolve the HVIP funding issues discussed above in the near-term or we are able to mitigate the impact of certain anti-dilution and other rights contained in our outstanding warrants that have, to date, restricted our ability to raise additional debt or equity capital on terms that are acceptable to us. Such determination that our present capital resources will likely not be sufficient to fund our planned operations for the ~~next 12~~eighteen months ~~and beyond. However, if~~following the date of this Quarterly Report raises substantial doubt about our ability to continue as a going concern.

In the event we ~~do not~~are unable to resolve the HVIP funding issues in the near-term and successfully execute our business plan, we ~~may~~will likely need additional capital to continue our operations and support the increased working capital requirements associated with the fulfillment of purchase orders. As

The sale of ~~June 30, 2019,~~additional equity securities in the future could result in additional dilution to our stockholders and those securities may have rights senior to those of our common stock. In particular, the warrants issued and sold in our January 2018 public offering include anti-dilution rights, which provide that if, at any time the warrants are

outstanding, we ~~had~~issue or are deemed to have issued any shares of common stock or securities that are convertible into or exchangeable for shares of common stock (except for certain exempt issuances, including the issuance of certain stock options, shares of common stock upon the exercise of securities outstanding prior to January 2018 and securities issued in connection with certain acquisitions or strategic transactions) for consideration less than the then current exercise price of the warrants, which is currently $4.50 per share and subject to adjustment pursuant to the terms thereof, the exercise price of such warrants is automatically reduced to the price per share of such new issuance. Further, simultaneously with any adjustment to the exercise price of such warrants, the number of shares of common stock that may be purchased upon exercise of such warrants will be increased or decreased proportionately, such that after such adjustment the aggregate exercise price payable thereunder for the adjusted number of shares of common stock underlying such warrants will be the same as the aggregate exercise price in effect immediately prior to such adjustment. To the extent that we issue or are or deemed to have issued securities for consideration that is substantially less than the exercise price of the warrants issued in our January 2018 public offering, holders of our common stock will experience dilution, which may be substantial and which could lower the market price of our securities. Further, the potential application of such anti-dilution rights has, to date, restricted our ability to obtain additional financing on terms that are acceptable to us. In the event that we are unable to mitigate the impact of such anti-dilution rights and raise additional capital to finance our operations and continue to support our growth initiatives, we may not be able to continue as a ~~backlog~~going concern and may be forced to curtail all of ~~3 zero-emission electric school buses, 38 drivetrain systems~~our activities and, ~~related battery packs~~ultimately, cease our operations.

In May 2020, we were awarded both an EIDL and ~~spare parts, 4 zero-emission cargo vans~~a PPP loan, both administered by the SBA, as provided for under the CARES Act (see Note 5 to our unaudited consolidated financial statements included in this Quarterly Report). The incurrence of additional indebtedness in the future would result in increased debt service obligations and ~~10 e-trikes, which consists~~could result in operating and financial covenants that would restrict our operations. Such capital, if required, may not be available on terms that are favorable to us or at all. We are currently incurring operating deficits that are expected to continue for the foreseeable future, and as we begin to execute our marketing plan, we expect our operating deficit will continue to grow until we begin to generate a sufficient level of ~~unfilled firm orders~~sales revenue from our sales and marketing efforts. The sale of additional equity securities in the future could result in additional dilution to our stockholders and those securities may have rights senior to those of our common stock. The incurrence of additional indebtedness in the future would result in increased debt service obligations and could result in operating and financial covenants that would restrict our operations. Such capital, if required, may not be available on terms that are favorable to us or at all. We are currently incurring operating deficits that are expected to continue for ~~products under signed contracts with customers.~~

the foreseeable future, and as we begin to execute our marketing plan, we expect our operating deficit will continue to grow until we begin to generate a sufficient level of sales revenue from our sales and marketing efforts. The sale of additional equity securities in the future could result in additional dilution to our stockholders and those securities may have rights senior to those of our common stock. The incurrence of additional indebtedness in the future would result in increased debt service obligations and could result in operating and financial covenants that would restrict our operations. Such capital, if required, may not be available on terms that are favorable to us or at all. We are currently incurring operating deficits that are expected to continue for the foreseeable future, and as we begin to execute our marketing plan, we expect our operating deficit will continue to grow until we begin to generate a sufficient level of sales revenue from our sales and marketing efforts.

On January 9, 2018, we completed a public offering of 3,666,667 units for net proceeds, after deducting commissions, expenses, and fees of approximately $1.2 million, of approximately $9.8 million. Each unit sold in the offering consisted of one share of our common stock and a warrant to purchase 1.5 shares of our common stock at an exercise price of $4.50.

As of June 30, ~~2019,~~2020, we had outstanding options to purchase ~~25,617,338~~13,904,436 shares of common stock, net of exercises, cancellations, and forfeitures, as discussed below. As of June 30, ~~2019, 9,735,291~~2020, 10,935,545 shares of common stock were issuable upon the exercise of options vested at such date. Options to purchase ~~9,527,481~~8,204,436 were issuable upon exercise at a price of $0.10 per share, none were issuable upon exercise at a price of $0.12 per share, 400,999 were issuable upon exercise at a price of $0.45 per share, 1,000,000 were issuable upon exercise at a price of $0.50 per share, 1,000,000 were issuable upon exercise at a price of $1.00 per share, and ~~207,810~~330,109 were issuable upon exercise at a price of $1.31 per share. If all vested options to purchase common stock were exercised, we would receive proceeds of ~~$1,224,979~~approximately $2.9 million and we would be

required to issue ~~9,735,291~~10,935,545 shares of common stock. There can be no assurance, however, that any such options will be exercised.

On March 6, 2018, Edward R. Monfort ceased serving as ~~our~~the Company’s Chief Technology Officer. Upon Mr. Monfort’s separation from service, ~~our~~the Company’s board of directors suspended Mr. Monfort’s outstanding options. Although such options remain outstanding, they were unexercisable as of ~~June 30, 2019 and through the date of this Quarterly Report.~~December 31, 2019. As of ~~June 30,~~ December 31,

2019, outstanding options to purchase an aggregate of 14,297,902 shares of common stock ~~are~~were attributable to Mr. Monfort.

Effective May 2, 2018, wethe Company secured a line of credit from Morgan ~~Stanley.~~Stanley Private Bank, National Association (“Morgan Stanley”). Borrowings under the line of credit bear interest at 30-day LIBOR plus 2.0%. There is no maturity date for the line, but Morgan Stanley may at any time, in its sole discretion and without cause, demand ~~that we~~the Company immediately repay any and all outstanding obligations under the line of credit in whole or in part. The line is secured by the cash and cash equivalents maintained by usthe Company in ~~our~~its Morgan Stanley accounts, which was approximately ~~$7.7~~$7.1 million ~~at June 30, 2019, and borrowings~~as of December 31, 2019. Borrowings under the line may not exceed 95% of ~~our~~such cash, cash equivalents, and ~~cash equivalent balances, subject to a~~marketable securities balances. The maximum ~~of $7 million. Such borrowing threshold, however, is subject to change~~amount the Company could borrow at ~~Morgan Stanley’s discretion~~December 31, 2019, was approximately $6.6 million, and ~~depends upon the holdings in our accounts, the maturity dates of the securities in the accounts and the credit quality of the underlying insurers. As of June 30, 2019,~~ the principal amount outstanding under this line of credit was ~~$4.3~~approximately $5.8 million at that date. The line of credit and ~~the undrawn borrowing availability~~related interest expense was ~~$2.7 million.~~repaid in full on February 3, 2020.

We do not have any contractual obligations for ongoing capital expenditures at this time. We do, however, purchase equipment necessary to conduct our operations on an as needed basis.

The following table summarizes our cash flows from operating, investing, and financing activities for the six months ended June 30, ~~2019~~2020 and ~~2018.~~2019.

	Six Months Ended						Six Months Ended
	June 30, 2019			June 30, 2018			June 30, 2020			June 30, 2019
Consolidated Statements of Cash Flow Data:
Net cash used in operating activities	$	(2,414	)	$	(4,316	)	$	(898	)	$	(2,414	)
Net cash used in investing activities		(1,155	)		(67	)
Net cash provided by financing activities		2,607			9,607
Net cash provided by (used in) investing activities								2,759			(1,155	)
Net cash provided by (used in) financing activities								(5,409	)		2,607
Net change in cash and cash equivalents	$	(962	)	$	5,224		$	(3,548	)	$	(962	)

Cash used in operating activities is primarily the result of our operating losses, reduced by the impact of non-cash expenses, including non-cash stock-based ~~compensation amounts.~~compensation. These numbers are further impacted by adjustments for non-cash interest expense.

~~For~~Net cash used in operating activities decreased by approximately $1.5 million to approximately $898,000 for the six months ended June 30, ~~2019,~~2020 compared to net cash used in operating activities of approximately $2.4 million for the six months ended June 30, 2019. The decrease in net cash used in operating activities was ~~2.4~~due to $1.3 million net cash provided by changes in asset and ~~consisted~~liability accounts, reduced by a reduction in non-cash expenses of approximately $165,000, combined with a decrease in net loss of $2.7 million, non-cash items of $575,894, and a net use from the change in operating assets and liabilities of $246,168. Changes in operating assets and liabilities were due to increases in trade accounts receivable and other current assets of $2.3 million, and decreases in accrued liabilities and other non-current liabilities of $148,628, offset by an increase in trade accounts payable of $2.1 million and a decrease in other non-current assets of $35,320.

For the six months ended June 30, 2018, net cash used in operating activities was $4.3 million, and consisted of a net loss of $8.3 million, non-cash items of $6.2 million, and a net use from the change in operating assets and liabilities of $2.2 million. Changes in operating assets and liabilities were due to increases in trade accounts receivable and

other current assets of $3.3 million, and a decrease in other non-current liabilities of $35,320, offset by increases in trade accounts payable and accrued liabilities of $867,329, and decreases in inventory and other non-current assets of $245,727.approximately $369,528.

We expect cash used in operating activities to fluctuate significantly in future periods as a result of a number of factors, some of which are outside of our control, including, among others: the success we achieve in generating revenue; the success we have in helping our customers obtain financing to subsidize their purchases of our products; our ability to efficiently develop our dealer and service network; the costs of batteries and other materials utilized to make our products; the extent to which we need to invest additional funds in research and development; and the amount of expense we incur to satisfy future warranty claims.

Net cash ~~used in~~provided by investing activities during the six months ended June 30, ~~2019~~2020 increased by ~~$1.1~~$3.9 million to ~~$1.2~~approximately $2.8 million, as compared to cash used in investing activities of ~~$67,359~~$1.2 million during the six months ended June 30, ~~2018.~~2019. The increase in net cash provided by investing activities during the six months ended June 30, 2020 is primarily due to proceeds received from the sale of liquid marketable securities in the amount of approximately $2.8 million, whereas net cash used in investing activities during the six months ended June 30, 2019 iswas primarily due to the ~~replacement~~ purchase of liquid marketable securities ~~that matured and issuing a note to a third party, whereas net cash used~~ in ~~investing activities during~~ the ~~six months ended June 30, 2018 was due to the acquisition~~amount of ~~property and equipment.~~approximately $1.1 million.

Net cash ~~provided by~~used in financing activities during the six months ended June 30, ~~2019 decreased~~2020 increased by ~~$7.0~~approximately $8 million to ~~$2.6~~approximately $5.4 million, as compared to ~~$9.6~~cash provided by financing activities of approximately $2.6 million during the six months ended June 30, ~~2018.~~ 2019. Net cash used in financing activities during the six months ended June 30, 2020 consisted of approximately $5.8 million in net principal repayments made under our line of credit with Morgan Stanley, offset by $411,244 in proceeds received from SBA loans.

Net cash provided by financing activities during the six months ended June 30, 2019 consisted of $2.6 million in net proceeds received under our line of credit with Morgan ~~Stanley and $7,108 in proceeds received from the exercise of stock options.~~

Net cash provided by financing activities during the six months ended June 30, 2018 consisted of net proceeds of $9.8 million from the closing of our follow-on offering on January 9, 2018, $1.8 million in proceeds received under our line of credit with Morgan Stanley and $76,578 in proceeds received from the exercise of stock options, offset by a $2.1 million repayment of notes payable principal and related accrued and unpaid interest.Stanley.

Except as set forth below, during the six months ended June 30, ~~2019,~~2020, there were no material changes in our contractual obligations and commitments, as described in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2018.~~2019.

~~In connection with~~On February 4, 2020, the ~~termination of our supply~~Company signed a sublease agreement with ~~Blue Bird Corporation, Blue Bird agreed~~Masters Transportation, Inc. (“Masters”) for Masters to ~~assume all warranty liabilities with respect~~occupy a portion of the Corona, California facility that the Company occupied effective January 1, 2020 (see above). The effective date of the Masters’ sublease is February 1, 2020, and it expires when the Company’s lease on the property expires on December 31, 2022. Under the sublease, Masters is obligated to pay the ~~drivetrains systems we sold under that agreement prior~~Company monthly rent payments in an amount equal to $6,000 at commencement and thereafter escalating to $6,365 by its ~~termination on May 31, 2019.~~ conclusion.

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.

Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to us, but which will only be resolved when one or more future events occur or fail to occur. Our management, in consultation with our legal counsel as appropriate, assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against us or unasserted claims that may result in such proceedings, we, in consultation with our legal counsel, evaluates the perceived merits of any legal proceedings or unasserted claims, as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in our financial statements. If the assessment indicates a potentially material loss contingency is not

probable, but is reasonably possible, or is probable, but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.

We measure the cost of services received in exchange for an award of equity instruments based on the fair value of the award. The fair value of the award is measured on the grant date and is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period. The fair value of our common stock was estimated by management based on observations of the cash sales prices of its common shares. Awards granted to directors are treated on the same basis as awards granted to employees.

The carrying values of our financial instruments, including cash, notes receivable and accounts payable approximate their fair value due to the short-term nature of these financial instruments. FASB ASC Topic 820, “Fair Value Measurement” defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. It also establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

Level 3: Unobservable inputs for which there is little or no market data, and which require the reporting entity to develop its own assumptions.

We do not have any assets or liabilities that are required to be measured and recorded at fair value on a recurring basis.

We are an “emerging growth company,” as defined in the JOBS Act. The JOBS Act contains provisions that, among other things, reduce certain reporting requirements for emerging growth companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards, and, therefore, will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. We have chosen to rely on the other exemptions and reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, as an emerging growth company we are not required to, among other things, (i) being permitted to provide only two years of audited financial statements, in addition to any required unaudited interim financial statements, with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure, (ii) not being required to comply with the auditor attestation requirements in the assessment of our internal control over financial reporting, (iii) not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements, (iv) reduced disclosure obligations regarding executive compensation or (v) exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

We will retain our emerging growth company status until the first to occur of: (i) the end of the fiscal year in which the fifth anniversary of the completion of our initial public offering occurs, (ii) the end of the fiscal year in which our annual revenues exceed $1.07 billion, (iii) the date on which we issue more than $1 billion in non-convertible debt during any three-year period or (iv) the date on which we qualify as a “large accelerated filer.”

We are exposed to market risks in the ordinary course of our business. We do not currently face material market ~~risks.~~

~~We are currently subject to~~risks such as interest rate fluctuation risk in connection with borrowings under our line of credit with Morgan Stanley, which bears interest at variable rates. As of June 30, 2019, the principal amount outstanding under this line of credit was approximately $4.3 million, and the undrawn borrowing availability was $2.7 million. Based on the amounts outstanding under the line of credit at June 30, 2019, a hypothetical 10% adverse movement in 30-day LIBOR would increase our annual interest expense by approximately $430,000. To the extent that we incur additional indebtedness, we may increase our exposure to risk from interest rate fluctuations. We currently do not engage in any interest rate hedging activity and we have no intention to do so in the foreseeable future.

foreign currency exchange risk. Our cash and cash equivalents include cash in readily available checking and money market accounts. These investments are not dependent on interest rate fluctuations that may cause the principal amount of these investments to fluctuate, and we do not expect such fluctuation will have a material impact on our financial conditions.

If we issue additional debt in the future, we will be subject to interest rate risk. The majority of our expenses are denominated in the U.S. dollar.

As we continue our commercialization efforts internationally, we may generate revenue and incur expenses denominated in currencies other than the U.S. dollar, a majority of which we expect to be denominated in Chinese Yuan. As a result, if and when the operations of ADOMANI China, our wholly owned subsidiary organized under the laws of China, expand in the future, our revenue may be significantly impacted by fluctuations in foreign currency exchange rates. We may face risks associated with the costs of raw materials, primarily batteries, ~~if and when~~as we ~~enter~~go into production. To the extent these and other risks materialize, they could have a material effect on our operating results or financial condition. We currently anticipate that our international selling, marketing and administrative costs related to foreign sales will be largely denominated in the same foreign currency, which may mitigate our foreign currency exchange risk exposure.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this Quarterly Report. Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures (a) were effective to ensure that information that we are required to disclose in reports that we file or ~~submits~~submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and (b) include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

There were no changes in our internal control over financial reporting that occurred during the six months ended June 30, ~~2019~~2020 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, cannot provide absolute assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs. Similarly, an evaluation of controls cannot provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected.

Except as set forth below, we know of no material, existing or pending, legal proceedings against our Company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial stockholder, is an adverse party or has a material interest adverse to our interest.

~~On August~~ 23, 2018, a purported class action lawsuit captioned M.D. Ariful Mollik v. ADOMANI, Inc. et al., Case No. RIC 1817493, was filed in the Superior Court of the State of California for the County of Riverside against us, certain of our executive officers (together, the “Company Defendants”), Edward R. Monfort, our former Chief Technology Officer and former director, and the two underwriters of our offering of common stock under Regulation A in June 2017. This complaint alleges that documents related to our offering of common stock under Regulation A in June 2017 contained materially false and misleading statements and that all defendants violated Section 12(a)(2) of the Securities Act, and that we and the individual defendants violated Section 15 of the Securities Act, in connection therewith. The plaintiff seeks on behalf of himself and all class members: (i) certification of a class under California substantive law and procedure; (ii) compensatory damages and interest in an amount to be proven at trial; (iii) reasonable costs and expenses incurred in this action, including counsel fees and expert fees; (iv) awarding of rescission or rescissionary damages; and (v) equitable relief at the discretion of the Court. ~~On November 9, 2018, in response to a demurrer filed by defendant Network 1 Financial Securities, Plaintiff~~Plaintiff’s counsel has subsequently filed a first amended complaint, which was substantially similar to the original complaint but refined certain allegations regarding the alleged material omissions that form the basis of the complaint. Defendants demurred to the first amended complaint. The court heard defendants’ demurrers to the first amended complaint on January 30, 2019. At this hearing the court granted plaintiff leave to file a second amended complaint. Plaintiff filed a second amended complaint, ~~on January 31, 2019. The second~~and a third amended complaint. Plaintiff Mollik was replaced by putative class representatives Alan K. Brooks and Electric Drivetrains, LLC. Alan K. Brooks was subsequently dropped as a putative class representative.

On June 19, 2019, Alan K. Brooks, an ADOMANI investor, filed a complaint, captioned Alan K. Brooks v. ADOMANI, Inc., et al., Case No. 1-CV-349153 in the Superior Court of California for the County of Santa Clara, against the Company, certain of the Company’s executive officers and directors, one of the underwriters (the “Underwriter”) of the Company’s offering of common stock under Regulation A in June 2017, and certain of the Underwriter’s personnel, among others. The complaint alleges that the Company and other defendants breached the terms of an agreement between Mr. Brooks and the Company by refusing to release 1,320,359 shares of ADOMANI, Inc. stock to Mr. Brooks. Mr. Brooks seeks damages of $13,500,000.00 plus interest and attorney’s fees. On September 20, 2019, Mr. Brooks filed his first amended complaint (“FAC”) reasserting his breach of contract claim and alleging five additional claims for (i) violations of Cal. Corp. Code Section 25401, (ii) fraud, (iii) negligent misrepresentation, (iv) elder abuse, and (v) unfair competition. We answered the FAC on November 12, 2019, generally denying the allegations in the FAC and asserting affirmative defenses. On January 9, 2020, the Underwriter filed a notice of related case, notifying the court of Mollik v. ADOMANI, et al., described above. On January 31, 2020, the Underwriter filed a motion to stay proceedings. The court heard the motion to stay on May 21, 2020 and took the matter under submission. The court subsequently issued a written order denying the motion to stay. A case management conference is scheduled in this matter for September 15, 2020. We believe that the lawsuit is without merit and intend to vigorously defend the action.

Except as set forth below, there were no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2018,~~2019, as filed with the SEC on ~~February 19, 2019.~~March 10, 2020.

~~NASDAQ~~Business interruptions resulting from the COVID-19 outbreak or similar public health crises could cause a disruption of the manufacturing of our products and adversely impact our business.

Public health crises such as pandemics or similar outbreaks could adversely impact our business. In December 2019, a novel strain of a virus named SARS-CoV-2 (severe acute respiratory syndrome coronavirus 2), or coronavirus, which causes coronavirus disease, or COVID-19, was reported to have surfaced in Wuhan, China, and has reached multiple other regions and countries, including the United States and, more specifically, Southern California, where our primary office is located. The coronavirus pandemic is evolving, and to date has led to the implementation of various responses, including government-imposed quarantines, travel restrictions and other public health safety measures. Global health concerns, such as coronavirus, could result in social, economic and labor instability in the countries in which we or the third parties with whom we engage operate. The extent to which the coronavirus impacts our operations or those of our third party partners will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the outbreak, new information that may ~~delist~~emerge concerning the severity of the coronavirus and the actions to contain the coronavirus or treat its impact, among others. We cannot presently predict the scope and severity of any potential business shutdowns or disruptions, but if we or any of the third parties with whom we engage, including the suppliers, customers and other third parties with whom we conduct business, were to experience shutdowns or other business disruptions, our ~~common stock from trading on its exchange, which could limit stockholders’~~ ability to ~~trade~~conduct our ~~common stock.~~business in the manner presently planned could be materially and negatively impacted. The future progression of the COVID-19 outbreak and its resulting effects on our business, financial condition and results of operations are uncertain and are continuing to be assessed.

AsThere is substantial doubt about our ability to continue as a ~~listed company on NASDAQ,~~going concern, which will affect our ability to obtain future financing and may require us to curtail our operations.

Our consolidated financial statements as of June 30, 2020, were prepared under the assumption that we will continue as a going concern. At June 30, 2020, we had cash and cash equivalents of $883,949. We do not believe that our existing cash and cash equivalents and short-term investments will be sufficient to fund our operations during the next eighteen months unless we are ~~required~~able to ~~meet~~resolve the HVIP funding issues in the near-term or we are able to mitigate the impact of certain ~~financial, public float, bid price~~anti-dilution and ~~liquidity standards~~other rights contained in our outstanding warrants that have, to date, restricted our ability to raise additional debt or equity capital on ~~an ongoing basis in order~~terms that are acceptable to us. Accordingly, our ability to continue as a going concern will depend on our ability to mitigate the ~~listing~~impact of such anti-dilution rights and raise additional capital to finance our ~~common stock. If we fail~~operations and continue to ~~meet these continued listing requirements,~~support our ~~common stock may be subject~~growth initiatives, attain further operating efficiencies, reduce or contain expenditures, and, ultimately, to delisting. If we fail to meet these continued listing requirements, our common stock may be subject to delisting. As previously reported, on August 16, 2018, we received a letter from the staff of the Listing Qualifications Department of Nasdaq (“Staff”) notifying us that, for the previous 30 consecutive business days, the bid price for our common stock had closed below the minimum $1.00 per share requirement for continued listing on The NASDAQ Capital Market under Nasdaq’s Listing Rule 5550(a)(2), which requires a minimum bid price of $1.00 per share (the “Minimum Bid Price Requirement”). In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we were automatically afforded an initial “compliance period” of 180 calendar days following the date of the notification, or until February 12, 2019, to regain compliance with the Minimum Bid Price Requirement. Although we did not regain compliance with the Minimum Bid Price Requirement by February 12, 2019, we received a letter from the Staff on February 13, 2019 notifying us that, pursuant to Listing Rule 5810(c)(3)(A), we were eligible for an additional “compliance period” of 180 calendar days, or until August 12, 2019, to regain compliance with the Minimum Bid Price Requirement. The Staff’s determination in the February 13, 2019 notification letter was based on us meeting, as of the last day of the initial “compliance period”, the continued listing requirement for market value of publicly held shares and all other applicable requirements for initial listing on The NASDAQ Capital Market with the exception of the Minimum Bid Price Requirement, and our written notice to NASDAQ of our intention to regain compliance by effecting a reverse stock split, if necessary.

At our annual meeting on May 8, 2019, our stockholders voted against authorizing our Board of Directors to implement a reverse stock split. As a result, we could not proceed with that plan to regain compliance with the NASDAQ listing requirements. As of the date of this filing, our stock price remains below the minimum $1.00 per share requirement.generate revenue.

If we ~~do not regain compliance by August 12, 2019,~~are unable to continue as a going concern, we may have to liquidate our assets and may receive less than the ~~Staff indicated~~value at which those assets are carried on our audited consolidated financial statements, and it is likely that itinvestors will lose all or part of their investment. If we seek additional financing to fund our business activities in the future and there remains substantial doubt about our ability to continue as a going concern, investors or other financing sources may be unwilling to provide ~~written notification~~additional funding to us on commercially reasonable terms or at all. Based on these factors, management determined that our common stock will be delisted. At that time, we may appeal the Staff’s delisting determination to a NASDAQ Hearings Panel (“Panel”). Our common stock would remain listed pending the Panel’s decision. There can be no assurance that, if we do appeal any delisting determination by the Staff to the Panel, that such appeal would be successful. If our common stockthere is ~~delisted and we are not able to list~~substantial doubt about our common stock on another national securities exchange, we expect our securities would be quoted on an over-the-counter market. If this were to occur, our stockholders could face significant material adverse consequences, including limited availability of market quotations for our common stock and reduced liquidity for the trading of our securities. In addition, we could experience a decreased ability to ~~issue additional securities and obtain additional financing in the future.~~continue as a going concern.

A list of exhibits is set forth at the end of this Quarterly Report on Form 10-Q for the information required by this item.

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐☒	Smaller reporting company	☒
		Emerging growth company	☒

		PAGE

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements:		1

	Unaudited Consolidated Balance Sheets as of June 30, ~~2019~~2020 and December 31, ~~2018~~2019	1

	Unaudited Consolidated Statements of Operations for the Th~~ree~~Three and Six Months Ended June 30, ~~2019~~2020 and ~~2018~~2019	2

	Unaudited Consolidated Statement of Stockholders’ Equity for the Six Months Ended June 30, 2020 and 2019	3

	Unaudited Consolidated Statements of Cash Flows for the Six Months Ended June 30, ~~2019~~2020 and ~~2018~~2019	4

	Notes to Unaudited Consolidated Financial Statements	5

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		1316

Item 3. Quantitative and Qualitative Disclosure about Market Risk		2024

Item 4. Controls and Procedures		2024

Part II. OTHER INFORMATION

Item 1. Legal Proceedings		2125

Item 1A. Risk Factors		2227

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		2227

Item 3. Defaults Upon Senior Securities		2227

Item 4. Mine Safety Disclosures		2227

Item 5. Other Information		2228

Item 6. Exhibits		2329

Signatures		2430

	ADOMANI, INC.

Date: ~~July 29, 2019~~August 14, 2020	By:	/s/ James L. Reynolds
		James L. Reynolds President and Chief Executive Officer (Principal Executive Officer)

Date: ~~July 29, 2019~~August 14, 2020	By:	/s/ Michael K. Menerey
		Michael K. Menerey Chief Financial Officer (Principal Financial and Accounting Officer)