(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 ~~November 10, 2020~~August 16, 2021 was ~~73,663,797.~~

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,~~“Envirotech,” the “Company,” “we,” “our,” and “us” refer to ~~ADOMANI,~~Envirotech Vehicles, Inc. and our consolidated subsidiaries, unless the context indicates otherwise.

	September 30,			December 31,			June 30,			December 31,
	2020			2019			2021			2020
ASSETS
Current assets:
Cash and cash equivalents	$	224		$	4,432		$	8,287,286		$	136,222
Marketable securities		—			2,771
Restricted cash								254,913			1,793,910
Marketable Securities								12,010,190			—
Accounts receivable		30			661			159,177			9,000
Notes receivable, net		—			40
Inventory, net		353			494			1,860,320			—
Prepaid expenses		974			1,197			3,269,369			—
Other current assets		93			41
Total current assets		1,674			9,636			25,841,255			1,939,132
Property and equipment, net		111			112			241,133			227,561
Goodwill								49,546,910			—
Other non-current assets		737			569			405,999			242,025
Total assets	$	2,522		$	10,317		$	76,035,297		$	2,408,718
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	635		$	418		$	234,357		$	345,383
Accrued liabilities		898			649			1,032,991			2,382,660
Notes payable, net		159			—			298,747			—
Line of credit		—			5,820
Total current liabilities		1,692			6,887			1,566,095			2,728,043
Long-term liabilities
Other non-current liabilities								388,887			—
Notes payable, net		255			—			45,298			152,835
Other non-current liabilities		255			148
Total liabilities		2,202			7,035			2,000,280			2,880,878
Commitments and contingencies
Stockholders' equity:
Preferred stock, 5,000,000 authorized $0.00001 par value, none issued and outstanding as of September 30, 2020 and December 31, 2019		—			—
Common stock, 350,000,000 authorized $0.00001 par value, 73,637,313 and 73,125,538 issued and outstanding as of September 30, 2020 and December 31, 2019, respectively		1			1
Stockholders' equity (deficit):
Preferred stock, 5,000,000 authorized $0.00001 par value, NaN issued and outstanding as of June 30, 2021								—			—
Common stock, 350,000,000 authorized $0.00001 par value, 293,959,034 and 1 issued and outstanding as of June 30, 2021 and December 31, 2020, respectively								2,940			100
Additional paid-in capital		62,827			62,459			76,055,926			—
Accumulated deficit		(62,508	)		(59,178	)		(2,023,849	)		(472,260	)
Total stockholders' equity		320			3,282
Total liabilities and stockholders' equity	$	2,522		$	10,317
Total stockholders' equity (deficit)								74,035,017			(472,160	)
Total liabilities and stockholders' equity (deficit)							$	76,035,297		$	2,408,718

	For the Three Months Ended						For the Nine Months Ended						For the Three Months Ended						For the Six Months Ended
	September 30, 2020			September 30, 2019			September 30, 2020			September 30, 2019				June 30, 2021			June 30, 2020		June 30, 2021			June 30, 2020
Sales	$	164		$	5,743		$	577		$	10,551		$	188,266		$	2,000		$	659,059		$	88,735
Cost of sales		116			5,320			279			9,774			147,932			250			461,366			73,560
Gross profit		48			423			298			777			40,334			1,750			197,693			15,175
Operating expenses
General and administrative		972			1,565			3,505			4,423			836,246			78,605			1,422,149			168,791
Consulting		38			66			139			220			95,108			16,800			105,358			37,300
Research and development		—			10			—			158
Total operating expenses, net		1,010			1,641			3,644			4,801			931,354			95,405			1,527,507			206,091
Loss from operations		(962	)		(1,218	)		(3,346	)		(4,024	)		(891,020	)		(93,655	)		(1,329,814	)		(190,916	)

Other income:
Interest income, net		6			23			20			51
Other income (expense):
Interest income (expense), net														(4,837	)		—			(5,759	)		—
Other income (expense)		(1	)		(23	)		(5	)		12			2,778			7,000			2,284			7,000
Total other income		5			—			15			63
Total other income (expense)														(2,059	)		7,000			(3,475	)		7,000

Loss before income taxes		(957	)		(1,218	)		(3,331	)		(3,961	)		(893,079	)		(86,655	)		(1,333,289	)		(183,916	)
Income tax expense		—			—			—			—			—			—			(218,300	)		—
Net loss	$	(957	)	$	(1,218	)	$	(3,331	)	$	(3,961	)	$	(893,079	)	$	(86,655	)	$	(1,551,589	)	$	(183,916	)

Net loss per share to common stockholders:
Basic and diluted	$	(0.01	)	$	(0.02	)	$	(0.05	)	$	(0.05	)	$	(0.00)		$	(86,655	)	$	(0.01	)	$	(183,916	)

Weighted shares used in the computation of net loss per share:
Basic and diluted		73,599,124			72,930,108			73,393,543			72,863,320			278,431,602			1			162,757,032			1

Additional

Common Stock

Paid-In

Accumulated

Stockholders'

Shares

Amount

Capital

Deficit

Equity

Balance, December 31, 2018

72,732,292

$
1

$
61,628

$
(54,025
)

$
7,604

Common stock issued for services

30,161

—

10

—

10

Stock based compensation

—

—

253

—

253

Common stock issued for stock options
exercised

71,084

—

7

—

7

Net loss

—

—

(1,449
)

(1,449
)
Balance, March 31, 2019

72,833,537

$
1

$
61,898

$
(55,474
)

$
6,425

Common stock issued for services

42,649

—

15

—

15

Stock based compensation

—

—

275

—

275

Net loss

—

—

—

(1,294
)

(1,294
)
Balance, June 30, 2019

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

Common stock issued for services

129,244

—

27

27

Stock based compensation

—

54

54

Net loss

—

$
(957
)

(957
)
Balance, September 30, 2020

73,637,313

$
1

$
62,827

$
(62,508
)

$
320

					Additional
	Common Stock				Paid-In		Accumulated			Stockholders'
	Shares		Amount		Capital		Deficit			Equity (Deficit)
Balance, December 31, 2020		1	$	100	$	—	$	(472,260	)	$	(472,160)
Common stock issued for cash		142,558,000		1,325		6,413,785		—			6,415,110
Common stock issued in merger		112,675,557		1,127		53,508,495		—			53,509,622
Offering costs netted against proceeds		—		—		(156,443)		—			(156,443	)
Net loss		—		—		—		(658,510	)		(658,510	)
Balance, March 31, 2021		255,233,558	$	2,552	$	59,765,837	$	(1,130,770	)	$	58,637,619
Common stock issued for cash		38,725,475		388		16,321,661		—			16,322,049
Offering costs netted against proceeds		—		—		(31,572)		—			(31,572)
Net loss		—		—		—		(893,079)			(893,079)
Balance, June 30, 2021		293,959,034	$	2,940	$	76,055,926	$	(2,023,849	)	$	74,035,017

	Nine Months Ended						Six Months Ended
	September 30, 2020			September 30, 2019			June 30, 2021			June 30, 2020
Cash flows from operating activities:
Net loss	$	(3,331	)	$	(3,961	)	$	(1,551,589	)	$	(183,915	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		35			36			35,376			—
Stock based compensation expense		300			730
Common stock issued for services		68			40
Provision for bad debt		100			—
Unrealized gain on marketable securities								(10,190	)		—
Changes in assets and liabilities:
Accounts receivable		631			(2,072	)	��	(146,804	)		(9,000	)
Notes receivable		(15	)		—
Prepaid expenses								(2,243,479	)		—
Inventory		141			—			(1,208,657	)		—
Prepaid expenses		223			—
Other current assets		(53	)		(580	)
Other non-current assets		(234	)		34			265,523			—
Accounts payable		216			2,862			(239,413	)		(132,502	)
Accrued liabilities		254			(105	)		(1,800,582	)		—
Other non-current liabilities		107			(53	)		82,348			—
Net cash used in operating activities		(1,558	)		(3,069	)		(6,817,467	)		(325,417	)

Cash flows from investing activities:
Purchase of property and equipment, net		(11	)		(12	)		(183,076	)		(30,166	)
Investment in note receivable, net		—			(38	)
Net sales (purchases) of marketable securities		2,770			(829	)
Net cash provided by (used in) investing activities		2,759			(879	)
Investment in marketable securities								(12,000,000	)		—
Cash acquired in merger								3,373,332			—
Net cash used in investing activities								(8,809,744	)		(30,166	)

Cash flows from financing activities:
Advances on line of credit		150			4,300
Principal repayments on line of credit		(5,970	)		(1,050	)
Proceeds from SBA loans		411			—
Proceeds from exercise of stock options		—			7
Net cash provided by (used in) financing activities		(5,409	)		3,257
Proceeds from issuance of common stock								22,737,159			—
Related-party investment								—			49,990
Payments for offering costs								(188,015	)		—
Principal repayments on long term debt (SBA)								(309,865	)		—
Net cash provided by financing activities								22,239,279			49,990

Net change in cash and cash equivalents		(4,208	)		(691	)
Cash and cash equivalents at the beginning of the period		4,432			3,759
Cash and cash equivalents at the end of the period	$	224		$	3,068
Net change in cash, restricted cash, and cash equivalents								6,612,067			(305,593	)
Cash, restricted cash, and cash equivalents at the beginning of the period								1,930,132			324,055
Cash, restricted cash, and cash equivalents at the end of the period							$	8,542,199		$	18,461

Supplemental cash flow disclosures:
Cash paid for interest expense	$	32		$	99		$	2,283		$	—
Cash paid for income taxes	$	—		$	—		$	—		$	—
Non-cash transactions:
Assets received offsetting notes receivable	$	22		$	—
Equipment transferred against note receivable	$	—		$	7

Envirotech Vehicles, Inc. (“we”, “us”, “our” or the “Company”) is a provider of ~~new~~ purpose-built zero-emission electric vehicles focused on reducing the total cost of ~~ownership. We are also a provider of advanced zero-emission electric drivetrain systems for integration in new buses~~vehicle ownership and medium to heavy-duty commercial fleet vehicles. The Company also provides re-power conversion kits to replace conventional drivetrain systems for combustion powered vehicles with zero-emission electric drivetrain systems. The Company’s vehicles and drivetrain systems are designed to helphelping fleet operators unlock the benefits of green ~~technology~~technology. We serve commercial and last-mile fleets, school districts, public and private transportation service companies and colleges and universities to meet the increasing demand for light to heavy-duty electric vehicles. Our vehicles address the challenges of traditional fuel price cost instability and local, state and federal regulatory ~~compliance~~compliance.

On March 15, 2021, the Company completed its acquisition of Envirotech Drive Systems, Inc., a Delaware corporation (“EVTDS”), a supplier of zero-emission trucks, cargo vans, chassis and ~~traditional-fuel price cost instability.~~other commercial vehicles. The transaction was completed in accordance with an Agreement and Plan of Merger, dated February 16, 2021 (the “Merger Agreement”), by and among the Company, EVTDS and EVT Acquisition Company, Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Merger Sub”). See Note 3.

The Company was formerly known as ADOMANI, Inc. On May 26, 2021, the Company filed a Certificate of Amendment of Amended and Restated Certificate of Incorporation the Company with the Secretary of State of the State of Delaware to change its name from ADOMANI, Inc. to Envirotech Vehicles, Inc., effective as of May 26, 2021.

Basis of Presentation—The consolidated financial statements and related disclosures of EVTDS (see Note 3) as of ~~September~~June 30, ~~2020~~2021, which include the consolidated balance sheet accounts of Envirotech Vehicles, Inc. and subsidiaries, and for the fiscal ~~periods~~period ended ~~September~~June 30, ~~2020~~2021, which include the consolidated results of operations of EVTDS for the entire six month period and ~~2019~~include the consolidated results of operations of Envirotech Vehicles, Inc. and subsidiaries for the post-merger period March 16, 2021 through June 30, 2021, 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~~the EVTDS audited financial statements for the years ended December 31, ~~2019~~2020 and ~~2018~~2019 included in our ~~Annual~~Current Report on Form ~~10-K for~~8-K/A filed with the ~~fiscal year ended December 31, 2019.~~SEC on April 22, 2021. The results of operations for the fiscal period ended ~~September~~June 30, ~~2020~~2021 are not necessarily indicative of the results to be expected for the full year.

~~Going Concern—~~ As of September 30, 2020, we had cash and cash equivalents of $223,712. 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,~~EVTDS, its wholly-owned subsidiary Envirotech Drive Systems, Incorporated, and, from March 16, 2021 forward, the financial statements of Envirotech Vehicles, Inc., ADOMANI California, Inc., Adomani (Nantong) Automotive Technology Co. Ltd., ADOMANI ZEV Sales, ~~Inc., formerly known as School Bus Sales of California,~~ Inc., 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~~0t 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 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. The Company recognizes revenue in accordance with ASC Topic 606, “Revenue from Contracts with Customers”, which requires an entity 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.

As part of the termination agreement with Blue Bird, the Company is to be paid $5,000 for each electric drivetrain Blue Bird ordered from Cummins Corporation during the period of June 1, 2019 through September 30, 2019. This agreement is a single performance obligation with the Company recognizing revenue upon notification from Blue Bird that delivery has been made to its customer. The final customer delivery by Blue Bird 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 electric trucks and cargo vans. These sales represent a single performance obligation with revenue recognition occurring at the time title transfers. Transfer of title occurs when the customer has accepted the ~~van~~vehicle 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 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. At June 30, 2021, the aggregate amount of the Company’s investments in marketable securities was $12,010,190. There were 0 investments in marketable securities at December 31, 2020.

Accounts Receivable and Allowance for Doubtful ~~Accounts~~—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 ~~$30,398~~$159,177 and ~~$661,352~~ $9,000 as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively. Because the trade accounts receivable balance ~~as of September~~at June 30, ~~2020~~2021 is ~~immaterial,~~from credit-worthy customers and because ~~all but $15,000 of~~ the ~~trade accounts receivable balance as of~~ December 31, ~~2019 related~~2020 balance was collected subsequent to ~~two California government agencies, and was paid to ADOMANI during the three months ended June 30, 2020, no~~that date, 0 allowance has been recorded relative to the trade accounts receivable balance as of ~~September~~June 30, ~~2020 and~~2021 or December 31, ~~2019, respectively.~~

~~Notes Receivables~~— The Company also had notes receivable of $827,335 and $834,491 as of September 30, 2020 and December 31, 2019, respectively. The Company provided an allowance for notes receivable of $571,000 and $471,000 as of September 30, 2020 and December 31, 2019, respectively (see Note 4 below).2020.

Inventory and Inventory Valuation Allowance— The Company records inventory at the lower of cost or market, and uses a First In, First Out (“FIFO”) accounting valuation methodology. The Company had finished goods inventory on hand of ~~$353,070~~$1,860,320 and ~~$494,158~~0 as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively. The Company provided no0 inventory allowance as of ~~September~~June 30, ~~2020 and December 31, 2019, respectively.~~2021 other than as discussed in Note 3.

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 ~~$801,204~~$2,877,875 and ~~$935,204~~0 as of ~~September~~June 30, ~~2020~~2021 and December 31, 2020, respectively.

Income Taxes—The Company uses the liability method, where deferred tax assets and liabilities are determined based on the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities for financial and income tax reporting purposes.

EVTDS previously recorded deferred tax benefits from net operating losses in current and prior periods. The Company, in light of the uncertainty of generating future taxable income against which those losses can be offset in order to realize such benefits, has determined that recording a valuation allowance to reduce the deferred income tax assets to the amount that is more likely than not to be realized is appropriate. In making such determinations, management considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations. As of June 30, 2020, EVTDS did not recognize a full valuation allowance for all deferred tax assets. In March 2021, the Company recognized a full valuation allowance for all deferred tax assets, and as a result, recorded income tax expense of $218,300 for the three months ended March 31, 2021 in order to establish the reserve. This amount is also an income tax expense for the six months ended June 30, 2021.

The December 31, 2020 audit report for EVTDS stated that corporate income tax returns for 2017, 2018, and 2019 ~~respectively.~~had not been filed; in fact, they were filed on December 15, 2020. The audit report also stated that corporate income tax returns for 2020 had not been filed; those returns were not due to be filed until May17, 2021, and they were filed in early May, 2021.

Accounting for Uncertainty in Income Taxes—The Company evaluates its uncertain tax positions and will recognize a loss contingency when it is probable that a liability has been incurred as of the date of the financial statements and the amount of the loss can be reasonably estimated. The amount recognized is subject to estimate and management judgment with respect to the likely outcome of each uncertain tax position. The amount that is ultimately sustained for an individual uncertain tax position or for all uncertain tax positions in the aggregate could differ from the amount recognized. At June 30, 2021 and 2020, respectively, management did 0t identify any uncertain tax positions.

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 ~~September~~June 30, ~~2020,~~2021, 12,398,573 shares of the ~~Company had 13,904,436 and 7,556,323~~Company’s common stock were subject to issuance upon the exercise of stock options then outstanding and 29,847,994 shares of the Company’s common stock were subject to issuance upon the exercise of warrants ~~outstanding, respectively.~~then outstanding.

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.~~Corporation (“FDIC”). Additionally, the Company maintains cash and short-term securities invested at Morgan Stanley Private Bank, National Association (“Morgan Stanley”). Between FDIC and the Securities Investor Protection Corporation (“SPIC”) coverage, funds up to $750,000, which may include cash up to $500,000, are insured. In addition, Morgan Stanley provides excess insurance acquired by them from SPIC for an additional $1.9 million in cash and unlimited per customer securities up to a $1 billion cap.

The restricted cash reported by EVTDS as of December 31, 2020, combined with additional cash raised in 2021, was used to fund both the merger closing requirement of $5,000,000 to ADOMANI, Inc. (see Note 3) and to repay liabilities of EVTDS. The amount of restricted cash and corresponding unpaid current liabilities of EVTDS that is included in the consolidated balance sheet at June 30, 2021 is approximately $254,913.

For the three months ended March 31, 2021, total EVTDS sales were to one customer, ADOMANI, Inc., prior to the merger closing (see Note 3). The customer account was collected within two days of invoicing. In addition, the merged entity recorded additional sales during the two weeks post-merger which were made to two other customers and were collected within weeks of invoicing. The Company sold two vehicles during the last week of the three months ended June 30, 2021, and expects to be paid for them promptly and in full. Accordingly, customer accounts are reported at the invoiced amount outstanding.

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 no0 impairment of long-lived assets, or property and equipment, as of ~~September~~June 30 ~~2020~~2021 and December 31, ~~2019,~~2020, respectively.

Goodwill. Goodwill represents the excess acquisition cost over the fair value of the net tangible and intangible assets acquired, Goodwill is not amortized and is subject to annual impairment testing on or between annual tests if an event or change in circumstance occurs that would more likely than not reduce the fair value of a reporting unit below its carrying value. In testing for goodwill impairment, the Company has the option lo first assess qualitative factors to determine whether the existence of events or circumstances lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events and circumstances, the Company concludes that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is not required. If the Company concludes otherwise, the Company is required to perform the two-step impairment test, The goodwill impairment test is performed at the reporting unit level by comparing the estimated fair value of a reporting unit with its respective carrying value. If the estimated fair value exceeds the carrying value, goodwill at the reporting unit level is not impaired. If the estimated fair value is less than the carrying value, further analysis is necessary to determine the amount of impairment, if any, by comparing the implied fair value of the reporting unit's goodwill to the carrying value of the reporting unit's goodwill.

Research and Development—Costs incurred in connection with the development of new products and manufacturing methods are charged to operating expenses as incurred. ~~Research~~NaN research and development costs were ~~$0 and $157,656~~incurred for the ~~nine~~three or six months ended ~~September~~June 30, ~~2020 and 2019, respectively.~~2021 or 2020.

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 implemented this change beginning in 2019. Because all outstanding unvested employee stock options became fully vested upon the merger close and change in control (see Notes 3 and 8), and because no new options to purchase shares of common stock were granted between March 16, 2021 and June 30, 2021, no stock-based compensation expense is recorded in the consolidated financial statements for the three or six months ended June 30, 2021.

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.

On March 15, 2021, the Company completed its acquisition of EVTDS, a supplier of zero-emission trucks, cargo vans, chassis and other commercial vehicles. The transaction was completed in accordance with the Merger Agreement, by and among the Company, EVTDS and Merger Sub. As a result of such transaction, Merger Sub was merged with and into EVTDS, with EVTDS surviving as our wholly owned subsidiary (the “Merger”). In accordance with the terms of the Merger Agreement, at the effective time of the Merger, each outstanding share of the common stock of EVTDS was automatically converted into the right to receive one share of the common stock of the Company. As a result of the Merger, the Company issued an aggregate of 142,558,001 shares of its common stock to the former EVTDS stockholders, which shares represented approximately 56% of the total issued and outstanding shares of common stock of the Company as of immediately following the effective time of the Merger. This exchange of shares and the resulting controlling ownership of EVTDS constitutes a reverse acquisition resulting in a recapitalization of EVTDS and purchase accounting being applied to ADOMANI, Inc. under ASC 805 due to EVTDS being the accounting acquirer and ADOMANI, Inc. being deemed an acquired business. This requires financial reporting from the Merger close date forward to reflect only the historic consolidated results of EVTDS and to include the consolidated results for Envirotech Vehicles, Inc. and subsidiaries from March 16, 2021 forward.

At December 31, 2020, EVTDS had subscription restricted cash of $1,793,910 on its balance sheet as a result of offering a restricted subscription agreement to the stockholders of Envirotech Vehicles, Inc., a Canadian entity, to have the right to purchase two shares of EVTDS for every one common share of EVT Canada they owned. The purpose of this subscription agreement was to raise the necessary capital to close the Merger and to provide working capital for EVTDS so that it could pay off certain liabilities and pay for ongoing expenses through the closing of the Merger. A corresponding liability account was also recorded as of December 31, 2020. The total amount raised just prior to the Merger closing was $6,415,210. At the closing of the Merger, EVTDS satisfied its obligation to deliver $5 million in cash to ADOMANI, Inc. and repaid the majority of the items discussed above. However, some liabilities were not repaid and are still being negotiated, resulting in $258,083 in cash at March 31, 2021 still being restricted and $258,083 in liabilities remaining outstanding on the March 31, 2021 balance sheet included in the unaudited consolidated financial statements. This number has decreased to $254,913 in both categories as of June 30, 2021.

EVTDS entered into an exclusive 50-year distribution agreement as of October 4, 2017 to become the sole USA distributor of Envirotech Electric Vehicles, Inc., a Canadian entity. This agreement grants EVTDS the exclusive right in the United States to promote sales, including the right to use trademarks, trade names, service marks and logos and to obtain orders based on sales targets for orders. The agreement also provides that Envirotech Electric Vehicles, Inc. may not independently appoint additional distributors. The Company obtained this agreement in the Merger.

The following table presents the estimated allocation of the purchase price of the assets acquired and liabilities assumed for the acquisition by EVTDS of ADOMANI, Inc. via the reverse acquisition:

This preliminary allocation is based on management’s estimated fair value of the ADOMANI Inc. assets and liabilities at March 15, 2021 and is subject to adjustment when a third party valuation to determine the fair value of the assets for ASC 805, Business Combinations reporting purposes is received. That report is not yet completed as of the date of filing this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2021. Accordingly, there have been no adjustments made to the initial estimates of fair value. Adjustments made to the ADOMANI, Inc. assets are derived from a total value of $53,509,622, based on 112,675,558 shares of common stock outstanding on March 15, 2021 and the closing price that day of $0.4749 per share. From that amount, total assets acquired of $5,570,628 (including a reduction in the carrying value of finished goods inventory of $26,400 to reflect fair value) was deducted, and total acquired liabilities of $1,607,916 were added back to arrive at the $49,546,910 of Goodwill recorded. The Company incurred approximately $415,472 in transaction costs related to the Merger.

The unaudited consolidated statement of operations for the three months ended March 31, 2021 included $151,793 of revenue and a loss from operations of $(144,015) contributed by ADOMANI, Inc. and its subsidiaries, excluding EVTDS. Since the closing of the Merger on March 15, 2021, primarily due to the fact that EVTDS brought no employees or sales people to the merged entity, and that sales and operating activities have been conducted on a company-wide basis, not on the basis of either EVTDS alone or the ADOMANI entities alone, other than nominal expense items related to EVTDS leases assumed in the Merger (see Notes 10 and 12), all accounting subsequent to the closing of the Merger has been and will continue to be done on a consolidated basis. We therefore are not able to segregate the operating results of operations between the formerly separate entities in the current periods.

The following unaudited pro forma financial information presents the combined results of operations for the Company and gives effect to the Merger discussed above as if it had occurred on January 1, 2020 and on January 1, 2021. The pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of the results of operations for the three and six months ended June 30, 2020 and 2021, respectively, that would have been realized if the Merger had occurred on January 1, 2020 or January 1, 2021, nor does it purport to project the results of the merged entity in future periods. The pro forma financial information does not give effect to any anticipated integration costs related to the merged entities.

3.For purposes of the pro forma disclosures above, there were 0 adjustments required for the three months ended June 30, 2020 because there were 0 transactions between EVTDS and ADOMANI, Inc. during that period. For the three months ended June 30,2021, there were also 0 adjustments required, as the quarter reflects the results of operations of the merged entity. The adjustments for the six months ended June 30, 2020 resulted in a reduction in sales of $79,735 and a $15 decrease in net loss. The adjustments for the six months ended June 30, 2021 resulted in a reduction of sales of $319,000 and a $91,800 increase in net loss. Both sales adjustments resulted from sale of vehicles by EVTDS to ADOMANI, Inc. However, the actual loss for ADOMANI, Inc. for the period January 1, 2021 through March 15, 2021 that is included in this pro forma information included an adjustment to fully amortize the unamortized stock-based compensation expense related to outstanding stock options that fully vested at the closing of the Merger. This adjustment increased pro forma expenses, and therefore the pro forma net loss, for both the three months ended March 31, 2021 and the six months ended June 30, 2021 by approximately $1,826,623 more than would otherwise have been recorded absent the consummation of the Merger.

On February 3, 2020, the Company purchased substantially all of the assets of Ebus, Inc. (“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 $22,440. These assets have been recorded as “Machinery & equipment” on the schedule below.

Components of property and equipment, net, consist of the following as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019:~~2020:

~~Depreciation~~EVTDS sold all its property and equipment owned at December 31, 2020, reflected above, to Envirotech Electric Vehicles, Inc. in the first quarter of 2021and after recording $6,560 depreciation expense ~~was $11,246 and $12,562~~ for the three months ended ~~September~~March 31, 2021, recognized 0 gain or loss on the sale. The balances above at June 30, ~~2020~~2021 therefore reflect Envirotech Vehicles, Inc. assets acquired in the Merger (see Note 3) and ~~2019, respectively,~~assets purchased subsequent to the Merger closing.

Depreciation expense was $27,380 and ~~$34,936~~$0 and ~~$35,914~~was $35,376 and $0 for the ~~nine~~three and six months ended ~~September 30, 2020 and 2019, respectively.~~

On February 3, 2020, the Company acquired substantially all of the assets of Ebus in a foreclosure sale through a credit bid in the amount of $582,000, representing the amount then owed by Ebus to the Company on its note receivable. Following the Company’s successful credit bid at the foreclosure sale, Ebus’s obligations under the note were extinguished and the Company was entitled to take possession of substantially all of the assets of Ebus. In March 2020, the Company obtained possession of certain of the assets with an estimated fair market value of approximately $22,440 (see Note 3). The Company has taken possession of the majority of the foreclosed assets that it wants, and has moved them to a temporary site. However, the Company is still being denied access to the remaining foreclosed assets it desires to remove from the Ebus location. 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, and as soon as the issue is resolved, will then proceed to dispose of those assets it will not use in its daily operations.

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. 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, 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 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, ~~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~~2021 and ~~their lender was signed prior to June 30,~~ 2020, the third party revealed to the Company that loan funding will not occur until sometime in Q4 2020. As of September 30, 2020, the note remained unpaid. Based on communication with the unaffiliated third party subsequent to September 30, 2020, financing has been further delayed, but is still anticipated to occur during Q4 2020, and, as such, repayment of the note will occur at that time. Between March 31, 2020 and the date of repayment of the note, interest will accrue at the stated rate of 9% plus the default rate of 4%, as prescribed in the note. Though the Company feels comfortable that the principal and accrued, but unpaid, interest will be repaid during Q4 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 both of these notes was $282,675 and $263,491 as of September 30, 2020 and December 31, 2019, respectively.

As of December 31, ~~2019,~~2020, EVTDS had a $150,000 loan outstanding payable to the U.S. Small Business Administration (“SBA”) under the Economic Injury Disaster Loan (“EIDL”) program administered by the SBA, which program was expanded pursuant to the Coronavirus Aid, Relief, and Economic Security Act of 2020 (the “CARES Act”). The EIDL loan was evidenced by a promissory note, with interest accruing on the outstanding principal at the rate of 3.75% per annum. As of December 31, 2020 the principal ~~amount outstanding under the Morgan Stanley line of credit was approximately $5.8 million,~~ and ~~the undrawn borrowing availability was $820,948. On February 3, 2020, the Company sold marketable securities and paid off the balance, including~~ accrued interest on the EIDL loan was $152,835, which was reflected on the consolidated balance sheets as long-term notes payable. In connection with the Merger (see Note 3), EVTDS repaid the loan and accrued interest in full in the amount of ~~the line of credit.~~$153,668.

On May 6, 2020, ~~the Company~~ADOMANI, Inc. received $261,244 in loan funding from the Paycheck Protection Program (the “PPP”) established pursuant to the ~~recently enacted Coronavirus Aid, Relief, and Economic Security~~CARES Act ~~of 2020 (the “CARES Act”)~~ and administered by the ~~U.S. Small Business Administration (“SBA”).~~SBA. The unsecured loan (the “PPP Loan”) is evidenced by a promissory note of the Company, dated May 3, 2020 (the “PPP Note”) in the principal amount of $261,244 with Wells Fargo Bank, N.A. (“Wells Fargo”), the lender. The PPP provides for loans to ~~qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. The loans and accrued interest~~be forgiven under certain circumstances if provisions 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 loan forgiveness will be reduced if the borrower terminates employees or reduces salaries during the eight-week or twenty-four week period, as applicable.met. Under the terms of the PPP Note and the PPP, interest accrues on the outstanding principal at the rate of 1.0% per annum. The term of the PPP Note is two years, though it may be payable sooner in connection with an event of default under the PPP Note. To the extent the loan amount is not forgiven under the PPP, the Company will be obligated to make equal monthly payments of principal and interest beginning on

November 1, 2020 through the maturity date of May 3, 2022. The Company filed its forgiveness application on October 16, 2020 and ~~believes it has satisfied all requirements~~was notified by Wells Fargo on January 6, 2021 that its PPP Loan had been approved internally for ~~full~~100% forgiveness, ~~of the PPP Loan.~~and had been forwarded to SBA for their approval. 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 ~~September~~June 30, ~~2020,~~2021 the principal and accrued interest on the PPP Note ~~is $262,334,~~was $280,469, of which ~~$159,762 and $102,572~~$266,959 is reflected on the consolidated ~~unaudited~~ balance sheets as current ~~and~~notes payable, while $13,510 is reflected on the consolidated balance sheets as long-term ~~liabilities, respectively.~~notes payable.

On May 20, 2020 ~~the Company~~ADOMANI, Inc. received $150,000 in loan funding from the ~~U.S.~~ SBA under the ~~Economic Injury Disaster Loan (“EIDL”)~~EIDL program administered by the SBA, which program was expanded pursuant to the ~~recently enacted~~ CARES Act. The EIDL ~~load~~loan is evidenced by a promissory note, dated May 17, 2020 (the “EIDL Note”) in the original principal amount of $150,000 with the SBA, the lender. Under the terms of the EIDL Note, interest accrues on the outstanding principal at the rate of 3.75% per annum. The term of the EIDL Note is thirty years, though it may be payable sooner upon an event of default under the EIDL Note. Under the EIDL Note, the Company will be obligated to make equal monthly payments of principal and interest beginning on May ~~17, 2021~~18, 2022 through the maturity date of May ~~17, 2051.~~18, 2050. The EIDL Note may be prepaid in part or in full, at any time, without penalty. ~~As of September 30, 2020, the principal~~The loan and accrued interest in the amount of $154,817 was repaid on May 17, 2021.

On June 15, 2021, the ~~EIDL Note~~Company entered into an equipment financing agreement with Navitas Credit Corp. in connection with the purchase of certain inventory management software. The $63,576 loan is ~~$152,358,~~payable over twenty four months, beginning in July, 2021, with monthly payments of ~~which $0 and $152,358~~$2,648.99. As of June 30, 2021, $31,788 is reflected on the consolidated ~~unaudited~~ balance ~~sheets~~sheet as current notes payable while $31,788 is classified as long-term notes payable.

Effective May 2, 2018, ADOMANI, Inc. secured a line of credit from 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 ~~long-term liabilities, respectively~~without cause, demand 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 the Company in its Morgan Stanley accounts. Borrowings under the line may not exceed 95% of such cash, cash equivalents, and marketable securities balances. The maximum amount the Company could borrow at June 30, 2021, was approximately $17.1 million; there was no principal amount outstanding at that date. The line of credit and related interest expense was repaid in full on February 3, 2020. The line of credit is still available to the Company, but there is no current plan to borrow from it.

On March 15, 2021, in connection with the closing of the Merger, the Company issued 142,558,001 shares of its common stock to the former stockholders of EVTDS in exchange for their shares of EVTDS (see Note ~~12).~~

~~Effective January 1, 2020,~~3), increasing the ~~Company renewed its agreement with a consultant to provide sales and marketing expertise. The consultant is to be paid $8,200 per month, consisting~~total number of ~~$3,200 in cash and $5,000 of common stock. The number of~~outstanding 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. Effective August 31,~~Company to 255,233,559 as of immediately following the closing of the Merger.

On December 24, 2020, ADOMANI, Inc. entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain institutional and accredited investors, whereby the Company ~~terminated its agreement with~~agreed to sell, and the ~~consultant. For the nine months ended September 30, 2020 and 2019, the Company issued 336,574 and 180,664~~investors agreed to purchase, shares of common stock ~~to the consultant, respectively. As~~ of ~~September 30, 2020,~~ the Company, ~~has issued a total of 658,736~~and warrants (the “Warrants”) to purchase additional shares ~~of common stock to the consultant.~~

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, at which point the Company had not received public funding appropriate to it completing $2 million in transactions, therefore, the consultant did not earn the $9,000 bonus. As of September 30, 2020, 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 common stock (the “Financing”).

The first closing of the Financing occurred on December 29, 2020. ADOMANI, Inc. raised net cash proceeds, net of offering costs, of approximately $5.3 million through the sale and issuance of 11,500,000 shares of its common stock at a purchase price equal to $0.50 per share and Warrants to purchase up to an aggregate of 8,625,001 shares of its common stock at an exercise price of $0.50 per share. The share and warrant amounts issued include 650,000 shares and 487,500 warrants issued to the underwriter in lieu of paying $325,000 of fees in cash. The share and warrant amounts issued include 650,000 shares and Warrants to purchase up to 487,500 shares issued to the underwriter in lieu of paying $325,000 of fees in cash.

The second closing of the Financing was completed on May 7, 2021, following the closing of the Merger (see Note 3) and the subsequent effectiveness of the Registration Statement on Form S-3 (File No.333-255341) filed with the SEC on April 19, 2021, registering for ~~respective preceding month. For~~ resale the ~~nine months ended September 30, 2020~~shares of the Company’s common stock sold, and ~~2019,~~ the shares issuable under the Warrants issued, in connection with the Financing. At the second closing of the Financing, the Company ~~issued 45,524~~raised aggregate net cash proceeds of approximately $16.3 million through the sale and 0issuance of an additional 38,333,333 shares of its common stock at a purchase price equal to $0.45 per share, and additional Warrants to purchase up to an aggregate of 19,166,667 shares of its common stock at an exercise price of $1.00 per share. The share and Warrant amounts issued include 2,166,666 shares and a Warrant to purchase 1,083,330 shares issued to the ~~consultant, respectively. As~~underwriter in lieu of ~~September 30, 2020, the Company has issued a total~~paying $975,000 of 45,524 shares of common stock to the consultant. On October 1, 2020 and November 1, 2020, the Company issued 14,983, and 11,501 shares of common stock to the consultant, respectively, and, as of November 1, 2020, the Company has issued a total of 72,008 shares of common stock to the consultant (seefees in cash. See Note ~~12).~~

As a result of ~~September 30, 2020,~~the Merger closing (see Note 3), as of March 31, 2021, the Company ~~has issued~~had outstanding warrants to purchase an aggregate of ~~7,556,323~~10,681,327 shares of common ~~stock.~~stock, 2,056,326 of which were exercisable. The warrants were previously issued by ADOMANI, Inc. and assumed in the Merger. In connection with the second closing of the Financing discussed in Note 6, the Company issued additional warrants to purchase up to 19,166,667 shares of its common stock, all of which were exercisable as of June 30, 2021. The Company’s ~~warrant activity for the nine months ended September~~outstanding warrants as of June 30, ~~2020~~2021 is summarized as ~~follows:~~follows, and all were exercisable at that date (see Note 6):

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 September 30, 2020

7,556,323

$
4.45

2.0

Exercisable at September 30, 2020

7,556,323

$
4.45

2.0

	Number of		Exercise		Remaining
	Shares		Price		Contractual Life (years)
Outstanding warrants expiring August 31, 2021		1,250,000	$	4.00		0.17
Outstanding warrants expiring June 9, 2022		199,659	$	6.00		0.94
Outstanding warrants expiring June 9, 2022		350,000	$	5.00		0.94
Outstanding warrants expiring January 9, 2023		256,667	$	3.75		1.58
Outstanding warrants expiring January 28, 2025		8,625,001	$	0.50		3.58
Outstanding warrants expiring May 7, 2026		19,166,667	$	1.00		4.85
Outstanding on June 30, 2021		29,847,994	$	1.09		3.54

The Warrants issued as part of the Purchase Agreement (see Note 6) contain a call provision whereby the Company, after the 13-month anniversary of the issuance date, and if the volume weighted average price of the common stock for such date exceeds four times the exercise price of the warrants for 20 consecutive trading days, may call the Warrants that have not previously been exercised, and the Warrant holders have ten trading days within which to exercise before the Warrants may be cancelled.

As of ~~September~~June 30, ~~2020,~~2021, the outstanding warrants have no intrinsic value.

As a result of the Merger closing (see Notes 2 and 3) there were 12,992,857 fully vested stock options outstanding at March 30, 2021 that were previously issued by ADOMANI, Inc. and assumed in the Merger. The outstanding options at June 30, 2021 consisted of the following:

Effective January 2, 2020, the Company entered into consulting agreement with Suneel Sawant under which Mr. Sawant agreed to 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. SawantOn June 14, 2021, options to purchase ~~up to 2,000,000~~33,571 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~~were exercised at a price of ~~$0.50~~$0.12 per share, ~~and will expire if not exercised on or before December 31, 2020, and the remaining 1,000,000 shares subject~~resulting in a payment to the ~~options have an exercise price~~Company of ~~$1.00 per share and will expire if not exercised~~$4,029. Also 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 andJune 14, 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 remained outstanding, they were unexercisable as of December 31, 2019. As of December 31, 2019, outstanding options to purchase an aggregate of 14,297,902 shares of common stock were attributable to Mr. Monfort. Effective as of January 29, 2020, all such options were cancelled by the Company in connection with the settlement of Mr. Monfort’s claims against the Company.

In May 2020, the Company’s board of directors granted to certain employees and directors options to purchase an aggregate of 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. The exercise price for these options is $0.12 per share. The options were valued using the Black-Scholes option-pricing model, resulting in a fair market value of $204,933. The assumptions used in the valuation included an expected term of 5.75 years, volatility of 147.50% and a risk-free interest rate of 0.50%.

~~On November 1, 2020, options to purchase an aggregate of 2,000,000~~67,144 shares of common stock with an exercise price of ~~$0.10~~$0.12 per share, options to purchase 75,000 shares of common stock with an exercise price of $0.45 per share, and options to purchase 60,000 shares of common stock with an exercise price of $1.31 per share were forfeited by the former holder thereof, as they were not exercised prior to the ~~end of their contractual term (see Note 12).~~expiration date specified with respect to such options.

~~Stock option activity for the nine months ended September 30, 2020 is as follows:~~

Stock -based compensation expense was $53,713 and $202,650 for the three months ended September 30, 2020 and 2019 respectively, and $300,146 and $730,192 for the nine months ended September 30, 2020 and 2019, respectively, and is included in general and administrative expense in the accompanying unaudited consolidated statementsOn June 25, 2021, options to purchase 358,571 shares of ~~operations. As~~common stock were exercised by an officer of ~~September 30, 2020,~~ the Company ~~expects~~at a price of $0.12 per share, resulting in a payment to ~~recognize approximately $321,358~~the company of ~~stock-based compensation expense for the non-vested portion of outstanding options over a weighted-average period of 2.02 years.~~$43,029.

As of ~~September~~June 30, ~~2020,~~2021, outstanding options have an intrinsic value of ~~$717,379.~~$2,356,000.

The Company has entered into an engagement agreement (the “SRI Services Agreement”) with SRI Professional Services, Incorporated (“SRI”), pursuant to which the Company engaged SRI to provide certain services in connection with the day-to-day operations of the Company, including the issuing of invoices to customers and making payments on behalf of the Company with respect to month-to-month leases of facilities, vehicles and trailers under separate agreements between the Company and SRI, including the SRI Equipment Leases and the SRI Office Leases further described in the following paragraphs in this Note 9, as well as Notes 10, 12 and 13. The term of the SRI Services Agreement will continue for a period of three months unless earlier terminated by the parties in accordance therewith, and it is contemplated that an aggregate of $26,042 will be paid by the Company to SRI in consideration of the services rendered under the SRI Services Agreement. Phillip W. Oldridge, the Company’s Chief Executive Officer and Chairman of the Board, and a member of its board of directors, serves as an executive officer and a member of the board of directors of SRI.

The Company has entered into lease agreements with SRI (the “SRI Equipment Leases”), pursuant to which the Company leases equipment used in connection with the operation of its business. The SRI Equipment Leases provide for the leasing of 2 vehicles that commenced on January 1, 2020 and the combined rent under such leases is $3,880 per month, and a separate SRI Equipment Lease provides for a trailer lease that commenced on December 1, 2019, under which the rent is $3,891 per month. The total monthly payment obligations of the Company under the SRI Equipment Leases is $7,771.

EVTDS has entered into a cancelable month-to-month lease with SRI (the “SRI Office Lease”), pursuant to which EVTDS has leased office and warehouse space in the Porterville, California area for a term that commenced on January 1, 2020. The monthly rent under the SRI Office Lease is $910.

In addition to the SRI Services Agreement, the SRI Equipment Leases, and the SRI Office Lease, during the three months ended June 30, 2021, the Company purchased a heavy-duty pick-up truck and a trailer from SRI for $81,293. The Company intends to use such equipment to transport its electric vehicles to and from customer demonstration sites and to and from equipment outfitters when the vehicles have custom bodies and accessories added for specific customers.

The Company has entered into a commercial lease agreement (the “ABCI Office Lease”) with Alpha Bravo Charlie, Inc. (“ABCI”) that commenced on April 1, 2020, for the lease of office space in Porterville, California. The monthly rent for this facility is $2,800. See Notes 10, 12 and 13. Phillip W. Oldridge, the Company’s Chief Executive Officer and Chairman of the Board, and a member of its board of directors, is a director of ABCI.

During the three months ended June 30, 2021, the Company purchased 2 used automobiles from Mr. Oldridge for an aggregate purchase price of $33,250. The Company purchased such vehicles from Mr. Oldridge for use by the Company’s employees for sales calls and other business purposes and are housed at the Company’s Corona, California, corporate offices.

In connection with the closing of the Merger in March 2021, the Company purchased 2 electric trucks from Mr. Oldridge for an aggregate purchase price of $128,000. The purchase price for such vehicles was paid in full to Mr. Oldridge during the three months ended June 30, 2021.

Prior to the closing of the Merger, Mr. Oldridge had permitted the vehicles to be used by the Company as customer demonstration vehicles for no cost. The purchase price of $64,000 per vehicle was less than the purchase price of $83,000 per vehicle that ADOMANI, Inc. had paid to EVTDS for similar vehicles in prior transactions. One of the vehicles purchased by the Company was subsequently sold to a customer of the Company in March 2021 and the second truck remains in the Company’s inventory at June 30, 2021.

~~In January 2020,~~The Company has entered into the ~~Company renewed its lease for office space in Los Altos, California, which serves as office space for its Northern California operations. This lease expires December 31, 2020, and the total amount due~~SRI Equipment Leases (see Note 9). Rent expense under the ~~renewal is $6,432.~~SRI Equipment Leases for the three and six months ended June 30, 2021 was $23,313 and $42,745, respectively, and was $29,312 and $52,624 for the three and six months ended June 30, 2020, respectively.

The Company has entered into the SRI Office Lease (see Note 9). Rent expense under the SRI Office Lease for the three and six months ended June 30, 2021 was $2,730 and $5,460, respectively, and was also $2,730 and $5,460 for the three and six months ended June 30, 2020, respectively.

The Company has entered into the ABCI Office Lease (see Note 9). Rent expense under the ABCI Office Lease for the three and six months ended June 30, 2021 was $8,400 and $16,800, respectively, and was $8,400 for both the three and six months ended June 30, 2020, respectively, as it commenced on April 1, 2020.

In February 2017, ~~the Company~~ADOMANI, Inc. 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~~ADOMANI, Inc. signed a non-cancellable lease for its former corporate office space in Corona, California, to serve as its corporate headquarters. The lease iswas for a period of 65 months, terminating February 28, 2023. The base rent for the term of the lease iswas $568,912. The total amount due monthly is $7,600 at commencement and ~~will escalate~~would have escalated to $10,560 by its ~~conclusion. Additionally,~~conclusion had ADOMANI, Inc. remained a tenant. In November 2020, ADOMANI, Inc. vacated this space following staff reductions and moved remaining staff into the space discussed in the following paragraph. Through June 30, 2021, the Company had not paid the rent on this facility since October 2020, but the expense was accrued. On July 2, 2021 a resolution was reached with the landlord. Two of the four suites covered by this lease were re-leased by the building management in March and April 2021, ending the Company’s obligation on those two suites. ADOMANI, Inc.’s $11,616 deposit with the landlord has been applied against the outstanding amounts by the landlord, and the net outstanding amount at June 30, 2021 was approximately $53,735. In June, the landlord advised the Company that the remaining 2 suites were re-leased with a commencement date of September 1, 2021, and the landlord agreed to terminate the Company’s obligation as of July 31, 2021. Accordingly,

the Company paid the landlord $60,630 on July 2, 2021 in exchange for a full release from the lease ~~includes five months in which no rent payment is due.~~obligation. See Notes 12 and 13.

In December 2019, ~~the Company~~ADOMANI, Inc. signed a lease for combined office space and warehouse ~~space~~location in Corona, California. The facility ~~will be~~had been 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 goods vehicle ~~inventories.~~inventories prior to November 2020 when ADOMANI, Inc. vacated its former corporate office space in Corona, California, and made such facility the new corporate office location in addition to its prior use. 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 iswas $495,720, with $265 due per month for fire sprinkler alarm monitoring and landscape maintenance. The base rent amount due monthly iswas $13,108 at commencement and will escalate to $13,906 by its conclusion.

On February 4, 2020, ~~the Company~~ADOMANI, Inc. 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 iswas February 1, 2020, and it expires when the Company’s lease on 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 thereafter escalating to $6,365 by its conclusion.

~~In November 2019,~~The Company’s total net rent expense for the ~~Company renewed its agreement with THINKP3 to provide services with~~three and six months ended June 30, 2021 was $132,949 and $190,796, respectively. The total expense for the ~~goal of securing federal grant assistance for development of the Company’s zero-emission~~three and hybrid transportation solutions for school bus, commercial, government and utility fleets. The agreement expires on November 30, 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 August 31, 2020, the parties mutually agreed to terminate this agreement.

Effective September 16, 2019, the Company renewed its employment agreement with James L. Reynolds, its President. 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. Mr. Reynolds resigned effective October 30, 2020. In connection with Mr. Reynolds’ resignation, the Company and Mr. Reynolds entered into Separation Agreement and General Release, dated Octobersix months ended June 30, 2020 ~~(the “Separation Agreement”), pursuant to which Mr. Reynolds will be entitled to receive certain separation benefits (see Note 12).~~was $46,252 and $78,104, respectively.

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 August 31, 2020, the parties mutually agreed to terminate this agreement.Other Agreements

Effective January 1, 2017, the Company entered into an employment agreement with Michael Menerey, its Chief Financial Officer. The term of the employment agreement iswas five years and the agreement provides for an initial annual base salary of $200,000. Effective January 1, 2020, Mr. Menerey’s annual base salary was increased to $215,000. On November 1, 2020, Mr. Menerey agreed to reduce his compensation to $150,000 indefinitely.

The following table summarizes the Company’s future minimum payments under contractual commitments, excluding debt, as of ~~September~~June 30, 2021:

On December 17, 2019, GreenPower Motor Company Inc., a public company incorporated under the laws of British Columbia (“GreenPower”), of which Phillip W. Oldridge, the Company’s Chief Executive Officer and Chairman of the Board, and a member of its board of directors, previously served as a senior officer and a member of its board of directors, filed a notice of civil claim, captioned GreenPower Motor Company Inc. v. Phillip Oldridge et al., Action No. S-1914285, in the Supreme Court of British Columbia, against Phillip Oldridge, his trust, EVTDS and certain other companies affiliated therewith. The notice of civil claim alleges that Mr. Oldridge breached certain fiduciary duties owed to GreenPower by working with certain parties in direct competition with and at the expense of GreenPower. GreenPower alleges that the Company conspired with Mr. Oldridge to build its business, competing products and unfairly compete with GreenPower, GreenPower seeks general damages, special damages and punitive damages, plus interest and costs against EVTDS. On February 2, 2020, the Company and ~~after giving effect~~the other companies affiliated therewith named in the notice of civil claim filed a response to the ~~termination~~civil claim in which they denied certain of the ~~Company’s employment agreement with James L. Reynolds, its former President,~~allegations and asserted that certain other facts were outside of their knowledge. Fact discovery, through

document disclosure and examinations for discoveries, in this matter remain ongoing. We believe that the ~~related payment obligations thereunder, effective as of October 30, 2020,~~lawsuit is without merit and intend to vigorously defend the ~~Company’s entry into the Separation Agreement and the related payment obligations thereunder, effective as of October 30, 2020 (see Note 12):~~

~~10. Contingencies~~On or about July 18, 2021, Greenpower and GP Greenpower Industries Inc. filed a counterclaim against David Oldridge, Phillip Oldridge, the Company and other companies in Supreme Court of British Columbia Action No. S207532. The counterclaim alleges that David Oldridge, Phillip Oldridge, the Company and other companies committed the tort of abuse of process by causing 42 Design Works Inc. to commence a lawsuit against Greenpower and GP Greenpower Industries Inc. Additionally, Greenpower and GP Greenpower Industries Inc. also advance claim against David Oldridge, Phillip Oldridge, the Company and other companies for conspiracy. The pleadings in this lawsuit have not closed and we intend to vigorously defend the counterclaim.

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~~the former Chief Technology Officer and a former director of ADOMANI, Inc., 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. Plaintiff’s counsel has subsequently filed a first amended complaint, a second amended complaint, a third amended complaint, and a ~~third~~fourth 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,~~27, 2020, we answered the ~~third~~fourth amended complaint, 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 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~~March 2, 2021, Electric Drivetrains ~~engaged~~filed its motion for class certification. On March 17, 2021, the court held a case management conference. At the case management conference, the court set a tentative schedule for class discovery and briefing on the motion for class certification. On June 2, 2021, Electric Drivetrains and ADOMANI filed a stipulation extending the deadline for class certification discovery proposing the following deadlines: close of class discovery on September 28, 2021; defendants’ opposition to the motion for class certification due on October 28, 2021; plaintiff’s reply in ~~mediation.~~support of its motion due on November 29, 2021; a case management conference on December 13, 2021 to set a date for hearing on the merits of the motion for class certification. Electric Drivetrains settled its claims against Mr. Monfort. The Underwriters ~~declined to participate in the mediation. The mediation did not result in settlement. On April 16, 2020,~~have reached settlements with Electric Drivetrains ~~requested that~~on the primary claims in this matter. All defendants ~~stipulate to~~are maintaining their cross claims against each other. On July 13, 2021, 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. On August 12, 2020, the court denied Plaintiff’s motion to amend the complaint without prejudice and continued the status conference that wascounsel moved to be ~~held~~relieved as counsel. The court will hear this motion on ~~this date. On~~ August ~~24, 2020, Plaintiff filed a renewed motion to amend the complaint. On September~~ 23, 2020, the court granted Plaintiff’s motion to amend the complaint, and on September 30, 2020, Plaintiff filed the fourth amended complaint (“FAC”). On October 26, 2020, the Underwriters filed their answer to the FAC, and on October 27, 2020, the Company Defendants and Mr. Monfort filed their respective answers to the FAC.2021. We believe that the purported class action lawsuit is without merit and intend to vigorously defend the action.

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~~two 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~~underwriters’ 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~~Fact discovery in this matter ~~under submission. The court subsequently issued a written order denying the motion to stay. The court held a case management conference on September 15, 2020. The court~~remains ongoing. Trial is currently set ~~a trial setting conference~~ for ~~March 9,~~November 1, 2021. We believe that the lawsuit is without merit and intend to vigorously defend the action.

On February 3, 2020, the Company acquired substantially all of the assets of Ebus in a foreclosure sale through a credit bid in the amount of $582,000, representing the amount then owed by Ebus to the Company evidenced by a secured promissory note. Following the Company’s successful credit bid at the foreclosure sale, Ebus’s obligations under the note were extinguished and the Company was entitled to take possession of substantially all of the assets of Ebus. While the Company was able to take possession of some of the assets, Ebus prevented the Company from taking possession of all of the assets purchased at the foreclosure sale. As a result, on April 13, 2020, the Company filed a complaint ~~against~~captioned ADOMANI, Inc. v. Ebus, Inc., ~~Anders B. Eklov and Carol J. Eklov, Case No. 20ST-CV14275,~~et al., in the Superior Court of California for the County of Los Angeles, Case No. 20ST CV 14275, against Ebus and certain of its insiders and affiliates seeking to recover the remainder of the assets ~~acquired by~~and related damages. On January 14, 2021, a cross-complaint was filed against the Company ~~through a credit bid~~by Ebus, Inc. and Anders B. Eklov for Unjust Enrichment and Conversion of Domain Name, seeking monetary damages and injunctive relief. The Company intends to pursue its claims set forth in the ~~amount of $582,000 at a foreclosure sale initiated by~~complaint and defend the ~~Company following Ebus’s default~~claims set forth 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.cross-complaint.

As of ~~September~~June 30, ~~2020,~~2021, the Company is a party to ~~four~~nine operating leases. ~~All~~NaN of these leases are office or warehouse ~~leases.~~leases; the remaining 3 are equipment leases (see Note 10). 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 ~~September~~June 30, ~~2020,~~2021, this exception applies to the six EVTDS leases and to the ADOMANI Inc. Stockton, California lease, which ~~is month-to-month, and the Los Altos, California lease, which is for a term of one year.~~are all month-to-month. In applying the guidance in ASC 842, the Company has determined that all current leases should be classified as operating leases.

~~During~~As a result of applying the ~~nine months ended September 30, 2020, the Company~~guidance of ASC 842 to its former corporate office lease (see Note 10) entered into ~~an operating lease for warehouse space~~ in ~~Corona, California (see Note 9). As required by ASC 842, in conjunction with this lease,~~2017, 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~~lease. As of March 15, 2021, that balance was $131,622. As of June 30, 2021, the ROU asset and related liability accounts were written off against each other due to the settlement of the outstanding amounts discussed in Note 10.

During the year ended December 31, 2020, the Company entered into an operating lease for warehouse space in Corona, California (see Note 10). As required by ASC 842, in conjunction with this lease, is the ~~Company’s estimated borrowing rate~~Company recognized an operating liability with a corresponding Right-Of-Use (“ROU”) asset of ~~14%. The~~the same amounts based on the present value of the minimum rental payments of such lease. As of March 15, 2021, the ROU asset had a balance of ~~$452,703 and $218,504 as~~$238,365. As of ~~September~~June 30, ~~2020 and December 31, 2019, respectively,~~2021, the ROU asset had a balance of $199,916, which is included in other non-current assets in the consolidated balance ~~sheets.~~sheet. Current liabilities relating to the ROU asset, which are included in accrued liabilities in the consolidated balance sheet, were ~~$198,075 and $70,492 as of September 30, 2020 and December 31, 2019, respectively, and non-current~~$149,844 at June 30,2021. Non-current liabilities relating to the ROU asset, ~~were $254,628 and $148,012 as of September 30, 2020 and December 31, 2019, respectively, and~~which are included in ~~accrued liabilities and~~ other non-current liabilities in the ~~unaudited~~ consolidated balance ~~sheets. Cash paid for amounts included in~~sheet, were $80,238 as of June 30, 2021. As of June 30, 2021, the Company’s warehouse operating lease ~~liabilities was $203,308 and $87,199 for the nine months ended September 30, 2020 and 2019, respectively. As of September 30, 2020, the Company’s operating leases~~ had a weighted-average remaining lease term of ~~2.3~~1.50 years. See Note 10.

On ~~October 1, 2020 and November 1, 2020,~~July 2, 2021, as more fully discussed in Note 10 above, the Company ~~issued~~reached a ~~total of 26,484~~settlement with the landlord regarding the lease obligation for its former corporate offices.

On July 23, 2021, options to purchase 358,571 shares of ~~its~~ common stock were exercised by a former officer of the Company at a price of $0.12 per share, resulting in a payment to ~~a consultant engaged~~the company of $43,029. On July 29, 2021, options to purchase an aggregate of 135,000 shares of common stock with an exercise price of $0.45 per share and options to purchase 135,000 shares of common stock with an exercise price of $1.31 per share were forfeited by the same former officer of the Company as ~~partial consideration for such consultant’s services (see Note 6).~~they were not exercised prior to the 90th day following his resignation of employment.

On ~~October 16, 2020, the Company filed an application for forgiveness of the PPP Loan. The Company believes it has satisfied all requirements for full forgiveness of the PPP Loan (see Note 5)~~

On October 28, 2020, the Company received $500,000 in loan funding (the “Envirotech Loan”) from Envirotech Drive Systems Incorporated / SRI Professional Services, Incorporated (“Envirotech”). The Envirotech Loan is evidenced by a balloon payment promissory note, dated October 28, 2020, issued by the Company in favor of Lender (the “Envirotech Note”) in an original principal amount of $500,000. No interest will accrue on the unpaid principal amount of the Envirotech Loan. In connection with the funding of the Envirotech Loan, the Company paid to Envirotech an origination fee in the amount of $49,999. Under the terms of the Envirotech Note, the unpaid principal amount of the Envirotech Loan will be payable by the Company in one installment due upon the Company securing additional financing or issuing shares of its capital stock on or before December 31, 2020. In the event the Company does not secure such additional financing or issue such shares of its capital stock on or before December 31, 2020, the unpaid principal amount of the Envirotech Loan will be due and payable by the Company on April 27, 2021. The Envirotech Note may be prepaid in part or in full, at any time, without penalty. The Envirotech Note provides for certain customary events of default, including: (i) the failure of the Company to pay the principal when due; (ii) the filing of bankruptcy proceedings involving the Company as a debtor; (iii) the application for the appointment of a receiver for the Company; (iv) the making of a general assignment for the benefit ofAugust 4, 2021, the Company’s ~~creditors; (v)~~Compensation Committee granted Phillip W. Oldridge, the insolvency of the Company; and (vi) a misrepresentation by the Company to Envirotech for the purpose of obtaining or extending credit. Upon the occurrence of an event of default, all amounts owed under the Envirotech Note and any other obligations of the Company to Envirotech will become immediately due and payable.

~~On October 30, 2020 (the “Separation Date”), James L. Reynolds resigned from his employment with the Company, including his positions as the President~~Company’s Chief Executive Officer and Chairman of the Board, ~~of the Company, as~~and a member of ~~the~~its board of directors, of the Company, and any and all other positions, directorships, and committee memberships that Mr. Reynolds held with the Company or any of its subsidiaries or other affiliated entities, in each case, effective as of the Separation Date. Mr. Reynold’s resignation did not result from a disagreement with the Company on any matter relating to its operations, policies, or practices. In connection with Mr. Reynold’s resignation, the Company and Mr. Reynolds entered into the Separation Agreement. Pursuant to the Separation Agreement, Mr. Reynolds will be entitled to receive the following separation benefits in consideration of, and subject to, Mr. Reynolds’ compliance with his continuing obligations under the Separation Agreement and all other agreements between Mr. Reynolds and the Company:

The Separation Agreement also contains a general release of any and all claims that Mr. Reynolds had or could have had against the Company and other related parties specified in the Separation Agreement, as well as customary provisions relating to the return of the Company’s property and covenants regarding the non-use and non-disclosure of the Company’s confidential and proprietary information. granted.

On November 1, 2020, options to purchase an aggregate of 2,000,000 shares of common stock with an exercise price of $0.10 per share were forfeited as they were not exercised prior to the end of their contractual term (see Note 8).

ITEM 2. MANAGEMENT’S DISCUSSION 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 are a provider of ~~new~~ purpose-built zero-emission electric vehicles focused on reducing the total cost of ~~ownership. The vehicles are manufactured by outside, original equipment manufacturer (“OEM”) partners located in China, Malaysia~~vehicle ownership and the Philippines that can be marketed, sold, warrantied and serviced through our developing distribution and service network. We also are a provider of advanced zero-emission electric drivetrain systems for integration in new buses and medium to heavy-duty commercial fleet vehicles. We also provide re-power conversion kits to replace conventional drivetrain systems for combustion powered vehicles with zero-emission electric drivetrain systems. Our vehicles and drivetrain systems are designed to helphelping fleet operators unlock the benefits of ~~technology that reduces greenhouse gases (“GHG”),nitrous oxide (“NOx”), particulate matter (“PM”)~~green technology. We serve commercial and ~~other pollutants, as well as~~last-mile fleets, school districts, public and private transportation service companies and colleges and universities to meet the increasing demand for light to heavy-duty electric vehicles. Our vehicles address the challenges of traditional fuel price instability and local, state and federal regulatory ~~compliance and traditional-fuel price cost instability.~~compliance.

For the three and six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, our net losses were ~~$957,446 million~~$893,079 and ~~$1.2 million, respectively,~~$1,551,589, respectively. As discussed in Item 1, Notes 2 and ~~$3.3 million~~3 to the unaudited consolidated financial statements contained in this Quarterly Report on Form 10-Q, as a result of the closing of the Merger on March 15, 2021, the historical results discussed in this section of the Quarterly Report on Form 10-Q are those of Envirotech Drive Systems, Inc. (“EVTDS”) as of and ~~$4 million~~ for the ~~nine months~~periods ended ~~September~~June 30, 2020 and ~~2019, respectively.~~are the results for EVTDS as of and for the three and six months ended June 30, 2021, including the balance sheet accounts of Envirotech Vehicles, Inc. at June 30, 2021 and the results of operations of Envirotech Vehicles, Inc. for the period March 16, 2021 through June 30, 2021. On May 26, 2021, the Company filed a Certificate of Amendment of Amended and Restated Certificate of Incorporation of the Company with the Secretary of State of the State of Delaware to change its name from ADOMANI, Inc. to Envirotech Vehicles, Inc., effective as of May 26, 2021.

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

COVID-19 pandemic.Global health concerns related to the ongoing COVID-19 pandemic have resulted in social, economic and labor instability in the countries in which we or the third parties with whom we engage operate, and resulted in unexpected legal and regulatory changes, such as travel, social distancing and quarantine policies, boycotts, curtailment of trade, and other business restrictions that have negatively our ability to procure and sell our products and provide our services. Accordingly, our future performance will depend in part upon our ability to successfully respond and adapt to these challenges and we have developed, and continue to develop, plans to address the ongoing effects and help mitigate the potential negative impact of the pandemic on our business.

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,~~As an alternative to being dependent on such funding, however, we are exploring the possibility of leasing our ~~business and operating results have been and continue~~vehicles 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.as well.

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.

~~Dependence 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.20

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 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 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 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 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 solutions for alternative fuel technology, specifically all-electric 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, the amounts of such assistance to our 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 an EIDL and the 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 new, purpose-built zero-emission electric ~~vehicles; zero-emission electric drivetrain systems for fleet vehicles; the sale and/or installation of re-power conversion kits to replace conventional drivetrain systems in combustion powered~~ vehicles ~~with zero-emission electric 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 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 Financial Accounting Standards Board (“FASB”) ASC 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 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.~~made in 2021, and the income tax benefit recorded in 2020 has been reversed and effectively reserved as well.

The following discussion compares operating data for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 to the corresponding periods ended ~~September~~June 30, ~~2019:~~2020:

Sales ~~severely impacted by the HVIP-created administrative delays~~were $188,266 and ~~subsequent denying us access to funding, were approximately $164,000 and $577,000~~$2,000 for the three ~~and nine~~ months ended ~~September~~June 30, 2021 and 2020, respectively, ~~compared to $5.7 million~~ and ~~$10.6 million~~$659,059 and $88,735 for the ~~three and nine~~six months ended ~~September 30, 2019, respectively.~~June 30,2021 and 2020, respectively, Sales for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 consisted of four cargo vans sold to ~~the City of Palmdale in July, SnowCap Community Charities in June, and~~ADOMANI, Inc. prior to the ~~City~~closing of ~~Orlando Florida in January, as well as fees due us relating~~the Merger, a box truck sold to the ~~Blue Bird termination agreement, as discussed in Note 2~~Pittsburg, California Unified School District, a complete cargo van and a cab and chassis truck sold to ~~our unaudited consolidated financial statements included in this Quarterly Report,~~two different factory authorized representatives, and maintenance and inspection services provided.

Cost of sales were ~~approximately $116,000~~$147,932 and ~~$279,000~~$250 for the three ~~and nine~~ months ended ~~September~~June 30, 2021 and 2020, respectively, ~~compared to $5.3 million~~ and ~~$9.8 million~~$461,366 and $73,560 for the ~~three and nine~~six months ended ~~September~~June 30, ~~2019,~~2021, respectively. Cost of sales for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 consisted of the costs related to the ~~sales revenue~~sale of the vehicles sold as described ~~above.~~above and the costs of providing maintenance and inspection services.

General and administrative expenses were $836,246 and $78,605 for the three months ended ~~September~~June 30, 2021 and 2020, respectively, an increase of $757,641. The increase was related primarily to payroll-related expenses of $222,875; to legal and professional fees of $157,373; to rent of $87,628; to insurance of $81,460; to investor relations expenses of $43,110; to advertising and marketing costs of $29,706; to travel costs of $27,488; to depreciation of $27,379, and to $ 80,622 in other general and administrative expenses.

General and administrative expenses were ~~approximately $972,000, compared to approximately $1.6 million~~$1,422,149 and $168,791 for the ~~corresponding three-month period~~six months ended June 30, 2021 and 2020, respectively, an increase of ~~2019, a decrease~~$1,253,358. The increase was related primarily to legal and professional fees of $445,302, of which approximately ~~$600,000, which was primarily~~$290,000 related to ~~decreases~~the Merger. Increases in ~~legal~~payroll-related expenses of ~~$271,000; a $149,000 decrease in non-cash stock-based compensation expense; an $82,000 decrease in salaries~~$250,172; rent of $134,897; insurance of $101,027; accounting services of $100,842; investor relations expenses of $44,478; depreciation of $35,376; and ~~benefits, and decreases~~$141,264 in other general and administrative expenses in the current year period. The third quarter 2020 general and administrative expenses include approximately $65,000 in non-cash charges, including $54,000 in non-cash stock-based compensation expense.

~~General and administrative expenses~~accounted for the ~~nine months ended September 30, 2020 were approximately $3.5 million, compared to approximately $4.4 million for~~remainder of the corresponding nine-month period of 2019, a decrease of $900,000, which was related to a $430,000 decrease in non-cash stock-based compensation expense; a $332,000 decrease in legal expense; and a $147,000 decrease in investor relation expenses in the current year period. The nine month 2020 general and administrative expenses include approximately $435,000 in non-cash charges, including $300,000 in stock-based compensation expense and $100,000 in bad debt expense.increase.

Consulting expenses were ~~$38,000~~$95,108 and ~~$139,000~~$16,800 for the three ~~and nine~~ months ended ~~September~~June 30, 2021 and 2020, respectively, ~~as compared to $66,000~~ and ~~$220,000, respectively,~~were $105,358 and $37,300 for the ~~corresponding periods in 2019, which decreases were~~six months ended June 30, 2021 and 2020, respectively. This increase was due primarily ~~a result~~to payments to temporary professional firms to support operations and accounting activities of the absence of grant application and tax credit consulting expenses incurred in 2019 that were not incurred in 2020. Consulting expenses include non-cash charges of approximately $27,000 and $68,000 for the three and nine months ended September 30, 2020, respectively.

~~Research and development expenses were $0 for both the three and nine months ended September 30, 2020, respectively, as compared~~Company due to $10,000 and $158,000, respectively, for the corresponding periods in 2019, which decreases were primarily attributable to certain supply chain expenditures made for research and development activity in 2019.vacant internal staff positions.

As discussed above and in Note 3 to the unaudited consolidated financial statements contained in this Quarterly Report on Form 10-Q, ADOMANI, Inc. had approximately $3.4 million in cash and cash equivalents at the Merger closing date, primarily the result of ~~September~~the approximately $5.3 million net proceeds from the December 2020 closing of the Financing discussed below. EVTDS delivered $5 million cash at the Merger closing.

As of June 30, ~~2020,~~2021, we had cash and cash equivalents of ~~$223,712.~~$8,542,199 and marketable securities of $12,010,190, a combined total of $20,552,389 We ~~do not~~ believe that our existing cash, ~~and~~ cash equivalents and ~~short-term investments~~marketable securities will be sufficient to fund our operations during the next eighteen months ~~unless~~and beyond. However, 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 likelymay 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, and if we ~~will likely~~do not, we may need additional capital to continue our operations and support the increased working capital requirements associated with the fulfillment of purchase orders. ~~See Note 12~~

On December 24, 2020, ADOMANI, Inc. entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain institutional and accredited investors, whereby the Company agreed to sell, and the ~~consolidated unaudited financial statements for the nine months ended September 30, 2020 for a discussion of recent financing, which alleviates, but does not solve, our liquidity issues.~~

~~The sale of additional equity securities in the future could result in additional dilution~~investors agreed 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 anypurchase, shares of common stock ~~or securities that are convertible into or exchangeable for~~of the Company, and warrants (the “Warrants”) to purchase additional shares of the Company’s common stock (the “Financing”).

The first closing of the Financing occurred on December 29, 2020. ADOMANI, Inc. raised net cash proceeds, net of offering costs of approximately $5.3 million through the sale and issuance of 11,500,000 shares of its common stock at a purchase price equal to $0.50 per share and Warrants to purchase up to an aggregate of 8,625,001 shares of its common stock at an exercise price of $0.50 per share. The share and warrant amounts issued include 650,000 shares and 487,500 warrants issued to the underwriter in lieu of paying $325,000 of fees in cash.

The second closing of the Financing was completed on May 7, 2021. The Company raised net cash proceeds, net of offering costs, of approximately $16.3 million through the sale and issuance of 38,333,333 shares of common stock ~~(except for certain exempt issuances, including the issuance~~at a purchase price equal to $0.45 per share and Warrants to purchase up to an aggregate of ~~certain stock options,~~19,166,667 shares of its 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~~at an exercise price of ~~the warrants, which is currently $4.50~~$1.00 per share. The share and ~~subject~~warrant amounts issued include 2,166,666 shares and 1,083,330 warrants to ~~adjustment pursuant~~be issued to the ~~terms thereof, the exercise price~~underwriter in lieu of ~~such warrants is automatically reduced~~paying $975,000 of fees in cash.

Options to ~~the price per share of such new issuance. Further, simultaneously with any adjustment~~Purchase Common Stock

Because all outstanding unvested options to ~~the exercise price of such warrants, the number of shares of~~purchase ADOMANI, Inc.’s common stock ~~that may be purchased~~became fully vested 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 priceclosing of the ~~warrants issued in our January 2018 public offering, holders~~Merger, the Company has 12,398,571 fully vested options outstanding as of ~~our common stock will experience dilution, which may be substantial~~June 30,2021. See Notes 2, 3 and ~~which could lower~~8 to 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.

~~In May 2020, we were awarded an EIDL and the 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 could result in operating and financial covenants that would restrict our operations. Such capital, if required, may not be availableReport 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. 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. 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.Form 10-Q.

As of ~~September~~June 30, ~~2020, we had outstanding~~2021, the 12,398,571 vested options were comprised of options to purchase ~~13,904,436~~5,000,000 shares ~~of common stock, net of exercises, cancellations, and forfeitures, as discussed below. As of September 30, 2020, 11,058,519 shares of common stock were issuable upon the~~with an exercise ~~of options vested at such date. Options to purchase 8,204,436 were issuable upon exercise at a~~ price of $0.10 per ~~share, none were issuable upon~~share; options to purchase 1,358,571 shares with an exercise ~~at a~~ price of $0.12 per ~~share,~~

~~486,200 were issuable upon~~share; options to purchase 5,770,000 shares with an exercise ~~at a~~ price of $0.45 per share, ~~1,000,000 were issuable upon~~and 270,000 shares with an 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 367,883 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 approximately $3$3.6 million and we would be required to issue ~~11,058,519~~12,398,571 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 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 outstanding, they were unexercisable as of December 31, 2019. As of December 31, 2019, outstanding options to purchase an aggregate of 14,297,902 shares of common stock were attributable to Mr. Monfort. Effective as of January 29, 2020, all such options were cancelled by the Company in connection with the settlement of Mr. Monfort’s claims against the Company.

~~On November 1, 2020, options to purchase an aggregate of 2,000,000 shares of common stock with an exercise price of $0.10 per share were forfeited as they were not exercised prior~~See Notes 2, 3, 8 and 13 to the ~~end of their contractual term (see Note 12 to our~~ unaudited consolidated financial statements included in this Quarterly ~~Report).~~Report on Form 10-Q.

Effective May 2, 2018, the Company secured a line of credit from Morgan 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 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 the Company in its Morgan Stanley accounts, which was approximately ~~$7.1~~$5.7 million as of ~~December~~March 31, ~~2019.~~2021. Borrowings under the line may not exceed 95% of such cash, cash equivalents, and marketable securities balances. The maximum amount the Company could borrow at ~~December 31, 2019,~~June 30, 2021, was approximately ~~$6.6 million, and the~~$17.1 million; there was no principal amount outstanding ~~under this line of credit was approximately $5.8 million~~ at that date. The line of credit and related interest expense was repaid in full on February 3, 2020. The line of credit is still available to the Company, but there is no current plan to use it.

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 ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019.~~2020:

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.~~expenses. These numbers are further impacted by adjustments for ~~non-cash interest expense.~~changes in other balance sheet accounts.

Net cash used in operating activities ~~decreased~~increased by ~~approximately $1.5 million~~$6,492,050 to ~~approximately $1.6 million~~$6,817,467 for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 compared to net cash used in operating activities of ~~approximately $3.1 million~~$325,417 for the ~~nine~~six months ended ~~September~~June 30, ~~2019.~~2020. The ~~decrease~~increase in net cash used in operating activities was due primarily to ~~approximately $1.2 million~~our net loss increasing to $1,551,589 over the net loss of $183,915 for the six months ended June 30, 2020, or by $1,367,674 and to a net increase in operating assets and liabilities that required the use of $5,291,064 of cash. Approximately $2,877,875 of this amount related to deposits made to our supplier related to the order of new vehicles for inventory. $1,208,657 of the use of cash ~~provided~~for operating assets related to purchases of inventory that were received during the six months ended June 30, 2021. The remaining $1,204,532 related primarily to cash used to reduce accounts payable and accrued liabilities, which was partially offset by changes in ~~asset and liability accounts, reduced by a reduction in non-cash expenses of approximately $303,000, combined with a decrease in net loss of approximately $630,000.~~the other balance sheet accounts.

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 by investing activities during the six months ended June 30, 2021 was $8,809,744 as compared to $30,166 used by investing activities during the six months ended June 30, 2020. The $8,779,578 increase in net cash used by investing activities during the six months ended June 30, 2021 is due to the $12.0 million purchase of marketable securities, reduced by the $3.4 million of cash acquired in the Merger and by capital expenditures of $183,076.

Net cash provided by investing activities during the nine months ended September 30, 2020 increased by approximately $3.6 million to approximately $2.8 million, as compared to cash used in investing activities of approximately $879,000 during the nine months ended September 30, 2019. The increase in net cash provided by investing activities during the nine months ended September 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 nine months ended September 30, 2019 was primarily due to the purchase of liquid marketable securities in the amount of approximately $829,000.

~~Net cash used in~~ financing activities during the ~~nine~~six months ended ~~September~~June 30, ~~2020 increased by approximately $8.7 million to approximately $5.4 million,~~2021 was $22,239,279 as compared to $49,990 provided by financing activities during the six months ended June 30, 2020. Net cash provided by financing activities ~~of approximately $3.3 million~~ during the ~~nine~~six months ended ~~September~~June 30, ~~2019. Net cash used in financing activities during the nine months ended September 30, 2020~~2021 consisted of ~~approximately $5.8 million~~$6,415,110 proceeds from the issuance of common stock by EVTDS, and $16,322,049 proceeds from the issuance of common stock by the Company in ~~net principal repayments made under our line~~May, 2021 when the second tranche of ~~credit with Morgan Stanley, offset~~the Financing discussed above closed. The combined financing proceeds of $22,737,159 were reduced by ~~$411,244~~offering costs of $188,015 and were further reduced by both EVTDS and ADOMANI, Inc. repaying their SBA EIDL loans and accrued interest in ~~proceeds received from SBA loans.~~the amounts of $152,835 and $157,030, respectively.

Except as set forth below, during the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, there were no material changes in our contractual obligations and commitments as described in the audited financial statements of Envirotech Drive Systems, Inc. for the year ended December 31, 2020 included in ADOMANI, Inc.’s Current Report on Form 8-K/A filed with the SEC on April 22, 2021, or as described in Part II, Item 7 of ~~our~~the ADOMANI, Inc. Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019.~~

~~On February 4,~~ 2020, ~~the Company signed a sublease agreement with Masters Transportation,~~as amended by ADOMANI, Inc. ~~(“Masters”) for Masters~~’s Amendment No. 1 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 leaseAnnual Report on the property 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 thereafter escalating to $6,365 by its conclusion.

~~On October 30, 2020, James L. Reynolds resigned from his employment~~Form 10-K/A, as filed with the Company, including his positions as the President and Chairman of the Board of the Company, as a member of the board of directors of the Company, and any and all other positions, directorships, and committee memberships that Mr. Reynolds held with the Company or any of its subsidiaries or other affiliated entities, in each case, effective as of October 30, 2020. Mr. Reynolds’ resignation did not result from a disagreement with the CompanySEC on any matter relating to its operations, policies, or practices. In connection with Mr. Reynolds’ resignation, the Company and Mr. Reynolds entered into Separation Agreement and General Release, dated October 30, 2020, pursuant to which Mr. Reynolds will be entitled to receive certain separation benefits (see Note 12 to our unaudited consolidated financial statements included in this Quarterly Report).April 28, 2021.

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. Because all outstanding unvested options to purchase common stock became fully vested upon the Merger close and change in control, and

because there were no new stock options granted between March 16, 2021 and June 30, 2021, no stock-based compensation is recorded in the unaudited consolidated financial statements for the three and six months ended June 30, 2021 included in this Quarterly Report on Form 10-Q.

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.

WeOther than those items required to be addressed due to the purchase accounting requirements of the reverse acquisition, 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.”

ITEM 3. QUANTITATIVE AND ~~QUALITATIVE~~QUALITATIVE DISCLOSURE ABOUT MARKET RISK

We are exposed to market risks in the ordinary course of our business. We do not currently face material market risks such as interest rate fluctuation risk and 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, which is unlikely, 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, as we 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, if any, 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 not effective to ensure that information that we are required to disclose in reports that we file or ~~submit~~submits 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~~Due to the staff reductions and voluntary resignations we experienced beginning in the fourth quarter of 2020 and continuing through the closing of the Merger in March 2021, we increased our reliance on outsourced accounting help during such periods and for all periods thereafter through the date of this filing. As a result of such changes, inwe have been unable to maintain the levels of segregation of duties during such periods at the levels of prior periods, and such changes to our disclosure controls and procedures have significantly affected our internal control over financial reporting ~~that occurred~~ during the ~~nine~~three and six months ended ~~September~~June 30, ~~2020 that materially affected, or are reasonably likely~~2021. We have yet to ~~materially affect,~~fully resolve such deficiencies as of the date of this filing. However, as of June 25, 2021, we have engaged an experienced accounting professional with relevant expertise to serve as a consultant to the Company and provide additional accounting services intended to mitigate the negative effects of such recent changes to our ~~internal control over financial reporting.~~disclosure controls and procedures.

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 December 17, 2019, GreenPower Motor Company Inc., a public company incorporated under the laws of British Columbia (“GreenPower”), of which Phillip W. Oldridge, the Company’s Chief Executive Officer and Chairman of the Board, and a member of its board of directors, previously served as a senior officer and a member of its board of directors, filed a notice of civil claim, captioned GreenPower Motor Company Inc. v. Phillip Oldridge et al., Action No. S-1914285, in the Supreme Court of British Columbia, against Phillip Oldridge, his trust, EVTDS and certain other companies affiliated therewith. The notice of civil claim alleges that Mr. Oldridge breached certain fiduciary duties owed to GreenPower by working with certain parties in direct competition with and at the expense of GreenPower. GreenPower alleges that the Company conspired with Mr. Oldridge to build its business, competing products and unfairly compete with GreenPower. GreenPower seeks general damages, special damages and punitive damages, plus interest and costs against EVTDS. On February 2, 2020, the Company and the other companies affiliated therewith named in the notice of civil claim filed a response to the civil claim in which they denied certain of the allegations and asserted that certain other facts were outside of their knowledge. Fact discovery, through document disclosure and examinations for discoveries, in this matter remain ongoing. We believe that the lawsuit is without merit and intend to vigorously defend the action.

On or about July 18, 2021, Greenpower and GP Greenpower Industries Inc. filed a counterclaim against David Oldridge, Phillip Oldridge, the Company and other companies in Supreme Court of British Columbia Action No. S207532. The counterclaim alleges that David Oldridge, Phillip Oldridge, the Company and other companies committed the tort of abuse of process by causing 42 Design Works Inc. to commence a lawsuit against Greenpower and GP Greenpower Industries Inc. Additionally, Greenpower and GP Greenpower Industries Inc. also advance claim against David Oldridge, Phillip Oldridge, the Company and other companies for conspiracy. The pleadings in this lawsuit have not closed and we intend to vigorously defend the counterclaim.

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~~the former Chief Technology Officer and a former director of ADOMANI, Inc. 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. Plaintiff’s counsel has subsequently filed a first amended complaint, a second amended complaint, a third amended complaint, and a ~~third~~fourth 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.

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.

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~~Fact discovery in this matter ~~under submission. The court subsequently issued a written order denying the motion to stay. The court held a case management conference on September 15, 2020. The court~~remains ongoing. Trial is currently set ~~a trial setting conference~~ for ~~March 9,~~November 1, 2021. We believe that the lawsuit is without merit and intend to vigorously defend the action.

On February 3, 2020, the Company acquired substantially all of the assets of Ebus in a foreclosure sale through a credit bid in the amount of $582,000, representing the amount then owed by Ebus to the Company evidenced by a secured promissory note. Following the Company’s successful credit bid at the foreclosure sale, Ebus’s obligations under the note were extinguished and the Company was entitled to take possession of substantially all of the assets of Ebus. While the Company was able to take possession of some of the assets, Ebus prevented the Company from taking possession of all of the assets purchased at the foreclosure sale. As a result, on April 13, 2020, the Company filed a complaint ~~against~~captioned ADOMANI, Inc. v. Ebus, Inc., ~~Anders B. Eklov and Carol J. Eklov, Case No. 20ST-CV14275,~~et al., in the Superior Court of California for the County of Los Angeles, Case No. 20ST CV 14275, against Ebus and certain of its insiders and affiliates seeking to recover the remainder of the assets ~~acquired by~~and related damages. On January 14, 2021, a cross-complaint was filed against the Company ~~through a credit bid~~by Ebus, Inc. and Anders B. Eklov for Unjust Enrichment and Conversion of Domain Name, seeking monetary damages and injunctive relief. The Company intends to pursue its claims set forth in the ~~amount of $582,000 at a foreclosure sale initiated by~~complaint and defend the ~~Company following Ebus’s default~~claims set forth 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.cross-complaint.

Except as set forth below, there were no material changes from the risk factors previously disclosed in ~~our~~the audited financial statements of Envirotech Drive Systems, Inc. for the year ended December 31, 2020 included in the Company’s Current Report on Form 8-K/A filed with the SEC on April 22, 2021, or as described in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019,~~2020, as filed with the SEC on March ~~10, 2020.~~

~~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~~31, 2021, 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 ledamended by that certain Amendment No. 1 to the ~~implementation of various responses, including government-imposed quarantines, travel restrictions and other public health safety measures. Global health concerns, such~~Company’s Annual Report on Form 10-K/A, as ~~coronavirus, could result in social, economic and labor instability in~~filed with 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~~SEC on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the outbreak, new information that may 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 ability to conduct our 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.April 28, 2021.

~~There is substantial doubt about our ability to continue as a 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 September 30, 2020, were prepared under the assumption that we will continue as a going concern. At September 30, 2020, we had cash and cash equivalents of $223,712. 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 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. Accordingly, our ability to continue as a going concern will depend on our ability to mitigate the impact of such anti-dilution rights and raise additional capital to finance our operations and continue to support our growth initiatives, attain further operating efficiencies, reduce or contain expenditures, and, ultimately, to generate revenue.

If we are unable to continue as a going concern, we may have to liquidate our assets and may receive less than the value at which those assets are carried on our audited consolidated financial statements, and it is likely that investors 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 additional funding to us on commercially reasonable terms or at all. Based on these factors, management determined that there is substantial doubt about our ability to 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.

		PAGE

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements:		1

	Unaudited Consolidated Balance Sheets as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019~~2020	1

	Unaudited Consolidated Statements of Operations for the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020	2

	Unaudited Consolidated ~~Statement~~Statements of Stockholders’ Equity (Deficit) for the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2020 and 2019~~2021	3

	Unaudited Consolidated Statements of Cash Flows for the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020	4

	Notes to Unaudited Consolidated Financial Statements	5

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		1820

Item 3. Quantitative and Qualitative Disclosure about Market Risk		27

Item 4. Controls and Procedures		27

Part II. OTHER INFORMATION

Item 1. Legal Proceedings		28

Item 1A. Risk Factors		29

~~Item 2. Unregistered Sales of Equity Securities and Use of Proceeds~~		30

Item ~~3. Defaults Upon Senior~~2. Unregistered Sales of Equity Securities and Use of Proceeds		30

Item ~~4. Mine Safety Disclosures~~3. Defaults Upon Senior Securities		30

Item ~~5. Other Information~~4. Mine Safety Disclosures		30

Item 5. Other Information		30

Item 6. Exhibits		31

Signatures		32

Purchase Price Allocation of ADOMANI, Inc.
Accounts receivable and other current assets	$	1,680,926
Property and equipment		86,873
Right of use asset		369,987
Other assets		59,510
Goodwill		49,546,910
Accounts payable and accrued expenses		(820,389	)
Lease liability		(369,987	)
Notes payable		(417,540	)
Purchase price, net of $3,373,332 cash acquired	$	50,136,290

	September 30			December 31,			June 30,			December 31,
	2020			2019			2021			2020
Furniture and fixtures	$	41,799		$	41,799		$	41,799		$	—
Leasehold improvements		35,042			23,338			28,112			30,166
Computers		59,668			59,667
Machinery & equipment		22,440			—			86,266			92,853
Vehicles		72,299			72,299			186,842			128,999
Test/Demo vehicles		15,784			15,784			15,784			—
Total property and equipment	$	247,032		$	212,887		$	358,802		$	252,018
Less accumulated depreciation		(135,980	)		(101,044	)		(117,669	)		(24,457	)
Net property and equipment	$	111,052		$	111,843		$	241,133		$	227,561

								Weighted
								Average
								Remaining
	Number of Shares				Exercise Price			Contractual Life (years)
Outstanding at March 31, 2021		12,992,857				$	0.29		4.61
Exercised		(392,142		)		$	0.12
Cancelled / Forfeited at $0.12 Exercise Price		(67,144		)		$	0.12
Cancelled / Forfeited at $0.45 Exercise Price		(75,000		)		$	0.45
Cancelled / Forfeited at $1.31 Exercise Price		(60,000	)		$		1.31
Outstanding Options at $0.10 Exercise Price		5,000,000			$		0.10		0.71
Outstanding Options at $0.12 Exercise Price		1,358,571			$		0.12		0.54
Outstanding Options at $0.45 Exercise Price		5,770,000			$		0.45		8.37
Outstanding Options at $1.31 Exercise Price		270,000			$		1.31		3.32
Outstanding at June 30, 2021		12,398,573			$		0.29		4.31

	Payments due by period
	Total		Less than one year		1 - 3 years		4 - 5 years		More than 5 years
Operating lease obligations	$	510,843	$	213,429	$	297,414	$	—	$	—
Employment contracts		283,167		245,667		37,500		—		—
Total	$	794,010	$	459,096	$	334,914	$	—	$	—

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

	Six months ended June 30,
	2021			2020
Lease expenses
Operating lease expenses	$	29,487		$	—
Short-term lease expenses	$	183,515		$	78,104
Total lease cost	$	213,002		$	78,104
Other information
Cash paid for the amounts included in the measurement of lease liabilities for operating leases:
Operating cash flows	$	27,906		$	—
Weighted-average remaining lease term (in years):
Operating leases		1.56			—
Weighted-average discount rate:
Operating leases		14	%		—

	ADOMANI, INC.

Date: ~~November 13, 2020~~August 19, 2021	By:	/s/ Phillip W. Oldridge
		Phillip W. Oldridge Chief Executive Officer (Principal Executive Officer)

Date: ~~November 13, 2020~~August 19, 2021	By:	/s/ Michael K. Menerey
		Michael K. Menerey Chief Financial Officer (Principal Financial and Accounting Officer)