Azio Ai Holdings, Inc 10-Q for FY2021 Q3
Azio Ai Holdings, Inc. (AZIO)
10-Q
2021-11-12
For: 2021-09-30
View Original
Added on
April 12, 2026
About this 10-Q
Azio Ai Holdings, Inc filed this 10-Q on November 12, 2021, covering the quarter ended September 30, 2021 (FY2021 Q3).
Headline figures
Quarter ended September 30, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $709.09K
- Net loss
- $850.48K
- compared with a net loss of $70.95K a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2021
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ___________ to ___________
Commission File Number: 001-38078
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices, including zip code)
(951 ) 407-9860
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
OTC Markets Group Inc. |
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 Yes ☒ No ☐
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). 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. | Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer |
☒ | Smaller reporting company | ||||
| Emerging growth company | ||||||
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
12
, 2021 was
.
ENVIROTECH VEHICLES, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
FORM
10-Q
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2021 PAGE |
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Part I. FINANCIAL INFORMATION |
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2 |
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20 |
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28 |
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Part II. OTHER INFORMATION |
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29 |
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31 |
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32 |
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33 |
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
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:
• |
Our ability to generate demand for our zero-emission commercial fleet vehicles in order to generate revenue. |
• |
Our ability to achieve independence from external sources for the financing of our operations. |
• |
Our ability to effectively execute our business plan. |
• |
Our ability and our suppliers’ ability to scale our zero-emission products assembling processes effectively and quickly from low volume production to high volume production. |
• |
Our ability to manage our expansion, growth and operating expenses and reduce and adequately control the costs and expenses associated with operating our business. |
• |
Our ability to obtain, retain and grow our customers. |
• |
Our ability to enter into, sustain and renew strategic relationships on favorable terms. |
• |
Our ability to achieve and sustain profitability. |
• |
Our ability to evaluate and measure our current business and future prospects. |
• |
Our ability to compete and succeed in a highly competitive and evolving industry. |
• |
Our ability to respond and adapt to changes in electric vehicle technology. |
• |
Our ability to protect our intellectual property and to develop, maintain and enhance a strong brand. |
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 “Envirotech,” the “Company,” “we,” “our,” and “us” refer to Envirotech Vehicles, Inc. and our consolidated subsidiaries, unless the context indicates otherwise.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ENVIROTECH VEHICLES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited)
September 30, |
December 31, |
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2021 |
2020 |
|||||||
ASSETS |
||||||||
| Current assets: |
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| Cash and cash equivalents |
$ | $ | ||||||
| Restricted cash |
||||||||
| Marketable Securities |
— | |||||||
| Accounts receivable |
||||||||
| Inventory, net |
— | |||||||
| Prepaid expenses |
— | |||||||
| |
|
|
|
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| Total current assets |
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| Property and equipment, net |
||||||||
| Goodwill |
— | |||||||
| Other non-current assets |
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| |
|
|
|
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| Total assets |
$ | $ | ||||||
| |
|
|
|
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LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) |
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| Current liabilities: |
||||||||
| Accounts payable |
$ | $ | ||||||
| Accrued liabilities |
||||||||
| Notes payable, net |
— | |||||||
| |
|
|
|
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| Total current liabilities |
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| Long-term liabilities |
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| Other non-current liabilities |
— | |||||||
| Notes payable, net |
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| |
|
|
|
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| Total liabilities |
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| Stockholders’ equity (deficit): |
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| Preferred stock, $ and |
||||||||
| Common stock, $ and issued and outstanding as of September 30, 2021 and tanding as of |
||||||||
| Additional paid-in capital |
— | |||||||
| Accumulated deficit |
( |
) | ( |
) | ||||
| |
|
|
|
|||||
| Total stockholders’ equity (deficit) |
( |
) | ||||||
| |
|
|
|
|||||
| Total liabilities and stockholders’ equity (deficit) |
$ | $ | ||||||
| |
|
|
|
|||||
See Accompanying Notes to Unaudited Consolidated Financial Statements.
1
ENVIROTECH VEHICLES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited
For the Three Months Ended |
For the Nine Months Ended |
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September 30, 2021 |
September 30, 2020 |
September 30, 2021 |
September 30, 2020 |
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| Sales |
$ | $ | — | $ | $ | |||||||||||
| Cost of sales |
— | |||||||||||||||
| |
|
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| Gross profit |
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| Operating expenses |
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| General and administrative |
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| Consulting |
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| |
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| Total operating expenses, net |
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| |
|
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|
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|
|
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| Loss from operations |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| |
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|
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|
|
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| Other income (expense): |
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| Interest income , net |
— | — | ||||||||||||||
| Other income |
— | |||||||||||||||
| |
|
|
|
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|
|
|
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| Total other income |
— | |||||||||||||||
| |
|
|
|
|
|
|
|
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| Loss before income taxes |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Income tax expense |
( |
) | — | ( |
) | — | ||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Net loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| |
|
|
|
|
|
|
|
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| Net loss per share to common stockholders: |
||||||||||||||||
| Basic and diluted |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| |
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|
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|
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| Weighted shares used in the computation of net loss per share: |
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| Basic and diluted |
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| |
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See Accompanying Notes to Unaudited Consolidated Financial Statements.
2
ENVIROTECH VEHICLES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(unaudited)
Common Stock |
Additional Paid-In |
Accumulated |
Stockholders’ |
|||||||||||||||||
Shares |
Amount |
Capital |
Deficit |
Equity (Deficit) |
||||||||||||||||
| Balance, December 31, 2020 |
$ | $ | — | $ | ( |
) | $ | ( |
) | |||||||||||
| Common stock issued for cash |
— | |||||||||||||||||||
| Common stock issued in merger |
— | |||||||||||||||||||
| Offering costs netted against proceeds |
— | — | ( |
) | — | ( |
) | |||||||||||||
| Net loss |
— | — | — | ( |
) | ( |
) | |||||||||||||
| |
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| Balance, March 31, 2021 |
$ | $ | $ | ( |
) | $ | ||||||||||||||
| Common stock issued for cash |
— | |||||||||||||||||||
| Offering costs netted against proceeds |
— | — | ( |
) | — | ( |
) | |||||||||||||
| Net loss |
— | — | — | ( |
) | ( |
) | |||||||||||||
| |
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| Balance, June 30, 2021 |
$ | $ | $ | ( |
) | $ | ||||||||||||||
| Common stock issued for cash |
— | |||||||||||||||||||
| Stock based compensation |
— | — | — | |||||||||||||||||
| Net loss |
— | — | — | ( |
) | ( |
) | |||||||||||||
| |
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| Balance, September 30, 2021 |
$ | $ | $ | ( |
) | $ | ||||||||||||||
| |
|
|
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|
|
|
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|
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See Accompanying Notes to Unaudited Consolidated Financial Statements.
3
ENVIROTECH VEHICLES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Nine Months Ended |
||||||||
September 30, 2021 |
September 30, 2020 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net loss |
$ | ( |
) | $ | ( |
) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
| Depreciation and amortization |
— | |||||||
| Unrealized gain on marketable securities |
( |
) | — | |||||
| Stock based compensation expense |
— | |||||||
| Provision for bad debt |
— | |||||||
| Gain on debt forgiveness |
|
|
( |
) |
|
|
— |
|
| Changes in assets and liabilities: |
||||||||
| Accounts receivable |
( |
) | ( |
) | ||||
| Prepaid expenses |
( |
) | — | |||||
| Inventory |
( |
) | — | |||||
| Accounts payable |
( |
) | ( |
) | ||||
| Accrued liabilities |
( |
) | — | |||||
| Other non-current liabilities |
( |
) | — | |||||
| |
|
|
|
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| Net cash used in operating activities |
( |
) | ( |
) | ||||
| |
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|
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| Cash flows from investing activities: |
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| Purchase of property and equipment, net |
( |
) | ( |
) | ||||
| Investment in marketable securities |
( |
) | — | |||||
| Sale of marketable securities |
— | |||||||
| Cash acquired in merger |
— | |||||||
| |
|
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|
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| Net cash used in investing activities |
( |
) | ( |
) | ||||
| |
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|
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| Cash flows from financing activities: |
||||||||
| Proceeds from issuance of common stock |
— | |||||||
| Related-party investment |
— | |||||||
| Payments for offering costs |
( |
) | — | |||||
| Principal advances from (repayments on) long term debt (SBA) |
( |
) | ||||||
| |
|
|
|
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| Net cash provided by financing activities |
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| |
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|
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| Net change in cash, restricted cash, and cash equivalents |
( |
) | ||||||
| Cash, restricted cash, and cash equivalents at the beginning of the period |
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| |
|
|
|
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| Cash, restricted cash, and cash equivalents at the end of the period |
$ | $ | ||||||
| |
|
|
|
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| Supplemental cash flow disclosures: |
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| Cash paid for interest expense |
$ | $ | — | |||||
| |
|
|
|
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| Cash paid for income taxes |
$ | $ | — | |||||
| |
|
|
|
|||||
See Accompanying Notes to Unaudited Consolidated Financial Statements.
4
ENVIROTECH VEHICLES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. Organization and Operations
Envirotech Vehicles, Inc. (“we”, “us”, “our” or the “Company”) is a provider of purpose-built vehicles address the challenges of traditional fuel price cost instability and local, state and federal regulatory compliance.
zero-emission
electric vehicles focused on reducing the total cost of vehicle ownership and helping fleet operators unlock the benefits of green technology. The Compa
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. ny serves
The Company
’
s
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 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.
2. Summary of Significant Accounting Policies
Basis of Presentation
t
he Company
’
s
o
pinion, 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 the EVTDS audited financial statements for the years ended December 31, 2020 and 2019 included in t
he Company
’
s
Current Report on Form 8-K/A
filed with the SEC on April 22, 2021. The results of operations for the fiscal period ended September 30, 2021 are not necessarily indicative of the results to be expected for the full year. Principles of Consolidation
Use of Estimates
Fair Value of Financial Instruments
5
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 1: Observable inputs such as quoted prices in active markets;
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 no
Revenue Recognition
zero-emission
electric vehicles and 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. In applying ASC Topic 606, the Company is required to:
(1)
i
dentify any contracts with customers;
(2)
d
etermine if multiple performance obligations exist;
(3)
d
etermine the transaction price;
(4)
a
llocate the transaction price to the respective obligation; and(5)
r
ecognize the revenue as the obligation is satisfied. 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 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.
Due to significant impacts of Covid-19 restrictions on the tourist industry in the Philippines, the market to which GerWeiss primarily sold the e-trikes to, they have not been able to complete the current 50 units in production. We do not expect that we will receive the e-trikes nor have our deposit returned, and therefore have fully reserved that amount in the three months ended September 30, 2021.
Other revenue includes 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
Marketable Securities
held-to-maturity,
6
Accounts Receivable and Allowance for Doubtful Accounts—
Company’s
(
“
FARs”
, and because the December 31, 2020 balance was collected subsequent to that date, )
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 and establishes an inventory valuation allowance for vehicles that it does not intend to support in the future. The Company had finished goods inventory on hand of
$as of September 30, 2021 and recorded an inventory valuation allowance of
$related to three vehicles that the Company does not intend to support in the future as of September 30, 2021, resulting in a net inventory balance of $1,019,453 as of September 30, 2021. The Company had no finished goods inventory on hand and no related inventory valuation allowance as of December 31, 2020.
Inventory Deposits—
Income Taxes
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 September 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 nine months ended September 30, 2021.
The December 31, 2020 audit report for EVTDS stated that corporate income tax returns for 2017, 2018, and 2019 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—
Net Loss Per Share
7
Concentration of Credit Risk
The Company has credit risks related to cash and cash equivalents on deposit with a federally insured bank, as at times it exceeds the $250,000 maximum amount insured by the Federal Deposit Insurance Corporation (“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 September 30, 2021 is zero , as the $254,913 60,000 .
included on the unaudited consolidated balance sheet at June 30, 2021 was resolved by EVTDS using the cash to pay an invoice on behalf of its former stockholder. During the 3 months ended September 30, 2021, the Company’s bank required compensating balances for a subsidiary’s potential lease exposure and for the Company’s credit card limit, resulting in restricted cash of approximately
$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 sold
eight
additional vehicles in the latter part of September, 2021, many of them to the Company’s
FARs.
The Company
expects
to be paid for them in full; to the extent the invoices are outstanding for more than 30 days, the FAR
are charged flooring interest on the sale price. Accordingly, customer accounts are reported at the invoiced amount outstandings
.
Impairment of Long-Lived Assets
Goodwill
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. 8
Research and Development
Stock-Based Compensation
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 was recorded in the consolidated financial statements for the three or six months ended June 30, 2021. However, with respect to the options to purchase Property and Equipment
Leases
Recent Accounting Pronouncements
3. Merger
On March 15, 2021, the Company completed its acquisition of EVTDS, a supplier of 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.
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 a
wholly owned subsidiary of the Company
(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 9
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
Electric
Vehicles, Inc., a Canadian entity (“EVT Canada”),
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 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 zero
we
re still being negotiated, resulting in $EVTDS entered into an exclusive
50-year
distribution agreement as of October 4, 2017 to become the sole USA distributor of EVT Canada
. 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 EVT Canada
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:
Purchase Price Allocation of ADOMANI, Inc. |
||||
| Accounts receivable and other current assets |
$ | |||
| Property and equipment |
||||
| Right of use asset |
||||
| Other assets |
||||
| Goodwill |
||||
| Accounts payable and accrued expenses |
( |
) | ||
| Lease liability |
( |
) | ||
| Notes payable |
( |
) | ||
| |
|
|||
| Purchase price, net of $3,373,332 cash acquired |
$ | |||
| |
|
|||
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 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.
10-Q
for the quarterly period ended September
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 $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.
The Company
therefore is
not able to segregate the operating results of operations between the formerly separate entities in the current periods. 10
Unaudited Pro Forma Financial Information
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 nine months ended September 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.
Pro forma combined results of operations |
For the three months ended |
For the nine months ended |
||||||||||||||
September 30 |
September 30 |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
| Sales |
$ | $ | $ | $ | ||||||||||||
| Net loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
For purposes of the pro forma disclosures above, there were no adjustments required for the three months ended September 30, 2020 because there were no transactions between EVTDS and ADOMANI, Inc. during that period. For the three months ended September 30,2021, there were also no adjustments required, as the quarter reflects the results of operations of the merged entity. The adjustments for the nine months ended September 30, 2020 resulted in a reduction in sales of $79,735 and a $15 decrease in net loss. The adjustments for the nine months ended September 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 nine months ended September 30, 2021 by approximately $1,826,623 more than would otherwise have been recorded absent the consummation of the Merger.
4. Property and Equipment, Net
Components of property and equipment, net, consist of the following as of September 30, 2021 and December 31, 2020:
September 30, |
December 31, |
|||||||
2021 |
2020 |
|||||||
| Furniture and fixtures |
$ | $ | — | |||||
| Leasehold improvements |
||||||||
| Machinery & equipment |
||||||||
| Vehicles |
||||||||
| Test/Demo vehicles |
— | |||||||
| |
|
|
|
|||||
| Total property and equipment |
$ | $ | ||||||
| Less accumulated depreciation |
( |
) | ( |
) | ||||
| |
|
|
|
|||||
| Net property and equipment |
$ | $ | ||||||
| |
|
|
|
|||||
EVTDS sold all its property and equipment owned at December 31, 2020, reflected above,
to EVT Canada in the first quarter of 2021 and after recording
$6,560 depreciation expense for the three months ended March 31, 2021, recognized no gain or loss on the sale. The balances above at September 30, 2021 therefore reflect Envirotech Vehicles, Inc. assets acquired in the Merger (see Note 3) and assets purchased subsequent to the Merger closing.
Depreciation expense was $7,655 and 43,031 ,
$
respectively
for the three and nine months ended September 30, 2021,
,
and was $0
11
5. Debt
As of December 31, 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 and 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 $153,668 .
On May 6, 2020, ADOMANI, Inc. received $261,244 in loan funding from the Paycheck Protection Program (the “PPP”) established pursuant to the CARES Act and administered by the SBA. The unsecured loan (the “PPP Loan”) 261,244 with Wells Fargo Bank, N.A. (“Wells Fargo”), the lender. The PPP provides for loans to be forgiven under certain circumstances if provisions are 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 was notified by Wells Fargo on January 6, 2021 that its PPP Loan had been approved internally for 100 % 10,000
was
evidenced by a promissory note of the Company, dated May 3, 2020 (the “PPP Note”) in the principal amount of $forgiveness, and had been forwarded to SBA for their approval. On May 26, 2021, Wells Fargo sent a letter to the Company at its former corporate office address which did not get forwarded to its new address. After inquiring of Wells Fargo why no decision had been made on the forgiveness of the loan, the Company was informed on August 23,2021 that its loan had been forgiven in May and that there was no balance due. Wells Fargo subsequently provided a copy of the May 26, 2021 letter to the Company. Accordingly, the
$that was advanced as part of the Company’s application for the EIDL loan (see below) but was not required to be repaid in connection with the forgiveness of the PPP loan, was removed from current liabilities and reflected as miscellaneous income during the three months ended September 30, 2021.
On May 20, 2020 ADOMANI, Inc. received
$in loan funding from the SBA under the EIDL program administered by the SBA, which program was expanded pursuant to the CARES Act. The EIDL loan was 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
per annum. The term of the EIDL Note is
though it may be payable sooner upon an event of default under the EIDL Note. Under the EIDL Note, the Company would have been obligated to make equal monthly payments of principal and interest beginning on
through the maturity date of May 18, 2050. The EIDL Note may be prepaid in part or in full, at any time, without penalty. The loan and accrued interest in the amount of
$was repaid on May 17, 2021.
On June 15, 2021, the 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 payable over months, beginning in July, 2021, with monthly payments of $2,648.99 . As of September 30, 2021, $31,788 is reflected on the consolidated balance sheet as current notes payable while $21,292 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 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 The maximum amount the Company could borrow at September 30, 2021, was approximately $15.6 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.
95
% of such cash, cash equivalents, and marketable securities balances.12
6. Common Stock
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 3), increasing the total number of outstanding shares of common stock of the 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 agreed to sell, and the investors agreed to purchase, shares of common stock 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 $0.50 650,000 shares and 487,500 325,000
per share. The share and Warrant amounts issued include
Warrants issued to the underwriter in lieu of paying
$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 16.3 million through the sale and issuance 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 underwriter in lieu of paying $975,000 of fees in cash. See Note 8.
S-3
(File No. 333-255341)
filed with the SEC on April 19, 2021, registering for resale the shares of the Company’s common stock sold, and the shares issuable under the Warrants issued, in connection with the Financing. At the second closing of the Financing, the Company raised aggregate net cash proceeds of approximately $7. Stock Warrants
As a result
of the Merger closing (see Note 3), as of March 31, 2021, the Company had outstanding warrants to purchase an aggregate of 10,681,327 shares of common 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 September 30, 2021. The Company’s outstanding warrants as of September 30, 2021 is summarized as follows, and all were exercisable at that date (see Note 6):
Number of |
Exercise |
Remaining |
||||||||||
Shares |
Price |
Contractual Life (years) |
||||||||||
| Outstanding warrants expiring |
$ |
|||||||||||
| Outstanding warrants expiring |
$ |
|||||||||||
| Outstanding warrants expiring |
$ |
|||||||||||
| Outstanding warrants expiring |
$ |
|||||||||||
| Outstanding warrants expiring |
$ |
|||||||||||
| |
|
|
|
|
|
|||||||
| Outstanding warrants on September 30, 2021 |
$ | |||||||||||
| |
|
|
|
|
|
|||||||
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 30, 2021, the outstanding warrants have no intrinsic value.
13
8. Stock Options
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 September 30, 2021 consisted of the following:
Weighted |
||||||||||||
Average |
||||||||||||
Remaining |
||||||||||||
Number of Shares |
Exercise Price |
Contractual Life (years) |
||||||||||
| Outstanding at March 31, 2021 |
$ | |||||||||||
| Exercised |
( |
) | $ | |||||||||
| Cancelled / Forfeited at $0.12 Exercise Price |
( |
) | $ | |||||||||
| Cancelled / Forfeited at $0.45 Exercise Price |
( |
) | $ | |||||||||
| Cancelled / Forfeited at $1.31 Exercise Price |
( |
) | $ | |||||||||
| Outstanding Options at $0.10 Exercise Price |
$ | |||||||||||
| Outstanding Options at $0.12 Exercise Price |
$ | |||||||||||
| Outstanding Options at $0.45 Exercise Price |
$ | |||||||||||
| Outstanding Options at $1.31 Exercise Price |
$ | |||||||||||
| Outstanding Options at $ 0 .2753 Exercise Price |
$ | |||||||||||
| |
|
|
|
|
|
|||||||
| Outstanding at September 30, 2021 |
$ | |||||||||||
On June 14, 2021, options to purchase 33,571 shares of common stock were exercised at a price of $0.12 per share, resulting in a payment to the Company of $4,029 . Also on June 14, 2021, options to purchase an aggregate of 67,144 shares of common stock with an exercise price of $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 expiration date specified with respect to such options.
On June 25, 2021, options to purchase 358,571 shares of common stock were exercised by an officer of the Company at a price of $0.12 per share, resulting in a payment to the company of $43,029 .
On July 23, 2021, options to purchase 358,571 shares of common stock were exercised by a former officer of the Company at a price of $0.12 per share, resulting in a payment to 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 they were not exercised prior to the 90th day following his resignation of employment.
On August 4, 2021, the Company’s Compensation Committee granted Phillip W. Oldridge, the Company’s Chief Executive Officer and Chairman of the Board, and a member of its board of directors, options to purchase 440,000 shares of common stock at an exercise price of $0.2753 per share. The Committee determined that Mr. Oldridge would be immediately vested in the options granted. The options were valued using the Black-Scholes option-pricing model, resulting in fair market value of $121,132 for the options which expire on August 3, 2031 . The assumptions used in the valuation of the options included an expected term of ten years, volatility of 172.40 %, and a risk-free interest rate of 1.56 %. Because these options were fully vested and exercisable as of the grant date, the fair market value of $121,132 was recorded as stock based compensation expense during the three months ended September 30, 2021.
As of September 30, 2021, outstanding options have an intrinsic value of $2,356,000 .
9. Related Party Transactions
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 operations of the Company, including the issuing of invoices to customers and making payments on behalf of the Company with respect to leases of facilities, vehicles and trailers
day-to-day
month-to-month
14
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 two 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 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 .
month-to-month
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 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.
pick-up
truck and a trailer from SRI for $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 two 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 two 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 September 30, 2021.
10. Commitments
Operating Leases
The Company has entered into the SRI Equipment Leases (see Note 9). Rent expense under the SRI Equipment Leases for the three and nine months ended September 30, 2021 was $38,853 and $66,055 , respectively, and was $23,312 and $75,935 for the three and nine months ended September 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 nine months ended September 30, 2021 was $4,550 and $11,270 , respectively, and was $2,730 and $8,190 for the three and nine months ended September 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 nine months ended September 30, 2021 was $8,400 and $25,200 , respectively, and was $8,400 and $16,800 for the three and nine months ended September 30, 2020, respectively.
15
In February 2017, ADOMANI, Inc. signed a lease for storage basis and can be terminated by either party with 30 -days’ notice. The total amount due monthly is $1,000 .
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
In October 2017, ADOMANI, Inc. signed a 65 months, terminating February 28, 2023 . The base rent for the term of the lease was $568,912 . The total amount due monthly is $7,600 at commencement and would have escalated to $10,560 60,630 ,
non-cancellable
lease for its former corporate office space in Corona, California, to serve as its corporate headquarters. The lease was for a period of by its 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. The Company ceased paying the rent on this facility after October 2020, but the expense was accrued. 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. In June 2021, the landlord advised the Company that the remaining two suites were re-leased
with a commencement date of September 1, 2021. On July 2, 2021, a resolution was reached with the landlord, whereby the parties mutually agreed to terminate the lease as of July 31, 2021 and the Company would be released from all obligations under the lease, in consideration of the Company’s agreement to pay the landlord an amount equal to representing the aggregate amount then owed to the landlord under the lease net of the Company’s $11,616 security deposit retained by the landlord, which amount was paid in full on July 2, 2021. See Notes 12 and 13.
In December 2019, ADOMANI, Inc. signed a lease for combined office space and warehouse location in Corona, California. The facility 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 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 months, commencing on
, and terminating on
. The base rent for the term of the lease was $
, with $
due per month for fire sprinkler alarm monitoring and landscape maintenance. The base rent amount due monthly was $
at commencement and will escalate to $
by its conclusion.
On February 4, 2020, 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 was 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.
The Company’s total net rent expense for the three and nine months ended September 30, 2021 was ($14,841 ) and $198,161 , respectively. The reduced expense for the three months ended September 30, 2021 was due to adjustments recorded in the quarter related to rent expense accrued during the six months ended June 30, 2021. The total expense for the three and nine months ended September 30, 2020 was $38,579 and $116,682 , respectively.
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 was 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.
16
The following table summarizes the Company’s future minimum payments under contractual commitments, excluding debt, as of September 30, 2021:
| Payments due by period | ||||||||||||||||||||
| Total | Less than one year |
1 - 3 years | 4 - 5 years |
More than 5 years |
||||||||||||||||
Operating lease obligations |
$ | $ | $ | $ | — | $ | — | |||||||||||||
Employment contract |
— | — | — | |||||||||||||||||
Total |
$ | $ | $ | $ | — | $ | — | |||||||||||||
11. Contingencies
On December 17, 2019, GreenPower Motor Company Inc., a public company incorporated under the laws of British Columbia (“GreenPower”), of which Phillip W. Oldridge, our Chief Executive Officer and a member of our 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 Mr. Oldridge, his trust, Envirotech Drive Systems Incorporated, a Wyoming corporation and a wholly owned subsidiary of EVTDS that upon the closing of the Merger became our indirect wholly owned subsidiary (“EVTDS Wyoming”), and certain other companies . 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 EVTDS Wyoming 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 Wyoming. On February 2, 2020, EVTDS Wyoming and the other companies affiliated therewith named in the notice of civil claim filed a response to 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 Phillip W. Oldridge, our Chief Executive Officer and a member of our board of directors, David Oldridge, our Chief Technology Officer and the brother of Phillip W. Oldridge, EVTDS Wyoming and other companies in Supreme Court of British Columbia Action No. S207532. The counterclaim alleges that David Oldridge, Phillip Oldridge, EVTDS Wyoming 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. claim against David Oldridge, Phillip W. Oldridge, EVTDS Wyoming and the other companies for conspiracy. EVTDS Wyoming, David Oldridge and the other companies have filed an application to strike the allegations in the counterclaim regarding abuse of process and conspiracy. The court application is scheduled to be heard on November 12, 2021.
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, Edward R. Monfort, 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
c
ourt. Plaintiff’s counsel has subsequently filed a first amended complaint, a second amended complaint, a third amended complaint, and a 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 27, 2020, we answered the 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 17
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 March 2, 2021, Electric Drivetrains 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 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 have reached settlements with Electric Drivetrains on the primary claims in this matter. All defendants are maintaining their cross claims against each other. On July 13, 2021, Electric Drivetrains’ counsel moved to be relieved as counsel and on August 23, 2021, the court granted this motion. Also on August 23, 2021, the Clerk of Court issued an order to show cause why the complaint should not be stricken and matter dismissed for failure to retain new counsel to Electric Drivetrains. On October 28, 2021, Electric Drivetrains filed a substitution of attorney, substituting J. Ryan Gustafson of Good Gustafson Aumais LLP as its new counsel. A case management conference and hearing on the order to show cause are set for December 13, 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. in the Superior Court of California for the County of Santa Clara, against the Company, certain of the Company’s executive officers and directors, two of the underwriters of the Company’s offering of common stock under Regulation A in June 2017, and certain of the 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
1-CV-349153
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. Fact discovery in this matter remains ongoing. On August 10, 2021, we filed a motion for summary judgement and dismissal of plaintiff’s FAC. The hearing on the motion for summary judgement as well as the trial setting conference is set for November 23, 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 captioned ADOMANI, Inc. v. Ebus, Inc., 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 and related damages. On January 14, 2021, a cross-complaint was filed against the Company 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 complaint and defend the claims set forth in the cross-complaint.
12. Leases
As of September 30, 2021, the Company is a party to nine operating leases. Four of these leases are office or warehouse leases; the remaining five 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 30, 2021, this exception applies to the six EVTDS leases and to the ADOMANI Inc. Stockton, California lease, which are all In applying the guidance in ASC 842, the Company has determined that all current leases should be classified as operating leases.
month-to-month.
As a result of applying the guidance of ASC 842 to its former corporate office lease (see Note 10) entered into in 2017, the Company recognized an operating liability with a corresponding (“ROU”) asset of the same amounts based on the present value of the minimum rental payments of such 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.
Right-Of-Use
18
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, the Company recognized an operating liability with a corresponding (“ROU”) asset of 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 $238,365 . As of September 30, 2021, the ROU asset had a balance of $166,483 , which is included in other 131,244 at September 30,2021. 35,239 as of September 30, 2021. As of September 30, 2021, the Company’s warehouse operating lease had a weighted-average remaining lease term of 1.25 years. See Note 10.
Right-Of-Use
non-current
assets in the consolidated balance sheet. Current liabilities relating to the ROU asset, which are included in accrued liabilities in the consolidated balance sheet, were $Non-current
liabilities relating to the ROU asset, which are included in other non-current
liabilities in the consolidated balance sheet, were $Quantitative information regarding the Company’s leases is as follows:
| Nine months ended September 30, | ||||||||
| 2021 | 2020 | |||||||
| Lease expenses |
||||||||
| Operating lease expenses |
$ | $ | — | |||||
| Short-term lease expenses |
$ | $ | ||||||
| |
|
|
|
|||||
| Total lease cost |
$ | $ | ||||||
| |
|
|
|
|||||
| Other information |
||||||||
| Cash paid for the amounts included in the measurement of lease liabilities for operating leases: |
|
|||||||
| Operating cash flows |
$ | $ | — | |||||
| Weighted-average remaining lease term (in years): |
||||||||
| Operating leases |
— | |||||||
| Weighted-average discount rate: |
||||||||
| Operating leases |
% | — | ||||||
19
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. Overview
We are a provider of purpose-built
zero-emission
electric vehicles focused on reducing the total cost of vehicle ownership and helping fleet operators unlock the benefits of green 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 instability and local, state and federal regulatory compliance. For the three and nine months ended September 30, 2021 and 2020, our net losses were $850,475 and $2,402,064, respectively. As discussed in Item 1, Notes 2 and 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 for the periods ended September 30, 2020 and are the results for EVTDS as of and for the three and nine months ended September 30, 2021, including the balance sheet accounts of Envirotech Vehicles, Inc. at September 30, 2021 and the results of operations of Envirotech Vehicles, Inc. for the period March 16, 2021 through September 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.Factors Affecting Our Performance
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. 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.
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. As an alternative to being dependent on such funding, however, we are exploring the possibility of leasing our vehicles to our customers as well. New customers.
20
Investment in growth.
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.
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.
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
.
zero-emission
vehicles of all sizes 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. Third-party contractors, suppliers and manufacturers.
Components of Results of Operations
Sales
Sales are recognized from the sales of new, purpose-built
zero-emission
electric vehicles and from 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
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 also includes costs related to the valuation of inventory due to impairment, obsolescence, or shrinkage.
21
General and Administrative Expenses
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.
Consulting and Research and Development Costs
These expenses are related to our consulting and research and development activity.
Other Income/Expenses, Net
Other income/expenses include
non-operating
income and expenses, including interest income and expense. Provision for Income Taxes
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 in 2021, and the income tax benefit recorded in 2020 has been reversed and effectively reserved as well.
Results of Operations
The following discussion compares operating data for the three and nine months ended September 30, 2021 to the corresponding periods ended September 30, 2020:
Sales
Sales were $709,092 and $0 for the three months ended September 30, 2021 and 2020, respectively, and $1,368,151 and $88,735 for the nine months ended September 30, 2021 and 2020, respectively. Sales for the three months ended September 30, 2021 consisted of two cargo vans and four cab & chassis trucks sold to certain factory authorized representatives; one van sold to a business owner in New Jersey who utilized a voucher from the NJ Zip program; and one upfitted truck sold to a new business in the San Francisco Bay area. Sales for the nine months ended September 30, 2021 consisted of the items sold in the third quarter plus four cargo vans sold to ADOMANI, Inc. prior to the closing of the Merger, a box truck sold to the Pittsburg, California Unified School District, a complete cargo van and a cab and chassis truck sold to two different factory authorized representatives in June 2021, and maintenance and inspection services provided.
Cost of Sales
Cost of sales were $469,611 and $0 for the three months ended September 30, 2021 and 2020, respectively, and $930,977 and $73,560 for the nine months ended September 30, 2021 and 2020, respectively. Cost of sales for the three and nine months ended September 30, 2021 consisted of the costs related to the sale of the vehicles sold as described above and the costs of providing maintenance and inspection services.
22
General and Administrative Expenses
General and administrative expenses were $1,344,840 and $54,146 for the three months ended September 30, 2021 and 2020, respectively, an increase of $1,290,694. The increase was related to bad debt expense of $303,879 unrelated to trade accounts receivable; to payroll-related expenses of $281,184; to investor relations expenses of $123,433; to
non-cash
stock based compensation expense of $121,132; to insurance of $120,539; to legal and professional fees of $93,766; to travel and related expenses of $91,289 related primarily to locating a United States manufacturing location; to advertising and marketing costs of $66,322; to contract labor of $47,451 primarily related to engineering and technical assistance; to depreciation of $7,655, and to $34,044 in other general and administrative expenses. The third quarter 2021 general and administrative expenses include $432,666 in non-cash
charges, including $303,879 in bad debt expense unrelated to trade accounts receivable, $121,132 in stock-based compensation expense and $7,655 in depreciation expense. There were no non-cash
general and administrative expenses in the 2020 periods. General and administrative expenses were $2,766,989 and $222,935 for the nine months ended September 30, 2021 and 2020, respectively, an increase of $2,544,054. The increase was related to increases in legal and professional fees of $561,701, of which approximately $290,000 related to the Merger. Increases in payroll-related expenses of $531,355; bad debt expense unrelated to trade accounts receivables of $303,879; insurance of $221,412; investor relations expense of $167,911;
non-cash
stock-based compensation expense of $121,132; travel and related expenses of $110,457 primarily related to locating a United States manufacturing facility; marketing and advertising expense of $85,650 accounting services of $83,487; rent expense of $81,479; contract labor of $66,323 primarily related to engineering and technical assistance; depreciation of $43,031; and $166,237 in other general and administrative expenses accounted for the remainder of the increase. The nine month 2021 general and administrative expenses include $468,042 in non-cash charges, including $303,879 in bad debt expense unrelated to trade accounts receivable, $121,132 in stock-based compensation expense and $43,031 in depreciation expense. Consulting Expenses
Consulting expenses were $36,735 and $16,800 for the three months ended September 30, 2021 and 2020, respectively, and were $142,092 and $54,101 for the nine months ended September 30, 2021 and 2020, respectively. The increases in the current year periods were due primarily to payments to temporary professional firms to support operations and accounting activities of the Company due to vacant internal staff positions.
Liquidity and Capital Resources
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 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 September 30, 2021, we had cash and cash equivalents of $10,640,486 and marketable securities of $7,007,000, a combined total of $17,647,486. We believe that our existing cash, cash equivalents and marketable securities will be sufficient to fund our operations during the next eighteen months and beyond. However, we may not successfully execute our business plan, and if we 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. In addition, to the extent we are successful in establishing a U.S. manufacturing facility, additional debt and/or equity capital may be required in order to purchase related equipment and set up production lines.
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 investors agreed to purchase, shares of common stock 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 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 a Warrant to
purchase
487,500 shares issued to the underwriter in lieu of paying $325,000 of fees in cash.
23
The second closing of the Financing was completed on May 7, 2021. The Company raised cash proceeds, net of offering costs, of approximately $16.3 million through the sale and issuance of 38,333,333 shares of common stock at a purchase price equal to $0.45 per share and 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 underwriter in lieu of paying $975,000 of fees in cash.
Options to Purchase Common Stock
Because all outstanding unvested options to purchase ADOMANI, Inc.’s common stock became fully vested upon the closing of the Merger, the Company had 12,398,571 fully vested options outstanding as of June 30,2021. On July 23, 2021, options to purchase 358,571 shares of common stock were exercised by a former officer of the Company. On July 29, 2021, options to purchase an aggregate of 270,000 shares of common stock were forfeited by the same former officer of the Company.
On August 4, 2021, the Company’s Compensation Committee granted Phillip W. Oldridge, the Company’s Chief Executive Officer and Chairman of the Board, and a member of its board of directors, options to purchase 440,000 shares of common stock. The Committee determined that Mr. Oldridge would be immediately vested in the options granted.
As a result of the activity described above during the three months ended September 30, 2021, the number of fully vested options outstanding as of September 30, 2021 was 12,210,000. See Notes 2, 3 and 8 to the unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q.
As of September 30, 2021, the 12,210,000 vested options were comprised of options to purchase 5,000,000 shares with an exercise price of $0.10 per share; options to purchase 1,000,000 shares with an exercise price of $0.12 per share; options to purchase 5,635,000 shares with an exercise price of $0.45 per share, and 135,000 shares with an exercise price of $1.31 per share. If all vested options to purchase common stock were exercised, we would receive proceeds of approximately $3.5 million and we would be required to issue 12,210,000 shares of common stock. There can be no assurance, however, that any such options will be exercised. See Notes 2, 3 and 8 to the unaudited consolidated financial statements included in this Quarterly Report on Form
10-Q.
Credit Facilities
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 $5.7 million as of March 31, 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 September 30, 2021, was approximately $15.6 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 use it. Capital Expenditures
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.
24
Cash Flows
The following table summarizes our cash flows from operating, investing, and financing activities for the nine months ended September 30, 2021 and 2020:
Nine Months Ended |
||||||||
September 30, 2021 |
September 30, 2020 |
|||||||
| Consolidated Statements of Cash Flow Data: |
||||||||
| Net cash used in operating activities |
$ | (9,917,328 | ) | $ | (328,322 | ) | ||
| Net cash used in investing activities |
(3,654,626 | ) | (30,166 | ) | ||||
| Net cash provided by financing activities |
22,282,308 | 199,990 | ||||||
| |
|
|
|
|||||
| Net change in cash and cash equivalents |
$ | 8,710,354 | $ | (158,498 | ) | |||
| |
|
|
|
|||||
Operating Activities
Cash used in operating activities is primarily the result of our operating losses, reduced by the impact of
non-cash
expenses. These numbers are further impacted by adjustments for changes in other balance sheet accounts. Net cash used in operating activities increased by $9,298,486 to $9,626,808 for the nine months ended September 30, 2021, compared to net cash used in operating activities of $328,322 for the nine months ended September 30, 2020. The increase in net cash used in operating activities was due primarily to our net loss for the nine months ended September 30, 2021 increasing to $2,402,064 over the net loss of $254,861 for the nine months ended September 30, 2020, or by $2,147,203, and to a net increase in operating assets and liabilities that required the use of $7,672,428 of cash, reduced by net
non-cash
charges of $157,164, which include the non-cash gain on forgiveness of debt (the PPP loan) of $290,519. Approximately $4,498,225 of the $7,672,428 related to deposits made to our supplier related to the order of new vehicles for inventory. $792,800 of the use of cash for operating assets related to purchases of inventory that were received during the nine months ended September 30, 2021. The remaining $2,381,402 related primarily to cash used to reduce accounts payable and accrued liabilities, which was partially offset by changes in 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.
Investing Activities
Net cash used by investing activities during the nine months ended September 30, 2021 was $3,654,626 as compared to $30,166 used by investing activities during the nine months ended September 30, 2020. The $3,624,460 increase in net cash used by investing activities during the nine months ended September 30, 2021 is due to the net $7.0 million purchase of marketable securities, reduced by the $3,373,332 of cash acquired in the Merger and reduced by the capital expenditures decrease of $2,208.
Financing Activities
Net cash provided by financing activities during the nine months ended September 30, 2021 was $22,282,308 as compared to $199,990 provided by financing activities during the nine months ended September 30, 2020, an increase of $22,082,318. Net cash provided by financing activities during the nine months ended September 30, 2021 consisted of $6,415,110 proceeds from the issuance of common stock by EVTDS, and $16,365,078 proceeds from the issuance of common stock by the Company, of which $16,275,001 related to the second closing of the Financing discussed above and the remaining $90,077 was received from the exercise of stock options in June and July of 2021. The net Financing proceeds of $16,275,001 were reduced by offering costs of $188,015 and were further reduced by both EVTDS and ADOMANI, Inc. repaying their SBA EIDL loans and accrued interest in the amounts of $152,835 and $157,030, respectively.
25
Contractual Obligations
During the nine months ended September 30, 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 the ADOMANI, Inc. Annual Report on Form 10-K
for the fiscal year ended December 31, 2020, as amended by ADOMANI, Inc.’s Amendment No. 1 to Annual Report on Form 10-K/A,
as filed with the SEC on April 28, 2021. Off-Balance
Sheet Arrangements 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. Contingencies
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.
Stock-Based Compensation
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. Although all outstanding unvested options to purchase common stock became fully vested upon the Merger close and change in control, the new stock options granted to Mr. Oldridge in August 2021 discussed above resulted in stock-based compensation expense of $121,132 being recorded recorded in the unaudited consolidated financial statements for the three and nine months ended September 30, 2021 included in this Quarterly Report on Form
10-Q.
Fair Value Measurement
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 1: Observable inputs such as quoted prices in active markets;
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.
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Other 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.
Jumpstart Our Business Startups Act of 2012 (“JOBS Act”)
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.” 27
ITEM 3. QUANTITATIVE AND 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.
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 United States dollars, which may create foreign currency exchange risk exposure.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
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 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. Changes in Internal Control over Financial Reporting
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, we 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 during the three and nine months ended September 30, 2021. We have yet to fully resolve such deficiencies as of the date of this filing. We have engaged, and continue to seek additional, experienced accounting professionals with relevant expertise to provide additional accounting services intended to supplement our efforts and mitigate the negative effects of such recent changes to our disclosure controls and procedures.
Limitations on Effectiveness of 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.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
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, our Chief Executive Officer and a member of our 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 Mr. Oldridge, his trust, Envirotech Drive Systems Incorporated, a Wyoming corporation and a wholly owned subsidiary of EVTDS that upon the closing of the Merger became our indirect wholly owned subsidiary (“EVTDS Wyoming”), EVTDS and certain other companies. 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 EVTDS Wyoming conspired with Mr. Oldridge to build its business, competing products and unfairly compete with Greenpower. GreenPower seeks general damages, special damages and punitivedamages, plus interest and costs against EVTDS Wyoming. On February 2, 2020, EVTDS Wyoming and the other companies affiliated therewith named in the notice of civil claim filed a response to 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 Phillip W. Oldridge, our Chief Executive Officer and a member of our board of directors, David Oldridge, our Chief Technology Officer and the brother of Phillip W. Oldridge, EVTDS Wyoming and other companies in Supreme Court of British Columbia Action No. S207532. The counterclaim alleges that David Oldridge, Phillip Oldridge, EVTDS Wyoming 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. claim against David Oldridge, Phillip W. Oldridge, EVTDS Wyoming and the other companies for conspiracy. EVTDS Wyoming, David Oldridge and the other companies have filed an application to strike the allegations in the counterclaim regarding abuse of process and conspiracy. The court application is scheduled to be heard on November 12, 2021.
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, Edward R. Monfort, 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 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 27, 2020, we answered the 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.
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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 March 2, 2021, Electric Drivetrains 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 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 have reached settlements with Electric Drivetrains on the primary claims in this matter. All defendants are maintaining their cross claims against each other. On July 13, 2021, Electric Drivetrains’ counsel moved to be relieved as counsel and on August 23, 2021, the court granted this motion. Also on August 23, 2021, the Clerk of Court issued an order to show cause why the complaint should not be stricken and matter dismissed for failure to retain new counsel to Electric Drivetrains. On October 28, 2021, Electric Drivetrains filed a substitution of attorney, substituting J. Ryan Gustafson of Good Gustafson Aumais LLP as its new counsel. A case management conference and hearing on the order to show cause are set for December 13, 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. in the Superior Court of California for the County of Santa Clara, against the Company, certain of the Company’s executive officers and directors, two of the underwriters of the Company’s offering of common stock under Regulation A in June 2017, and certain of the 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. Fact discovery in this matter remains ongoing. On August 10, 2021, we filed a motion for summary judgement and dismissal of plaintiff’s FAC. The hearing on the motion for summary judgement as well as the trial setting conference is set for November 23, 2021. We believe that the lawsuit is without merit and intend to vigorously defend the action.
1-CV-349153
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 captioned ADOMANI, Inc. v. Ebus, Inc., 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 and related damages. On January 14, 2021, a cross-complaint was filed against the Company 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 complaint and defend the claims set forth in the cross-complaint.
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ITEM 1A. RISK FACTORS
There were no material changes from the risk factors previously disclosed in 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, 2020, as filed with the SEC on March 31, 2021, as amended by that certain Amendment No. 1 to the Company’s Annual Report on Form 10-K/A,
as filed with the SEC on April 28, 2021. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None.
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ITEM 6. EXHIBITS
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. Incorporated by Reference |
||||||||||||||||||||||
Exhibit Number |
Exhibit Description |
Form |
File No. |
Exhibit |
Filing Date |
Filed Herewith |
||||||||||||||||
| 31.1 | Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer | X | ||||||||||||||||||||
| 31.2 | Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer | X | ||||||||||||||||||||
| 32.1# | 18 U.S.C. Section 1350 Certification of Chief Executive Officer, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | X | ||||||||||||||||||||
| 32.2# | 18 U.S.C. Section 1350 Certification of Chief Financial Officer, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | X | ||||||||||||||||||||
| 101.INS | Inline XBRL Instance Document* | X | ||||||||||||||||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document* | X | ||||||||||||||||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document* | X | ||||||||||||||||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document* | X | ||||||||||||||||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document* | X | ||||||||||||||||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definitions Linkbase Document* | X | ||||||||||||||||||||
| 104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). | |||||||||||||||||||||
| # | The information in Exhibits 32.1 and 32.2 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall they be deemed incorporated by reference in any filing under the Securities Act or the Exchange Act (including this Quarterly Report), unless the Registrant specifically incorporates the foregoing information into those documents by reference. |
| * | In accordance with Rule 402 of Regulation S-T, this interactive data file is deemed not filed or part of this Quarterly Report for purposes of Sections 11 or 12 of the Securities Act or Section 18 of the Exchange Act and otherwise is not subject to liability under these sections. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Quarterly Report to be signed on its behalf by the undersigned, thereunto duly authorized.
Envirotech Vehicles, Inc. | ||||||
| Date: November 12, 2021 | By: | /s/ Phillip W. Oldridge | ||||
| Phillip W. Oldridge Chief Executive Officer (Principal Executive Officer) | ||||||
| Date: November 12, 2021 | By: | /s/ Michael K. Menerey | ||||
| Michael K. Menerey Chief Financial Officer (Principal Financial and Accounting Officer) | ||||||
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