What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2024-03-28 compared with 2023-09-25 · 437 added, 667 removed, 278 unchanged (80% of the section changed)

1 unchanged sentence

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm  

Barton CPA PLLC (PCAOB Firm ID 6968 )

Report of Independent Registered Public Accounting Firm  MaloneBailey, LLP (PCAOB Firm ID 206) 51

Report of Independent Registered Public Accounting Firm Barton CPA PLLC (PCAOB Firm ID 6968 )

Consolidated Balance Sheets as of December 31, 2023 and 2022

Consolidated Statements of Operations for the years ended December 31, 2023 and 2022

Consolidated Statements of Stockholders’ Equity (Deficit) for the years ended December 31, 2022 and 2021

Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2023 and 2022

Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022

1 unchanged sentence

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of Envirotech Vehicles, Inc.

Osceola, Arkansas

Certified Public Accountants and Advisors

A PCAOB Registered Firm

817-721-0341 bartoncpafirm.com Cypress, Texas

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders

Envirotech Vehicles, Inc.

and its Subsidiaries

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheet of Envirotech Vehicles, Inc.

and its subsidiaries (collectively, the “Company”) as of December 31, 2022, and the related consolidated statements of operations, stockholders’

equity, and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

We have audited the accompanying consolidated balance sheets of Envirotech Vehicles, Inc.

and its Subsidiaries as of December 31, 2023 and 2022, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the year then ended, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of Envirotech Vehicles, Inc.

and its Subsidiaries as of December 31, 2023 and 2022, and the results of its operations and its cash flows for the year ended December 31, 2023 and 2022, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

The consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

These consolidated financial statements are the responsibility of the entity’s management.

Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to Envirotech Vehicles, Inc.

and its Subsidiaries in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Envirotech Vehicles, Inc.

and its Subsidiaries is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provides a reasonable basis for our opinion.

/s/ Barton CPA, PLLC

www.bartoncpafirm.com

We have served as the Company’s auditor since 2023.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

Critical audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Valuation of Goodwill

Description of the Matter:

As of December 31, 2023, the Company’s goodwill was $9,583,836.

As disclosed in Note 2 to the consolidated financial statements, goodwill is tested for impairment at least annually at the reporting unit level.

For a reporting unit in which the Company concludes, based on the qualitative assessment, that it is more likely than not that the fair value of the reporting unit is less than its carrying amount (or if the Company elects to skip the optional qualitative assessment), the Company is required to perform a quantitative impairment test, which includes measuring the fair value of the reporting unit and comparing it to the reporting unit’s carrying amount.

In the year ended December 31, 2023, the Company recorded a goodwill impairment charge of $5,098,784 as disclosed in Note 2 to the consolidated financial statements.

Auditing management’s quantitative impairment test for goodwill was complex and judgmental due to the significant estimation required to determine the fair value of a reporting unit.

In particular, the fair value estimate was sensitive to significant assumptions, such as changes in the weighted average costs of capital, revenue growth rates, operating margins, working capital and terminal value, which are affected by expectations about future market or economic conditions.

How We Addressed the Matter in Our Audit:

We performed substantive procedures which included, among others, (i) testing management’s process for estimating the fair value of the reporting units;

(ii) testing the completeness, accuracy and relevance of the data used in estimating the fair value of the reporting units;

and (iii) evaluating the reasonableness of the significant assumptions used by management.

We have served as Envirotech Vehicles, Inc.

and its Subsidiaries’ auditor since 2023.

Cypress, Texas

September 25, 2023

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of

Envirotech Vehicles, Inc.

Osceola, Arkansas

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Envirotech Vehicles, Inc.

and its subsidiaries (collectively, the “Company”) as of December 31, 2021, and the related consolidated statements of operations, stockholders’

equity, and cash flows for the year then ended, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021, and the results of their operations and their cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audit.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

/s/ MaloneBailey, LLP

www.malonebailey.com

We served as the Company’s auditor from 2021 to 2023.

Houston, Texas

April 26, 2022

March 28, 2024

ENVIROTECH VEHICLES, INC.

3 unchanged sentences

Cash and cash equivalents

$ 2,765,068  

$ 4,846,490  

$ 456,719 $ 2,765,068

Restricted cash

60,399  

60,035  

Marketable securities

2,336,402  

8,002,700  

Accounts receivable, net of allowance of $ 20,929 and $ 271,218 , respectively,

2,073,691  

1,428,030  

692,102 2,073,691

Inventory, net

5,671,326  

3,850,541  

6,830,593 5,671,326

Inventory deposits

4,829,933  

4,503,079  

3,300,388 4,829,933

Prepaid expenses

445,963  

332,514  

614,238 445,963

Other current assets

156,457  

162,119 156,457

Total current assets

18,339,239  

23,023,389  

12,056,159 18,339,239

Property and equipment, net

368,461  

272,113  

14,682,620  

51,775,667  

320,687 368,461

Right-of-use asset

9,583,836 14,682,620

Other non-current assets

93,369  

236,639  

$ 33,483,689  

$ 75,307,808  

LIABILITIES AND STOCKHOLDERS’

EQUITY (DEFICIT)

153,555 93,369

$ 22,653,169 $ 33,483,689

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

Current liabilities:

Accounts payable

$ 603,744  

$ 238,464  

$ 760,802 $ 603,744

Accrued liabilities

652,528  

1,280,020  

452,236 652,528

Operating lease liability - short-term

Notes payable - current

215,766  

31,788  

269,245 215,766

Total current liabilities

1,472,038  

1,550,272  

1,773,546 1,472,038

Long-term liabilities

Other non-current liabilities

Operating lease liability - long-term

Notes payable - long-term

16,671  

13,245  

10,420 16,671

Total liabilities

1,488,709  

1,565,944  

Stockholders’

2,019,591 1,488,709

Stockholders’ equity:

Preferred stock, 5,000,000 authorized, $ 0.00001 par value per share, none issued and outstanding as of December 31, 2023 and 2022

1 unchanged sentence

Additional paid-in capital

83,923,350  

81,866,075  

85,245,925 83,923,350

Accumulated deficit

( 51,928,520 )  

( 64,612,499 ) ( 51,928,520 )

Total stockholders’

31,994,980  

73,741,864  

Total liabilities and stockholders’

$ 33,483,689  

$ 75,307,808  

Total stockholders’ equity

20,633,578 31,994,980

Total liabilities and stockholders’ equity

$ 22,653,169 $ 33,483,689

See accompanying notes to consolidated financial statements.

3 unchanged sentences

Year Ended December 31,

$ 2,862,853 $ 4,504,621

Cost of sales

1,857,273 2,772,673

1,005,580 1,731,948

Operating expenses:

General and administrative

8,171,344 7,996,906

213,930 339,505

Research and development

236,181 149,912

Goodwill impairment charge

5,098,784 37,093,047

Total operating expenses, net

13,720,239 45,579,370

Loss from operations

( 12,714,659 ) ( 43,847,422 )

Other income (expense):

Interest income, net

34,835 45,026

Other (expense) income, net

( 4,155 ) ( 1,764 )

Total other income

30,680 43,262

Loss before income taxes

( 12,683,979 ) ( 43,804,160 )

Income tax expense

$ ( 12,683,979 ) $ ( 43,804,160 )

Net loss per share to common stockholders:

Basic and diluted

$ ( 0.84 ) $ ( 2.92 )

Weighted shares used in the computation of net loss per share:

Basic and diluted

15,061,945 14,991,837

See accompanying notes to consolidated financial statements.

1 unchanged sentence

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS ’

Stockholders’

Balance, December 31, 2020

EVTDS common stock issued for cash

common stock issued in Merger

Post-Merger common stock issued for cash

Offering costs netted against proceeds from common stock issued for cash

Stock based compensation

CONSOLIDATED STATEMENTS OF STOCKHOLDERS ’ EQUITY

Stockholders’

Balance, December 31, 2021

14,912,189 $ 149 $ 81,866,075 $ ( 8,124,360 ) $ 73,741,864

Common stock issued for cash

50,000 1 119,999 — 120,000

Common stock issued for litigation settlements accrued in 2021

58,899 — 322,431 — 322,431

Stock based compensation

— — 1,614,845 — 1,614,845

— — — ( 43,804,160 ) ( 43,804,160 )

Balance, December 31, 2022

15,021,088 $ 150 $ 83,923,350 $ ( 51,928,520 ) $ 31,994,980

Common stock issued for services rendered by external parties

150,660 2 99,998 — 100,000

Unearned compensation issued to external party

— — ( 100,000 ) — ( 100,000 )

Stock based compensation

— — 1,322,577 — 1,322,577

— — — ( 12,683,979 ) ( 12,683,979 )

Balance, December 31, 2023

15,171,748 $ 152 $ 85,245,925 $ ( 64,612,499 ) $ 20,633,578

See accompanying notes to consolidated financial statements.

4 unchanged sentences

Cash flows from operating activities:

$ ( 12,683,979 ) $ ( 43,804,160 )

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

128,801 97,242

Provision for bad debt

20,929 245,219

Stock based compensation expense

1,322,577 1,614,845

Goodwill impairment charge

Gain on debt forgiveness

5,098,784 37,093,047

9,904 ( 10,004 )

Changes in assets and liabilities:

Accounts receivable

1,360,660 ( 890,880 )

( 1,159,267 ) ( 1,820,785 )

Inventory deposits

1,529,545 ( 326,854 )

Prepaid expenses

298,798 325,638

Other current assets

( 21,806 ) ( 156,457 )

Other non-current assets

( 72,230 ) 143,270

Accounts payable

111,838 365,284

Accrued liabilities

( 189,654 ) ( 305,065 )

Other non-current liabilities

Net cash used in operating activities

( 4,245,100 ) ( 7,432,087 )

Cash flows from investing activities:

Purchase of property and equipment, net

( 35,810 ) ( 168,583 )

Purchases of marketable securities

— ( 3,942,940 )

Proceeds from sales and maturities of marketable securities

Cash acquired in merger

Net cash provided by (used in) investing activities

2,342,643 9,619,242

Net cash provided by investing activities

2,306,833 5,507,719

Cash flows from financing activities:

Proceeds from issuance of common stock

Payments for deferred offering costs

Principal advances from (repayments on) debt

Net cash (used in) provided by financing activities

Principal repayments on debt

( 430,481 ) ( 276,690 )

Net cash used in financing activities

( 430,481 ) ( 156,690 )

Net change in cash, restricted cash and cash equivalents

( 2,368,748 ) ( 2,081,058 )

Cash, restricted cash and cash equivalents at the beginning of the period

2,825,467 4,906,525

Cash, restricted cash and cash equivalents at the end of the period

$ 456,719 $ 2,825,467

Supplemental cash flow disclosures:

Cash paid for interest expense

Cash paid for income taxes

$ 14,997 $ 16,338

Non-cash investing and financing activities:

Common stock issued in litigation settlements accrued in 2022

Common stock issued in litigation settlements accrued in previous years

$ — $ 322,431

Common stock issued for services rendered

Notes payable issued to finance prepaid insurance

$ 467,074 $ 439,087

Notes payable issued to finance purchase of property and equipment

5 unchanged sentences

Envirotech Vehicles, Inc.

(“we,”

“us,”

“our”

or the “Company”) is 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,” “us,” “our” or the “Company”) is 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.

The Company serves 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.

The Company’s vehicles address the challenges of traditional fuel price cost instability and local, state and federal regulatory compliance.

On March 15, 2021, the Company completed its acquisition of Envirotech Drive Systems, Inc., a Delaware corporation (“EVTDS”), a supplier of zero -emission trucks, cargo vans, chassis and 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 - Merger.

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.

On February 22, 2022, the Company announced Osceola, Arkansas, as the site of its state-of-the-art manufacturing facility and new corporate offices.

The Company has moved into an approximately 587,000 square foot facility.

The Company’s vehicles address the challenges of traditional fuel price cost instability and local, state and federal regulatory compliance.

On June 28, 2022, we effected a 1 -for- 20 reverse stock split of our common stock with no change to authorized shares of common stock.

All share, restricted stock unit (“RSU”), and per share or per RSU information through this Annual Report on Form 10 -K has been retroactively adjusted to reflect the stock split.

The shares of common stock retain a par value of $ 0.00001 per share.

Accordingly, an amount equal to the par value of the decreased shares resulting from the reverse stock split was reclassified from “Common stock”

to “Additional paid-in capital.”

Accordingly, an amount equal to the par value of the decreased shares resulting from the reverse stock split was reclassified from “Common stock” to “Additional paid-in capital.”

On March 30 2023, the Company entered into an agreement with Berthaphil, Inc.

("Berthaphil") to sublease approximately 3,600 square yards of a warehouse building based in the Clark Freeport Zone in the Philippines.

The term of the lease is two years and two months with a turnover date of July 1, 2023 ( "turnover date") and a rental commencement date of September 1, 2023.

The Company intends to use the leased space as a production facility as it seeks to expand its business presence both in the region and the United States.

Summary of Significant Accounting Policies

Basis of Presentation —The consolidated financial statements and related disclosures as of December 31, 2022 include the Consolidated Balance Sheet of Envirotech Vehicles, Inc.

(formerly ADOMANI, Inc.) and subsidiaries, including EVTDS (see Note 3 - Merger), and for the fiscal period ended December 31, 2022 , include the Consolidated Results of Operations of Envirotech Vehicles, Inc.

(formerly ADOMANI, Inc.) and EVTDS for the entire annual period.

The consolidated financial statements and related disclosures as of 

December 31, 2021 include the Consolidated Balance Sheet of Envirotech Vehicles, Inc.

(formerly ADOMANI, Inc.) and its subsidiaries, including EVTDS.

The Consolidated Results of Operations for the fiscal period ended December 31, 2021 , include the results of operations of EVTDS for the entire annual period and include the consolidated results of operations of Envirotech Vehicles, Inc.

(formerly ADOMANI, Inc.) and its subsidiaries for the post-merger period March 16, 2021 through December 31, 2021.

Principles of Consolidation —The accompanying financial statements reflect the consolidation of the financial statements of EVTDS, its wholly-owned subsidiary Envirotech Drive Systems, Incorporated, and, from March 16, 2021 forward, the financial statements of Envirotech Vehicles, Inc., ADOMANI California, Inc., Adomani (Nantong) Automotive Technology Co.

(dissolved in December, 2021), ADOMANI ZEV Sales, Inc., Zero Emission Truck and Bus Sales of Arizona, Inc., and ZEV Resources, Inc.

Basis of Presentation —The accounting and reporting policies of the Company conform with generally accepted accounting principles in the United States (“GAAP”).

Principles of Consolidation —The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries.

All significant intercompany accounts and transactions have been eliminated.

Use of Estimates —The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.

Actual results could differ from those estimates.

Fair Value of Financial Instruments —The carrying values of the Company’s financial instruments, including cash and cash equivalents, restricted cash, accounts receivable and accounts payable approximate their fair value due to the short-term nature of these financial instruments.

Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) No.

820, “Fair Value Measurement”

defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

Accounting Standards Codification (“ASC”) 820, Fair Value Measurement ("ASC 820" ) 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:

3 unchanged sentences

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

Revenue Recognition —The Company recognizes revenue from the sales of 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.

For the year ended December 31, 2022 , three  customers accounted for approximately 43  percent of the annual revenue recorded.

At December 31, 2021, the Company did have a concentration of customers;

four customers’

balances account for approximately 81 percent of the outstanding accounts receivable;

for the year ended December 31, 2021, four customers accounted for approximately 63 percent of the annual revenue recorded.

In applying ASC Topic 606, the Company is required to:

Revenue Recognition —The Company recognizes revenue from the sales of zero -emission electric vehicles and vehicle maintenance and inspection services.

The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers ("ASC 606" ), 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.

For the year ended December 31, 2023 , eight customers accounted for approximately 75 percent of the annual revenue recorded.

At December 31, 2022 , three customers accounted for approximately 43 percent of the annual revenue recorded.

The Company had accounts receivable, net of $ 692,102 and $ 2,073,691 on December 31, 2023 and December 31, 2022, respectively.

In applying ASC 606, the Company is required to:

identify any contracts with customers;

7 unchanged sentences

At this time, the title of the vehicle is transferred to the customer.

The Company provides the option of financing (flooring) to Factory Authorized Representatives (“FARs”) for demo vehicles that are used in their selling process.

Flooring agreements are made either expressly or implicitly and last no longer than one year with respect to specific vehicles, as payment for the vehicles is due in full before the first anniversary of the agreement, or upon sale by the FAR of the demo vehicle.

1 unchanged sentence

The Company has elected the practical expedient allowed by ASC Topic 606 where consideration does not need to be adjusted for financing components of the agreement.

Other revenue for the year ended December 31, 2021 included performing basic vehicle maintenance and detailing, as well as safety inspections for compliance with United States Department of Transportation guidelines.

Other revenue for the years ended December 31, 2023 and December 31, 2022 were $ 29,605 and $ 36,320 respectively, and primarily included safety inspection and document fees 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.

These sales were approximately $ 118,000 for the year ended December 31, 2021 , and did not recur in 2022 .

The Company has therefore not provided any additional disaggregation information, as all other revenue relates to the sale of vehicles as discussed above.

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

The recorded value of our restricted cash and cash equivalents approximates their fair value.

Restricted Cash —The Company classifies certain bank balances as restricted cash as these balances are required to support certain minor activities.

See Concentration of Credit Risk below in this Note.

The Company had $ 60,399 and $ 60,035 of restricted cash at December 31, 2022 and December 

31, 2021, respectively.

Short-term Investments —The Company invests in short-term, highly liquid, marketable securities, such as U.S.

The Company had $ 0 and $ 60,399 of restricted cash at December 31, 2023 and December 31, 2022 , respectively.

Short-term Investments —The Company invests in short-term, highly liquid, marketable securities, such as U.S.

Treasury notes, U.S.

1 unchanged sentence

The Company also invests in bank certificates of deposit.

The Company classifies these short-term investments as held-to-maturity, as the intent is not to liquidate them prior to the respective stated maturity date. These securities had original maturity dates ranging from 158 days to 200 days, and at December 31, 2022 , the remaining maturity dates on these securities ranged from 1 day to 90 days. At December 

31, 2021, the aggregate amount of the Company’s investments in marketable securities was $ 8,002,700 .

These securities had original maturity dates ranging from 

143  days to 

364  days, and at December 31, 2021, the remaining maturity dates on these securities ranged from 

13  days to 

167  days.

Accounts Receivable and Allowance for Doubtful Accounts —The Company establishes an allowance for doubtful accounts through a review of several factors including historical collection experience, current aging status of the customer accounts, and financial condition of its customers.

The Company does not generally require collateral for its accounts receivable. A significant portion of the Company’s sales are made to customers who qualify for state-sponsored grant programs which can cover a significant portion, up to most of, a vehicle’s purchase price.

The Company classifies these short-term investments as held-to-maturity, as the intent is not to liquidate them prior to the respective stated maturity date.

These securities had original maturity dates ranging from 158 days to 200 days, and at December 31, 2023 , the Company had $ 0 investments in such securities.

At December 31, 2022 , the aggregate amount of the Company’s investments in marketable securities was $2,336,402.

These securities had original maturity dates ranging from 143 days to 364 days, and at December 31, 2022 , the remaining maturity dates on these securities ranged from 1 to 90 days.

The Company does not generally require collateral for its accounts receivable.

A significant portion of the Company’s sales are made to customers who qualify for state-sponsored grant programs which can cover a significant portion, up to most of, a vehicle’s purchase price.

Grant monies are paid directly to vehicle dealers like the Company after the customer and the dealer meet state requirements related to the transaction;

reimbursements to the dealer may take two to nine months from the date of request before being received.

The Company does not provide an allowance for doubtful accounts related to sales made utilizing state grant funds, as those funds are guaranteed by the state(s) once awarded.

The Company had trade accounts receivable of $ 2,344,909 and an allowance for doubtful accounts of $ 271,218 at December 31, 2022.

The Company had trade accounts receivable of $ 1,428,030 as of December 31, 2021 with no allowance for bad debt.

The trade accounts receivable balance at December 31, 2022 is primarily from credit-worthy customers many of whom are fully or partially funded through state government sponsored programs and the December 31, 2021 balance was in the collection process for guaranteed state grant funding subsequent to that date.

The Company estimates its allowance for doubtful accounts using an aging schedule, including a review of customers who may have a likelihood of default.

A percentage is applied to the respective portfolio of customers which are grouped by how long their balance has been outstanding.

This percentage represents an estimate of credit losses for the remaining estimated life of the accounts receivable balances and is estimated using historical experience, current conditions and reasonable and supportable forecasts that generally applies to accounts receivables, which are measured at amortized costs.

The Company had trade accounts receivable of $ 713,031 and an allowance for doubtful accounts of $ 20,929 at December 31, 2023 .

The Company had trade accounts receivable of $ 2,344,909 and an allowance for doubtful accounts of $ 271,218 as of December 31, 2022 .

The Company did have a concentration of customers:

three customers’

balances account for approximately 37  percent of the outstanding accounts receivable;

for the year ended December 31, 2022 , At December 31, 2021, four customers’

balances account for approximately 81 percent of the outstanding accounts receivable;

for the year ended December 31, 2021, four customers accounted for approximately 63 percent of the annual revenue recorded.

Inventory and Inventory Valuation Allowance —The Company records inventory at the lower of cost or net realizable value, uses a First In, First Out (“FIFO”) accounting valuation methodology and establishes an inventory valuation allowance for vehicles that it does not intend to sell in the future.

The Company had finished goods inventory on hand of $ 5,683,755  as of December 31, 2022 and recorded an inventory valuation allowance of $ 12,429 related to three vehicles that the Company does not intend to support in the future, resulting in a net inventory balance of $ 5,671,326  at 

December 31, 2022 .

The Company had finished goods inventory on hand of $ 3,862,970 as of 

December 31, 2021 and recorded an inventory ,valuation allowance of $ 12,429 resulting in a net inventory balance of $ 3,850,541 as of December 31, 2021 .

Inventory Deposits —Certain of our vendors require the Company to pay upfront deposits before they will commence manufacturing our vehicles, and then require progress deposits through the production cycle and before the finished vehicles are shipped.

four customers’ balances account for approximately 90 percent of the outstanding accounts receivable for the year ended December 31, 2023 .

If the Company is unable to collect from these customers, the Company's write-offs will significantly increase and the write-offs may have a material adverse impact on the Company's financial condition.

However, the Company does not believe the receivables balance from these customers represents a significant risk based on past collection experience.

At December 31, 2022 , three customers’ balances account for approximately 37 percent of the outstanding accounts receivable;

for the year ended December 31, 2022

The Company had finished goods inventory on hand of $ 6,843,022 as of December 31, 2023 and recorded an inventory valuation allowance of $ 12,429 related to three vehicles that the Company does not intend to support in the future, resulting in a net inventory balance of $ 6,830,593 at December 31, 2023 .

The Company had finished goods inventory on hand of $ 5,683,755 as of December 31, 2022 and recorded an inventory valuation allowance of $ 12,429 resulting in a net inventory balance of $5,671,326 as of December 31, 2022 .

These deposits are classified as inventory deposits in the Consolidated Balance Sheets.

Upon completion of production, acceptance by the Company, and passage of title to the Company, deposits are reclassified to inventory. Deposits paid to three vendors accounted for 70 percent of the deposits outstanding at December 31, 2022 .

Inventory deposits made in 2021 accounted for $ 2,731,294 of the balance outstanding at December 31, 2022 .

The Company had inventory deposits of $ 4,829,933  and $ 4,503,079 as of December 31, 2022 and December 31, 2021, respectively.

Deposits paid to two vendors accounted for 

96  percent of the deposits outstanding at December 31, 2021;

one different vendor with an affiliation to the two vendors just mentioned accounted for approximately 

85  percent of the cost of sales for the year ended December 31, 2021.

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

EVTDS previously recorded deferred tax benefits from net operating losses in current and prior periods.

Upon completion of production, acceptance by the Company, and passage of title to the Company, deposits are reclassified to inventory.

The Company had inventory deposits of $ 3,300,388 and $ 4,829,933 as of December 31, 2023 and December 31, 2022 , respectively.

Deposits paid to one vendor accounted for 99 percent of the deposits outstanding at December 31, 2023 .

Deposits paid to three vendors accounted for 70 percent of the deposits outstanding at December 31, 2022.

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

Envirotech Drive Systems, Inc.

("EVT") 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 December 31, 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 year ended December 31, 2021 .

A full valuation allowance is also recorded at December 31, 2022.

Accounting for Uncertainty in Income Taxes —The Company evaluates its uncertain tax positions and will recognize a loss contingency when it is probable that a liability has been incurred as of the date of the financial statements and the amount of the loss can be reasonably estimated.

A full valuation allowance is recorded at December 31, 2023 and December 31, 2022.

The amount recognized is subject to estimate and management judgment with respect to the likely outcome of each uncertain tax position.

1 unchanged sentence

At December 31, 2023 and 2022 , respectively, management did not identify any uncertain tax positions.

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

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

The diluted weighted average number of shares of common stock outstanding is the basic weighted number of shares of common stock adjusted for any potentially dilutive debt or equity securities.

As of December 31, 2022 , 608,266 shares of the Company’s common stock were subject to issuance upon the exercise of stock options then outstanding and 1,402,417 shares of the Company’s common stock were subject to issuance upon the exercise of warrants then outstanding.

As of December 31, 2021 , 338,500 shares of the Company’s common stock were subject to issuance upon the exercise of stock options then outstanding and 1,429,900 shares of the Company’s common stock were subject to issuance upon the exercise of warrants then outstanding.

As of December 31, 2023 , 1,207,888 shares of the Company’s common stock were subject to issuance upon the exercise of stock options then outstanding and 1,389,584 shares of the Company’s common stock were subject to issuance upon the exercise of warrants then outstanding.

As of December 31, 2022 , 608,266 shares of the Company’s common stock were subject to issuance upon the exercise of stock options then outstanding and 1,4202,417 shares of the Company’s common stock were subject to issuance upon the exercise of warrants then outstanding.

Stock options and warrants were not included in the diluted weighted average number of shares outstanding for the years ended December 31, 2023 and 2022 , as the effect would be anti-dilutive.

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 Arvest Bank, National Association (“Arvest”).

Between FDIC and the Securities Investor Protection Corporation (“SIPC”) coverage, funds up to $ 750,000 , which may include cash up to $ 500,000 , are insured.

In addition, Arvest provides excess insurance acquired by them from SIPC for unlimited per customer securities up to a $ 1 billion cap.

The Company’s bank requires compensating balances, which are reported as Restricted Cash on the Company's Consolidated Balance Sheets as disclosed above, for a subsidiary’s potential lease exposure and for the Company’s credit card limit, resulting in restricted cash of $ 60,399 and approximately $ 60,000  at December 31, 2022 and 2021 , respectively.

Impairment of Long-Lived Assets —Long-lived assets, including property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Between FDIC and the Securities Investor Protection Corporation (“SIPC”) coverage, funds up to $ 750,000 , which may include cash up to $ 500,000 , are insured.

The Company’s bank requires compensating balances, which are reported as Restricted Cash on the Company's Consolidated Balance Sheets as disclosed above, for a subsidiary’s potential lease exposure and for the Company’s credit card limit, resulting in restricted cash of $ 0 and approximately $ 60,399 at December 31, 2023 and 2022 , respectively.

The Company evaluates these assets to determine potential impairment by comparing the carrying amount to the undiscounted estimated future cash flows of the related assets.

If the estimated undiscounted cash flows are less than the carrying value of the assets, the assets are written down to their fair value.

There was no impairment of long-lived assets, or property and equipment, as of 

December 31, 2022 and December 31, 2021 , respectively.

Goodwill —Goodwill represents the excess of acquisition cost over the fair value of the net tangible and intangible assets acquired.

There was no impairment of long-lived assets, or property and equipment, as of December 31, 2023 and December 31, 2022 , respectively.

Goodwill —Goodwill represents the excess of acquisition cost over the fair value of the net tangible and intangible assets acquired.

Goodwill is not amortized and is subject to annual impairment testing on or between annual tests if an event or change in circumstance occurs that would more likely than not reduce the fair value of a reporting unit below its carrying value.

4 unchanged sentences

The Company has determined that it has one reporting unit.

Based on the annual impairment test, which predominantly utilized the Company's quoted market price and the number of outstanding shares toward the end of the fourth quarter of 2022 as inputs, the Company recorded a non-cash goodwill impairment charge of $37,093,047  as of December 31, 2022 .

See Note 3 - Merger.

Research and Development ("R&D") —Costs incurred in connection with the development of new products and manufacturing methods are charged to operating expenses as incurred.

In 2023, the Company conducted two impairment test:

( 1 ) due to a triggering event that occurred during the quarter of 2023 and ( 2 ) the annual impairment test.

Based on the impairment tests, which predominantly utilized the Company's quoted market price and the number of outstanding shares at the end of the periods as inputs, the Company recorded a non-cash goodwill impairment charge of $ 5,098,784 and $ 37,093,047 as of December 31, 2023 and December 31, 2022, respectively.

See Note 3 - Goodwill.

Research and Development ("R&D") —Costs incurred in connection with the development of new products and manufacturing methods are charged to operating expenses as incurred.

R&D expenses were $ 236,181 and $ 149,912 for the years ended December 31, 2023 and December 31, 2022 , respectively.

Stock-Based Compensation —The Company accounts for employee stock-based compensation in accordance with the guidance of FASB ASC Topic 718, “Compensation-Stock Compensation”, which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their grant date fair values using the Black-Scholes option pricing model and is recognized as compensation expense ratably over the requisite service period, which is generally the option or warrant vesting period.

With respect to options to purchase 340,893 shares of common stock issued on January 7, 2022 and options to purchase 3,874 shares of common stock issued on January 31, 2022 ( see Note 9 - Stock Options), the Company recorded non-cash stock-based compensation expense of $ 1,614,845 for the year ended December 31, 2022 .

With respect to the options to purchase 22,000 shares of common stock issued on August 4, 2021 ( see Note 9 - Stock Options), non-cash stock-based compensation expense was $ 121,132 for the year ended December 31, 2021 .

An additional $ 3,293,308 was recorded related to the value of certain options assumed by the merged entity, bringing the total amount recorded for the year ended December 31, 2021 to $3,414,440.

Property and Equipment —Property and equipment are stated at cost, less accumulated depreciation and amortization.

The Company provides for depreciation using the straight-line method over the estimated useful lives of the assets, which range from three to five years, except leasehold improvements, which are being amortized over the shorter of its useful life or the lease term.

Stock-Based Compensation —The Company accounts for employee stock-based compensation in accordance with the guidance of FASB ASC 718, Compensation-Stock Compensation ("ASC 718" ), which requires all share-based payments to employees, including grants of employee stock options and restricted shares and stock options to external consultants, to be recognized in the financial statements based on their grant date fair values using the Black-Scholes option pricing model for stock options and the closing market price on the date of the award for restricted shares and are recognized as compensation expense ratably over the requisite service period, which is generally the awards' vesting period.

The Company recorded non-cash stock-based compensation expense of $ 1,322,577 and $ 1,614,845 for the years ended December 31, 2023 and December 31, 2022, respectively.

Property and Equipment —Property and equipment are stated at cost, less accumulated depreciation and amortization.

Major repairs and replacements, which extend the useful lives of equipment, are capitalized and depreciated over the estimated useful lives of the property.

All other maintenance and repairs are expensed as incurred.

Leases —The Company accounts for leases as required by ASC Topic 842 - Leases.

The guidance requires companies to recognize leased assets and liabilities on the balance sheet and to disclose key information regarding leasing arrangements.

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

On March 15, 2021, the Company completed its acquisition of EVTDS, a supplier of zero -emission trucks, cargo vans, chassis and other commercial vehicles.

The transaction was completed in accordance with the Merger Agreement, by and among the Company, EVTDS and Merger Sub.

As a result of such transaction, Merger Sub was merged with and into EVTDS, with EVTDS surviving as 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 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 7,129,887 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.

(formerly ADOMANI, Inc.) and subsidiaries from March 16, 2021 forward.

The primary reasons EVTDS consummated the merger with ADOMANI, Inc.

were the opportunity to immediately become a public company without the process of doing its own initial public offering, affording it the opportunity to more quickly raise capital (see Note 7 - Common Stock) and provide liquidity options to its stockholders, at the same time acquiring the infrastructure required of a public company run by people experienced in investor relations and the public company regulatory compliance issues and filings required.

In addition, since ADOMANI, Inc.

had been the sole customer of EVTDS, the two management teams had experience working with each other and anticipated a smooth transition in addition to obtaining synergies, chief of which was a layer of profit required when two  separate entities were involved in making and selling a vehicle that was immediately eliminated upon the Merger close, enabling the purchase price of vehicles to customers to be reduced.

The combined entity also was able to exert more pressure on suppliers to reduce vehicle costs, which also supported the price reductions to customers.

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 $ 6,415,110 .

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.

This number has decreased to zero in both categories as of December 31, 2021.

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

$ 1,680,926  

Property and equipment

86,873  

Right of use asset

369,987  

59,510  

51,775,667  

Accounts payable and accrued expenses

Lease liability

Notes payable

Purchase price, net of $3,373,332 cash acquired

$ 52,365,047  

This allocation is based on management’s estimated fair value of the ADOMANI Inc.

assets and liabilities at March 15, 2021.

ADOMANI, Inc.

assets were derived from a total value of $ 53,509,622 , based on 5,635,247 shares of common stock outstanding on March 15, 2021 and the closing price that day of $ 9.498 per share.

The fair value of certain of the stock options assumed by EVTDS in the Merger of $ 2,228,757 (see Note 9 - Stock Options) was added to reach an adjusted value of $ 55,738,379 .

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, in order to arrive at the $ 51,775,667 of goodwill recorded, none of which will be deductible for future income tax purposes.

The Company incurred approximately $ 415,472 in transaction costs related to the Merger, which were expensed.

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 11 - Commitments and 13 - Leases), 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.

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, 2021.

The pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of the results of operations for the year ended December 31, 2021 that would have been realized if the Merger had occurred on 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.

For the year ended December 31,

Pro forma combined results of operations

$ 1,740,255  

$ ( 10,296,024 )

The adjustments for the year ended December 31, 2021 resulted in a reduction of sales of $ 319,000 and a $ 91,800 increase in net loss.

The sales adjustment 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 the year ended December 31, 2021 by approximately $ 1,826,623 more than would otherwise have been recorded absent the consummation of the Merger.

Leases —The Company accounts for leases in accordance with ASC 842, Leases (“ASC 842” ).

At the inception or modification of a contract, the Company determines whether a lease exists and classifies its leases as an operating or finance lease at commencement.

Right-of-use ("ROU") assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent their obligation to make lease payments arising from the lease.

See Note 13 - Leases.

As most of the Company’s leases do not provide an implicit interest rate, the lease liability is calculated at lease commencement as the present value of unpaid lease payments using the Company’s estimated incremental borrowing rate.

The incremental borrowing rate represents the rate of interest that the Company would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term and is determined using a portfolio approach based on information available at the commencement date of the lease.

The lease asset also reflects any prepaid rent, initial direct costs incurred and lease incentives received.

The Company’s lease terms may include optional extension periods when it is reasonably certain that those options will be exercised.

Leases with an initial expected term of 12 months or less are not recorded in the Balance Sheet and the related lease expense is recognized on a straight-line basis over the lease term.

For certain classes of underlying assets, the Company has elected to not separate fixed lease components from the fixed non-lease components.

Recent Accounting Pronouncements—Currently Adopted

On January 1, 2023, the Company adopted Accounting Standards Update (“ASU”) 2016 - 13 Financial Instruments – Credit Losses (Topic 326 ):

Measurement of Credit Losses on Financial Instruments (“ASC 326” ).

This standard replaced the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology.

CECL requires an estimate of credit losses for the remaining estimated life of the financial asset using historical experience, current conditions, and reasonable and supportable forecasts and generally applies to financial assets measured at amortized cost, such as accounts receivable.

The adoption of ASU 2016 - 13 did not have a material impact on the Company’s consolidated financial statements.

The Company conducted two impairment tests in 2023:

( 1 ) during the first quarter when a triggering event occurred and ( 2 ) at year-end during its annual impairment test.

in accordance with ASC 350 - 20, Goodwill .

The Company conducted its annual impairment test in 2022.

As a result of these tests, the Company recorded goodwill impairment charges of $ 5,098,784 and $ 37,093,047 for the years ended December 31, 2023 and December 31, 2022, respectively.

The following table presents a reconciliation of the carrying amount of goodwill for the year ended December 31, 2023 :

Goodwill, December 31, 2021

$ 51,775,667  

Goodwill impairment charge

Balance at January 1, 2022

Impairment charge

( 37,093,047 )

Goodwill, December 31, 2022

$ 14,682,620  

Balance at December 31, 2022

Goodwill impairment charge ( 5,098,784 )

Balance at December 31, 2023 $ 9,583,836

Property and equipment, net

3 unchanged sentences

Furniture and fixtures

$ 56,646  

$ 41,799  

$ 56,646 $ 56,646

Leasehold improvements

122,711  

28,112  

136,847 122,711

Machinery & equipment

165,753  

86,266  

252,724  

172,527 165,753

297,940 252,724

Test/Demo vehicles

15,784  

30,685 15,784

Total property and equipment

613,618  

424,685  

694,645 613,618

Less accumulated depreciation

( 245,157 )  

( 373,958 ) ( 245,157 )

Net property and equipment

$ 368,461  

$ 272,113  

$ 320,687 $ 368,461

Depreciation expense was $ 128,801 and $ 97,242 for the years ended December 31, 2023 and 2022 , respectively.

The cumulative estimated net operating loss (“NOL”) carry-forward is $37,312,984 and $ 31,347,786 at December 31, 2022 and 2021 , respectively.

$22,935,645  of this carry-forward may be carried forward indefinitely while $ 14,377,339  is subject to expiration over a 20 -year period.

EVTDS recognized a cumulative tax benefit of $ 218,300 on its financial statements through the year ended December 31, 2020, and therefore did not reserve the deferred tax asset.

As mentioned in Note 2, that benefit has been reversed and recorded as income tax expense in the consolidated results of operations for the year ended December 31, 2021 , effectively establishing a valuation allowance for it.

The cumulative estimated net operating loss (“NOL”) carry-forward is $ 44,188,133 and $37,312,984 at December 31, 2023 and 2022 , respectively.

$ 29,810,794 of this carry-forward may be carried forward indefinitely while $ 14,377,339 is subject to expiration over a 20 -year period.

Due to the enactment of the Tax Cuts and Jobs Act of 2017, the corporate tax rate for those tax years beginning with 2018 has been reduced to 21%.

Therefore, the cumulative tax effect of the NOL carryforward at the expected rate of 21% comprising the Company’s net deferred tax amount is as follows:

Tax effected net operating loss

$ 1,169,392  

$ 866,991  

$ 1,361,609 $ 1,169,392

Deferred tax asset attributable to:

Net operating loss carryover

6,666,335  

5,716,044  

7,917,898 6,666,335

Research and development tax credit carryforward

274,891  

8,110,618  

6,857,926  

274,891 274,891

9,554,398 8,110,618

Valuation allowance

( 8,110,618 )  

( 9,554,398 ) ( 8,110,618 )

1 unchanged sentence

Cumulative NOL

$ 37,312,984  

$ 31,347,786  

$ 44,188,133 $ 37,312,984

Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carryover for federal income tax reporting purposes are subject to annual limitations.

The net operating loss carry-forward includes the years 2012 through 2022 for the Envirotech Vehicles, Inc./ADOMANI, Inc.

losses, and includes the years 2014 through 2020 for EVTDS, as the 2021 EVTDS loss is included in the consolidated Envirotech Vehicles, Inc.

Because a change in ownership occurred as a result of the Merger, net operating loss carryover will be limited as to use in future years.

Federal tax returns for tax years since 2019  are still open for examination by the Internal Revenue Service.

The net operating loss carry-forward includes the years 2012 through 2022 for the Envirotech Vehicles, Inc losses, and includes the years 2014 through 2020 for EVT, as the 2021 EVT loss is included in the consolidated Envirotech Vehicles, Inc.

Because a change in ownership occurred as a result of the Company’s acquisition of EVT pursuant to a merger of a wholly owned subsidiary of the Company with and into EVT, with EVT surviving the Merger as a wholly-owned subsidiary of the Company, net operating loss carryover will be limited as to use in future years.

Federal tax returns for tax years since 2020 are still open for examination by the Internal Revenue Service.

Notes Payable

2 unchanged sentences

The $ 63,576 loan is payable over twenty-four months, beginning in July 2021, with monthly payments of $ 2,649 .

The balance of this note on 

December 31, 2022 is $ 13,245 and is classified as Notes Payable - Current on the Company's Consolidated Balance Sheets.

The balance of this note is $ 0 and $ 13,245 on December 31, 2023 and December 31, 2022, respectively.

On August 10, 2022, the Company entered into an equipment financing agreement with Wells Fargo in connection with the purchase of facility grounds equipment.

The $ 25,007 loan is payable over 48 months, beginning in August 2022, with monthly payments of $ 521 .

The balance of this note on December 31, 2022 

is $ 22,923 of which $ 6,252 is classified as Notes Payable - current and $ 16,671 is classified as Notes Payable - Long Term on the Company's Consolidated Balance Sheets.

The $ 25,007 loan is payable over 48 months, beginning in August 2022, with required monthly payments of $ 521 .

The balance of this note is $ 16,671 and $ 22,923 on December 31, 2023 and December 31, 2022, respectively.

On December 31, 2023, $ 6,252 is classified as Notes Payable - current and $ 10,420 is classified as Notes Payable - long term on the Company's Consolidated Balance Sheets.

On December 31, 2022, $ 6,252 is classified as Notes Payable - current and $ 16,671 is classified as Notes Payable - long term on the Company's Consolidated Balance Sheets.

Effective August 4, 2022, EVT secured a line of credit from Centennial Bank.

3 unchanged sentences

Borrowings under the line may not exceed cash, cash equivalents, and marketable securities balances up to $ 1,000,000 .

There was no principal amount outstanding on December 31, 2022, and there is no current plan to borrow from it.

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 

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 95 % of such cash, cash equivalents, and marketable securities balances. The maximum amount the Company could borrow at December 

31, 2021, was approximately $ 10.4  million;

there was no principal amount outstanding at that date.

This line is currently closed.

This line of credit was closed during the third quarter of 2023 and there was no amount outstanding at the time of closing.

Effective June 15, 2022, the Company entered into a premium financing agreement with First Insurance Funding to finance certain insurance coverage.

The $ 225,000 loan is payable over nine months, beginning in July 2022, and bears interest at 5.8 % with monthly payments of $ 25,608 .

The balance of this note is $ 76,087 and is classified as Notes Payable - Current on the Company's Consolidated Balance Sheets.

The balance of this note is $ 0 on December 31, 2023.

The balance of this note is $ 76,087 and is classified as Notes Payable - Current on the Company's Consolidated Balance Sheets on December 31, 2022.

Effective August 20, 2022, the Company entered into a second premium financing agreement with First Insurance Funding to finance other insurance coverages.

The $ 214,088 loan is payable over nine months, beginning in September 2022, and bears interest at 6.3 % with monthly payments of $ 24,416 .

The balance of this note is $ 120,182  and is classified as Notes Payable - Current on the Company's Consolidated Balance Sheets.

On March 15, 2021, in connection with the closing of the Merger, the Company issued 7,129,887 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 12,765,236 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 575,000 shares of its common stock at a purchase price equal to $ 10.00 per share and Warrants to purchase up to an aggregate of 431,250 shares of its common stock at an exercise price of $ 10.00 per share.

The share and Warrant amounts issued include 32,500 shares and 24,375 Warrants issued to the underwriter in lieu of paying $ 325,000 of fees in cash.

Although this ADOMANI, Inc.

activity occurred before the close of the Merger, it is discussed here because it was primarily the source of the $ 3,373,332  cash acquired by EVTDS in the Merger that closed on March 15, 2021.

The second closing of the Financing was completed on May 7, 2021, following the closing of the Merger (see Note 3 ) and the subsequent effectiveness of the Registration Statement on Form S- 3 (File No.

333 - 255341 ) filed with the SEC on April 19, 2021, registering for 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 $ 16,274,991 through the sale and issuance of an additional 1,916,667 shares of its common stock at a purchase price equal to $ 9.00 per share, and additional Warrants to purchase up to an aggregate of 958,334 shares of its common stock at an exercise price of $ 20.00 per share.

The share and Warrant amounts issued include 108,333 shares and a Warrant to purchase 54,167 shares issued to the underwriter in lieu of paying $ 975,000 of fees in cash.

In addition to the $ 16,274,991 cash equity proceeds received during the year ended December 31, 2021 discussed in the previous paragraph, the Company also received $ 120,000 and $ 211,219 cash equity proceeds from the exercise of various stock option agreements during the years ended December 31, 2022 and 2021 , respectively, as discussed in Note 9.

The balance of this note is $ 0 on December 31, 2023.

The balance of this note is $ 120,182 and is classified as Notes Payable - Current on the Company's Consolidated Balance Sheets on December 31, 2022.

Effective August 20, 2023, the Company entered into a third premium financing agreement with First Insurance Funding to finance other insurance coverages.

The $ 467,074 loan is payable over nine months, beginning in September 2023, and bears interest at 8.2 % with monthly payments of $ 53,675 .

The balance of this note is $ 262,993 on December 31, 2023 and is classified as Notes-Payable - current on the Company's Consolidated Balance Sheets.

The following table depicts the future annual minimum principal payments as of December 31, 2023:

Total payments

The Company has 5,000,000 authorized preferred stock with $ 0.00001 par value per share on December 31, 2023 and December 31, 2022.

There was no outstanding preferred stock on December 31, 2023 and December 31, 2022.

The Company has 350,000,000 authorized common stock of which 15,171,748 and 15,021,088 were outstanding on December 31, 2023 and December 31, 2022, respectively.

The par value of the Company's common stock is $ 0.00001 .

150,660 shares of the Company's common stock were issued during 2023 to external parties in conjunction with certain services rendered during the period.

Stock Warrants

As a result of the Merger closing (see Note 3 ), as of March 15, 2021, the Company had outstanding warrants to purchase an aggregate of 534,067 shares of common stock, 102,817 of which were exercisable.

The warrants were previously issued by ADOMANI, Inc.

and assumed in the Merger.

Of the 534,067 outstanding at the Merger date, 27,483 and 62,500 expired unexercised during 2022 and 2021, respectively.

In connection with the second closing of the Financing discussed in Note 7, the Company issued additional warrants to purchase up to 958,334 shares of its common stock.

The Company’s outstanding warrants as of December 31, 2022 are summarized as follows, and all were exercisable at that date:

The Company’s outstanding warrants as of December 31, 2023 are summarized as follows, and all were exercisable at that date:

Number of Shares

2 unchanged sentences

Outstanding warrants expiring January 28, 2025

12,833  

Outstanding warrants expiring January 28, 2025

431,250  

431,250 $ 10.00 1.08

Outstanding warrants expiring May 7, 2026

958,334  

958,334 $ 20.00 2.35

Outstanding warrants on December 31, 2023

1,402,417  

The Warrants issued as part of the Purchase Agreement (see Note 7 ) 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.

1,389,584 $ 17.43 1.93

The warrants issued 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 December 31, 2023 and 2022 , the outstanding warrants have no intrinsic value.

Stock Options and Restricted Shares

Stock Options

The following is a summary of stock option activity under the Company’s 2017 Equity Incentive Plan for the year ended December 31, 2022 :

The following is a summary of stock option activity under the Company’s 2017 Equity Incentive Plan for the year ended December 31, 2023 :

Number of Shares

1 unchanged sentence

Weighted Average Remaining Contractual Life (years)

Outstanding EVTDS at December 31, 2020

Options acquired in Merger

649,643  

$ 5.80  

( 287,536 )  

$ 2.40  

Cancelled/Forfeited at $2.40 Exercise Price

( 3,357 )  

$ 2.40  

Cancelled/Forfeited at $9.00 Exercise Price

( 10,500 )  

$ 9.00  

Cancelled/Forfeited at $26.20 Exercise Price

( 9,750 )  

$ 26.20  

Subtotal, as follows:

338,500  

Outstanding options at $2.40 Exercise Price

50,000  

$ 2.40  

Outstanding options at at $9.00 Exercise Price

281,750  

$ 9.00  

Outstanding options at $26.20 Exercise Price

$ 26.20  

Outstanding at December 31, 2021

338,500  

$ 8.40  

338,500 $ 8.40 6.98

Options Granted during 2022:

Options Granted at $2.00 Exercise Price

250,000  

$ 2.00  

250,000 $ 2.00

Options Granted at $2.40 Exercise Price

90,893  

$ 2.40  

90,893 $ 2.40

Options Granted at $3.62 Exercise Price

$ 3.62  

Options Granted at $9.00 Exercise Price

$ 9.00  

( 50,000 )  

$ 2.40  

( 50,000 ) $ 2.40

Canceled/Forfeited

( 25,000 )  

$ 9.00  

Subtotal, as follows:

608,266  

( 25,000 ) $ 9.00

Outstanding at December 31, 2022

Outstanding Options at $2.00 Exercise Price

250,000  

$ 2.00  

250,000 $ 2.00 9.05

Outstanding Options at $2.40 Exercise Price

90,893  

$ 2.40  

90,893 $ 2.40 9.05

Outstanding Options at $3.62 Exercise Price

$ 3.62  

2,762 $ 3.62 4.09

Outstanding Options at $9.00 Exercise Price

257,861  

$ 9.00  

257,861 $ 9.00 7.96

Outstanding Options at $26.20 Exercise Price

$ 9.00  

6,750 $ 9.00 5.30

Outstanding at December 31, 2022

608,266  

$ 5.30  

608,266 $ 5.30 8.52

Options Granted during 2023:

Options Granted at $2.65 Exercise Price

15,000 $ 2.65

Options Granted at $2.10 Exercise Price

588,495 $ 2.10

Options expired at $9.00 Exercise Price

( 1,111 ) $ 9.00

Options expired at $3.62 Exercise Price

( 2,762 ) $ 3.62

Outstanding at December 31, 2023

Outstanding Options at $2.00 Exercise Price

250,000 $ 2.00 8.02

Outstanding Options at $2.40 Exercise Price

90,893 $ 2.40 9.05

Outstanding Options at $9.00 Exercise Price

256,750 $ 9.00 7.96

Outstanding Options at $26.20 Exercise Price

6,750 $ 26.20 5.30

Options Granted at $2.65 Exercise Price

15,000 $ 2.65 9.29

Options Granted at $2.10 Exercise Price

588,495 $ 2.10 9.53

Outstanding at December 31, 2022

1,207,888 $ 3.71 8.53

Exercisable at December 31, 2022

605,101  

$ 5.30  

On January 7, 2022, the Company’s Compensation Committee granted Phillip W.

Oldridge, the Company’s Chief Executive Officer, options to purchase 150,000 shares of common stock at an exercise price of $ 2.00 per share and options to purchase 50,000 shares of common stock at an exercise price of $ 2.40 per share.

1,196,220 $ 3.72 8.52

On January 7, 2022, the Company’s Compensation Committee granted Phillip W.

The options vested immediately and expire on the tenth anniversary of grant.

On January 7, 2022, the Company’s Compensation Committee granted Susan M.

Emry, the Company’s Executive Vice President, options to purchase 100,000 shares of common stock at an exercise price of $ 2.00 per share and options to purchase 40,893 shares of common stock at an exercise price of $ 2.40 per share.

On January 7, 2022, the Company’s Compensation Committee granted Susan M.

The options vested immediately and expire on the tenth anniversary of grant.

On January 31, 2022, the Company’s Compensation Committee granted Christian S.

Rodich, the Company’s Chief Financial Officer, options to purchase 2,762 shares of common stock at an exercise price of $ 3.62 per share and options to purchase 1,111 shares of common stock at an exercise price of $ 9.00 per share.

On January 31, 2022, the Company’s Compensation Committee granted Christian S.

Rodich, the Company’s former Chief Financial Officer, options to purchase 2,762 shares of common stock at an exercise price of $ 3.62 per share and options to purchase 1,111 shares of common stock at an exercise price of $ 9.00 per share.

The options vest ratably at 1/60th per month over five years and expire on the tenth anniversary of grant.

These options were forfeited three months after Mr.

Rodich resigned from his employment with the Company.

On March 15, 2022, options to purchase 50,000 shares of common stock were exercised by the former President and CEO of the Company at a price of $ 2.40 per share, resulting in a payment to the Company of $ 120,000 .

Also on March 15, 2022, options to purchase an aggregate of 25,000 shares of common stock with an exercise price of $ 9.00 per share were forfeited by the former executive, as they were not exercised prior to their expiration on March 15, 2022.

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 22,000 shares of common stock at an exercise price of $ 5.506 per share.

The Committee determined that Mr.

Oldridge would be immediately vested in the options granted.

The options granted during 2022  were valued using the Black-Scholes option pricing model, resulting in a weighted average fair market value of approximately $ 4.71  per option for the years ended December 31, 2022.

On April 19, 2023 options to purchase 15,000 shares of common stock at an exercise price of $ 2.65 per share were granted to two employees.

These options vest ratably over three years.

On July 11, 2023, the Company’s Compensation Committee granted the Board of Directors options to purchase 588,495 shares of common stock at an exercise price of $ 2.10 per share.

The options vested immediately and expire on the tenth anniversary of grant.

The options granted during 2023 were valued using the Black-Scholes option pricing model, resulting in a weighted average fair market value of approximately $ 4.71 per option for the years ended December 31, 2023 .

The weighted average assumptions used in the valuation of the options are summarized in the following table:

3 unchanged sentences

Expected dividend yield

As of December 31, 2022 , outstanding options had intrinsic value of $ 32,500 , all of which was exercisable.

As of December 31, 2023 , the outstanding options had $ 0 intrinsic value.

The Company recorded total stock compensation expense of $ 1,095,199 for the year ended December 31, 2023.

Restricted Shares

During the first quarter of 2023, the Company awarded 85,000 restricted shares to a vendor that will vest over a six -month period in exchange for marketing services to be provided over the same period.

As a result, the Company recorded stock compensation expense $ 204,850 during the year ended December 31, 2023.

These restricted shares were issued as common stock in the third quarter of 2023.

During the fourth quarter of 2023, the Company awarded 65,660 restricted shares to a vendor in exchange for marketing services to be provided over a six -month period.

As a result, the Company recorded stock compensation expense $ 22,528 during the year ended December 31, 2023.,

Related Party Transactions

The Company has entered into lease agreements with SRI Professional Services, Incorporated (“SRI”), pursuant to which the Company leases equipment used in connection with the operation of its business (the “SRI Equipment Leases”).

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 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 obligation of the Company under the SRI Equipment Leases is $ 7,771 .

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

As a result of these agreements, the Company recorded rent expense of $ 93,247 for the year ended December 31, 2023.

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

The monthly rent under the SRI Office Lease is $ 2,730 .

In addition to the SRI Equipment Leases and the SRI Office Lease, during 2021, the Company purchased a heavy-duty pick-up truck and a trailer from SRI for $ 81,293 .

The Company uses such equipment to transport its electric vehicles to and from customer demonstration sites and to and from equipment outfitters when the vehicles have custom bodies and accessories added for specific customers.

The Company has entered into a commercial lease agreement (the “ABCI Office Lease”) with Alpha Bravo Charlie, Inc.

(“ABCI”) that commenced on April 1, 2020, for the lease of office space in Porterville, California.

The monthly rent for this facility was $ 2,800 .

On January 13, 2023, based on a review of office and warehousing space in the Porterville market, the Company’s audit committee approved an increase in the monthly rent to $ 5,000 for 2023.

See Notes 11 and 13.

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 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.

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 .

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 December 31, 2022 .

The following table summarizes these related party transactions for the years ending December 31, 2022 and 2021 :

Year Ended December 31,

SRI Equipment Leases

$ 93,247  

$ 116,559  

SRI Office Lease

26,390  

14,000  

Truck & trailer purchase from SRI

81,293  

119,637  

211,852  

Vehicles purchased from Phillip W.

161,250  

ABCI Office leases

33,600  

50,610  

$ 153,237  

$ 423,712  

The Company recorded rent expense of $ 13,650 for the year ended December 31, 2023 in connection with this agreement.

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 approximately $ 5,000 .

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.

The Company recorded rent expense of $ 68,400 for the year ended December 31, 2023 in connection with this agreement.

The rent included for a short period in 2023, payments of $ 8,400 for hangar facilities.

During 2023, the Company reimbursed Phillip W.

Oldridge, the Company’s Chief Executive Officer and Chairman of the Board, and a member of its board of directors, $ 81,269 for use of the CEO's personal airplane for certain business-related activities.

During the second quarter of 2023, the Company purchased a vehicle from Phillip W.

Oldridge for $ 45,216 , which remains unpaid as of December 31, 2023.to

The Company also paid 42Motorsports LTD $ 150,000 for engineering consulting services, the owner of which is a sibling of the Company's Chief Executive Officer and Chairman of the Board.

Other Agreements

On December 31, 2021, the Company entered into employment agreements with Phillip W.

Oldridge (the “Oldridge Agreement”), its Chief Executive Officer, and with Susan M.

Emry (the “Emry Agreement”), its Executive Vice President.

Oldridge (the “Oldridge Agreement”), its Chief Executive Officer, and with Susan M.

Emry (the “Emry Agreement”), its Executive Vice President.

According to the Oldridge Agreement, effective as of March 1, 2021, Mr.

Oldridge will receive an annual base salary of $ 300,000 , payable in semi-monthly installments consistent with the Company’s payroll practices.

Oldridge will also receive participation in medical insurance, dental insurance, and the Company’s other benefit plans.

Oldridge will receive an annual base salary of $ 300,000 , payable in semi-monthly installments consistent with the Company’s payroll practices.

Oldridge will also receive participation in medical insurance, dental insurance, and the Company’s other benefit plans.

Under the Oldridge Agreement, Mr.

Oldridge will also receive an amount equal to five percent of the net income of the Company on an annual basis and will be eligible for a bonus at the sole discretion of the Company’s Board of Directors (the “Board”).

The Oldridge Agreement also provides for an automobile monthly allowance of $ 1,500 .

Oldridge’s employment shall continue until terminated in accordance with the Oldridge Agreement.

Oldridge is terminated without cause or if he terminates his employment for good reason, Mr.

2 unchanged sentences

Emry will receive an annual base salary of $ 200,000 and will be eligible for a bonus at the sole discretion of the Board.

Emry will also receive participation in medical insurance, dental insurance, and the Company’s other benefit plans.

Emry’s employment shall continue until terminated in accordance with the Emry Agreement.

Emry will also receive participation in medical insurance, dental insurance, and the Company’s other benefit plans.

Emry’s employment shall continue until terminated in accordance with the Emry Agreement.

Emry is terminated without cause or if she terminates her employment for good reason, Mrs.

Emry will be entitled to receive (i) one -year of base salary, (ii) reimbursement of reimbursable expenses in accordance with the Emry Agreement, and (iii) the value of any accrued and unused paid time off as of the date of termination.

The following table summarizes the Company's future minimum payments under contractual commitments, excluding debt, as of December 31, 2021:

Payments due by period

Less than one year

More than 5 years

Operating lease obligations

$ 46,173  

Employment contracts

2,500,000  

500,000  

1,500,000  

500,000  

$ 2,546,173  

$ 546,173  

$ 1,500,000  

$ 500,000  

There are no future minimum payments under the terms of both agreements as each party has a right to terminate the agreement without any contractual payments other than what has been stated in their respective contracts.

In March 2023, the Company entered into an agreement with Berthaphil to sublease approximately 3,600 square yards of a warehouse building based in the Clark Freeport Zone in the Philippines.

The term of the lease is two years and two months with a turnover date of July 1, 2023 and a rental commencement of September 1, 2023.

The Company intends to use the leased space as a production facility as it seeks to expand its business presence in the region and the United States.

See Note 13 - Leases for further disclosures.

Contingencies

Except as set forth below, we know of no material, existing or pending, legal proceedings against our Company, nor are we involved as a plaintiff in any material proceeding or pending litigation.

There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial stockholder, is an adverse party or has a material interest adverse to our interest.

On December 17, 2019, GreenPower Motor Company Inc., a public company incorporated under the laws of British Columbia (“GreenPower”), of which Phillip W.

Oldridge, the Company’s Chief Executive Officer and Chairman of the Board, and a member of its board of directors, previously served as a senior officer and a member of its board of directors, filed a notice of civil claim, captioned GreenPower Motor Company Inc.

There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial stockholder of more than 5% of our common stock, or any associate of any of the foregoing persons, is an adverse party or has a material interest adverse to our interest.

GreenPower Litigation

On December 17, 2019, GreenPower Motor Company Inc., a public company incorporated under the laws of British Columbia (“GreenPower”), of which Phillip W.

Phillip Oldridge et al., Action No.

S- 1914285, in the Supreme Court of British Columbia, against Phillip Oldridge, his trust, EVTDS and certain other companies affiliated therewith.

The notice of civil claim alleges that Mr.

Oldridge breached certain fiduciary duties owed to GreenPower by working with certain parties in direct competition with and at the expense of GreenPower.

GreenPower alleges that the Company conspired with Mr.

Oldridge to build its business, competing products and unfairly compete with GreenPower.

GreenPower seeks general damages, special damages and punitive damages, plus interest and costs against EVTDS.

On February 2, 2020, the Company and the other companies affiliated therewith named in the notice of civil claim filed a response to the civil claim in which they denied certain of the allegations and asserted that certain other facts were outside of their knowledge.

S- 1914285, in the Supreme Court of British Columbia, against Phillip Oldridge, his trust, EVT and certain other companies affiliated therewith.

On February 2, 2020, the Company and the other companies affiliated therewith named in the notice of civil claim filed a response to the civil claim in which they denied certain of the allegations.

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., (collectively “the GreenPower entities”) filed a counterclaim against David Oldridge, Phillip Oldridge, the Company and other companies in Supreme Court of British Columbia Action No.

The counterclaim alleges that David Oldridge, Phillip Oldridge, the Company and other companies committed the tort of abuse of process by causing 42 Design Works Inc., to commence a lawsuit against the GreenPower entities.

Additionally, GreenPower entities also advanced claims against David Oldridge, Phillip Oldridge, the Company and other companies for conspiracy.

The pleadings in this lawsuit have not closed and we intend to vigorously defend the counterclaim.

On or about July 18, 2021, GreenPower and GP GreenPower Industries Inc.

(collectively “the GreenPower entities”), filed a counterclaim against David Oldridge, Phillip Oldridge, the Company and other companies in Supreme Court of British Columbia Action No.

The pleadings in this lawsuit have not closed and the Company intends to vigorously defend the counterclaim.

On February 8, 2022, GreenPower Motor Company, Inc., a Delaware corporation, and GreenPower Motor Company Inc., a Canadian corporation, filed a complaint captioned GreenPower Motor Company, Inc.

1 unchanged sentence

5:22 -cv- 00252 in the United States District Court for the Central District of California.

The complaint names the Company and the following affiliated entities, officers, or directors:

Phillip Oldridge, Envirotech Electric Vehicles Inc., Envirotech Drive Systems Incorporated US, Envirotech Drive Systems Incorporated Canada, Sue Emry, David Oldridge, S&P Financial and Corporate Services, Inc.

GreenPower also named the Phillip Oldridge Trust and a purported entity called EVT Motors, Inc., but has since dismissed those parties.

The complaint alleges (i) RICO violations, (ii) conspiracy to commit RICO violations, (iii) breach of fiduciary duties, (iv) breach of an employment contract, (v) conversion of GreenPower property, (vi) violation of the Defend Trade Secrets Act, and (vii) violations of California’s Business and Profession Code.

The complaint seeks an undisclosed amount of compensatory and punitive damages, injunctive relief to prevent the alleged anti-Competitive behavior, restitution for harm, an award of treble damages, and associate fees and costs.

The complaint’s allegations are centered around the same assertions in the pending Canadian litigation.

On May 10, 2022, the Company, together with other defendants, filed a Motion to Dismiss and/or Stay the lawsuit pending the outcome of the Canadian litigation.

The complaint’s allegations are centered around the same assertions in the pending Canadian litigation.

On May 10, 2022, the Company, together with other defendants, filed a Motion to Dismiss and/or Stay the lawsuit in the United States District Court for the Central District of California pending the outcome of the Canadian litigation.

The Court issued stay of this case pending resolution of parallel litigation in Canada between similar parties.

1 unchanged sentence

GreenPower case will not proceed while Canadian litigation is pending.

We believe that the lawsuit is without merit and intend to vigorously defend the action.

On August 23, 2018, a purported class action lawsuit captioned M.D.

Ariful Mollik v.

ADOMANI, Inc.

et al., Case No.

RIC 1817493, was filed in the Superior Court of the State of California for the County of Riverside against us, certain of our executive officers, 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 recessionary damages;

and (v) equitable relief at the discretion of the court.

Plaintiff’s counsel 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 (“Electric Drivetrains”).

Brooks was subsequently dropped as a putative class representative.

On October 27, 2020, the Company answered the fourth amended complaint, generally denying the allegations and asserting affirmative defenses.

On July 13, 2021, Electric Drivetrains’

counsel moved to be relieved as counsel and on August 23, 2021, the court granted this motion.

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.

On December 10, 2021, the Court vacated the order to show cause.

Over the tenure of the action, Electric Drivetrain has dismissed all defendants in the action except for the Company and two former Company executives.

Any and all pending cross claims between or among defendants have been resolved and dismissed.

On August 31, 2022, Electric Drivetrains filed its Fifth Amended Complaint, which:

i) drops certain class allegations;

ii) adds certain state law claims;

iii) and drops certain factual allegations but leaves the remaining claims against defendants intact.

On October 6, 2022, the Company and remaining defendants filed their respective answer denying the allegations and asserting counterclaims.

On the same day, the Company cross claimed against Electric Drivetrains and its managing member.

The Court has set a trial setting conference on December 21, 2022.

We believe that the 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.

ADOMANI, Inc., et al., Case No.

1 -CV- 349153 in the Superior Court of California for the County of Santa Clara, against the Company, certain of the Company’s executive officers and directors, 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 “Brooks Case”).

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.

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.

Code Section 25401, (ii) fraud, 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 parties participated in two days of mediation with Mark LeHocky.

LeHocky provided the parties with a mediator’s proposal.

Both parties accepted the proposal and reduced the proposal to a written settlement agreement.

Pursuant to the settlement agreement, the Company has agreed to pay plaintiffs $ 197,500 in cash and $ 197,500 in shares of common stock.

In addition, the Company’s insurance carrier has agreed to pay plaintiffs $ 170,000 .

On January 14, 2022, the parties filed a joint motion for an order approving the fairness of the terms of the settlement agreement.

On March 7, 2022, the Court issued an Order approving the settlement and the parties are in the process of effectuating its terms.

On April 5, 2022, the Company and Boustead resolved Boustead’s cross claim for indemnification in the Brooks action.

This settlement is still subject to court approval.

There are no further claims pending in the Brooks action and, if and when the Court approves the settlement, it should be dismissed.

On February 3, 2020, the Company acquired substantially all 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.

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.

A settlement agreement was entered into on March 15, 2022.

In October 2017, ADOMANI, Inc.

signed a 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 

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  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 

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 $ 60,630 , 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 

As of December 31, 2022 , the Company is a party to eight operating leases.

Five of these leases are office or warehouse leases;

the remaining three 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.

In applying the guidance in ASC 842, the Company has determined that all current leases as of December 31, 2022 should be classified as short-term operating leases.

The Company has entered into the SRI Equipment Leases (see Note 10 ).

Rent expense under the SRI Equipment Leases was $ 93,247 for each of the years ended December 31, 2022 and 2021 .

The Company has entered into the SRI Office Lease (see Note 10 ).

Rent expense under the SRI Office Lease was $ 26,390 and $ 24,711 for the years ended December 31, 2022 and 2021 , respectively.

The Company has entered into the ABCI Office Lease (see Note 10 ).

Rent expense under the ABCI Office Lease was $ 33,600 and $ 30,800 , for the years ended December 31, 2022 and 2021 , respectively.

The Company has entered into the Toledo Jet Center Lease for office space in the Ft.

Lauderdale, Florida area effective February 15, 2022.

The lease has a one -year term with the option to renew after one year.

Rent expense for the Toledo Jet Center Lease for the year ended December 31, 2022 was $ 16,853 .

In February 2017, ADOMANI, Inc.

signed a lease for storage space in Stockton, California to serve as a location to store vehicles and other equipment utilized for marketing and trade-show purposes.

The lease is on a month-to-month basis and can be terminated by either party with 30 -days’

The total amount due monthly is $ 1,000 .

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 36 months, commencing on January 1, 2020, and terminating on December 31, 2022.

The base rent for the term of the lease was $ 495,720 , with $ 265 due per month for fire sprinkler alarm monitoring and landscape maintenance.

The base rent amount due monthly was $ 13,108 at commencement and would have escalated to $ 13,906 by its conclusion.

However, the Company vacated the premises effective March 31, 2022, and the lease was taken over on April 1, 2022 by its sublease tenant, as discussed below.

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.

On April 1, 2022, Masters took over the remaining lease obligation for the facility.

As required by ASC 842, in conjunction with the Corona, California lease, the Company recognized an operating liability with a corresponding Right-Of-Use (“ROU”) asset of the same amounts based on the present value of the minimum rental payments of such lease.

As of December 31, 2021 , the ROU asset had a balance of $ 133,672 , which is included in other 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 $ 131,245 at December 31, 2021 .

Non-current liabilities relating to the ROU asset, which are included in other non-current liabilities in the consolidated balance sheet, were $ 2,427 as of December 31, 2021 .

Because the lease was assumed by Masters effective April 1, 2022, and terminated on December 31, 2022, there were no remaining ROU assets or lease liabilities as of December 31, 2022 .

Quantitative information regarding the Company’s leases is as follows:

The Company believes that the lawsuit is without merit and intend to vigorously defend the action.

Operating leases

The Company has active operating lease arrangements for office space and warehouse facilities.

The Company is typically required to make fixed minimum rent payments relating to its right to use the underlying leased assets.

Although these leases have terms that are either month-to-month or terms that are one year or less (with renewal options), the Company concluded in the fourth quarter of 2023 that the term renewal options are reasonably certain to be exercised.

As a result of changes in certain circumstances related to some of the Company's short-term leases, the Company was required to classify such leases as operating leases in accordance with the provisions of ASC 842 - Leases.

Therefore, the Company recognized operating lease liabilities with corresponding Right-Of-Use ("ROU") assets based on the present value of the minimum rental payments of such leases during the fourth quarter of 2023.

In March 2023, the Company entered into an agreement with Berthaphil, Inc.

to sublease approximately 3,600 square yards of a warehouse building based in the Clark Freeport Zone in the Philippines.

The term of the lease is two years and two months with a turnover date of July 1, 2023 ( "turnover date") and a rental commencement of September 1, 2023.

However, the warehouse building was not available for use to the Company till the early part of the fourth quarter of 2023.

Therefore, the commencement date is deferred until the fourth quarter of 2023, which is when the Company was given access to use the warehouse building.

There is a grace period of two months for rental payments starting from the turnover date.

The monthly rent for the first year is $ 15,000 , escalating to $ 15,750 for the second year and $ 16,530 for the remaining term.

In addition to the monthly rent, the Company is required to pay an additional 5 % of the monthly rent as common area maintenance costs.

The sublease may be renewed for an additional period that is mutually agreed upon subject to certain terms and conditions.

The Company intends to use the leased space as a production facility as it seeks to expand its business presence in the region and the United States.

The Company accounted for this lease as an operating lease under ASC Topic 842 and recorded an operating lease liability and a corresponding ROU asset for this lease.

The Company's lease agreements do not provide an implicit borrowing rate.

Therefore, the Company used a benchmark approach to derive an appropriate incremental borrowing rate.

The Company benchmarked itself against other companies of similar credit ratings and comparable credit quality and derived an incremental borrowing rate to discount each of its lease liabilities based on the remaining lease terms.

ROU assets at December 31, 2023 were $ 538,932 .

Short-term and long-term operating lease liabilities were $ 291,263 and $ 235,625 at December 31, 2023, respectively.

As required by ASC 842, in conjunction with the Corona, California 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 31, 2022, the ROU asset and related liability accounts were written off against each other due to the Company leaving the Corona California office and warehouse effective April 1, 2022 and to Masters taking over the remaining lease obligation for the facility.

Quantitative information regarding the Company’s leases is as follows:

Year Ended December 31,

1 unchanged sentence

Operating lease expenses

$ 61,380  

$ 164,234  

$ 89,268 $ 61,380

Short-term lease expenses

$ 167,367  

$ 88,312  

$ 188,921 $ 167,367

Total lease cost

$ 228,747  

$ 252,546  

$ 278,189 $ 228,747

Other information

1 unchanged sentence

Operating cash flows

$ 45,767  

$ 212,955  

$ 101,312 $ 45,767

Weighted-average remaining lease term (in years):

2 unchanged sentences

Operating leases

As of December 31, 2023, future minimum lease payments required under operating leases are as follows:

Total payments

Subsequent Events

EVTV evaluated its subsequent events through September 25, 2023, which is the date the financial statements were issued or available to be issued.

In March 2023, the Company entered into an agreement with  Berthaphil, Inc.

to sublease approximately 3,600 square yards of a warehouse building based in the Clark Freeport Zone in the Philippines.

The term of the lease is two years and two months with a turnover date of July 1, 2023 ( "turnover date") and a rental commencement date of September 1, 2023.

There is a grace period of two months for rental payments, starting from the turnover date.

The monthly rent for the first year is $ 15,000 , escalating to $ 15,750 for the second year and $ 16,530 for the remaining term.

The sublease may be renewed for an additional period that is mutually agreed upon subject to certain terms and conditions.

The Company intends to use the leased space as a production facility as it seeks to expand its business presence both in the region and the United States.

The Company evaluates subsequent events through March 28, 2024, which is the date the financial statements were issued or available to be issued.

There are two types of subsequent events:

( 1 ) recognized, or those that provide additional evidence with respect to conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements, and ( 2 ) non-recognized, or those that provide evidence with respect to conditions that did not exist at the date of the balance sheet but arose subsequent to that date.

first quarter of

2024, the Company issued

348,889 shares of its common stock for proceeds of

$ 585,500 to various parties.

The weighted average issue price per share of common stock sold was approximately

The proceeds will be used to fund the Company's operations.

The Company also entered into a convertible note agreement for

$ 1,000,000 with an unrelated

third -party investor.

The origination fee of this note was

The maturity date of the note is the earlier of the next S-

September 30, 2024.

The investor is entitled to convert the note into common stock at the greater of

$ 1.50 per share or at

90 % of the share price on the maturity date.

The investor also has a security interest in the Company's assets in the event of non-payment of the debt.

March 18, 2024, the Company entered into a Sale and Purchase Agreement (the "Agreement") with PlugD Commercial Electric Leasing and Rentals Inc.

("PlugD"), a Texas-based commercial electric vehicle leasing company.

Under the terms of the Agreement, the Company will deliver

200 electric high roof vans and trucks to PlugD for a total of approximately

$ 16.2 million.

The sale will take place over the next

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data