Good day, ladies and gentlemen and thank you for your patience. Welcome to ADOMANI’s Q2 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder this conference may be recorded. I would now like to turn the call over to you host with Investor Relations, Mr. James Carbonara. Sir, you may begin.

Thank you. Good day and welcome to ADOMANI’s second quarter 2018 earnings call. With me on the call are Jim Reynolds, Chief Executive Officer; and Mike Menerey, Chief Financial Officer. I would like to begin the call by reading the Safe Harbor statement. All statements made on this call with the exception of historical facts may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, they can make no assurance that such expectations will prove to have been correct. Actual results may differ considerably from the company's expectations due to changes in operating performance and other technical and economic factors. For a discussion of such risks and uncertainties which could cause actual results to differ from those contained in the forward-looking statements, see risk factors in the company's report on forms 10-K and 10-Q as well as other reports that the company files from time to time with the Securities and Exchange Commission. Any forward-looking statements included in this earnings call are made only as of the date of this call. We do not undertake any obligation to update or supplement any forward-looking statement to reflect subsequent events or circumstances. We cannot assure you that projected results or events will be achieved. Now, I will turn the call over to Jim Reynolds, Chief Executive Officer of ADOMANI. Jim, please proceed.

Thank you, James, and welcome everybody. As you can see from our earnings release, sales for the second quarter of 2018 were $744,000. That’s an increase of 160% compared to the first quarter and brings first half revenue to $1.2 million. Backlog at the close of the period ending June 30, 2018 was $6.3 million, an increase of 40% compared to Q1. We expect to be able to deliver the entire backlog of $6.3 million in 2018 at least half by the end of September and the balance by November. That would mean revenue for the second half of the year would grow by more than 500%. We were optimistic that as we look to 2019 and beyond, we will grow rapidly and that total revenues will increase exponentially. This is for multiple reasons. First, only a small portion of the $2.9 billion in the Volkswagen Environmental Mitigation Trust, which will fund projects to reduce diesel emissions, has been released. As ADOMANI begins to flow, so too will the orders. And this is not a question of if but when. We see positive signs in terms of firm date for the release of funding. We are finding more and more funding opportunities at the state and local levels. The backlog of funding is increasing as it continues to grow each month. The second reason we are confident in our growth trajectory is that we are Blue Bird Corporation’s exclusive drivetrain technology partner for the Type C. and Type D zero-emission all-electric school bus. Blue Bird is the leading U.S. independent designer and manufacturer of alternative fuel school buses. They have approximately 180,000 total school buses in operation today. Their manufacturing is over 11,500 school buses per year and over 20% of those are alternative fuel vehicles. Currently, there are 475,000…

Thanks. Good afternoon everyone. As Jim mentioned sales for the second quarter were $744,000 and $1.2 million for the six months, cost of sales was $722,000 for the quarter and $1,201,000 for the six month period. That number includes $15,000 valuation allowance that was recorded in Q1 and there were no sales across the sales in the 2017 periods. General administrative expenses in Q2 were $3.9 million compared to $5.4 million in the first quarter of 2017, which is a decrease of $1.5 million. That was primarily related to $1.7 million decrease in non-cash stock-based compensation expense in Q2 of 2018. And that decrease was partially offset by increases in a number of general and administrative expense accounts – other accounts. Year-to-date expenses for the six months were $7.8 million in 2018 versus $6.6 million in 2017, an increase of $1.1 million. $700,000 of that relates to non-cash stock-based compensation, the remaining $400,000 of it to other general and administrative expenses. Consulting expenses were significantly lower both for the three months and the six months in 2018 versus last year related to recording in June of 2017 issuance of a warrant to purchase 350,000 shares of common stock, which was valued at $1.2 million, and the payment of $800,000, in each case pursuant to the terms of a settlement agreement we entered into during the three months ended June 30, 2017. So both periods decrease in consulting expenses were about $2.1 million. Our research and development expenses in the second quarter of 2018 decreased by $20,000 compared to last year due to the timing of certain advances made on research and development activity and those expenses increased by $77,000 for the six months are due to expanded product development efforts in 2018, primarily related to the trucks that Jim mentioned.…

Thank you, sir. [Operator Instructions] Our first question comes from the line of Ed Woo of Ascendiant. Your line is open.

Yeah, thank you for taking my question and congratulations. My question relates to more of a – just the sales cycle. You guys done many ride-and-drive events and you guys seem to getting a lot of product quotes. What do you think is going to really get things to accelerate to get those people on just being [indiscernible] placing orders like how long the sales cycle?

Well, thanks. The question is a good one. It’s almost unknown if you will. We think we have dates from different entities whether it's a California Air Resources Board, California Energy Commission, it could be from Ohio, it could be from New York, it could be an HVIP program, it’s Volkswagen funding. So there's funding from multiple sources. They put together a program date specific and then typically they miss those dates. The school program, which is $10 million, which we expected to get a number of orders from that, was through the close in June and that’s going to close in August. The Energy Commission, there is $75 million for electrical buses, we expect that to close in August or September. It will now have the second round of workshops in August and that will close in probably January-February. So the dates are continually moving. There's a lot of moving parts. There's funding that has to be encumbered. So while we think we have a good handle on it, it’s subject to change and we can't really pinpoint dates except that we know the funding hasn't been lost. It's only been moved forward a little bit.

Great. And then in terms of your outlook, you guys are going to be delivering this backlog you say by November. How much capacity do you have guys if business really accelerates? Do you think you guys are near capacity or do you guys have ability to leverage much figure?

Well from our – one of our subcontractors, they have added roughly 20 people in the last ninety days. They’ve added new equipment and they've ramped up their capacity tremendously because they believe in the product and they believe in the Blue Bird network of dealers and Blue Bird itself will accomplish great things going forward. So I think our capacity now is more than adequate the day we start to bump up against 20% capacity left will broaden our horizons and find new facilities that we can do assembly work in.

Great. And my last question is just on competition. It seems as if the electric truck market has a lot more competitors out there, do you see that as a case or is it pretty similar or [indiscernible] in the bus market?

Well, I think if you look at the announcements that are being made by people, there is a lot of interest in giving into the market because it’s wide-open. The school bus market really only has three major players and maybe another three or so players that are less than major. So it's difficult to get into that market by providing a product. The truck market you can get into a lot easier, but I think the announcements and delivery are two different things. Our plan is not to take an existing product and retrofit it although we have that capability. We’ll be building ground up units, clean sheet design so that our product starts off being electric and ends up in electric rather than starting up being a diesel or gasoline has to be converted. So I think though while there is competition, there's not that much competition for a clean sheet electric design. It's only a few people out there doing it and no one has really captured a big portion of the market yet.

Is that market also dependent on funding and subsidies and grants as the bus market?

It’s not as depended. The school bus market has a limited amount of miles that put on the vehicle each year, sometimes it’s around 13,000 to 16,000 per year that limits the amount of ROI you can look for, but on the truck market they're working in five, sometimes six days a week and they're driving all day long and they don't stop for the summer time, like schools do. So they're working 52 weeks out of the year. They put a lot more miles on it. The return on investment on those vehicles is certainly greater. We're going to need some funding, but there's lots of funding out there. But the people who are buying that product are looking at it for the return they will receive over the next two or three years and helping to buy the cost down to the same cost as a gasoline or diesel and then seeing savings immediately that plays in our favor.

Great, well, thank you and best of luck.

Thank you.

Thanks, Aaron.

Thank you. [Operator Instructions] Our next question comes from the line of Amit Dayal of H.C. Wainwright. Your question please.

Thank you. Hi, Mike. Hi, Jim.

Hi.

Hey, Amit.

Just following up on the truck market opportunity. Are you growing after this market on your own or are you partnering with some other players on this front? And if you are doing this on your own, can you talk about the plans around manufacturing et cetera?

Sure, we are going to approach this market like we do most other ones. We in some areas will sign up dealers to become a dealer for the product and help them to sell that in a localized regional area. Other areas we may take the sales on directly because we feel we have a presence there and the expertise to do that. As far as manufacturing is concerned much like that drivetrain it will be a contract manufacturing to start with. Our plans are to – to build it with subcontractors to start with and then move into our own manufacturing down the road when we're able to afford something like that. So we have a lot of I think forward thinking people here who are concerned not only about what we're going to do today, what we're going to do two years from today, but the day it's going to be contract manufacturing and where we need to help we'll set up dealers to be dealers for the truck business across the country.

Understood. The timing for deliveries on the existing backlog, has that been pushed out a little? I believe previously this was supposed to be done before the end of the third quarter?

Yeah, you’re right. It should have been done before the end of the third quarter. Most of the delays are from component manufacturers that when they had to gear up to building a certain quantity of products and they have to gear up to build a lot more of the same product. It took them longer to realize that production capabilities and we assumed they had told us they could do. So we do have some delays, but we are meeting the goals as best as we can and we're working with our partners on delivery of the time. And on the school buses themselves with the school districts to keep them informed of what's going on.

Understood. That’s all I have guys. Thank you so much.

Thank you.

Thank you.

Thank you. As there are no further questions in queue, ladies and gentlemen this concludes today's conference. Thank you for your participation and have a wonderful day.