Xos Inc

Previous wording

During the three months ended June 30, 2024, we delivered 78 vehicles and 12 powertrains (including hubs). During the three months ended June 30, 2023, we delivered 37 vehicles (including leases) and 1 powertrain. During the three months ended June 30, 2024, we generated $14.6 million in revenue (or 94% of revenue) from vehicle, powertrain and hub sales, $0.6 million (or 4% of revenue) in other product revenue, and $0.3 million (or 2% of revenue) in ancillary revenue. During the three months ended June 30, 2023, we generated $4.5 million in revenue (or 95% of revenue) from vehicle and powertrain sales, $0.1 million (or 3% of revenue) in other product revenue, and $0.1 million (or 2% of revenue) from ancillary revenue.

Current wording

During the three months ended September 30, 2024, we delivered 78 vehicles and 16 powertrains (including leases and hubs). During the three months ended September 30, 2023, we delivered 104 vehicles and 1 powertrain. During the three months ended September 30, 2024, we generated $14.9 million in revenue (or 95% of revenue) from vehicle, powertrain and hub sales, $0.1 million (or 1% of revenue) in other product revenue, and $0.7 million (or 5% of revenue) in ancillary revenue. During the three months ended September 30, 2023, we generated $16.0 million in revenue (or 96% of revenue) from vehicle and powertrain sales, $0.1 million (or 1% of revenue) in other product revenue, and $0.6 million (or 3% of revenue) from ancillary revenue.

Previous wording

During the six months ended June 30, 2024, we delivered 138 vehicles and 14 powertrains (including hubs). During the six months ended June 30, 2023, we delivered 67 vehicles and 2 powertrains. During the six months ended June 30, 2024, we generated $26.6 million in revenue (or 93% of revenue) from vehicle, powertrain and hub sales, $1.3 million (or 4% of revenue) in other product revenue, and $0.9 million (or 3% of revenue) in ancillary revenue. During the six months ended June 30, 2023, we generated $8.8 million in revenue (or 93% of revenue) from vehicle and powertrain sales, $0.3 million (or 3% of revenue) in other product revenue, and $0.4 million (or 4% of revenue) from ancillary revenue.

Current wording

During the nine months ended September 30, 2024, we delivered 216 vehicles and 30 powertrains (including leases and hubs). During the nine months ended September 30, 2023, we delivered 171 vehicles (including leases) and 3 powertrains. During the nine months ended September 30, 2024, we generated $41.5 million in revenue (or 93% of revenue) from vehicle, powertrain and hub sales, $1.4 million (or 3% of revenue) in other product revenue, and $1.6 million (or 4% of revenue) in ancillary revenue. During the nine months ended September 30, 2023, we generated $24.8 million in revenue (or 95% of revenue) from vehicle and powertrain sales, $0.4 million (or 2% of revenue) in other product revenue, and $1.0 million (or 3% of revenue) from ancillary revenue.

Previous wording

We believe our growth in the coming years is supported by the strong secular tailwinds of an increased focus on the impact of climate change and the growth of e-commerce and last-mile delivery. Commercial trucks are the largest emitters of greenhouse gases per capita in the transportation industry. The U.S. federal, state and foreign governments, along with corporations such as FedEx, UPS and Amazon, have set ambitious goals to reduce greenhouse gas emissions. Simultaneously, e-commerce continues to grow rapidly and has been accelerated by changes in consumer purchasing behavior during the COVID-19 pandemic. We believe the increased regulation relating to commercial vehicles, the launch of sustainability initiatives from leading financial and corporate institutions and the rapid growth of last-mile logistics will fuel accelerated adoption of our products worldwide.

Current wording

We believe our growth in the coming years will be supported by the growth of e-commerce and last-mile delivery, and will depend in part on regulatory and consumer interest in reducing the impacts of climate change. E-commerce continues to grow rapidly and has been accelerated by changes in consumer purchasing behavior as a result of the COVID-19 pandemic. Commercial trucks are the largest emitters of greenhouse gasses per capita in the transportation industry. Although there can be no assurance such goals will be maintained, the U.S. federal, state and foreign governments, along with corporations such as FedEx, UPS and Amazon, have set ambitious goals to reduce greenhouse gas emissions. We believe regulation relating to commercial vehicles, sustainability initiatives from leading financial and corporate institutions and growth of last-mile logistics will be important factors in establishing the level of demand for, and adoption of, our products worldwide.

Previous wording

We expect to derive future revenue from sales of our vehicles, battery systems and other product and service offerings. As many of these products are in development, we will require substantial additional capital to continue developing our products and services and bring them to full commercialization as well as fund our operations for the foreseeable future. Until we can generate sufficient revenue from product sales, we expect to finance a substantial portion of our operations through commercialization and production with proceeds from the Business Combination, the SEPA (as defined below), the Convertible Note (as defined below), the ElectraMeccanica acquisitionand any future capital raising efforts. The amount and timing of our future funding requirements, if any, will depend on many factors, including the pace and results of our commercialization efforts.

Current wording

We expect to derive future revenue from sales of our vehicles, battery systems and other product and service offerings. As many of these products are in development, we will require substantial additional capital to continue developing our products and services and bring them to full commercialization as well as fund our operations for the foreseeable future. Until we can generate sufficient revenue from product sales, we expect to finance a substantial portion of our operations through commercialization and production with proceeds from the Business Combination, the SEPA, the Convertible Note (as defined below), the ElectraMeccanica acquisitionand any future capital raising efforts. The amount and timing of our future funding requirements, if any, will depend on many factors, including the pace and results of our commercialization efforts.

Previous wording

Despite these disruptions, our supply chain team continues to employ mitigating strategies to effectively source inventory for all of our products. The team has continued working with vendors to find alternative solutions to overcome these constraints and, where appropriate, working to find alternate sources of supply for critical components, including placing orders in advance of projected need, while ensuring such components have extended usage projected. These steps are designed to promote availability of materials in time to meet production plans, without inflating inventory beyond projected lead times.

Current wording

Despite these disruptions, our supply chain team continues to employ mitigating strategies to effectively source inventory for all of our products. We continue working with vendors to find alternative solutions to overcome these constraints and, where appropriate, working to find alternate sources of supply for critical components, including placing orders in advance of projected need, while ensuring such components have extended usage projected. We also have been closely monitoring potential changes to trade policies and tariffs in order to proactively adjust and refine our strategy. These steps are designed to promote availability of materials in time to meet production plans, without inflating inventory beyond projected lead times.

Previous wording

Cost of goods sold includes materials and other direct costs related to production of our vehicles, including components and parts, batteries, direct labor costs and manufacturing overhead, among others. Cost of goods sold also includes material and other direct costs related to the production and assembly of powertrains and battery packs as well as materials and other costs incurred related to charging infrastructure installation. Materials include inventory purchased from suppliers, as well as assembly components that are assembled by company personnel, including allocation of stock-based compensation expense. Direct labor costs relate to the wages of those individuals responsible for the assembly of vehicles, powertrain units and batteries delivered to customers. Cost of goods sold also includes depreciation expense on property and equipment related to cost of goods sold activities, calculated over the estimated useful life of the property and equipment on a straight-line basis.

Current wording

Cost of goods sold includes materials and other direct costs related to production of our vehicles, including components and parts, batteries, direct labor costs and manufacturing overhead, among others. Cost of goods sold also includes material and other direct costs related to the production and assembly of powertrains and battery packs as well as materials and other costs incurred related to charging infrastructure installation. Materials include inventory purchased from suppliers, as well as assembly components that are assembled by company personnel, including allocation of stock-based compensation expense. Direct labor costs relate to the wages of those individuals responsible for the assembly of vehicles, powertrain units and batteries delivered to customers. Cost of goods sold also includes depreciation expense on property and equipment related to cost of goods sold activities, calculated over the estimated useful life of the property and equipment on a straight-line basis. Upon property and equipment retirement or disposal, the cost of the asset disposed, and the related accumulated depreciation from the accounts and any gain or loss is reflected in the consolidated statements of operations and comprehensive loss, allocated to cost of goods sold.

Previous wording

Other income (expense), net is primarily comprised of income associated with the duty drawback receivable, which are estimated recoveries of tariffs paid for vehicles that were acquired through the EMV acquisition, and interest income from our investments in marketable debt securities, available-for-sale, partially offset by interest paid on our equipment leases and interest expense related to our financing obligations, including the amortization for debt discount and issuance costs.

Current wording

Other income (expense), net is comprised of income associated with the duty drawback receivable, which is estimated recovery of tariffs paid for vehicles that were acquired through the ElectraMeccanica acquisition, interest income from our investments in marketable debt securities, available-for-sale (applicable to 2023), income from the sublease of our Los Angeles office space, and other income, partially offset by interest paid on our equipment leases and interest expense related to our financing obligations, including the amortization for debt discount and issuance costs.

Previous wording

Comparison of the Three and Six Months Ended June 30, 2024 and 2023

Current wording

Comparison of the Three and Nine Months Ended September 30, 2024 and 2023

Previous wording

Our total revenues increased by $10.8 million, or 227%, from $4.8 million in the three months ended June 30, 2023 to $15.5 million in the three months ended June 30, 2024, primarily driven by an increase in unit sales and in average selling price. During the three months ended June 30, 2024, we sold 78 stepvans and 12 powertrains (including hubs), compared to 37 stepvans and 1 powertrain during the three months ended June 30, 2023.

Current wording

Our total revenues decreased by $0.9 million, or 5%, from $16.7 million in the three months ended September 30, 2023 to $15.8 million in the three months ended September 30, 2024, primarily driven by a decrease in unit sales and ancillary revenue, partially offset by an increase in average selling price, and the sale of automotive regulatory credits. During the three months ended September 30, 2024, we sold 78 stepvans and 16 powertrains (including hubs), compared to 104 stepvans and 1 powertrain during the three months ended September 30, 2023.

Previous wording

Our total revenues increased by $19.2 million, or 204%, from $9.5 million in the six months ended June 30, 2023 to $28.7 million in the six months ended June 30, 2024, primarily driven by an increase in unit sales and in average selling price. During the six months ended June 30, 2024, we sold 138 stepvans, 14 powertrains (including hubs), compared to 67 stepvans and 2 powertrains during the six months ended June 30, 2023.

Current wording

Our total revenues increased by $18.3 million, or 70%, from $26.1 million in the nine months ended September 30, 2023 to $44.5 million in the nine months ended September 30, 2024, primarily driven by an increase in unit sales and in average selling price. During the nine months ended September 30, 2024, we sold 216 stepvans, 30 powertrains (including hubs), compared to 171 stepvans (including leases) and 3 powertrains during the nine months ended September 30, 2023.

Previous wording

(1)Percentage changes greater than or equal to 400% are not meaningful and noted as “nm” in the table above.

Current wording

(6)Percentage changes greater than or equal to 400% are not meaningful and noted as “nm” in the table above.

Previous wording

Revenue for the six months ended June 30, 2024 and 2023 consisted of the following (dollars in thousands):

Current wording

Revenue for the nine months ended September 30, 2024 and 2023 consisted of the following (dollars in thousands):

Previous wording

(1)Percentage changes greater than or equal to 400% are not meaningful and noted as “nm” in the table above.

Current wording

(6)Percentage changes greater than or equal to 400% are not meaningful and noted as “nm” in the table above.

Previous wording

Cost of goods sold increased by $5.0 million, or 59%, from $8.5 million in the three months ended June 30, 2023 to $13.5 million in the three months ended June 30, 2024. The increase in cost of goods sold is directly attributable to the increase in our product revenue and associated increases of (i) $5.6 million in direct materials and (ii) $1.7 million in direct labor, manufacturing overhead, and freight costs. These increases were offset by decreases of (i) $1.3 million related to reductions in inventory reserves and associated write-downs to net realizable value during the three months ended June 30, 2023, (ii) $0.6 million less in unfavorable physical inventory count and other adjustments and (iii) $0.4 million for dealer return reserves and warranty.

Current wording

Cost of goods sold decreased by $1.8 million, or 12%, from $14.7 million in the three months ended September 30, 2023 to $12.9 million in the three months ended September 30, 2024. The decrease in cost of goods sold is directly attributable to the decrease in our product revenue and associated decreases of (i) $2.6 million in direct materials and (ii) $0.3 million for dealer return reserves. These decreases were offset by increases of (i) $0.9 million related to inventory reserves and associated write-downs to net realizable value, (ii) $0.1 million for warranty reserve and (iii) $0.1 million more in unfavorable physical inventory count and other adjustments. In addition, direct labor, manufacturing overhead, and freight costs stayed the same quarter over quarter.

Previous wording

Cost of goods sold increased by $9.8 million, or 70%, from $14.1 million in the six months ended June 30, 2023 to $23.9 million in the six months ended June 30, 2024. The increase in cost of goods sold is directly attributable to theincrease in our product revenue and associated increases of (i) $10.0 million in direct materials, (ii) $1.5 million in direct labor, manufacturing overhead, and freight, and (iii) $0.8 million for dealer return reserves and warranty. These increases were offset by a decrease of (i) $2.1 million related to reductions in inventory reserves and write-downs of inventories to their net realizable value recorded during the six months ended June 30, 2023 and (ii) $0.4 million less in unfavorable physical inventory count and other adjustments.

Current wording

Cost of goods sold increased by $8.0 million, or 28%, from $28.8 million in the nine months ended September 30, 2023 to $36.8 million in the nine months ended September 30, 2024. The increase in cost of goods sold is directly attributable to theincrease in our product revenue and associated increases of (i) $7.5 million in direct materials, (ii) $1.1 million in direct labor, manufacturing overhead, and freight, and (iii) $1.1 million for dealer return reserves. These increases were offset by a decrease of (i) $1.1 million related to reductions in inventory reserves and write-downs of inventories to their net realizable value recorded during the nine months ended September 30, 2023, (ii) $0.3 million for warranty reserve and (iii) $0.3 million less in unfavorable physical inventory count and other adjustments.

Previous wording

The increase in direct labor encompasses both employee and subcontractor labor costs. The increases in direct labor, manufacturing overhead and direct material costs are driven by an increase in units sold. A significant portion of the overhead costs incurred include indirect salaries, facility rent, utilities, and depreciation of production equipment, which are primarily fixed in nature and allocated based on production levels. Accordingly, these costs are still incurred when we experience a reduction in production volume. In the near term, we plan to increase production activities, expecting fixed and semi-fixed overhead costs to be absorbed through the production of our batteries, hubs and chassis.

Current wording

The changes in direct labor encompasses both employee and subcontractor labor costs. The changes in direct labor, manufacturing overhead and direct material costs are driven by changes in units sold. A significant portion of the overhead costs incurred include freight, indirect salaries, facility rent, utilities, and depreciation of production equipment, which are primarily fixed in nature and allocated based on production levels. Accordingly, these costs are still incurred when we experience a reduction in production volume. As we increase production activities, we are expecting fixed and semi-fixed overhead costs to be absorbed through the production of our batteries, hubs and chassis.

Previous wording

General and administrative expenses decreased by $3.3 million, or 15%, from $21.4 million in the six months ended June 30, 2023 to $18.1 million in the six months ended June 30, 2024, attributable to decreases of (i) $1.3 million in professional fees, (ii) $1.0 million in headcount and personnel costs for legal, finance, accounting, information technology and general and administrative functions, (iii) $0.9 million in insurance costs driven by cost efficiencies associated with a new broker, (iv) $0.2 million in other operating expenses, including travel, recruiting, and facility costs and (v) $0.1 million in stock-based compensation expense. These decreases were offset by increases of $0.2 million in depreciation expense due to the allocation of overhead costs.

Current wording

General and administrative expenses increased by $0.4 million, or 4%, from $8.5 million in the three months ended September 30, 2023 to $8.9 million in the three months ended September 30, 2024, attributable to increases of (i) $0.7 million in facility expenses, primarily due to two operating leases acquired in connection withthe ElectraMeccanica acquisition,, (ii) $0.2 million in stock-based compensation expense, (iii) $0.1 million in professional fees, and (iv) $0.1 million in headcount and personnel costs for legal, finance, accounting, information technology and general and administrative functions. These increases were offset by decreases of (i) $0.4 million in other operating expenses, including travel, recruiting, and equipment costs, (ii) $0.2 million in insurance costs, and (iii) $0.1 million in depreciation expense due to the allocation of overhead costs.

Previous wording

General and administrative expenses decreased by $0.6 million, or 7%, from $9.8 million in the three months ended June 30, 2023 to $9.2 million in the three months ended June 30, 2024, attributable to decreases of (i) $0.8 million in headcount and personnel costs for legal, finance, accounting, information technology and general and administrative functions, (ii) $0.2 million in professional fees, (iii) $0.2 million in stock-based compensation expense, (iv) $0.1 million in insurance costs driven by cost efficiencies associated with a new broker and (v) $0.1 million in depreciation expense due to the allocation of overhead costs. These decreases were offset by increases of $0.8 million in other operating expenses, primarily due to facility expenses related to two operating leases acquired in connection withthe ElectraMeccanica acquisition.

Current wording

General and administrative expenses decreased by $2.9 million, or 10%, from $30.0 million in the nine months ended September 30, 2023 to $27.0 million in the nine months ended September 30, 2024, attributable to decreases of (i) $1.2 million in professional fees, (ii) $1.2 million in other operating expenses, including travel, recruiting, and equipment costs, (iii) $1.1 million in insurance costs driven by cost efficiencies associated with a new broker, and (iv) $0.9 million in headcount and personnel costs for legal, finance, accounting, information technology and general and administrative functions. These decreases were offset by increases of (i) $1.3 million in facility expenses, primarily due to two operating leases acquired in connection withthe ElectraMeccanica acquisition, (ii) $0.1 million in depreciation expense due to the allocation of overhead costs, and (iii) $0.1 million in stock-based compensation expense.

Previous wording

Research and development expenses decreased by $2.2 million, or 42%, from $5.2 million in the three months ended June 30, 2023 to $3.0 million in the three months ended June 30, 2024. The change was primarily due to decreases of (i) $0.8 million in allocation of personnel costs driven by lower headcount in engineering, (ii) $0.8 million in equipment and material purchases due to fewer research and development projects in development year over year and (iii) $0.6 million in other research and development costs, including consulting and software.

Current wording

Research and development expenses decreased by $1.9 million, or 42%, from $4.5 million in the three months ended September 30, 2023 to $2.6 million in the three months ended September 30, 2024. The change was primarily due to decreases of (i) $1.1 million in allocation of personnel costs, including stock-based compensation expense, driven by lower headcount in engineering, (ii) $0.5 million in equipment and material purchases due to fewer research and development projects in development year over year and (iii) $0.3 million in other research and development costs, including consulting and software.

Previous wording

Research and development expenses decreased by $4.9 million, or 44%, from $10.9 million in the six months ended June 30, 2023 to $6.1 million in the six months ended June 30, 2024. The change was primarily due to decreases of (i) $2.4 million in allocation of personnel costs driven by lower headcount in engineering, (ii) $1.6 million in equipment and material purchases due to fewer research and development projects in development year over year and (iii) $0.9 million in other research and development costs, including consulting and software.

Current wording

Research and development expenses decreased by $6.8 million, or 44%, from $15.4 million in the nine months ended September 30, 2023 to $8.7 million in the nine months ended September 30, 2024. The change was primarily due to decreases of (i) $3.5 million in allocation of personnel costs, including stock-based compensation expense, driven by lower headcount in engineering, (ii) $2.2 million in equipment and material purchases due to fewer research and development projects in development year over year and (iii) $1.1 million in other research and development costs, including consulting and software.

Previous wording

Sales and marketing expense decreased by $0.5 million, or 30%, from $1.8 million in the three months ended June 30, 2023 to $1.2 million in the three months ended June 30, 2024. The change was primarily due to decreases of (i) $0.4 million in allocation of personnel costs driven by lower headcount and (ii) $0.1 million in stock-based compensation expense.

Current wording

Sales and marketing expense decreased by $0.5 million, or 33%, from $1.5 million in the three months ended September 30, 2023 to $1.0 million in the three months ended September 30, 2024. The change was primarily due to decreases of (i) $0.3 million in allocation of personnel costs driven by lower headcount and (ii) $0.2 million in other sales and marketing expenses such as customer accommodation payments and sales events.

Previous wording

Other income (expense), net increased by $5.5 million, from a $4.0 million expense in the three months ended June 30, 2023 to a $1.5 million income in the three months ended June 30, 2024. The change was attributable to decreases of (i) $2.5 million in net interest expense related to the Convertible Note and Convertible Debentures, including amortization of related discounts and issuance costs, primarily due to Convertible Debentures being fully repaid on December 4, 2023, (ii) $0.5 million for impairment on assets held for sale during the three months ended June 30, 2023 with no such comparable expense during the three months ended June 30, 2024, (iii) $0.3 million of redemption premiums related to prepayments on Convertible Debentures during the three months ended June 30, 2023 with no such comparable expense during the three months ended June 30, 2024, and (iv) $0.1 million in amortization expense related to marketable debt securities, available-for-sale with no such comparable expense during the three months ended June 30, 2024. Additionally, during the three months ended June 30, 2024 there was a $2.1 million increase in other income related to theestimated amount that can be recovered from previously paid tariffs relating to crushed SOLO vehicles that were acquired in connection with the ElectraMeccanica acquisition.

Current wording

Other income (expense), net increased by $1.0 million, from a $1.7 million expense in the three months ended September 30, 2023 to a $0.7 million expense in the three months ended September 30, 2024. The change was attributable to decreases of (i) $0.8 million in net interest expense related to the Convertible Note and Conv ertible Debentures, including amortization of related discounts and issuance costs, primarily due to Convertible Debentures being fully repaid on December 4, 2023 and (ii) $0.4 million of redemption premiums related to prepayments on Convertible Debentures during the three months ended September 30, 2023 with no such comparable expense during the three months ended September 30, 2024. This was partially offset by $0.2 million of impairment losses due to the sale of assets previously designated as held-for-sale.

Previous wording

Other income (expense), net increased by $9.1 million, from an $8.1 million expense in the six months ended June 30, 2023 to a $1 million income in the six months ended June 30, 2024. The change was attributable to decreases of (i) $4.4 million in net interest expense related to the Convertible Note and Convertible Debentures, including amortization of related discounts and issuance costs, primarily due to Convertible Debentures being fully repaid on December 4, 2023, (ii) $1.5 million for impairment on assets held for sale during the six months ended June 30, 2023 with no such comparable expense during the six months ended June 30, 2024, (iii) $0.8 million of redemption premiums related to prepayments on Convertible Debentures during the six months ended June 30, 2023 with no such comparable expense during the three months ended June 30, 2024, and (iv) $0.2 million in amortization expense related to marketable debt securities, available-for-sale with no such comparable expense during the three months ended June 30, 2024. Additionally, during the six months ended June 30, 2024, there was a $2.2 million increase in other income, net related to theestimated amount that can be recovered from previously paid tariffs relating to crushed SOLO vehicles that were acquired in connection with the ElectraMeccanica acquisition.

Current wording

Other income (expense), net increased by $10.1 million, from an $9.8 million expense in the nine months ended September 30, 2023 to a $0.3 million income in the nine months ended September 30, 2024. The change was attributable to decreases of (i) $5.1 million in net interest expense related to the Convertible Note and Convertible Debentures, including amortization of related discounts and issuance costs, primarily due to Convertible Debentures being fully repaid on December 4, 2023, (ii) $1.3 million for impairment on assets held for sale, (iii) $1.2 million of redemption premiums related to prepayments on Convertible Debentures during the nine months ended September 30, 2023 with no such comparable expense during the nine months ended September 30, 2024, and (iv) $0.2 million in amortization expense related to marketable debt securities, available-for-sale with no such comparable expense during the nine months ended September 30, 2024. Additionally, during the nine months ended September 30, 2024, there was a $2.3 million increase in other income, net related to the estimated amount that can be recovered from previously paid tariffs relating to crushed SOLO vehicles that were acquired in connection with the ElectraMeccanica acquisition.

Previous wording

The gain on the change in fair value of derivative instruments decreased by $0.2 million, or 58%, from $0.3 million in the three months ended June 30, 2023 to $0.1 million in the three months ended June 30, 2024. The change in fair value in both periods is primarily attributable to the change in our stock price and the resulting valuation at the respective reporting period.

Current wording

The loss on the change in fair value of derivative instruments increased by $0.4 million, or 134%, from a $0.3 million gain in the three months ended September 30, 2023 to $0.1 million loss in the three months ended September 30, 2024. The change in fair value in both periods is primarily attributable to the change in our stock price and the resulting valuation at the respective reporting period.

Previous wording

The loss on change in fair value of derivative instruments increased by $0.2 million, or 119%, from a gain of $0.2 million in the three months ended June 30, 2023 to a loss of $40 thousand in the three months ended June 30, 2024. The change in fair value in both periods is primarily attributable to the change in our stock price and the resulting valuation at the respective reporting period.

Current wording

The loss on change in fair value of derivative instruments increased by $0.7 million, or 128%, from a gain of $0.5 million in the nine months ended September 30, 2023 to a loss of $0.1 million in the nine months ended September 30, 2024. The change in fair value in both periods is primarily attributable to the change in our stock price and the resulting valuation at the respective reporting period.

Previous wording

The gain on the change in fair value of contingent earn-out shares liability decreased by $0.5 million from $0.6 million in the three months ended June 30, 2023 to $36 thousand in the three months ended June 30, 2024. The change in fair value in both periods is primarily attributable to the change in our stock price and the resulting valuation at the respective reporting period.

Current wording

The gain on the change in fair value of contingent earn-out shares liability decreased by $0.4 million from $0.4 million in the nine months ended September 30, 2023 to $33,000 in the nine months ended September 30, 2024. The change in fair value in both periods is primarily attributable to the change in our stock price and the resulting valuation at the respective reporting period.

Previous wording

The Company recorded income tax provision of $4,000 and $2,000 during the three months ended June 30, 2024 and 2023, respectively. The Company recorded an income tax provision of $9,000 and $4,000 during the six months ended June 30, 2024 and 2023, respectively

Current wording

The Company recorded income tax provision of $4,000 and $3,000 during the three months ended September 30, 2024 and 2023, respectively. The Company recorded an income tax provision of $13,000 and $7,000 during the nine months ended September 30, 2024 and 2023, respectively.

Previous wording

As of June 30, 2024, our principal sources of liquidity were our cash and cash equivalents of$19.7 million. Our short-term uses of cash are for working capital, and our long-term uses of cash are for working capital and to pay the principal of our indebtedness.

Current wording

As of September 30, 2024, our principal sources of liquidity were our cash and cash equivalents of$8.4 million and an accumulated deficit of approximately $184.4 million. Our short-term uses of cash are for working capital, and our long-term uses of cash are for working capital and to pay the principal of our indebtedness. During the nine months ended September 30, 2024, we incurred a net loss of approximately $31.2 million and had net cash used in operating activities of $52.1 million.

Previous wording

In response to these conditions, we are currently evaluating different strategies to obtain the required funding for future operations. We have plans to secure and intend to employ various strategies to raise additional capital, which may include the SEPA as well as other capital raising strategies such as debt financing (which may include asset-based lending and/or receivable financing), other non-dilutive financing, and/or equity financing. However, our access to the SEPA is not available as of the date of this Report and will not be available until a post-effective amendment to the Registration Statement on Form S-1 filed on July 27, 2023, is filed and declared effective and other applicable conditions are met. Our ability to access other capital when needed is not assured and, if capital is not available to us when, and in the amounts needed, we could be required to delay, scale back or abandon some or all of our development programs and other operations, which could materially harm our business, prospects, financial condition and operating results. Global general economic and political conditions, such as inflation, uncertain credit and global financial markets, supply chain disruption, international currency fluctuations, and geopolitical events have had and could continue to have an adverse impact in our ability to raise additional funds. If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce or eliminate our commercialization, research and development programs and/or other efforts and our ability to continue our operations would be negatively impacted. If we seek additional financing to fund our business activities in the future and there remains substantial doubt about our ability to continue as a going concern, investors or other financing sources may be unwilling to provide funding to us on commercially reasonable terms, if at all. In addition, we may have to liquidate our assets and may receive less than the value at which those assets are carried on our audited financial statements and/or seek protection under Chapters 7 or 11 of the United States Bankruptcy Code. This could potentially cause us to cease operations and result in a complete or partial loss of your investment in our Common Stock.

Current wording

In response to these conditions, we are currently evaluating different strategies to obtain the required funding for future operations. We have plans to secure and intend to employ various strategies to raise additional capital, which may include capital raising strategies such as debt financing (which may include asset-based lending and/or receivable financing), other non-dilutive financing, and/or equity financing. We also have in place the ability to access capital through the SEPA; however, our ability to access the SEPA is dependent on trading volumes and the market price of Xos’ Common Stock. Furthermore, our access to capital under the SEPA is limited to the extent of the 3,333,333 shares registered for resale pursuant to our Registration Statement on Form S-1, as amended by Post-Effective Amendment Number 1 thereto which was declared effective on September 10, 2024 and the satisfaction of other applicable conditions. Our ability to access other capital when needed is not assured and, if capital is not available to us when, and in the amounts needed, we could be required to delay, scale back or abandon some or all of our development programs and other operations, which could materially harm our business, prospects, financial condition and operating results. Global general economic and political conditions, such as inflation, uncertain credit and global financial markets, supply chain disruption, international currency fluctuations, and geopolitical events have had and could continue to have an adverse impact in our ability to raise additional funds. If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce or eliminate our commercialization, research and development programs and/or other efforts and our ability to continue our operations would be negatively impacted. If we seek additional financing to fund our business activities in the future and there remains substantial doubt about our ability to continue as a going concern, investors or other financing sources may be unwilling to provide funding to us on commercially reasonable terms, if at all. In addition, we may have to liquidate our assets and may receive less than the value at which those assets are carried on our audited financial statements and/or seek protection under Chapters 7 or 11 of the United States Bankruptcy Code.

Previous wording

On March 23, 2022, we entered into a Standby Equity Purchase Agreement with YA II PN, Ltd. (“Yorkville”), which was subsequently amended on June 22, 2023 (as amended, the "SEPA"), whereby we have the right, but not the obligation, to sell to Yorkville up to $125.0 million of our shares of Common Stock at our request any time until February 11, 2026, subject to certain conditions. As of June 30, 2024, the remaining commitment available under the SEPA was $119.4 million. We used the net proceeds received from sales of Common Stock pursuant to the SEPA for working capital and general corporate purposes and expect similar uses of any remaining proceeds going forward. See Note 8 — Convertible Notes and Note 9 — Equity — Standby Equity Purchase Agreement in the accompanying unaudited condensed consolidated financial statements for more information regarding the SEPA, the Side Letter and the Securities Purchase Agreement.

Current wording

On March 23, 2022, we entered into a Standby Equity Purchase Agreement with YA II PN, Ltd. (“Yorkville”), which was subsequently amended on June 22, 2023 (as amended, the "SEPA"), whereby we have the right, but not the obligation, to sell to Yorkville up to $125.0 million of our shares of Common Stock at our request any time until February 11, 2026, subject to certain conditions. As of September 30, 2024, the remaining commitment available under the SEPA was $119.4 million. However, our ability to access the SEPA is dependent on trading volumes and the market price of our Common Stock and limited to the extent of the 3,333,333 shares registered for resale, among other things. We used the net proceeds received from sales of Common Stock pursuant to the SEPA for working capital and general corporate purposes and expect similar uses of any remaining proceeds going forward. See Note 8 — Convertible Notes and Note 9 — Equity — Standby Equity Purchase Agreement in the accompanying unaudited condensed consolidated financial statements for more information regarding the SEPA.

Previous wording

On August 11, 2022 and September 21, 2022, we issued convertible debentures (as subsequently amended, the “Convertible Debentures”) to Yorkville in the aggregate principal amount of $35.0 million, with a maturity date of November 11, 2023, which may be extended to February 11, 2024. Also on August 11, 2022, we issued a convertible promissory note (as subsequently amended and restated, the “Convertible Note”) to Aljomaih Automotive Co. (“Aljomaih”) with a principal amount of $20.0 million and a maturity date of August 11, 2025.

Current wording

On August 11, 2022 and September 21, 2022, we issued convertible debentures (as subsequently amended, the “Convertible Debentures”) to Yorkville in the aggregate principal amount of $35.0 million, with a maturity date of November 11, 2023, which was extended to February 11, 2024 pursuant to the terms of the Securities Purchase Agreement. Also on August 11, 2022, we issued a convertible promissory note (as subsequently amended and restated, the “Convertible Note”) to Aljomaih Automotive Co. (“Aljomaih”) with a principal amount of $20.0 million and a maturity date of August 11, 2025. See Note 8 - Convertible Notes in the accompanying unaudited condensed consolidated financial statements for more information.

Previous wording

The following table provides a summary of cash flow data for the six months ended June 30, 2024 and 2023(in thousands):

Current wording

The following table provides a summary of cash flow data for the nine months ended September 30, 2024 and 2023(in thousands):

Previous wording

Our cash flow from operating activities is significantly affected by the growth of our business primarily related to research and development and selling, general, and administrative activities and working capital needs to support growth in inventory reserves and fluctuations in accounts payable and other current assets and liabilities.

Current wording

Our cash flow from operating activities is significantly affected by the growth of our business primarily related to operating expenses and working capital needs to support growth in inventory reserves and fluctuations in accounts payable and other current assets and liabilities.

Previous wording

Netcash used in opera ting activities was$40.6 million for the six months ended June 30, 2024, primarily consisting of a netloss excluding non-cash expenses and gainsof $13.6 million, and unfavorable net changes in operating assets and liabilities of $26.9 million primarily driven by higher accounts receivable and inventory.

Current wording

Netcash used in opera ting activities was$52.1 million for the nine months ended September 30, 2024, primarily consisting of a netloss excluding non-cash expenses and gainsof$19.6 million, and unfavorable net changes in operating assets and liabilities of $32.5 million primarily driven by higher accounts receivable and inventory.

Previous wording

Net cash used in operating activities was $30.0 million for the six months ended June 30, 2023, primarily consisting of a net loss excluding non-cash expenses and gains of$34.4 million, partially offset by net changes in operating assets and liabilities of $4.4 million.

Current wording

Net cash used in operating activities was $38.7 million for the nine months ended September 30, 2023, primarily consisting of a net loss excluding non-cash expenses and gains of$43.6 million, partially offset by net changes in operating assets and liabilities of $5.0 million.

Previous wording

Net cash provided by investing activities was$51.2 million for the six months ended June 30, 2024, due to net cash acquired in connection with the acquisition of ElectraMeccanica, partially offset by property and equipment purchases of $0.2 million.

Current wording

Net cash provided by investing activities was$51.2 million for the nine months ended September 30, 2024, due to $51.4 million net cash acquired in connection with the acquisition of ElectraMeccanica and net proceeds from sale of assets held for sale of $0.1 million partially offset by property and equipment purchases of $0.3 million.

Previous wording

Net cash provided by investing activities was $36.6 million for the six months ended June 30, 2023, which primarily consisted of net proceeds from the sale of investments in marketable debt securities of $37.5 million and net proceeds from sale of assets held for sale of $0.5 million, offset by property and equipment purchases of $1.4 million.

Current wording

Net cash provided by investing activities was $50.9 million for the nine months ended September 30, 2023, which primarily consisted of net proceeds from the sale of investments in marketable debt securities of $50.7 million and net proceeds from sale of assets held for sale of $1.3 million, offset by property and equipment purchases of $1.2 million.

Previous wording

Net cash used in financing activitieswas $1.6 million for the six months ended June 30, 2024, which primarily related to (i) equipment lease principal paymentsof $1.2 million and (ii) taxes paid relating to net-settlement of stock-based awards of $0.8 million. This was partially offset by proceeds from net short-term insurance financing note activity of $0.3 million.

Current wording

Net cash used in financing activitieswas $1.5 million for the nine months ended September 30, 2024, which primarily related to (i) equipment lease principal paymentsof $1.7 million and (ii) taxes paid relating to net-settlement of stock-based awards of $0.9 million. This was partially offset by proceeds from net short-term insurance financing note activity of $1.1 million.

Previous wording

Net cash used in financing activities was $17.4 million for the six months ended June 30, 2023, primarily related to (i) payments for convertible notes of $15.7 million, (ii) equipment lease principal payments of $1.2 million, (iii) taxes paid relating to net-settlement of stock-based awards of $0.7 million, and (iv) outflow from net short-term insurance financing note activity of $0.7 million. This was partially offset by proceeds from issuance of common stock under the SEPA of $0.9 million.

Current wording

Net cash used in financing activities was $27.5 million for the nine months ended September 30, 2023, primarily related to (i) payments for convertible notes (including prepayment premium) of $25.0 million, (ii) equipment lease principal payments of $2.5 million, (iii) taxes paid relating to net-settlement of stock-based awards of $0.9 million, and (iv) outflow from net short-term insurance financing note activity of $0.3 million. This was partially offset by proceeds from issuance of common stock under the SEPA of $1.2 million.

Previous wording

We did not have any material contractual obligations or other commitments as of June 30, 2024, other than as disclosed in the 2023 Form 10-K, except the remaining obligations for operating leases acquired in connection with ElectraMeccanica acquisition aggregating$24.8 million.

Current wording

We did not have any material contractual obligations or other commitments as of September 30, 2024, other than as disclosed in the 2023 Form 10-K, except the remaining obligations for operating leases acquired in connection with ElectraMeccanica acquisition aggregating $24.1 million.