Xos, Inc.

Previous wording

We are a leading fleet electrification solutions provider committed to the decarbonization of commercial transportation. We design and manufacture Class 5-8 battery-electric commercial vehicles that travel on last-mile, back-to-base routes of up to 200 miles per day. We also offer charging infrastructure products and services through Xos Energy Solutions™ to support electric vehicle fleets. Our proprietary fleet management software, Xosphere™, integrates vehicle operation and vehicle charging to provide commercial fleet operators a more seamless and cost-efficient vehicle ownership experience than traditional internal combustion engine counterparts. We developed the X-Platform (our proprietary, purpose-built vehicle chassis platform) and the X-Pack (our proprietary battery system) specifically for the medium- and heavy-duty commercial vehicle segment with a focus on last-mile commercial fleet operations.

Current wording

We are a leading fleet electrification solutions provider committed to the decarbonization of commercial transportation. We design and manufacture Classes 5 through 8 battery-electric commercial vehicles that travel on last-mile, back-to-base routes of up to 200 miles per day. We also offer, through Xos Energy Solutions™, mobile and fixed charging infrastructure products, such as the Xos Hub, and have from time to time offered services to support electric vehicle fleets. Our proprietary fleet management software, Xosphere™, integrates vehicle operation and vehicle charging to provide commercial fleet operators a more seamless and cost-efficient vehicle ownership experience than traditional internal combustion engine counterparts. We developed the X-Platform (our proprietary, purpose-built vehicle chassis platform) and high-voltage architecture with a focus on the medium-duty commercial vehicle segment and, in particular, last-mile commercial fleet operations.

Previous wording

Our X-Platform and X-Pack provide modular features that allow us to accommodate a wide range of last-mile applications and enable us to offer clients at a lower total cost of ownership compared to traditional diesel fleets. The X-Platform and X-Pack were both engineered to be modular in nature to allow fleet operators to customize their vehicles to fit their commercial applications (e.g., upfitting with a specific vehicle body and/or tailoring battery range).

Current wording

Our X-Platform provides modular features that allow us to accommodate a wide range of last-mile applications and enable us to offer clients vehicles at a lower total cost of ownership compared to traditional diesel fleets. The X-Platform was engineered to be modular in nature to allow fleet operators to customize their vehicles to fit their commercial applications (e.g., upfitting with a specific vehicle body and/or tailoring battery range).

Previous wording

Xos Energy Solutions™ is our comprehensive charging infrastructure through which we offer mobile and permanent multi-application charging equipment, mobile energy storage, and turnkey energy infrastructure services to accelerate transitions to electric fleets by maximizing incentive capture and reducing implementation lead times and costs. Xos Energy Solutions™ offers customers full service project management, electric vehicle chargers and charging equipment, and solutions for charging infrastructure installation. This service is available to customers whether they use Xos trucks, competitor trucks, or a mixed fleet.

Current wording

Xos Energy Solutions™ is our charging infrastructure business through which we offer mobile and stationary multi-application chargers, including the Xos Hub, and mobile energy storage to accelerate transitions to electric fleets by maximizing incentive capture and reducing implementation lead times and costs.

Previous 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.

Current wording

During the three months ended March 31, 2025, we delivered 22 vehicles, 5 Hubs and 2 powertrains. During the three months ended March 31, 2024, we delivered 60 vehicles and 2 powertrains. During the three months ended March 31, 2025, we generated $3.6 million in revenue (or 61% of revenue) in vehicle sales, $1.6 million (or 27% of revenue) in powertrain and Hub sales, $0.5 million (or 8% of revenue) in other product revenue, and $0.2 million (or 4% of revenue) in ancillary revenue. During the three months ended March 31, 2024, we generated $11.6 million in revenue (or 88% of revenue) from vehicle sales, $0.4 million (or 3% of revenue) in powertrain and Hub sales, $0.6 million (or 5% of revenue) in other product revenue, and $0.5 million (or 4% of revenue) from ancillary revenue. The reduction in deliveries in the current year period is primarily due to a delay in executing sales orders with respect to an additional 31 stripped chassis that we shipped to our upfitter during the period.

Previous wording

Xos is an early-stage growth company, and as such incurred net losses and cash outflows since its inception. As an early-stage growth company, the Company's ability to access capital is critical. However, there can be no assurance such capital will be available to the Company when needed, on favorable terms or at all. If we are unable to collect on our outstanding accounts receivable, obtain a sufficient level of new capital in the near-term and/or obtain replacement financing for or extend the maturity of existing debt, we could be required to dissolve and liquidate our assets under bankruptcy laws or otherwise.

Current wording

Xos is an early-stage growth company, and as such has incurred net losses and cash outflows since its inception. As an early-stage growth company, the Company's ability to access capital is critical. However, there can be no assurance such capital will be available to the Company when needed, on favorable terms or at all. If we are unable to collect on our outstanding accounts receivable, obtain a sufficient level of new capital in the near-term and/or obtain replacement financing for or extend the maturity of existing debt, we could be required to dissolve and liquidate our assets under bankruptcy laws or otherwise.

Previous wording

Management plans to continue to seek opportunities to reduce costs and, in particular, cash expenditures, in a manner intended to minimize their adverse impact on our core operations. However, there can be no assurance that the measures described above, or any other cost-cutting measures we may implement in the future, will be sufficient to address our immediate or longer-term liquidity and working capital needs. Moreover, it is possible that such measures will have an adverse effect on our operations (see Part II, Item 1A Risk Factors of this Report, under the caption “Our recent cost-cutting measures may not adequately reduce our operating costs or improve our operating margins, may lead to additional workforce attrition and may cause operational disruptions”).

Current wording

Management plans to continue to seek opportunities to reduce costs and, in particular, cash expenditures, in a manner intended to minimize their adverse impact on our core operations. However, there can be no assurance that the measures described above, or any other cost-cutting measures we may implement in the future, will be sufficient to address our immediate or longer-term liquidity and working capital needs.

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, 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 productionand 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

While our ability to source certain critical inventory items has been steadily improving since prior years, it is still experiencing long-standing negative effects from global economic conditions, and expects such effects to continue to varying degrees for the foreseeable future. We have also observed, and expect to be impacted by, sporadic and unpredictable shortages for specific components, primarily in power electronics and harnesses, and disruptions to the supply of components. Fluctuating fuel prices and geopolitical conflicts have compounded ongoing supply and demand pressures for shipping, resulting in port congestion, higher freight fees and longer transit times.

Current wording

While our ability to source certain critical inventory items has been steadily improving since prior years, we are still experiencing long-standing negative effects from global economic conditions, and management expects such effects to continue to varying degrees for the foreseeable future. We have also observed, and expect to be impacted by, sporadic and unpredictable shortages for specific components, primarily in power electronics and harnesses, and disruptions to the supply of components.

Previous 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.

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. Changes to trade policies and tariffs (or the perception that such changes may occur) could materially adversely affect our ability to source components at reasonable prices or at all. We 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

To date, we have primarily generated revenue from the sale of electric step vans, stripped chassis vehicles and battery systems. Our stripped chassis is our vehicle offering that consists of our X-Platform electric vehicle base and X-Pack battery systems, which customers can upfit with their preferred vehicle body. As we continue to expand our commercialization, we expect our revenue to come from these products and other vehicle offerings including chassis cabs, which will feature our chassis and powertrain with the inclusion of a proprietary designed cab, and tractors, a shortened version of the chassis cab designed to haul trailers (also known as “day cabs”), that travel in last-mile use cases. In addition, we also offer service offerings that include Xos Energy Solutions™, our energy solutions offering and Xosphere™, our fleet management platform.

Current wording

To date, we have primarily generated revenue from the sale of electric step vans, stripped chassis vehicles and battery systems. Our stripped chassis is our vehicle offering that consists of our X-Platform electric vehicle base and battery systems, which customers can upfit with their preferred vehicle body. As we continue to expand our commercialization, we expect our revenue to come from these products and other vehicle offerings including chassis cabs, which will feature our chassis and powertrain with the inclusion of a proprietary designed cab, and tractors, a shortened version of the chassis cab designed to haul trailers (also known as “day cabs”), that travel in last-mile use cases. Through Xos Energy Solutions™, we have provided charging infrastructure, including our Xos Hub, as well as certain energy services. In addition, we offer Xosphere™, our fleet management platform.

Previous wording

Revenue consists of product sales, inclusive of shipping and handling charges, net of estimates for customer allowances, service offerings, and leasing. Revenue is measured as the amount of consideration we expect to receive in exchange for delivering products. All revenue is recognized when we satisfy the performance obligations under the contract. We recognize revenue by delivering the promised products to the customer, with the revenue recognized at the point in time the customer takes control of the products. For shipping and handling charges, revenue is recognized at the time the products are delivered to or picked up by the customer. For leasing, revenue is recognized on a straight-line basis over the term of the lease agreement. The majority of our current contracts have a single performance obligation, which is met at the point in time that the product is delivered, and title passes, to the customer, and are short term in nature.

Current wording

Revenue consists of product sales, inclusive of shipping and handling charges, net of estimates for customer allowances, service offerings, and leasing. Revenue is measured as the amount of consideration we expect to receive in exchange for delivering products. All revenue is recognized when we satisfy the performance obligations under the contract. We recognize revenue by delivering the promised products to the customer, with the revenue recognized at the point in time the customer takes control of the products. For shipping and handling charges, revenue is recognized at the time the products are delivered to or picked up by the customer. For operating leases which are accounted for under ASC 842, Leases, revenue is recognized on a straight-line basis over the term of the lease agreement. The majority of our current contracts have a single performance obligation, which is met at the point in time that the product is delivered, and title passes, to the customer, and are short term in nature.

Previous wording

Revenue also consists of sales-type leases which are accounted for under ASC 842. Revenue is the lower of the fair value of the asset leased or the present value of the lease receivable and prepayments.

Current wording

Revenue also consists of sales-type leases which are accounted for under ASC 842, Leases. Revenue is the lower of the fair value of the asset leased or the present value of the lease receivable and prepayments.

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. 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.

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, Hubs 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 unaudited condensed consolidated statements of operations and comprehensive loss, allocated to cost of goods sold.

Previous wording

General and administrative (“G&A”) expense consists of personnel-related expenses, outside professional services, including legal, audit and accounting services, as well as expenses for facilities, non-sales related travel, and general office supplies and expenses. Personnel-related expenses consist of salaries, benefits, allocations of stock-based compensation, and associated payroll taxes. Overhead items including rent, insurance, utilities, and other items are included in G&A expense. G&A expense also includes depreciation expense on property and equipment related to G&A 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 theconsolidated statements of operations and comprehensive loss, allocated to G&A.

Current wording

General and administrative (“G&A”) expense consists of personnel-related expenses, outside professional services, including legal, audit and accounting services, as well as expenses for facilities, non-sales related travel, and general office supplies and expenses. Personnel-related expenses consist of salaries, benefits, allocations of stock-based compensation, and associated payroll taxes. Overhead items including rent, insurance, utilities, and other items are included in G&A expense. G&A expense also includes depreciation expense on property and equipment related to G&A 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 unaudited condensed consolidated statements of operations and comprehensive loss, allocated to G&A.

Previous 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.

Current wording

Other expense, net primarily includes interest expense for our equipment leases and interest expense related to our financing obligations, including the amortization for debt discount and issuance costs, partially offset by income from the sublease of our Los Angeles, California, office space.

Previous wording

Change in fair value of derivative instruments relates to Common Stock warrant liability assumed as part of the Business Combination and the conversion feature on the convertible notes issued in prior years and derivative features of the Convertible Debentures issued on August 11, 2022 and September 21, 2022. Changes in the fair value relate to remeasurement of our public and private placement warrants to fair value as of any respective exercise date and as of each subsequent balance sheet date and mark-to-market adjustments for derivative liabilities each measurement period.

Current wording

Change in fair value of derivative instruments relates to Common Stock warrant liability assumed as part of the Business Combination. Changes in the fair value relate to remeasurement of our Public and Private Placement Warrants to fair value as of any respective exercise date and as of each subsequent balance sheet date and mark-to-market adjustments for these derivative liabilities each measurement period.

Previous wording

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

Current wording

Comparison of the Three Months Ended March 31, 2025 and 2024

Previous 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.

Current wording

Our total revenues decreased by $7.3 million, or 55%, from $13.2 million in the three months ended March 31, 2024 to $5.9 million in the three months ended March 31, 2025, primarily driven by a decrease in unit sales and average selling price. During the three months ended March 31, 2025, we sold 22 vehicles, 5 Hubs and 2 powertrains, compared to 60 vehicles and 2 powertrains during the three months ended March 31, 2024.

Previous 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.

Current wording

Cost of goods sold decreased by $5.7 million, or 55%, from $10.4 million in the three months ended March 31, 2024 to $4.7 million in the three months ended March 31, 2025. The decrease in cost of goods sold is directly attributable to the decrease in our product revenue and associated decreases of (i) $5.2 million in direct materials (ii) $0.4 million for dealer return reserves, and (iii) $0.7 million in direct labor and manufacturing overhead. These decreases were offset by increases of (i) $0.1 million for warranty reserve and (ii) $0.5 million in unfavorable physical inventory count and other adjustments.

Previous 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.

Current wording

General and administrative expenses decreased by $1.1 million, or 12%, from $9.0 million in the three months ended March 31, 2024 to $7.9 million in the three months ended March 31, 2025, attributable to decreases of (i) $2.3 million in headcount and personnel costs for legal, finance, accounting, information technology and general and administrative functions, (ii) $0.4 million in depreciation expense, (iii) $0.4 million in stock-based compensation expense due to decreased headcount, and (iv) $0.3 million in other operating expenses including travel, recruiting, and computer software costs. These decreases were offset by increases of (i) $1.9 million in financed equipment lease expense and (ii) $0.4 million in facility expenses, primarily due to two operating leases acquired in connection with the ElectraMeccanica acquisition.

Previous 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.

Current wording

Research and development expenses decreased by $1.1 million, or 37%, from $3.1 million in the three months ended March 31, 2024 to $1.9 million in the three months ended March 31, 2025. The change was primarily due to decreases of (i) $0.6 million in allocation of personnel costs, including stock-based compensation expense, driven by lower headcount in engineering, (ii) $0.3 million in other research and development costs, including consulting and software, and (iii) $0.2 million in equipment and material purchases due to fewer research and development projects in development year over year.

Previous 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.

Current wording

Sales and marketing expense decreased by $0.3 million, or 34%, from $1.0 million in the three months ended March 31, 2024 to $0.7 million in the three months ended March 31, 2025. The change was primarily due to decreases of (i) $0.2 million in allocation of personnel costs, including stock-based compensation expense, driven by lower headcount and (ii) $0.1 million in other sales and marketing expenses such as customer accommodation payments and sales events.

Previous 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.

Current wording

The loss on the change in fair value of derivative instruments decreased by $0.1 million, or 68%, from $0.2 million in the three months ended March 31, 2024 to $0.1 million in the three months ended March 31, 2025. 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 increased by $0.1 million from a $0.1 million loss in the three months ended September 30, 2023 to $0 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.

Current wording

The loss on the change in fair value of contingent earn-out shares liability decreased by $3,000 from $3,000 in the three months ended March 31, 2024 to $0 in the three months ended March 31, 2025. 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 $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.

Current wording

The Company recorded income tax provision of $12,000 and $5,000 during the three months ended March 31, 2025 and 2024, respectively.

Previous 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.

Current wording

As of March 31, 2025, our principal sources of liquidity were our cash and cash equivalents of$4.8 million and an accumulated deficit of approximately $213.6 million. Our short-term uses of cash are for working capital and to pay the principal of our indebtedness. During the three months ended March 31, 2025, we incurred a net loss of approximately $10.2 million and had net cash used in operating activities of $4.8 million.

Previous wording

Under ASC Subtopic 205-40, Presentation of Financial Statements—Going Concern (“ASC 205-40”), we have the responsibility to evaluate whether conditions and/or events raise substantial doubt about our ability to meet our future financial obligations as they become due within one year of the financial statements included elsewhere in this Report. The result of our ASC 205-40 analysis, due to uncertainties discussed below, is that there is substantial doubt about our ability to continue as a going concern through the next 12 months from the date of the condensed consolidated financial statements in this Report.

Current wording

Under ASC Subtopic 205-40, Presentation of Financial Statements—Going Concern (“ASC 205-40”), we have the responsibility to evaluate whether conditions and/or events raise substantial doubt about our ability to meet our future financial obligations as they become due within one year of the financial statements included elsewhere in this Report. The result of our ASC 205-40 analysis, due to uncertainties discussed below, is that there is substantial doubt about our ability to continue as a going concern through the next 12 months from the date of the unaudited condensed consolidated financial statements in this Report.

Previous wording

As an early-stage growth company, we have incurred net losses and cash outflows since our inception. We will continue to incur net losses and cash outflows in accordance with our operating plan as we continue to scale our operations to meet anticipated demand and seek to establish our product and service offerings. As a result, our ability to access capital is critical and until we can generate sufficient revenue to cover our operating expenses, working capital and capital expenditures, we will need to raise additional capital in order to fund and scale our operations. These conditions and events raise substantial doubt about our ability to continue as a going concern. Our consolidated financial information does not include any adjustment that may result from the outcome of this uncertainty.

Current wording

As an early-stage growth company, we have incurred net losses and cash outflows since our inception. We will continue to incur net losses and cash outflows in accordance with our operating plan as we continue to scale our operations to meet anticipated demand and seek to establish our product and service offerings. As a result, our ability to access capital is critical and until we can generate sufficient revenue to cover our operating expenses, working capital and capital expenditures, we will need to raise additional capital in order to fund and scale our operations. These conditions and events raise substantial doubt about our ability to continue as a going concern. Our unaudited condensed consolidated financial information does not include any adjustment that may result from the outcome of this uncertainty.

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 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.

Current wording

Global general economic and political conditions, such as inflation, tariffs (or the threat of tariffs), 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 unaudited condensed consolidated 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.

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 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.

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 March 31, 2025, the remaining commitment available under the SEPA was $119.4 million. However, our ability to access the remaining commitment amount may be limited by various factors, including, but not limited to, the availability of an effective registration statement permitting the resale of such shares of Common Stock. In particular, the Company’s access to capital under the SEPA is not available as of the date of this Report and will not be available until the Company files with the SEC a post-effective amendment to the applicable Registration Statement. Moreover, such registration statement only registers the resale of 3,333,333 shares of Common Stock, which is insufficient for us to fully utilize the remaining commitment under the SEPA, given the current market price of our Common Stock. Furthermore, unless extended by mutual agreement of the parties, the SEPA is scheduled to expire on February 11, 2026. 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 9 — Convertible Notes and Note 10 — Equity — Standby Equity Purchase Agreement in the accompanying unaudited condensed consolidated financial statements for more information regarding the SEPA.

Previous wording

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

Current wording

The following table provides a summary of cash flow data for the three months ended March 31, 2025 and 2024(in thousands):

Previous 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.

Current wording

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

Previous 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.

Current wording

Net cash provided by investing activities was $51.3 million for the three months ended March 31, 2024, due to net cash acquired in connection with the acquisition of ElectraMeccanica.

Previous 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.

Current wording

Net cash used in financing activitieswas $1.5 million for the three months ended March 31, 2025, which primarily related to (i)net short-term insurance financing note activity of $0.8 million, (ii) equipment lease principal paymentsof $0.6 million and (iii) taxes paid relating to net-settlement of stock-based awards of $0.1 million.

Previous 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.

Current wording

Net cash used in financing activities was $1.1 million for the three months ended March 31, 2024, primarily related to (i) equipment lease principal payments of $0.6 million, (ii) taxes paid relating to net-settlement of stock-based awards of $0.2 million, and (iii) outflow from net short-term insurance financing note activity of $0.3 million.

Previous 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.

Current wording

We did not have any material contractual obligations or other commitments as of March 31, 2025, other than as disclosed in the 2024 Form 10-K, and in Note 14 - Commitments and Contingencies.

Previous wording

Our unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) which requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the balance sheet date, as well as reported amounts of revenues and expenses during the reporting periods. Our most significant estimates and judgments involve inventory valuation, incremental borrowing rates for assessing operating and financing lease liabilities, useful lives of property and equipment, earn-out shares liability, stock-based compensation, common stock warrant liability, product warranty liability and and valuations utilized in connection with acquisitions. We base our estimates on historical experience and on various other assumptions believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from those estimates, and such differences could be material to our financial statements.

Current wording

Our unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) which requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the balance sheet date, as well as reported amounts of revenues and expenses during the reporting periods. Our most significant estimates and judgments involve inventory valuation, incremental borrowing rates for assessing operating and financing lease liabilities, useful lives of property and equipment, earn-out shares liability, stock-based compensation, common stock warrant liability, product warranty liability and valuations utilized in connection with acquisitions. We base our estimates on historical experience and on various other assumptions believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from those estimates, and such differences could be material to our financial statements.

Previous wording

There were no material changes in our critical accounting policies from those disclosed in our 2023 Form 10-K for the year ended December 31, 2023 other than below.

Current wording

There were no material changes in our critical accounting policies from those disclosed in our 2024 Form 10-K.

Previous wording

See Note 2 — Basis of Presentation and Summary of Significant Accounting Policies to our unaudited condensed consolidated financial statements included in this filing for more information about recent accounting pronouncements, the timing of their adoption, and our assessment, to the extent we have made one, of their potential impact on our financial condition and our results of operations.

Current wording

See Note 2 — Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements to our unaudited condensed consolidated financial statements included in this filing for more information about recent accounting pronouncements, the timing of their adoption, and our assessment, to the extent we have made one, of their potential impact on our financial condition and our results of operations.