Xos, Inc.

Previous 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.

Current wording

We are a leading energy storage and fleet electrification solutions provider committed to the decarbonization of commercial transportation. We offer, through Xos Energy Solutions™, mobile charging and energy storage products, such as the Xos Hub™, and have from time to time offered services to support electric vehicle fleets, including fixed charging infrastructure products. We design and manufacture Classes 5 and 6 battery-electric commercial vehicles that travel on last-mile, back-to-base routes of up to 200 miles per day. We developed 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

Through our Powered by Xos™ business, we also provide mix-use powertrain solutions for off-highway, industrial and other specialty vehicles, such as forklifts, school buses, medical and dental clinics, blood donation vehicles, and mobile command vehicles. Our powertrain offerings encompass a broad range of solutions, including high-voltage batteries, power distribution and management componentry, battery management systems, system controls, inverters, electric traction motors and auxiliary drive systems.

Current wording

Through our Powered by Xos™ business, we also provide mixed-use powertrain solutions for off-highway, industrial and other specialty vehicles, such as forklifts, school buses, medical and dental clinics, blood donation vehicles, and mobile command vehicles. Our powertrain offerings encompass a broad range of solutions, including high-voltage batteries, power distribution and management componentry, battery management systems, system controls, inverters, electric traction motors and auxiliary drive systems.

Previous wording

During the year ended December 31, 2024, we delivered 244 vehicles (including leases), 19 powertrains and 34 Hubs. During the year ended December 31, 2023, we delivered 277 vehicles (including leases), 5 powertrains and 1 hub.

Current wording

During the year ended December 31, 2025, we delivered 259 vehicles (including leases) and 69 powertrains and Hubs. During the year ended December 31, 2024, we delivered 244 vehicles (including leases) and 53 powertrains and Hubs.

Previous wording

For the year-ended December 31, 2024, we generated $42.8 million in revenue (or 76% of revenue) from vehicle sales, $8.7 million (or 16% of revenue) in powertrain and hub sales, $0.7 million (or 1% of revenue) in sales-type lease revenue, $1.8 million (or 3% of revenue) in other product revenue, and $1.9 million (or 3% of revenue) from ancillary revenue. For the year ended December 31, 2023, we have generated $39.9 million in revenue (or 90% of revenue) from vehicle sales, $1.2 million (or 3% of revenue) in powertrain and hub sales, $1.5 million (or 3% of revenue) in sales-type lease revenue, $0.8 million (or 2% of revenue) from other product revenue, and $1.1 million (or 2% of revenue) from ancillary revenue.

Current wording

For the year ended December 31, 2025, we generated $35.8 million in revenue (or 78% of revenue) from vehicle sales, $7.2 million (or 15% of revenue) in powertrain and hubs sales, $0.4 million (or 1% of revenue) in sales-type lease revenue, $1.7 million (or 4% of revenue) in other product revenue, and $0.9 million (or 2% of revenue) from ancillary revenue. For the year ended December 31, 2024, we generated $42.8 million in revenue (or 76% of revenue) from vehicle sales, $8.7 million (or 16% of revenue) in powertrain and hubs sales, $0.7 million (or 1% of revenue) in sales-type lease revenue, $1.8 million (or 3% of revenue) from other product revenue, and $1.9 million (or 3% of revenue) from ancillary revenue.

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 company, and as such has incurred net losses and cash outflows since its inception. As an early-stage 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

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. 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

As an early-stage 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. 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.

Previous wording

Management’s plans to improve Xos’s liquidity and working capital requirements over the next twelve months include reducing operating costs in order to conserve financial resources. Accordingly, in the fourth quarter of 2024, Xos took the following measures:

Current wording

Beginning in the fourth quarter of 2024, management implemented plans to improve Xos’s liquidity and working capital requirements. including reducing operating costs in order to conserve financial resources. In the fourth quarter of 2024, Xos took the following measures:

Previous wording

•We completed a reduction in force (the “RIF”) pursuant to which we terminated approximately 26% of our total workforce. We do not expect to incur material costs in connection with the RIF. The RIF may have unintended adverse effects on our operations and results. See “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” in Part I Item 1A Risk Factors of this Report.

Current wording

•We completed a reduction in force (the “RIF”) pursuant to which we terminated approximately 26% of our total workforce. The RIF may have had, and may continue to have, unintended and/or unknown adverse effects on our operations and results. See “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” in Part I Item 1A Risk Factors of this Report.

Previous wording

•Certain of our senior executives have accepted temporary reductions in their annual base salaries, including our Chief Executive Officer and Chief Operating Officer who have volunteered to temporarily reduce their cash salaries by between approximately 20% and approximately 50%, effective October 28, 2024.

Current wording

•Certain of our senior executives have accepted temporary reductions in their annual base salaries, including our Chief Executive Officer and Chief Operating Officer, reducing their cash salaries by between approximately 20% and approximately 50%, respectively effective October 28, 2024.

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, the ElectraMeccanica acquisition and 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, energy-storage 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 and 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, 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. 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, 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

The accompanying consolidated financial statements include the accounts of Xos and its wholly owned subsidiaries, Xos Fleet, Inc. and Xos Services, Inc. (f/k/a Rivordak, Inc.), as well as the entities acquired pursuant to the Arrangement. All significant intercompany accounts and transactions have been eliminated in consolidation. All long-lived assets are maintained in, and all losses are attributable to, the United States.

Current wording

The accompanying consolidated financial statements include the accounts of Xos and its wholly owned subsidiaries, Xos Fleet, Inc. and Xos Services, Inc. (f/k/a Rivordak, Inc.), as well as the entities acquired pursuant to the Arrangement with

Previous wording

Currently, we conduct business through one operating segment. We are an early-stage growth company with minimal commercial operations and our activities to date have been conducted primarily within North America. For more information about our basis of operations, refer to Note 1 - Description of Business in the accompanying notes to the consolidated financial statements for more information.

Current wording

Currently, we conduct business through one operating segment. We are an early-stage company with minimal commercial operations and our activities to date have been conducted primarily within North America. For more information about our basis of operations, refer to Note 1— Description of Business in the accompanying notes to the consolidated financial statements.

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 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.

Current wording

To date, we have primarily generated revenue from the sale of electric stepvans, 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

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 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 Hubs, 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 consolidated statements of operations, 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 theconsolidated statements of operations, allocated to G&A.

Previous wording

Research and development (“R&D”) expense consists primarily of costs incurred for the design and development of our vehicles and battery systems, which include:

Current wording

Research and development (“R&D”) expense consists primarily of costs incurred for the design and development of our vehicles and energy-storage systems, including the Hub, which include:

Previous wording

Sales and marketing (“S&M”) expense consists primarily of expenses related to our marketing of vehicles and brand initiatives, which includes:

Current wording

Sales and marketing (“S&M”) expense consists primarily of expenses related to our marketing of products and brand initiatives, which includes:

Previous wording

•web design, marketing and promotional items, and consultants who assist in the marketing of the Company and its products and services.

Current wording

•web design, marketing and promotional items, and consultants who assist in the marketing of our products, services and brand.

Previous wording

Other 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 ElectraMeccanica acquisition, and interest income from our investments in marketable debt securities, available-for-sale (applicable to 2023), income from the sublease of our Los Angeles, California 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, offset by gains from the termination of equipment leases and 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 (as defined below) 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

Our total revenue increased by $11.4 million, or 26%, from $44.5 million in the year ended December 31, 2023 to $56.0 million in the year ended December 31, 2024. The increase in revenues for the year ended December 31, 2024, was driven by increased deliveries of our hub and powertrain units coupled with an increase in average selling price associated with sales of our updated stepvan platform produced and delivered in the current year. During the year ended December 31, 2024, we delivered 297 units, (244 stepvans, including leases, 19 powertrains and 34 hubs, including leases), compared to 283 units (277 stepvans, 5 powertrains, and 1 hub) in the year ended December 31, 2023.

Current wording

Our total revenue decreased by $10.0 million, or 18%, from $56.0 million in the year ended December 31, 2024 to $46.0 million in the year ended December 31, 2025. The decrease in revenues for the year ended December 31, 2025, was driven by an overall decrease in average selling price from product mix, including a greater proportion of strip chassis and powertrain units as opposed to complete stepvans sold during the year ended December 31, 2025 compared to the year ended December 31, 2024. During the year ended December 31, 2025, we delivered 259 stepvans (including leases), 69 powertrains & Hubs, compared to 244 stepvans (including leases), 53 powertrains & Hubs, including leases, in the year ended December 31, 2024.

Previous wording

Cost of goods sold increased by $6.2 million, or 13%, from $45.8 million in year ended December 31, 2023 to $52.0 million in the year ended December 31, 2024. The increase in cost of goods sold is attributable to increases of (i) $2.3 million in inventory reserves and associated write-downs of inventory to its net realizable value, (ii) $2.3 million in unfavorable physical inventory count and other adjustments, (iii) $2.0 million in direct materials, (iv) $0.6 million related to overhead, and (v) $0.3 million due to recognition of return reserves for the year ended December 31, 2024. These increases were offset by a decrease of (i) $0.8 million in direct labor and (ii) $0.5 million related to warranty reserves.

Current wording

Cost of goods sold decreased by $8.7 million, or 17%, from $52.0 million in year ended December 31, 2024 to $43.3 million in the year ended December 31, 2025. The decrease in cost of goods sold is attributable to decreases of (i) $5.5 million in direct materials, (ii) $4.2 million in inventory reserves and associated write-downs of inventory to its net realizable value, (iii) $2.1 million in favorable physical inventory count and other adjustments, (iv) $0.6 million in direct labor, (v) $0.6 million related to overhead, and (vi) $0.5 million in freight out. These decreases were offset by increases of (i) $1.8 million related to additional reserves for freight related to a shift in product strategy, (ii) $1.3 million related to warranty reserves, (iii) $1.2 million in identifiable tariff charges, and (vi) $0.5 million due to recognition of return reserves for the year ended December 31, 2025.

Previous wording

General and administrative expense decreased by $2.6 million, or 7%, from $37.7 million in the year ended December 31, 2023 to $35.1 million in the year ended December 31, 2024, attributable to decreases of (i) $1.9 million in professional fees (ii) $1.1 million in headcount and personnel cost for legal, finance, accounting, IT and general and administrative functions, (iii) $1.0 million in insurance costs driven by cost efficiencies associated with a new broker and (iv) $1.0 million in other operating expenses, including travel, recruiting, and computer equipment. These decreases were offset by increases of (i) $1.9 million in facility costs and (ii) $0.5 million in stock-based compensation expense.

Current wording

General and administrative expense decreased by $10.3 million, or 29%, from $35.1 million in the year ended December 31, 2024 to $24.8 million in the year ended December 31, 2025, attributable to decreases of (i) $5.7 million in headcount and personnel cost for legal, finance, accounting, IT and general and administrative functions, (ii) $1.2 million in professional fees, including a favorable settlement of an outstanding vendor payable for $0.8 million, (iii) $1.1 million in depreciation due to the allocation of less overhead costs, (iv) $1.0 million in bad debt expense, (v) $0.7 million in stock-based compensation expense, (vi) $0.6 million in other operating expenses, including travel, recruiting, and computer equipment, (vii) $0.6 million in facility costs connected to the termination of the Mesa lease, (viii) and $0.5 million in insurance costs driven by cost efficiencies associated with a new broker. These decreases were offset by increase of (i) $0.9 million in financed equipment lease expense with no such comparable expense for the year ended December 31, 2024 and (ii) $0.2 million in incremental expense related to the settlement of an employee’s severance arrangements.

Previous wording

Research and development expenses decreased by $9.0 million, or 46%, from $19.6 million in the year ended December 31, 2023 to $10.6 million in the year ended December 31, 2024. The change was primarily due to decreases of (i) $4.3 million in allocation of personnel costs driven by lower headcount in engineering, (ii) $3.0 million in equipment and material purchases due to fewer research and development projects in development year over year, (iii) $1.3 million in net other costs, driven by reductions of consulting and design fees, in addition to equipment and vehicle purchases used solely for research and development purposes and (iv) $0.4 million in stock-based compensation expense.

Current wording

Research and development expenses decreased by $2.6 million, or 25%, from $10.6 million in the year ended December 31, 2024 to $8.0 million in the year ended December 31, 2025. The change was primarily due to decreases of (i) $2.4 million in allocation of personnel costs driven by lower headcount in engineering and (ii) $0.4 million in net other costs, driven by reductions of consulting and design fees, in addition to computer and software costs. These decreases were offset by increases of (i) $0.1 million in stock-based compensation expense and (ii) $0.1 million in equipment and material purchases related to the development of new Hub variants.

Previous wording

Sales and marketing expense decreased by $2.3 million, or 35%, from $6.4 million in the year ended December 31, 2023 to $4.1 million in the year ended December 31, 2024. The change was primarily due to decreases of (i) $1.7 million in allocation of personnel costs driven by lower headcount, (ii) $0.4 million related to reduction in public relations costs and tradeshows costs and (iii) $0.2 million in stock-based compensation expense.

Current wording

Sales and marketing expense decreased by $1.1 million, or 27%, from $4.1 million in the year ended December 31, 2024 to $3.0 million in the year ended December 31, 2025. The change was primarily due to decreases of (i) $1.2 million in allocation of personnel costs driven by lower headcount, (ii) $0.2 million related to reduction in public relations costs and tradeshows costs. These were offset by an increase of (i) $0.3 million in stock-based compensation expense.

Previous wording

Other expense, net decreased by $7.5 million, or 62%, from $12.0 million in the year ended December 31, 2023 to $4.6 million in the year ended December 31, 2024. The change was attributable to decreases of (i) $6.2 million in net interest expense related to the Convertible Debentures being paid off during the year ended December 31, 2023, (ii) $1.6 million of redemption premiums related to prepayments on Convertible Debentures during the year ended December 31, 2023, with no such comparable expense during 2024, (iii) $0.2 million in amortization expense related to marketable debt securities, available-for-sale, with no such comparable expenses during 2024, (iv) $2.7 million increase in other income from the duty drawback receivable, and (v) $0.1 million in other miscellaneous expenses. These decreases were offset by an increase of $3.3 million for impairment on property and equipment and assets held for sale.

Current wording

Other expense, net decreased by $2.5 million, or 53%, from $4.6 million in the year ended December 31, 2024 to $2.1 million in the year ended December 31, 2025. The change was attributable to decreases of (i) $4.3 million in impairment on property and equipment and assets held for sale, (ii) $0.5 million increase in sublease income, (iii) $0.2 million increase in other miscellaneous income, and (iv) $0.2 million in interest expense related to the Convertible Note during the year ended December 31, 2024. This was offset by a decrease of $2.7 million from the duty drawback receivable and EV credit sale.

Previous wording

The gain on the change in fair value of derivative instruments decreased by $0.4 million, or 59% from $0.7 million in the year ended December 31, 2023 to $0.3 million in the year ended December 31, 2024. The decrease in change in fair value in both periods is primarily attributable to differences in our stock price and the resulting valuation for the applicable reporting period.

Current wording

The gain on the change in fair value of derivative instruments decreased by $0.2 million, or 82% from $0.3 million in the year ended December 31, 2024 to $0.1 million in the year ended December 31, 2025. The decrease in change in fair value in both periods is primarily attributable to differences in our stock price and the resulting valuation for the applicable reporting period.

Previous wording

The gain on the change in fair value of contingent earn-out shares liability decreased by $0.5 million, or 93% from $0.5 million in the year ended December 31, 2023 to $39,000 in the year ended December 31, 2024. The decrease in change in fair value in both periods is primarily attributable to differences in our stock price and the resulting valuation for the applicable reporting period.

Current wording

The gain on the change in fair value of contingent earn-out shares liability decreased by $39,000, or 100% from $39,000 in the year ended December 31, 2024 to $0 in the year ended December 31, 2025. The decrease in change in fair value in both periods is primarily attributable to differences in our stock price and the resulting valuation for the applicable reporting period.

Previous wording

The Company recorded income tax provisions of $37,000 and $21,000 during the years ended December 31, 2024 and 2023, respectively.

Current wording

The Company recorded income tax provisions of $23,000 and $37,000 during the years ended December 31, 2025 and 2024, respectively.

Previous wording

As of December 31, 2024, our principal sources of liquidity were our cash and cash equivalents of$11.0 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 twelve months ended December 31, 2024, we incurred a net loss of approximately$50.2 million and had net cash used in operating activities of $48.8 million.

Current wording

As of December 31, 2025, our principal sources of liquidity were our cash and cash equivalents of$14.0 million, with an accumulated deficit of approximately $228.7 million. Our short-term uses of cash are for working capital and to pay the principal of our indebtedness. During the twelve months ended December 31, 2025, we incurred a net loss of approximately$25.3 million and had net cash provided by operating activities of $5.4 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 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 consolidated 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 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 financial information does not include any adjustment that may result from the outcome of this uncertainty.

Current wording

As an early stage company, we have mainly incurred net losses and cash outflows since our inception. We may 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 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 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 unless and 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. Moreover, unless extended by mutual agreement of the parties, the SEPA is scheduled to expire on February 11, 2026. 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.

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 the ATM Offering (as defined below) 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, we are limited in how much money we can raise under the ATM offering. Our SEPA (as defined below)expired on February 11, 2026, and therefore is not available to us. 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.

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 December 31, 2024, the remaining commitment available under the SEPA was $119.4 million. However, our ability to fully utilize 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 10 — Convertible Notes and Note 11 — Equity — Standby Equity Purchase Agreement in the accompanying consolidated financial statements for more information regarding the SEPA.

Current wording

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 December 31, 2025, the remaining commitment available under the SEPA was $119.4 million. However, our ability to access the remaining commitment amount was 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. The SEPA expired 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. See Note 11 — Equity — Standby Equity Purchase Agreement in the accompanying consolidated financial statements for more information regarding the SEPA.

Previous wording

Net cash used in operating activities was $39.3 million for the year ended December 31, 2023, primarily consisting of a cash-basis net loss of $53.8 million from normal operations of the Company (after non-cash adjustments of $22.1 million), partially offset by $14.5 million in working capital movements, primarily relating to inventory usage due to significant production and deliveries of stepvans in the second-half of 2023.

Current wording

Net cash provided by operating activities was $5.4 million for the year ended December 31, 2025, primarily consisting of a cash-basis net loss of $20.1 million from normal operations of the Company (after non-cash adjustments of $5.2 million), partially offset by favorable net working capital change of $25.5 million, primarily driven by lower accounts receivable and inventory usage, partially offset by lower accounts payable and other liabilities relating to the EMV lease termination.

Previous wording

Net cash used in operating activities was $48.8 million for the year ended December 31, 2024, primarily consisting of a cash-basis net loss of $26.2 million from normal operations of the Company (after non-cash adjustments of $24.0 million), and $22.6 million in unfavorable net working capital changes, primarily driven by higher accounts receivable, increases in other liabilities relating to the ElectraMeccanica acquisition and inventory usage, partially offset by higher accounts payable.

Current wording

Net cash used in operating activities was $48.8 million for the year ended December 31, 2024, primarily consisting of a cash-basis net loss of $26.2 million from normal operations of the Company (after non-cash adjustments of $24.0 million), together with $22.6 million in working capital movements, primarily relating to higher accounts receivable, increases in other liabilities relating to the ElectraMeccanica acquisition and inventory usage, partially offset by higher accounts payable.

Previous wording

Cash flow from investing activities primarily relates to capital expenditures activities, as well as the sale and maturity of marketable securities, available for sale (applicable to 2023) and cash acquired in connection with the acquisition of ElectraMeccanica (applicable to 2024).

Current wording

Cash flow from investing activities primarily relates to capital expenditures activities, and cash acquired in connection with the acquisition of ElectraMeccanica (applicable to 2024).

Previous wording

Net cash used in investing activities was $50.6 million for the year ended December 31, 2023, due to net proceeds from sale of investments in marketable debt securities of $50.7 million and proceeds from the disposal of assets held for sale of $1.3 million, partially offset by property and equipment additions of $1.4 million.

Current wording

Net cash provided by investing activities was $0.1 million for the year ended December 31, 2025, due to proceeds from the disposal of assets held for sale of $0.1 million.

Previous wording

Net cash used in financing activities was $38.4 million for the year ended December 31, 2023, primarily consisting of (i) payments for convertible notes (including prepayment premium) of $34.4 million, (ii) equipment lease principal payments of $3.0 million, (iii) taxes paid relating to net-settlement of stock-based awards of $1.1 million, and (iv) outflow from net short-term insurance financing note activity of $1.1 million. These decreases were 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 $2.4 million for the year ended December 31, 2025, primarily consisting of (i) equipment lease principal payments of $2.0 million, (ii) payments of principal on Convertible Notes of $1.5 million (iii) taxes paid relating to net-settlement of stock-based awards of $1.0 million, and (iv) payments of net short-term insurance financing note activity of $0.3 million. These decreases were partially offset by proceeds from issuance of common stock under the ATM Offering by the Company of $2.4 million