Xos, Inc.

Previous wording

The following discussion and analysis provides information which Xos’s management believes is relevant to an assessment and understanding of our consolidated results of operations and financial condition. You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and the related notes included elsewhere in this Report and our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Form 10-K”) filed with the SEC on March 31, 2025. This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in this Item 2 (including in the sections entitled “Overview” and “Liquidity and Capital Resources” below), in the accompanying unaudited notes to condensed consolidated financial statements in this Report, under the section entitled “Risk Factors” of this Report, and under the heading “Risk Factors” in the 2024 Form 10-K. Unless the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to “we”, “us”, “our”, and “the Company” are intended to mean the business and operations of Xos and its consolidated subsidiaries.

Current wording

The following discussion and analysis provides information which Xos’s management believes is relevant to an assessment and understanding of our consolidated results of operations and financial condition. You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and the related notes included elsewhere in this Report and our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on March 30, 2026 (as amended by Amendment No. 1 thereto, filed with the SEC on April 21, 2026, the “2025 Form 10-K”). This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in this Item 2 (including in the sections entitled “Overview” and “Liquidity and Capital Resources” below), in the accompanying unaudited notes to condensed consolidated financial statements in this Report, under the section entitled “Risk Factors” of this Report, and under the heading “Risk Factors” in the 2025 Form 10-K. Unless the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to “we”, “us”, “our”, and “the Company” are intended to mean the business and operations of Xos and its consolidated subsidiaries.

Previous wording

On August 8, 2025, the Company and Aljomaih amended the Convertible Note primarily (i) to provide for payment of Interest Shares with respect to all interest accrued through the initial maturity date, and (ii) to change the scheduled repayment of principal from all at once on August 11, 2025, to spread over ten quarterly installments beginning November 11, 2025 and ending February 11, 2028. See Note 9— Convertible Notes of this Report. 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.

Current wording

On August 8, 2025, the Company and Aljomaih Automotive Co. (“Aljomaih”) amended the Convertible Promissory Note (as amended from time to time, the “Convertible Note”) primarily (i) to provide for payment of Interest Shares (as defined in the Convertible Note) with respect to all interest accrued through the initial maturity date, and (ii) to change the scheduled repayment of principal from in full on August 11, 2025, to spread over ten quarterly installments beginning November 11, 2025 and ending February 11, 2028. See Note 8 — Convertible Notes of this Report.

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 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.

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 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

Fluctuating tariff regimes—particularly those targeting imports of power electronics, battery components, and structural materials—have introduced significant volatility in the Company’s cost structure and procurement planning. The uncertainty around tariff implementation timelines and scope has necessitated frequent adjustments to sourcing strategies, supplier selection, and contract terms.

Current wording

These overlapping and evolving tariff regimes have introduced significant volatility into our cost structure and procurement planning, particularly with respect to power electronics, battery components, and structural materials. The uncertainty around tariff implementation timelines, the scope of new investigations, and the expiration and potential replacement of the current Section 122 surcharge has necessitated frequent adjustments to sourcing strategies, supplier selection, and contract terms. To mitigate these impacts, we have undertaken the following measures:

Previous wording

•reclassification and compliance reviews to ensure correct HTS codes and leverage tariff exemptions or reduced duty programs, where applicable; and

Current wording

•reclassification and compliance reviews to ensure correct harmonized tariff schedule (HTS) codes and leverage tariff exemptions or reduced duty programs, where applicable;

Previous wording

We have been closely monitoring potential changes to trade policies and tariffs in order to proactively adjust and refine our strategy. These actions are aimed at preserving cost competitiveness and securing uninterrupted supply amid a fluid and unpredictable trade policy environment. Notwithstanding these efforts, the ongoing tariffs and regulatory changes may affect our ability to source components from specific regions or maintain access to critical suppliers.

Current wording

We have been closely monitoring potential changes to trade policies and tariffs in order to proactively adjust and refine our strategy. These actions are aimed at preserving cost competitiveness and securing uninterrupted supply amid a fluid and unpredictable trade policy environment. Notwithstanding these efforts, the ongoing tariffs and regulatory changes may affect our ability to source components from specific regions or maintain access to critical suppliers, and we do not expect the tariff environment to normalize in the near to medium term. The migration of tariff authority from emergency executive powers to Section 232 and Section 301, authorities that are expected to be more legally durable and carry broader industry and country coverage, means that tariff-driven cost pressure and supply chain disruption are likely to remain a persistent feature of our operating environment.

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 three months ended September 30, 2025, we delivered 98 vehicles (including leases) and 32 powertrains & Hubs. During the three months ended September 30, 2024, we delivered 78 vehicles and 16 powertrains & Hubs. During the three months ended September 30, 2025, we generated $13.7 million in revenue (or 83% of revenue) in vehicle sales, $2.6 million (or 16% of revenue) in powertrain & Hub sales, $0.1 million (or 1% of revenue) in other product revenue, and $0.1 million (or 0% of revenue) in ancillary revenue. During the three months ended September 30, 2024, we generated $12.1 million in revenue (or 77% of revenue) from vehicle sales, $2.8 million (or 18% of revenue) in powertrain & Hub sales, $0.1 million (or 1% of revenue) in other product revenue, and $0.7 million (or 4% of revenue) from ancillary revenue.

Current wording

During the three months ended March 31, 2026, we delivered 13 vehicles (including leases) and 82 powertrains & hubs. During the three months ended March 31, 2025, we delivered 22 vehicles and 7 powertrains & hubs. During the three months ended March 31, 2026, we generated $1.6 million in revenue (or 14% of revenue) in vehicle sales, $9.1 million (or 81% of revenue) in powertrain & Hub sales, $0.3 million (or 3% of revenue) in other product revenue, and $0.2 million (or 2% of revenue) in ancillary revenue. During the three months ended March 31, 2025, we generated $3.6 million in revenue (or 61% of revenue) from vehicle sales, $1.6 million (or 27% of revenue) in powertrain & Hub sales, $0.5 million (or 8% of revenue) in other product revenue, and $0.2 million (or 4% of revenue) from ancillary revenue.

Previous 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.

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 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.

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 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

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 unaudited notes to condensed consolidated financial statements.

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 unaudited notes to condensed 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 unaudited condensed consolidated statements of operations and comprehensive income (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 unaudited condensed 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 the unaudited condensed consolidated statements of operations and comprehensive income (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, 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) income, 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.

Current wording

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

Previous wording

Comparison of the Three and Nine Months Ended September 30, 2025 and 2024

Current wording

Comparison of the Three Months Ended March 31, 2026 and 2025

Previous wording

Our total revenues increased by $0.7 million, or 4%, from $15.8 million in the three months ended September 30, 2024 to $16.5 million in the three months ended September 30, 2025, primarily driven by an increase in unit sales offset by a decrease in average selling price resulting from product mix. During the three months ended September 30, 2025, we sold 98 vehicles and 32 powertrains & Hubs, compared to 78 vehicles and 16 powertrains & Hubs during the three months ended September 30, 2024.

Current wording

Our total revenues increased by $5.3 million, or 91%, from $5.9 million in the three months ended March 31, 2025 to $11.2 million in the three months ended March 31, 2026, primarily driven by an increase in unit sales. During the three months ended March 31, 2026, we sold 13 vehicles and 82 powertrains & hubs, compared to 22 vehicles and 7 powertrains & hubs during the three months ended March 31, 2025.

Previous wording

Cost of goods sold increased by $1.1 million, or 8%, from $12.9 million in the three months ended September 30, 2024 to $14.0 million in the three months ended September 30, 2025. The increase in cost of goods sold is directly attributable to the increase in our product revenue and associated increases of (i) $1.0 million in identifiable tariff charges, (ii) $0.3 million in dealer return reserve, (iii) $0.3 million in direct materials, and (iv) $0.1 million for warranty reserve. These increases were offset by decreases of (i) $0.2 million related to reductions in inventory reserves, and (ii) $0.4 million less in unfavorable physical inventory count and other adjustments.

Current wording

Cost of goods sold increased by $2.2 million, or 48%, from $4.7 million in the three months ended March 31, 2025 to $6.9 million in the three months ended March 31, 2026. The increase in cost of goods sold is directly attributable to the increase in our product revenue and associated increases of (i) $1.3 million in direct materials, (ii) $0.4 million in identifiable tariff charges, (iii) $0.2 million in direct labor, (iv) $0.2 in manufacturing overhead, (v) $0.2 million related to a smaller favorable adjustment of inventory reserves and (vi) $0.1 million for warranty reserve. These increases were offset by decreases of (i) $0.1 million less in unfavorable physical inventory count and other adjustments and (ii) $0.1 million less in freight costs related to product deliveries.

Previous wording

The changes in direct labor encompasses employee labor costs. The changes in direct labor, manufacturing overhead and direct material costs are driven by changes in units sold. A significant portion of the overhead costs incurred include freight, tariff charges, indirect salaries, facility rent, utilities, and depreciation of production equipment, which are primarily fixed in nature and allocated based on production levels. Accordingly, these costs increase correspondingly with an increase in production volume and units sold.

Current wording

The increases in direct material, direct labor, and manufacturing overhead costs are driven by an increase in units sold. A significant portion of the overhead costs incurred include freight, tariff charges, indirect salaries, facility rent, utilities, and depreciation of production equipment, which are primarily fixed in nature and allocated based on production levels. Accordingly, these costs increase correspondingly with an increase in production volume and units sold.

Previous wording

General and administrative expenses decreased by $6.7 million, or 25%, from $27.0 million in the nine months ended September 30, 2024 to $20.3 million in the nine months ended September 30, 2025, attributable to decreases of (i) $5.6 million in headcount and personnel costs for legal, finance, accounting, information technology and general and administrative functions, including stock-based compensation expense, (ii) $1.3 million in other operating expenses including travel, recruiting, and computer software costs, (iii) $0.9 million in depreciation expense due to the allocation of less overhead costs, (iv) $0.8 million in professional fees and (v) $0.2 million in insurance expense. These decreases were offset by increases of (i) $1.9 million in financed equipment lease expense with no such comparable expense for the nine months ended September 30, 2024 and (ii) $0.2 million in facility costs.

Current wording

General and administrative expenses decreased by $1.8 million, or 23%, from $7.9 million in the three months ended March 31, 2025 to $6.1 million in the three months ended March 31, 2026, attributable to decreases of (i) $1.9 million in financed equipment lease expense with no such comparable expense for the three months ended March 31, 2026, (ii) $0.5 million in facility expenses connected to the termination of the Mesa Lease (as defined below), and (iii) $0.1 million in insurance costs. These decreases were offset by increases of (i) $0.4 million in stock-based compensation expense, (ii) in $0.1 million in personnel costs for legal, finance, accounting, information technology and general and administrative functions (iii) $0.1 million in other operating expenses including professional services and computer software costs, and (iv) $0.1 million in depreciation expense due to the allocation of more overhead costs.

Previous wording

Other (expense) income, net decreased by $0.5 million, from an expense of $0.7 million in the three months ended September 30, 2024 to $0.2 million in the three months ended September 30, 2025. The change was attributable to (i) $0.3 million more in other income primarily due to sublease income, (ii) $0.1 million less in interest expense, and (iii) $0.1 million less in impairment expense.

Current wording

Other expense, net decreased by $0.6 million, from $0.9 million in the three months ended March 31, 2025 to $0.3 million in the three months ended March 31, 2026. The change was attributable to (i) $0.4 million less in impairment losses on property and equipment, (ii) $0.1 million less in interest expense, and (iii) $0.1 million related to intercompany accounts payable and currency revaluation reversal in the three months ended March 31, 2025.

Previous wording

The gain on the change in fair value of contingent earn-out shares liability decreased by $33,000 from $33,000 in the nine months ended September 30, 2024 to $0 in the nine months ended September 30, 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.

Current wording

The gain on the change in fair value of derivative instruments increased by $63,000, or 117%, from a loss of $54,000 in the three months ended March 31, 2025 to a gain of $9,000 in the three months ended March 31, 2026. 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 $23,000 and $13,000 during the nine months ended September 30, 2025 and 2024, respectively.

Current wording

The Company recorded an income tax provision of $5,000 and $12,000 during the three months ended March 31, 2026 and 2025, respectively.

Previous wording

As of September 30, 2025, our principal sources of liquidity were our cash and cash equivalents of $14.1 million with an accumulated deficit of approximately $219.0 million. Our short-term uses of cash are for working capital and to pay the principal of our indebtedness. During the nine months ended September 30, 2025, we incurred a net loss of approximately $15.6 million and had net cash provided by operating activities of $3.0 million.

Current wording

As of March 31, 2026, our principal sources of liquidity were our cash and cash equivalents of$9.8 million with an accumulated deficit of approximately$233.7 million. Our short-term uses of cash are for working capital and to pay the principal of our indebtedness. During thethree months ended March 31, 2026, we incurred a net loss of approximately$5.0 million and had net cash used in operating activities of$1.6 million.

Previous wording

As an early-stage growth 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 unaudited condensed consolidated 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 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 the ATM Offering (as defined below) and/or the SEPA (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, and 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 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 August 14, 2025, we entered into a Sales Agreement (the “Sales Agreement”) with Roth Capital Partners, LLC (the “Agent”). Pursuant to the terms of the Sales Agreement, we may offer and sell shares of our common stock having an aggregate offering amount of up to $20 million from time to time through the Agent (the “ATM Offering”). Pursuant to General Instruction I.B.6 of Form S-3, we can currently only sell up to an aggregate of $5,367,542 during any 12-month period pursuant to the Sales Agreement (and any other primary offerings registered on Form S-3). Any sales of common stock pursuant to the Sales Agreement would be made in sales deemed to be an “at-the-market offering” as defined in Rule 415 under the Securities Act of 1933, as amended. The Agent is entitled to a commission of 3.0% of the gross proceeds from the sale of common stock sold under the Sales Agreement. In August 2025, we sold an aggregate of 730,000 shares of common stock in the ATM Offering, resulting in net proceeds of approximately $2.4 million.

Current wording

On August 14, 2025, we entered into a Sales Agreement (the “Sales Agreement”) with Roth Capital Partners, LLC (the “Agent”). Pursuant to the terms of the Sales Agreement, we may offer and sell shares of our common stock having an aggregate offering amount of up to $20 million from time to time through the Agent (the “ATM Offering”). Pursuant to General Instruction I.B.6 of Form S-3, the prospectus setting forth the offer and sale of securities pursuant to the ATM Offering is limited to an aggregate of $5.4 million during any 12-month period pursuant to the Sales Agreement. Any sales of common stock pursuant to the Sales Agreement would be made in sales deemed to be an “at-the-market offering” as defined in Rule 415 under the Securities Act of 1933, as amended. The Agent is entitled to a commission of 3.0% of the gross proceeds from the sale of common stock sold under the Sales Agreement. During 2025, we sold an aggregate of 730,400 shares of common stock in the ATM Offering, resulting in net proceeds of approximately $2.4 million. As of March 31, 2026, we had$2.5 million of shares of Common Stock available for future issuance under the ATM Offering pursuant to our prospectus supplement with respect to the ATM Offering, and$17.2 million remaining under the terms of the Sales Agreement.

Previous wording

The following table provides a summary of cash flow data for the nine months ended September 30, 2025 and 2024(in thousands):

Current wording

The following table provides a summary of cash flow data for the three months ended March 31, 2026 and 2025(in thousands):

Previous wording

Netcash provided by opera ting activities was$3.0 million for the nine months ended September 30, 2025, primarily consisting of a cash-basis net lossof$15.3 million from normal operations of the Company (after non-cash adjustments of$0.2 million), partially offset by favorable net working capital changes of $18.3 million, primarily driven by lower accounts receivable due to collections, inventories due to improved inventory turns and other liabilities, partially offset by lower accounts payable.

Current wording

Netcash used in opera ting activities was$1.6 million for the three months ended March 31, 2026, primarily consisting of a cash-basis net lossof$1.7 million from normal operations of the Company (after non-cash adjustments of$3.3 million), partially offset by favorable net working capital changes of $0.1 million, primarily driven by lower inventories due to improved inventory turns and other assets, partially offset by higher accounts receivable and prepaid expenses and other current assets.

Previous wording

Net cash used in operating activities was $52.1 million for the nine months ended September 30, 2024, primarily consisting of a cash-basis net loss of$19.6 million from normal operations of the Company (after non-cash adjustments of$11.6 million), further driven by unfavorable net working capital changes of $32.5 million, primarily driven by higher accounts receivable and inventory.

Current wording

Net cash used in operating activities was $4.8 million for the three months ended March 31, 2025, primarily consisting of a cash-basis net loss of$7.1 million from normal operations of the Company (after non-cash adjustments of$3.1 million), partially offset by favorable net working capital changes of $2.3 million, primarily driven by lower accounts receivable and other liabilities, partially offset by lower accounts payable and purchases of inventory for production build-up.

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$0.3 million for the three months ended March 31, 2026 due to proceeds from the disposal of assets held for sale, partially offset by $19,000 in purchases of property and equipment.

Previous wording

Net cash provided by investing activities was$43,000 for the nine months ended September 30, 2025.

Current wording

Net cash provided by investing activities was $0 million for the three months ended March 31, 2025.

Previous wording

Net cash provided by financing activitieswas $0.1 million for the nine months ended September 30, 2025, which primarily related to (i) $2.4 million of proceeds from issuance of common stock under anat-the-market offering by the Company and(ii)net short-term insurance financing note activity of $0.4 million. This was partially offset by (i) equipment lease principal paymentsof $1.9 million and (ii) taxes paid relating to net-settlement of stock-based awards of $0.8 million.

Current wording

Net cash used in financing activitieswas $2.9 million for the three months ended March 31, 2026, which primarily related to (i) $1.5 million for payments of principal on Convertible Notes, (ii) payments for short-term insurance financing notes of $0.7 million, (iii) taxes paid relating to net-settlement of stock-based awards of $0.6 million, and (iv) equipment lease principal paymentsof $0.1 million.

Previous wording

Net cash used in financing activities was $1.5 million for the nine months ended September 30, 2024, primarily related to (i) equipment lease principal payments of $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 activities was $1.5 million for the three months ended March 31, 2025, primarily related to (i)net short-term insurance financing note activity of $0.8 million, (ii) equipment lease principal payments of $0.6 million and (iii) taxes paid relating to net-settlement of stock-based awards of $0.1 million.

Previous wording

As a result of the Mesa Lease Termination, future lease commitments have been reduced, as further discussed in Note 2 - Summary of Significant Accounting Policies. We did not have any additional material contractual obligations or other commitments as of September 30, 2025, other than as disclosed in the 2024 Form 10-K, and in Note 14 - Commitments and Contingencies.

Current wording

As a result of the termination of the lease on the Company’s manufacturing facility in Mesa, Arizona (“Mesa Lease”), future lease commitments have been reduced. We did not have any additional material contractual obligations or other commitments as of March 31, 2026, other than as disclosed in the 2025 Form 10-K, and in Note 13— Commitments and Contingencies.