SEC Form 10-Q filed by Xos Inc.

5/15/25 1:29:35 PM ET

$XOS

Auto Parts:O.E.M.

Consumer Discretionary

Get the next $XOS alert in real time by email

xos-20250331

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________________________________________________________________

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission file number 001-39598

XOS, INC.

______________________________________________________________________________

(Exact name of registrant as specified in its charter)


Delaware						98-1550505
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

3550 Tyburn Street Los Angeles, CA						90065
(Address of Principal Executive Offices)						(Zip Code)

Registrant’s telephone number, including area code: (818) 316-1890

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of exchange on which registered
Common Stock, $0.0001 par value per share	XOS	The Nasdaq Capital Market
Warrants, every thirty warrants exercisable for one share of Common Stock at an exercise price of $345.00 per share	XOSWW	The Nasdaq Capital Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The registrant had outstanding 8,311,692 shares of Common Stock, $0.0001 par value as of May 6, 2025.

Table of Contents

TABLE OF CONTENTS


			Page
Part I - Financial Information			3
Item 1. Financial Statements (Unaudited)			6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			32
Item 3. Quantitative and Qualitative Disclosures About Market Risk			40
Item 4. Controls and Procedures			40
Part II - Other Information			43
Item 1. Legal Proceedings			43
Item 1A. Risk Factors			43
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			43
Item 3. Defaults Upon Senior Securities			43
Item 4. Mine Safety Disclosures			43
Item 5. Other Information			43
Item 6. Exhibits			44
Signatures			45

Table of Contents

Forward-Looking Statements

This Quarterly Report on Form 10-Q (this “Report”), including, without limitation, statements under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”). We have based these forward-looking statements on our current expectations and projections about future events. All statements, other than statements of present or historical fact included in this Report are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “seek,” “should,” “will,” “would” or the negative of such terms or other similar expressions. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. We caution you that these forward-looking statements are subject to numerous risks and uncertainties, most of which are difficult to predict and many of which are beyond our control. We claim the protection of the safe harbor contained in the Private Securities Litigation Reform Act of 1995.

As a result of a number of known and unknown risks and uncertainties, our actual results or performance may be materially different from those expressed or implied by these forward-looking statements. Some factors that could cause actual results to differ include:

•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.

•Our limited operating history makes evaluating our business and future prospects difficult and may increase the risk of your investment.

•Our mix of offerings, such as the Xos Hub™ and Xosphere™, is novel in the industry and has yet to be tested in the long term.

•We are an early-stage company with a history of losses and may incur significant expenses and continuing losses for the foreseeable future.

•We have yet to achieve positive operating cash flow for a full year and, given our projected funding needs, our ability to generate or maintain positive cash flow is uncertain.

•Our financial results may vary significantly from period to period due to fluctuations in our product development cycle and operating costs, product demand and other factors.

•Our business plans require a significant amount of capital. In addition, our future capital needs may require us to sell additional equity or debt securities that may dilute our stockholders or introduce covenants that may restrict our operations or our ability to pay dividends.

•We have incurred substantial debt, including $20 million principal amount of an outstanding Convertible Note, together with accrued interest thereon, which is due August 11, 2025, which could impair our flexibility and access to capital and adversely affect our financial position, and our business would be adversely affected if we are unable to service our debt obligations and are subject to default.

•We have experienced and may in the future experience significant delays in the design, manufacturing and wide-spread deployment of our products.

•We previously restated our financial statements for several prior periods, which resulted in unanticipated costs and may adversely affect investor confidence, our stock price, our ability to raise capital in the future and our reputation.

•We identified material weaknesses in our internal control over financial reporting, and we may identify additional material weaknesses in the future that may cause us to fail to meet our reporting obligations or result in material misstatements of our financial statements. If we fail to remediate any material weaknesses or if we otherwise fail to establish and maintain effective control over financial reporting, our ability to accurately and timely report our financial results could be adversely affected.

•If we fail to successfully tool our manufacturing facilities or if our manufacturing facilities become inoperable, we will be unable to produce our vehicles and our business will be harmed.

Table of Contents

•We are or may be subject to risks associated with strategic alliances or acquisitions and may not be able to identify adequate strategic relationship opportunities, or form strategic relationships, in the future.

•We derive a significant portion of our revenue from a small number of customers; if revenue derived from these customers decrease or the timing of such revenue fluctuates, our business and results of operations could be negatively affected.

•Our delay in providing sufficient charging solutions for our vehicles has resulted in the delay of the delivery of our vehicles to customers.

•We are dependent on our suppliers, some of which are limited source or single-source suppliers, and their inability or unwillingness to deliver necessary components and materials used in our products at prices and volumes, performance and specifications acceptable to us could harm our business.

•Our business and prospects depend significantly on our ability to build the Xos brand. We may not successfully establish, maintain and strengthen the Xos brand, and our brand and reputation could be harmed by negative publicity regarding Xos or our products.

•If we fail to manage our growth effectively, we may not be able to further design, develop, manufacture and market our products successfully.

•Our battery packs use lithium-ion battery cells, a class of batteries which have been observed to catch fire or vent smoke and flame.

•We have experienced, and may again experience increases in costs, disruption of supply or shortage of materials, in particular for lithium-ion battery cells, semiconductors and other key components.

•We rely on complex machinery for the manufacture of our products, which involves a significant degree of risk and uncertainty in terms of operational performance and costs.

•We may be unable to realize the opportunities expected from the acquisition of ElectraMeccanica Vehicles Corp. (“ElectraMeccanica”).

•We may face regulatory limitations on our ability to sell vehicles directly to consumers, including changes to tax incentive policies.

•Compliance obligations and/or the actual or perceived failure to comply with existing or future laws, regulations, contracts, self-regulatory schemes, standards, and other obligations related to data privacy and security (including security incidents) could harm our business.

•The performance characteristics of our products may vary, due to factors outside of our control, which could harm our ability to develop, market and deploy our products.

•We may have insufficient reserves to cover future warranty or part replacement needs or other vehicle, powertrain and battery pack repair requirements, including any potential software upgrades.

•We have experienced product recalls and may experience future product recalls.

•We are highly dependent on the services of Dakota Semler and Giordano Sordoni, our co-founders, as well as our key personnel and senior management, and if we are unable to attract and retain key personnel and hire qualified management, technical and electric vehicle engineering personnel, our ability to compete could be materially and adversely affected.

•The commercial vehicle market is highly competitive, and we may not be successful in competing in this industry.

•Our growth depends on the last-mile and return-to-base segment’s willingness to adopt electric vehicles.

•We have been and may continue to be impacted by macroeconomic conditions, including health crises, inflation, uncertain credit and global financial market, including potential bank failures, labor discord, supply chain disruption trade policies and tariffs, and geopolitical events, such as the ongoing conflicts between Russia and Ukraine and in the Middle East and political tensions with China.

Table of Contents

A discussion of these and other factors affecting our business and prospects is set forth in Part II, Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission (the “SEC”) on March 31, 2025 (the “2024 Form 10-K”). We encourage investors to review these risk factors.

Although we believe that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore such statements included in this Report may not prove to be accurate. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results and plans could differ materially from those expressed in any forward-looking statements. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that the results or conditions described in such statements or our objectives and plans will be achieved.

Forward-looking statements and such risks, uncertainties and other factors speak only as of the date of this Report, and we expressly disclaim any obligation or undertaking to update or revise any forward-looking statement contained herein to reflect any change in our expectations with regard thereto, or any other change in events, conditions or circumstances on which any such statement is based, except to the extent otherwise required by law.

Part I - Financial Information

Glossary of Terms

Unless otherwise stated in this Report or the context otherwise requires, reference to:

•“Business Combination” means the Domestication, the Merger and the other transactions contemplated by the Merger Agreement, collectively;

•“Closing” means the closing of the Business Combination;

•“Common Stock” means the shares of common stock, par value $0.0001 per share, of Xos;

•“Domestication” means the transfer by way of continuation and deregistration of NextGen from the Cayman Islands and the continuation and domestication of NextGen as a corporation incorporated in the State of Delaware;

•“Hub” means our rapid-deployment mobile charger designed to expedite fleet transitions to electric vehicles;

•“Legacy Xos” means Xos, Inc., a Delaware corporation, prior to the consummation of the Business Combination, now known as Xos Fleet, Inc.;

•“Merger” means the merger of NextGen Merger Sub with and into Legacy Xos pursuant to the Merger Agreement, with Legacy Xos as the surviving company in the Merger and, after giving effect to such Merger, Legacy Xos becoming a wholly owned subsidiary of Xos;

•“Merger Agreement” means that certain Merger Agreement, dated as of February 21, 2021, as amended on May 14, 2021, by and among NextGen, Sky Merger Sub I, Inc., a Delaware corporation and direct wholly owned subsidiary of NextGen, and Legacy Xos;

•“NextGen” means NextGen Acquisition Corp., a Cayman Islands exempted company, prior to the consummation of the Domestication;

•“Powertrain” means an assembly of every component that pushes a vehicle forward. A vehicle’s powertrain creates power from the engine and delivers it to the wheels on the ground. The key components of a powertrain include an engine, transmission, driveshaft, axles, and differential;

•“Preferred Stock” means preferred stock, par value $0.0001 per share, authorized under the Certificate of Incorporation of Xos;

•“Private Placement Warrants” means the warrants to purchase Common Stock originally issued in a private placement in connection with the initial public offering of NextGen;

Table of Contents

•“Public Warrants” means the redeemable warrants to purchase shares of Common Stock at an exercise price of $345 per share originally issued in connection with the initial public offering of NextGen;

•“Warrants” means Private Placement Warrants and Public Warrants;

•“X-Pack” means our proprietary battery system;

•“X-Platform” means our proprietary, purpose-built vehicle chassis platform;

•“Xos” means the reporting issuer, Xos, Inc. (formerly known as NextGen Acquisition Corporation), together with its consolidated subsidiaries;

•“Xos Energy Solutions” means our comprehensive charging infrastructure business through which we offer mobile and stationary multi-application chargers, mobile energy storage and turnkey energy infrastructure services to accelerate client transitions to electric fleets; and

•“Xosphere” means our proprietary fleet management platform.

Item 1. Financial Statements

Index to Unaudited Condensed Consolidated Financial Statements


			Page
Condensed Consolidated Balance Sheets as of March 31 , 202 5 (Unaudited) and December 31, 202 4			7
Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three Months Ended March 31 , 202 5 (Unaudited) and 202 4 (Unaudited)			8
Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2025 (Unaudited) and 202 4 (Unaudited)			9
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 20 25 (Unaudited) and 202 4 (Unaudited)			10
Notes to Condensed Consolidated Financial Statements (Unaudited)			12

Table of Contents

Xos, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

Unaudited

(in thousands, except par value)


	March 31, 2025		December 31, 2024
Assets
Cash and cash equivalents	$	4,758	$	10,996
Accounts receivable, net	22,210		26,870
Inventories	38,006		36,567
Prepaid expenses and other current assets	8,115		7,868
Total current assets	73,089		82,301
Property and equipment, net	5,212		6,111
Operating lease right-of-use assets, net	2,787		3,193
Other non-current assets	6,593		6,728
Total assets	$	87,681	$	98,333

Liabilities and Stockholders’ Equity
Accounts payable	$	6,514	$	8,931
Convertible debt, current	19,982		19,970
Other current liabilities	18,878		17,768
Total current liabilities	45,374		46,669
Common stock warrant liability	175		121
Other non-current liabilities	17,325		17,933
Total liabilities	62,874		64,723
Commitments and contingencies (Note 14)
Stockholders’ Equity
Common stock $0.0001 par value per share, authorized 1,000,000 shares, 8,102 and 8,046 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively	1		1
Preferred stock $0.0001 par value per share, authorized 10,000 shares, 0 shares issued and outstanding at March 31, 2025 and December 31, 2024	—		—
Additional paid-in capital	238,412		237,029
Accumulated deficit	(213,606)		(203,420)

Total stockholders’ equity	24,807		33,610
Total liabilities and stockholders’ equity	$	87,681	$	98,333

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

Xos, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Loss

Unaudited

(in thousands, except per share amounts)


	Three Months Ended March 31,
	2025		2024
Revenues	$	5,879	$	13,162
Cost of goods sold	4,668		10,374
Gross profit	1,211		2,788

Operating expenses
General and administrative	7,896		8,959
Research and development	1,930		3,074
Sales and marketing	654		998
Total operating expenses	10,480		13,031

Loss from operations	(9,269)		(10,243)

Other expense, net	(851)		(584)
Change in fair value of derivative instruments	(54)		(168)
Change in fair value of earn-out shares liability	—		(3)
Loss before provision for income taxes	(10,174)		(10,998)
Provision for income taxes	12		5
Net loss	$	(10,186)	$	(11,003)

Net and comprehensive loss	$	(10,186)	$	(11,003)

Net loss per share
Basic	$	(1.26)	$	(1.80)
Diluted	$	(1.26)	$	(1.80)
Weighted average shares outstanding
Basic	8,076		6,108
Diluted	8,076		6,108

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

Xos, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity

Unaudited

(in thousands)


	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Par Value

Balance at December 31, 2023	5,941	$	1	$	198,456	$	(153,261)	$	45,196
Stock options exercised	21	—		—		—		—
Stock based compensation expense	—	—		1,968		—		1,968
Issuance of common stock for vesting of restricted stock units	30	—		—		—		—
Shares withheld related to net share settlement of stock-based awards	(14)	—		(258)		—		(258)
Issuance of common stock for ElectraMeccanica acquisition	1,766	—		31,856		—		31,856
Issuance of common stock for commitment shares under the Standby Equity Purchase Agreement	6	—		47		—		47
Net and comprehensive loss	—	—		—		(11,003)		(11,003)
Balance at March 31, 2024	7,750	$	1	$	232,069	$	(164,264)	$	67,806

	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Par Value

Balance at December 31, 2024	8,046	$	1	$	237,029	$	(203,420)	$	33,610
Stock options exercised	—	—		—		—		—
Stock based compensation expense	—	—		1,523		—		1,523
Issuance of common stock for vesting of restricted stock units	98	—		—		—		—
Shares withheld related to net share settlement of stock-based awards	(42)	—		(140)		—		(140)
Net and comprehensive loss	—	—		—		(10,186)		(10,186)
Balance at March 31, 2025	8,102	$	1	$	238,412	$	(213,606)	$	24,807

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

Xos, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

Unaudited

(in thousands, unaudited)


	Three Months Ended March 31,
	2025		2024
OPERATING ACTIVITIES:
Net loss	$	(10,186)	$	(11,003)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	506		913
Amortization of right-of-use assets	406		404
Amortization of debt discounts and issuance costs	12		12
Amortization of insurance premiums	670		725
Inventory reserve	(517)		(803)
Impairment of property and equipment	401		—
Change in fair value of derivative instruments	54		168
Change in fair value of earn-out shares liability	—		3
Stock-based compensation expense	1,523		2,006
Bad debt expense	87		20
Other non-cash items	(30)		410
Changes in operating assets and liabilities:
Accounts receivable	4,573		(5,198)
Inventories	(947)		2,110
Prepaid expenses and other current assets	(870)		(1,104)
Other assets	135		120
Accounts payable	(2,417)		(1,272)
Other liabilities	1,844		(2,100)
Net cash used in operating activities	(4,756)		(14,589)

INVESTING ACTIVITIES:
Purchase of property and equipment	—		(30)
Net cash acquired in acquisition of ElectraMeccanica Vehicles Corp.	—		51,355
Net cash provided by investing activities	—		51,325

FINANCING ACTIVITIES:
Principal payment of equipment leases	(598)		(569)
Proceeds from short-term insurance financing note	92		451
Payment for short-term insurance financing note	(836)		(764)
Taxes paid related to net share settlement of stock-based awards	(140)		(258)
Proceeds from issuance of common stock under Standby Equity Purchase Agreement	—		47
Net cash used in financing activities	(1,482)		(1,093)

Net decrease in cash, cash equivalents and restricted cash	(6,238)		35,643
Cash, cash equivalents and restricted cash, beginning of period	10,996		11,640
Cash, cash equivalents and restricted cash, end of period	$	4,758	$	47,283

Table of Contents


Reconciliation of Cash, Cash Equivalents and Restricted Cash to Unaudited Condensed Consolidated Balance Sheets:
Cash and cash equivalents	$	4,758	$	46,168
Restricted cash	—		1,115
Total cash, cash equivalents and restricted cash	$	4,758	$	47,283

Supplemental disclosure of cash flow information
Cash paid for income taxes	$	—	$	16
Supplemental disclosure of non-cash investing and financing activities
Purchase of property and equipment in accounts payable	$	—	$	(16)
Net assets acquired in acquisition of ElectraMeccanica Vehicles Corp.	$	—	$	54,630
Xos common stock issued in exchange for ElectraMeccanica Vehicles Corp.	$	—	$	(31,856)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

Xos, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Unaudited

Note 1— Description of Business

Xos, Inc., together with its wholly owned subsidiaries (collectively, the “Company” or “Xos”) is a leading fleet electrification solutions provider committed to the decarbonization of commercial transportation. Xos designs and manufactures Classes 5 through 8 battery-electric commercial vehicles that travel on last-mile, back-to-base routes of up to 200 miles per day. Xos also offers charging infrastructure products and services through Xos Energy Solutions™ to support electric vehicle fleets. The Company’s 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. Xos developed the X-Platform (its proprietary, purpose-built vehicle chassis platform) specifically for the medium-duty commercial vehicle segment with a focus on last-mile commercial fleet operations. Xos seeks to offer customers a suite of commercial products and services to facilitate electric fleet operations and seamlessly transition their traditional combustion-engine fleets to battery-electric vehicles.

Business Combination

Xos, Inc. was initially incorporated on July 29, 2020, as a Cayman Islands exempted company under the name “NextGen Acquisition Corporation” (“NextGen”). On August 20, 2021, the transactions contemplated by the Agreement and Plan of Merger, as amended on May 14, 2021, by and among NextGen, Sky Merger Sub I, Inc., a Delaware corporation and a direct wholly owned subsidiary of NextGen (“Merger Sub”), and Xos, Inc., a Delaware corporation (now known as Xos Fleet, Inc., “Legacy Xos”), were consummated (the “Closing”), whereby Merger Sub merged with and into Legacy Xos, the separate corporate existence of Merger Sub ceased and Legacy Xos became the surviving corporation and a wholly owned subsidiary of NextGen (such transaction the “Merger” and, collectively with the Domestication, the “Business Combination”), and Xos became the publicly traded entity listed on Nasdaq.

ElectraMeccanica Acquisition

On January 11, 2024, the Company and ElectraMeccanica Vehicles Corp. (“ElectraMeccanica”) entered into an arrangement agreement, as amended on January 31, 2024 (the “Arrangement Agreement”), pursuant to which the Company acquired all of the issued and outstanding common shares of ElectraMeccanica (each an “ElectraMeccanica Share”) pursuant to a plan of arrangement (the “Plan of Arrangement”) under the Business Corporations Act (British Columbia) (the “Arrangement”).

The Arrangement was consummated on March 26, 2024. Subject to the terms and conditions set forth in the Arrangement Agreement and the Plan of Arrangement, on March 26, 2024, each ElectraMeccanica Share outstanding immediately prior to the effective time of the Arrangement was converted automatically into the right to receive 0.0143739 of a share of the Company’s Common Stock, for total consideration of 1,766,388 shares of Common Stock. The Company’s liquidity has been supplemented by accessing ElectraMeccanica’s cash balance, which was approximately $50.2 million (excluding severance related costs paid at closing) as of the effective date of the Arrangement.

Risks and Uncertainties

In recent years, the United States and other significant markets have experienced cyclical downturns and worldwide economic conditions remain uncertain. Global general economic and political conditions, such as recession, inflation, uncertain credit and global financial markets, including potential future bank failures, health crises, supply chain disruption, fuel prices, international currency fluctuations, changes to trade policies and tariffs (or the perception that such changes may occur), and geopolitical events such as local and national elections, corruption, political instability and acts of war or military conflict, or terrorism, make it difficult for our customers and us to accurately forecast and plan future business activities, and could cause our customers to slow spending on our products and services or impact their ability to make timely payments. A weak or declining economy could also strain our suppliers, possibly resulting in supply disruption. In addition, there is a risk that our current or future suppliers, service providers, manufacturers or other partners may not survive such difficult economic times, which would directly affect our ability to attain our operating goals on schedule and on budget. The ultimate impact of current economic conditions on the Company is uncertain, but it may have a material negative impact on the Company’s business, operating results, cash flows, liquidity and financial condition.

Additionally, ongoing geopolitical events, such as the military conflicts between Russia and Ukraine and in Israel or tensions with China and related sanctions and export control restrictions, may increase the severity of supply chain disruptions and

Table of Contents

Xos, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Unaudited

further hinder our ability to source inventory for our vehicles. These conflicts continue to evolve and the ultimate impact on the Company is uncertain, but any prolonged conflict may have a material negative impact on the Company’s business, operating results, cash flows, liquidity and financial condition.

Although the Company has used the best current information available to it in its estimates, actual results could materially differ from the estimates and assumptions developed by management.

Liquidity

As an early-stage growth company, the Company has incurred net losses and cash outflows since its inception. The Company will continue to incur net losses and cash outflows in accordance with its operating plan as the Company continues to scale its operations to meet anticipated demand and establish its product and service offerings. As a result, the Company’s ability to access capital is critical and until the Company can generate sufficient revenue to cover its operating expenses, working capital and capital expenditures, the Company will need to raise additional capital in order to fund and scale its operations. The Company may raise additional capital through a combination of debt financing, other non-dilutive financing and/or equity financing, including through asset-based lending and/or receivable financing and collecting on its outstanding receivables. The Company’s ability to raise or access capital when needed is not assured and, if capital is not available to the Company when, and in the amounts needed, the Company could be required to delay, scale back or abandon some or all of its development programs and other operations, which could materially harm its business, prospects, financial condition and operating results. Global general economic conditions continue to be unpredictable and challenging in many sectors, with disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from the effects of potential recessions, rising inflation rates, potential bank failures, supply chain disruption, fuel prices, international currency fluctuations, changes to trade policies and tariffs, and geopolitical events such as local and national elections, corruption, political instability and acts of war or military conflicts including repercussions of the wars between Russia and Ukraine and in Israel and tensions with China, or terrorism.

As of March 31, 2025, the Company’s principal sources of liquidity were its cash and cash equivalents aggregating to $4.8 million. Cash and cash equivalents as of March 31, 2025, reflects the consummation of the Arrangement with ElectraMeccanica on March 26, 2024. The Company’s short- and long-term uses of cash are for working capital and to pay interest and principal on its debt. The Company has incurred losses since inception and had negative cash flow used in operating activities of $4.8 million and $14.6 million for the three months ended March 31, 2025 and 2024, respectively, and $48.8 million for the year ended December 31, 2024.

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. The consolidated financial information does not include any adjustments that might result from the outcome of this uncertainty. These conditions and events raise substantial doubt about the Company’s ability to continue as a going concern.

The Company intends to employ various strategies to obtain the required funding for future operations, which may include capital raising strategies such as debt financing, other non-dilutive financing and/or equity financing, including through asset-based lending and/or receivable financing and collecting on its outstanding receivables. The Company also has in place the SEPA (defined below in Note 10 - Equity), however, the ability to access the SEPA is dependent on various conditions. The Company’s access to capital under the SEPA is not available as of the date of this filing and would 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 with the SEC and declared effective and other applicable conditions are met. Moreover, the SEPA is scheduled to expire on February 11, 2026.

On August 9, 2022 (as amended on September 28, 2022), the Company entered into a note purchase agreement (the “Note Purchase Agreement”) with Aljomaih Automotive Co. (“Aljomaih”) under which the Company agreed to sell and issue to Aljomaih a convertible promissory note with a principal amount of $20.0 million and a maturity date of August 11, 2025.

Based on the Company’s strategies to raise funds as described above and Xos’s cash and cash equivalents as of March 31, 2025, the Company has concluded that it is not probable that such proceeds would provide sufficient liquidity to fund operations for the next twelve months following the date of the issuance of the unaudited condensed consolidated financial statements. As a result, it is not probable that Xos’s plans alleviate the substantial doubt about the Company’s ability to continue as a going concern for at least one year from the issuance of the unaudited condensed consolidated financial statements in this Report. Absent the Company being able to collect on its 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, the Company could be

Table of Contents

Xos, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Unaudited

required to seek protection under Chapters 7 or 11 of the United States Bankruptcy Code. This could potentially cause the Company to cease operations.

Supply Chain Disruptions

While the Company’s ability to source certain critical inventory items has been steadily improving since prior years, it is still experiencing long-standing negative effects from global economic conditions, and expects such effects to continue to varying degrees for the foreseeable future. The Company has also observed, and expects to be impacted by, sporadic and unpredictable shortages for specific components, primarily in power electronics and harnesses, and disruptions to the supply of components. The implementation and/or threat of new and increased tariffs, as well as 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.

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

Note 2— Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements

The following is a summary of the significant accounting policies consistently applied in the preparation of the accompanying unaudited condensed consolidated financial statements:

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial information. They do not include all of the information and footnotes required by U.S. GAAP for complete audited financial statements. The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

In the opinion of management, all adjustments (primarily consisting of normal accruals) considered for a fair presentation have been included. Operating results for the three months ended March 31, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of and for the years ended December 31, 2024 and 2023 presented in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on March 31, 2025.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the balance sheet date, as well as reported amounts of revenues and expenses during the reporting periods. The areas with significant estimates and judgments include, among others, inventory valuation, incremental borrowing rates for assessing operating and financing lease liabilities, useful lives of property and equipment, stock-based compensation, product warranty liability, and valuation of convertible debt and related embedded derivatives, common stock warrant liability, earn-out shares liability and valuations utilized in connection with acquisitions. Management bases its estimates on historical experience and on various other assumptions believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from those estimates, and such differences could be material to the Company’s financial statements.

Reclassifications

Table of Contents

Xos, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Unaudited

Certain prior period balances have been reclassified to conform to the current period presentation in the unaudited condensed consolidated financial statements and the accompanying notes, including (i) presenting bad debt expense as a reconciling item for the calculation of the net cash used in operating activities, and (ii) classification of amounts comprising stepvans & vehicle incentives, powertrains & Hubs, and other product revenue as described in Note 3 — Revenue Recognition These reclassifications have no effect on previously reported total assets, total liabilities or net loss.

Warranty Liability

The Company provides customers with a product warranty that assures that the products meet standard specifications and is free for periods typically between 2 to 5 years. The Company accrues warranty reserve for the products sold, which includes its best estimate of the projected costs to repair or replace items under warranties and recalls if identified. These estimates are based on actual claims incurred to date and an estimate of the nature, frequency and costs of future claims. These estimates are inherently uncertain given the Company’s relatively short history of sales, and changes to its historical or projected warranty experience may cause material changes to the warranty reserve in the future. Claims incurred under the Company’s standard product warranty programs are recorded based on open claims. The Company recorded warranty liability within other current liabilities in the consolidated balance sheets as of March 31, 2025 and December 31, 2024.

The reconciliation of the change in the Company’s product liability balances during the three months ended March 31, 2025 and 2024 consisted of the following (in thousands):


	Three Months Ended March 31,
	2025		2024
Warranty liability, beginning of period	$	740	$	1,306
Reduction in liability (payments)	(308)		(522)
Increase in liability	431		415
Warranty liability, end of period	$	863	$	1,199

Concentrations of Credit and Business Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times, may exceed the Federal Depository Insurance Corporation coverage limit of $250,000. As of March 31, 2025 and 2024, the Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.

During the three months ended March 31, 2025, one customer accounted for 22% and three customers accounted for 14% each of the Company’s revenues. During the three months ended March 31, 2024, one customer accounted for 52% of the Company’s revenues.

Accounts receivable totaled $22.2 million, net of allowance of $0.3 million, and $26.9 million, net of allowance of $0.2 million, as of March 31, 2025 and December 31, 2024, respectively. As of March 31, 2025, two customers accounted for 11% each of the Company’s accounts receivable. As of March 31, 2024, two customers accounted for 36% and 10% of the Company’s accounts receivable. As of December 31, 2024, no customer had an accounts receivable balance greater than 10% of the Company’s accounts receivable.

Concentration of Supply Risk

The Company is dependent on its suppliers, the majority of which are single-source suppliers, and the inability of these suppliers to deliver necessary components of its products according to the schedule and at prices, quality levels and volumes acceptable to the Company, or its inability to efficiently manage these components, could have a material adverse effect on the Company’s results of operations and financial condition.

Table of Contents

Xos, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Unaudited

As of March 31, 2025, two vendors accounted for 31% and 14% of the Company’s accounts payable. As of December 31, 2024, three vendors accounted for 19%, 15%, and 10% of the Company’s accounts payable.

Segment Information

The Company operates under one segment as it has developed, marketed, and sold primarily only one class of similar products of electric step vans, stripped chassis vehicles, battery systems, Hubs, and other products. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”), or decision-making group, in deciding how to allocate resources and in assessing performance. The Company’s CODM is its Chief Executive Officer.

The CODM assesses performance of the segment and decides how to allocate resources based on revenue, gross profit, employee-related costs and net income (loss) presented on a consolidated basis, for purposes of allocating resources and evaluating financial performance. The Company has one business activity and there are no segment managers who are held accountable for operations, operating results and plans for products or components below the consolidated unit level. Accordingly, the Company reports under a single operating segment. The accounting policies of the segment are the same as those described in the summary of significant accounting policies.

Recent Accounting Pronouncements Issued and not yet Adopted:

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires incremental annual income tax disclosures. This amendment includes disclosures of specific categories in the rate reconciliation and additional information for reconciling items that meet a quantitative threshold; income taxes paid (net of refunds received) disaggregated by federal, state, and foreign taxes, and also disaggregated by individual jurisdictions that meet a quantitative threshold; income (or loss) from continuing operations before income tax expenses (or benefit) disaggregated between domestic and foreign; and income tax expense (or benefit) from continuing operations disaggregated by federal, state and foreign. The guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted and should be applied prospectively (with retrospective application permitted). The Company is evaluating the impact of this amendment to the related financial statement disclosures.

The Company has considered all other recently issued accounting pronouncements and does not believe the adoption of such pronouncements will have a material impact on its unaudited condensed consolidated financial statements or notes thereto.

Note 3— Revenue Recognition

Disaggregated revenues by major source for the three and three months ended March 31, 2025 and 2024 consisted of the following (in thousands):


	Three Months Ended March 31,
	2025		2024
Product and service revenue
Stepvans & vehicle incentives(1)	$	3,584	$	11,585
Powertrains & Hubs(1)	1,592		422
Other product revenue	467		628
Total product revenue	5,643		12,635
Ancillary revenue	236		527
Total revenues	$	5,879	$	13,162

___________

(1)Amounts are net of returns and allowances. Stepvans & vehicle incentives and powertrains & Hubs include revenue generated from operating leases.

The Company leases stepvans and Hubs to customers under operating leases with terms ranging from 24 to 36 months. At the end of the lease term, customers are required to return the vehicles to Xos. During the three months ended March 31, 2025 and 2024, the Company recorded operating lease revenue of $7,000 and $14,000, respectively, on a straight-line basis over the

Table of Contents

Xos, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Unaudited

contractual terms of the respective leases as part of Stepvans & vehicle incentives, above. During the three months ended March 31, 2025 and 2024, the Company recorded operating lease revenue of $11,000 and $0, respectively, on a straight-line basis over the contractual terms of the respective leases as part of Powertrains & Hubs, above.

Note 4 — Acquisition of ElectraMeccanica

On March 26, 2024, Xos acquired all of the issued and outstanding ElectraMeccanica Shares in exchange for the issuance of 1,766,388 shares of Xos Common Stock. The transfer of common shares resulted in the Xos stockholders and ElectraMeccanica shareholders immediately prior to the transaction owning approximately 79% and 21% of Xos upon completion of the transaction, respectively. The Company accounted for the acquisition of ElectraMeccanica as an asset acquisition in accordance with Accounting Standards Codification Topic 805-50, Acquisition of Assets Rather than a Business, because the acquired set of assets and activities did not include a substantive process. Therefore, the acquired set of assets and activities does not meet the definition of a business. This determination was made with key judgments including the following:

•ElectraMeccanica has discontinued, recalled, and repurchased all previously sold three-wheeled electric vehicles (the “SOLO”) because of a loss of propulsion issue that resulted in the vehicles being under a “do not drive” order from the National Highway Traffic Safety Administration. All in-process research and development (“IPR&D”) projects to commercialize the SOLO or a new four-wheeled electric (the “E4”) were terminated by ElectraMecannica. The IPR&D related to SOLO and E4 has nominal value and require significant time, cost, and engineering efforts to commercialize.

•The majority of the assembled workforce was performing administrative tasks or working on the destruction of the remaining inventory and closing of leased facilities at the time of the acquisition. The destruction of the remaining inventory was completed during the three months ended September 30, 2024. The acquired assembled workforce did not contain sufficient engineers with the knowledge and skill set to commercialize ElectraMeccanica’s terminated IPR&D projects.

Accordingly, the purchase consideration provided by Xos to effect the acquisition has been allocated to the acquired assets and assumed liabilities based upon their relative fair values. The following table summarizes the acquisition of ElectraMeccanica on March 26, 2024 (in thousands):


Purchase consideration (1)	$	(35,588)

Assets acquired
Cash and cash equivalents	$	50,240
Restricted cash	1,115
Prepaid expenses and other current assets	1,539
Other non-current assets	1,736
Total identifiable assets acquired	$	54,630

Liabilities assumed
Accounts payable	$	(804)
Other current liabilities (2)	(1,903)
Other non-current liabilities (2)	(16,335)
Total liabilities assumed	$	(19,042)

Net assets acquired and liabilities assumed	$	35,588

Table of Contents

Xos, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Unaudited

(1) As a result of the asset acquisition accounting, the transaction costs of $3.7 million associated with the acquisition are included in the costs of the assets acquired and allocated amongst qualifying assets using the relative fair value basis. The transaction costs primarily included financial advisor fees, accounting, and legal expenses.

(2) The Company assumed two lease facilities in connection with the ElectraMeccanica acquisition which are reflected in other current liabilities and other non-current liabilities of approximately $1.2 million and $16.0 million, respectively.

The Company recognized $0.0 million and $2.0 million of severance related expenses in general and administrative expense in its unaudited condensed consolidated statements of operations and comprehensive loss during the three months ended March 31, 2025 and 2024, respectively.

Note 5 — Lease Receivable

For deferred equipment agreements that contain embedded operating leases, upon lease commencement, the Company defers and records the equipment cost of operating lease assets within property and equipment, net of accumulated depreciation. These operating lease assets are subsequently amortized to cost of goods sold over the lease term on a straight-line basis.

For deferred equipment agreements that contain embedded sales-type leases, the Company recognizes lease revenue and costs, as well as a lease receivable, at the time the lease commences. Lease revenue related to both operating-type and sales-type leases for three months ended March 31, 2025 and 2024 was approximately $7,000 and $14,000, respectively. Costs related to embedded leases within the Company’s deferred equipment agreements are included in cost of goods sold in the accompanying unaudited condensed consolidated statement of operations and comprehensive loss. Interest on the lease receivable was immaterial to the unaudited condensed consolidated financial statements for the three months ended March 31, 2025 and 2024.


(in thousands)	Balance Sheet Location	March 31, 2025		December 31, 2024
Lease receivable		$	2,476	$	2,528
Allowance for expected credit losses		(719)		(719)
Lease receivable, net		1,757		1,809
Less: current portion of lease receivable	Prepaid expenses and other current assets	(1,303)		(1,264)
Lease receivable, non-current	Other non-current assets	$	454	$	545

As of March 31, 2025, estimated future maturities of customer sales-type lease receivable and operating lease payments for each of the following fiscal years are as follows:


	Future Lease Receivables/Payments (in thousands)
Fiscal year	Sales-Type Leases		Operating Leases
2025	$	1,303	$	13
2026	429		0
2027	14		0
2028	11		0
Thereafter	0		0
Total lease payments	$	1,757	$	13

Table of Contents

Xos, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Unaudited

Note 6 — Inventories

Inventory amounted to $38.0 million and $36.6 million, respectively, as of March 31, 2025 and December 31, 2024 and consisted of the following (in thousands):


	March 31, 2025		December 31, 2024
Raw materials	$	22,182	$	24,943
Work in process	4,879		6,983
Finished goods	10,945		4,641
Total inventories	$	38,006	$	36,567

Inventories as of March 31, 2025 and December 31, 2024 were comprised of raw materials, work in process and finished goods related to the production of vehicles, powertrains, Hubs, and other products for sale and finished goods inventory including vehicles in transit to fulfill customer orders, new vehicles, new vehicles awaiting final pre-delivery quality review inspection, and Xos Energy Solutions products available for sale.

Inventories are stated at the lower of cost or net realizable value. Cost is computed using average cost. Inventory write-downs are based on reviews for excess and obsolescence determined primarily by current and future demand forecasts. During the three months ended March 31, 2025 and 2024, the Company recorded a favorable change in our inventory reserves of $0.5 million and $0.8 million, respectively, to reflect inventories at their net realizable values and provide an allowance for any excess or obsolete inventories.

Note 7 — Selected Balance Sheet Data

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets as of March 31, 2025 and December 31, 2024 consisted of the following (in thousands):


	March 31, 2025		December 31, 2024
Prepaid inventories	$	1,738	$	725
Prepaid expenses and other(1)	2,541		2,814
Lease receivable	1,303		1,264
Contract assets	1,127		1,099
Financed insurance premiums	738		1,315
Assets held for sale(2)	668		651
Total prepaid expenses and other current assets	$	8,115	$	7,868

____________

(1) Primarily relates to assets acquired in connection with the ElectraMeccanica acquisition, other receivables, prepaid insurance, and prepaid licenses and subscriptions.

(2) Assets held for sale are comprised of manufacturing equipment no longer used in production and intended to be sold.

Other Non-Current Assets

Table of Contents

Xos, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Unaudited

Other non-current assets as of March 31, 2025 and December 31, 2024 consisted of the following (in thousands):


	March 31, 2025		December 31, 2024
Security deposits	$	1,767	$	1,873
Duty drawback receivable(1)	2,709		2,709
Lease receivable, non-current	454		545
Other non-current assets	1,663		1,601
Total other non-current assets	$	6,593	$	6,728

___________
(1) Represents the estimated amount that can be recovered from previously paid tariffs relating to crushed SOLO vehicles that were acquired in connection with the ElectraMeccanica acquisition.

Other Current Liabilities

Other current liabilities as of March 31, 2025 and December 31, 2024 consisted of the following (in thousands):


	March 31, 2025		December 31, 2024
Accrued expenses and other (1)	$	2,738	$	2,886
Accrued interest⁽²⁾	5,282		4,789
Accrued payroll⁽³⁾	2,630		2,079
Contract liabilities	249		260
Customer deposits	919		1,275
Warranty liability	863		740
Equipment notes payable, current	340		377
Short-term insurance financing notes	537		1,280
Operating lease liabilities, current	3,147		3,028
Finance lease liabilities, current	2,173		1,054
Total other current liabilities	$	18,878	$	17,768

____________

(1) Primarily relates to the liabilities assumed in connection with the ElectraMeccanica acquisition, accrued inventory purchases, accrued professional fees, and other accrued expenses.

(2) Represents accrued interest on Convertible Promissory Note, which interest is convertible into shares of our common stock at maturity. See Note 9 — Convertible Notes.

(3) Primarily relates to payroll liabilities such as accrued payroll, accrued vacation, accrued bonuses and other payroll liabilities.

Revenue recognized from the customer deposits balance amounted to $0.3 million for both the three months ended March 31, 2025 and 2024. Revenue recognized for the year ended December 31, 2024 from the customer deposits balance as of December 31, 2023 was $0.7 million.

Table of Contents

Xos, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Unaudited

Other Non-Current Liabilities

Other non-current liabilities as of March 31, 2025 and December 31, 2024 consisted of the following (in thousands):


	March 31, 2025		December 31, 2024
Accrued interest expense and other	$	625	$	635
Equipment notes payable, non-current	189		224
Operating lease liabilities, non-current	15,854		16,656
Finance lease liabilities, non-current	657		418
Total other non-current liabilities	$	17,325	$	17,933

Note 8 — Earn-out Shares Liability

The Company has a contingent obligation to issue 547,000 shares (the “Earn-out Shares”) of Common Stock and grant 8,700 restricted stock units (“Earn-out RSUs”) to certain stockholders and employees upon the achievement of certain market share price milestones within specified periods following the Business Combination on August 20, 2021.

The Earn-out Shares will be issued in tranches based on the following conditions:

i.If the volume-weighted average closing share price (“VWAP”) of the Common Stock equals or exceeds $420.00 per share for any 10 trading days within any consecutive 20-trading day period between the Merger closing date and the five year anniversary of such closing date (“Earn-out Period”), then the Company is required to issue an aggregate of 180,000 shares (“Tranche 1 Earn-out Shares”) of Common Stock to holders with the contingent right to receive Earn-out Shares (excluding any Earn-out RSUs). If after Closing and during the Earn-out Period, there is a Change in Control (as defined in the Merger Agreement), the Company is required to issue Tranche 1 Earn-out Shares when the value per share of the Company is equal to or greater than $420.00 per share, but less than $600.00. If there is a change in control where the value per share of common stock is less than $420.00, then the Earn-out Shares shall terminate prior to the end of the Earn-out Period and no Common Stock shall be issuable.

ii.If the VWAP of the Common Stock equals or exceeds $600.00 per share for any 10 trading days within any consecutive 20-trading day period during the Earn-out Period, then the Company is required to issue an aggregate of 180,000 shares (“Tranche 2 Earn-out Shares”) of Common Stock to holders with the contingent right to receive Earn-out Shares (excluding any Earn-out RSUs). If after Closing and during the Earn-out Period, there is a Change in Control (as defined in the Merger Agreement), the Company is required to issue Tranche 2 Earn-out Shares when the value per share of the Company is equal to or greater than $600.00 per share, but less than $750.00.

iii.If the VWAP of the Common Stock equals or exceeds $750.00 per share for any 10 trading days within any consecutive 20-trading day period during the Earn-out Period, then the Company is required to issue an aggregate of 180,000 shares (“Tranche 3 Earn-out Shares”) of Common Stock to holders with the contingent right to receive Earn-out Shares (excluding any Earn-out RSUs). If after Closing and during the Earn-out Period, there is a Change in Control (as defined in the Merger Agreement), the Company is required to issue Tranche 3 Earn-out Shares when the value per share of the Company is equal to or greater than $750.00 per share.

Pursuant to the guidance under ASC 815, Derivatives and Hedging, the right to Earn-out Shares was classified as a Level 3 fair value measurement liability, and the increase or decrease in the fair value during the reporting period is recognized in the unaudited condensed consolidated statement of operations accordingly. The fair value of the Earn-out Shares liability was estimated using the Monte Carlo simulation of the stock prices based on historical and implied market volatility of a peer group of public companies.

For each of the periods ended March 31, 2025 and December 31, 2024, the fair value of the Earn-out Shares liability was estimated to be $0. The Company recognized a loss on the change in fair value in Earn-out Shares liability of $0 and $3,000 in its unaudited condensed consolidated statements of operations and comprehensive loss during the three months ended March 31, 2025 and 2024, respectively.

Table of Contents

Xos, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Unaudited

The allocated fair value to the Earn-out RSU component, which is covered by ASU 718, Compensation — Stock Compensation, is recognized as stock-based compensation expense over the vesting period commencing on the grant date of the award.

Note 9 — Convertible Notes

Convertible Promissory Note

On August 9, 2022, the Company entered into a note purchase agreement (the “Note Purchase Agreement”) with Aljomaih Automotive Co. (“Aljomaih”) under which the Company agreed to sell and issue to Aljomaih a convertible promissory note with a principal amount of $20.0 million. On August 11, 2022, pursuant to the Note Purchase Agreement, the Company sold and issued $20.0 million in principal amount of a convertible promissory note (the “Original Note”) to Aljomaih. On September 28, 2022, the Company and Aljomaih agreed to amend and restate the Original Note (as amended and restated, the “Note”) to, among other things, adjust the calculation of the shares of the Company’s Common Stock issuable as interest, as described further below.

The Note, which matures on August 11, 2025, bears interest at a rate of 10.0% per annum, payable at maturity in validly issued, fully paid and non-assessable shares of Common Stock (“Interest Shares”), unless earlier converted or paid. If the 10-day VWAP ending on the trading day immediately prior to the applicable payment date is greater than or equal to the Minimum Price (as defined in Nasdaq Rule 5635(d)) or the Company has received the requisite approval from its stockholders (which it has), the number of Interest Shares to be issued will be calculated based on such 10-day VWAP; otherwise, the number of Interest Shares to be issued would have been based on the Nasdaq Minimum Price. The conversion price for the Note will initially be equal to $71.451 per share, subject to adjustment in some events pursuant to the terms of the Note. The Company will have the right, in its sole discretion and exercisable at its election by sending notice of such exercise to Aljomaih, to irrevocably fix the method of settlement that will apply to all conversions of Notes. Methods of settlement include (i) physical settlement in shares of Common Stock, (ii) cash settlement determined by multiplying the principal being converted by the 10-day VWAP ending on the trading day immediately prior to the conversion date and dividing by the conversion price, or (iii) a combination of Common Stock and cash.

The Note may not be converted into shares of Common Stock and Interest Shares may not be issued to the extent (i) such conversion or issuance would result in the investor having beneficial ownership of more than 19.99% of the then outstanding shares of the Company’s Common Stock or (ii) the aggregate number of shares issued would exceed the Authorized Share Cap (as defined in the Note).

The Note also includes an optional redemption feature that provides the Company, on or after August 11, 2024, or as otherwise agreed to between the Company and Aljomaih in writing, the right to redeem the outstanding principal and accrued and unpaid interest, upon written notice not less than 5 trading days prior to exercise of the option, in full or in part and without penalty.

The Company accounts for the Note in accordance with the guidance contained in ASC 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity, under which the Note was analyzed for the identification of material embedded features that meet the criteria for equity treatment and/or bifurcation and must be recorded as a liability. The Company initially classified the Note as a non-current liability given a maturity date of greater than one year, however, during the quarter ended September 30, 2024, the Note was reclassified as a current liability since its maturity date is less than one year from September 30, 2024.

The Note will not be included in the computation of either basic or diluted EPS for the three months ended March 31, 2025 in Note 1 7 — Net Loss per Share. This financial instrument is not included in basic EPS because it does not represent participating securities. Further, the Note is not included in diluted EPS because the Company reported a net loss from continuing operations for the three months ended March 31, 2025; thus, including these financial instruments would have an antidilutive effect on EPS.

As of March 31, 2025 and December 31, 2024, the Company had a principal balance of $20.0 million outstanding, net of unamortized debt and issuance costs of $18,000 and $30,000, respectively. Debt issuance costs are amortized through the maturity date of the Note using the effective interest rate method. Amortization of debt issuance costs, recorded in other expense, net, for the three months ended March 31, 2025 and 2024, was immaterial. The Company recorded interest expense of $0.5 million in other expense, net related to the Note during each of the three months ended March 31, 2025 and 2024.

Table of Contents

Xos, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Unaudited

Note 10 — Equity

Xos Common and Preferred Stock

The Company is authorized to issue two classes of stock to be designated, respectively, “Common Stock” and “Preferred Stock.” The total number of shares which the Company is authorized to issue is 1,010,000,000 shares. 1,000,000,000 shares shall be Common Stock, each having a par value of one-hundredth of one cent ($0.0001). 10,000,000 shares shall be Preferred Stock, each having a par value of one-hundredth of one cent ($0.0001).

Voting Rights: Each outstanding share of Common Stock shall entitle the holder thereof to one vote on each matter properly submitted to the stockholders of the Company for their vote; provided, however, that, except as otherwise required by law, holders of Common Stock shall not be entitled to vote on any amendment to this Certificate of Incorporation (including any certificate of designation filed with respect to any series of Preferred Stock) that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together as a class with the holders of one or more other such series, to vote thereon by law or pursuant to this Certificate of Incorporation (including any certificate of designation filed with respect to any series of Preferred Stock).

Preferred Stock: The Preferred Stock may be issued from time to time in one or more series. The Board of Directors of the Company (the “Board of Directors”) is hereby expressly authorized to provide for the issue of all or any number of the shares of the Preferred Stock in one or more series, and to fix the number of shares and to determine or alter for each such series, such voting powers, full or limited, or no voting powers, and such designation, preferences, and relative, participating, optional, or other rights and such qualifications, limitations, or restrictions thereof, as shall be stated and expressed in the resolution or resolutions adopted by the Board of Directors providing for the issuance of such shares and as may be permitted by the Delaware General Corporation Law (the “DGCL”). The Board of Directors is also expressly authorized to increase (but not above the total number of authorized shares of the class) or decrease (but not below the number of shares of such series then outstanding) the number of shares of any series subsequent to the issuance of shares of that series. In case the number of shares of any series shall be decreased in accordance with the foregoing sentence, the shares constituting such decrease shall resume the status that they had prior to the adoption of the resolution originally fixing the number of shares of such series.

Standby Equity Purchase Agreement

On March 23, 2022, the Company 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 the Company has the right, but not the obligation, to sell to Yorkville up to $125.0 million of shares of its Common Stock at its request any time until February 11, 2026, subject to certain conditions. The Company expects to use any net proceeds from the SEPA for working capital and general corporate purposes.

As consideration for Yorkville’s commitment to purchase shares of Common Stock at the Company’s direction upon the terms and subject to the conditions set forth in the SEPA, upon execution of the SEPA, the Company issued 619 shares of Common Stock to Yorkville.

On June 22, 2023, the Company and Yorkville entered into the First Amendment to Standby Equity Purchase Agreement (the “SEPA Amendment”), in which the Company and Yorkville amended the SEPA to: (1) change the calculation of the purchase price of an Option 1 Advance (as defined in the SEPA) from an average of the daily VWAP of the Common Stock during a three-day pricing period to the lowest VWAP during such three-day pricing period; (2) change the denomination of any requested advances from the Company to Yorkville under the SEPA from dollars to shares; (3) increase Yorkville’s beneficial ownership limitation under the SEPA from 4.99% to 9.99% of the outstanding Common Stock, provided that if any portion of an advance under the SEPA would cause Yorkville to exceed the beneficial ownership limitation due to Yorkville’s ownership of the Company’s securities convertible into Common Stock, then the maximum number of shares of Common Stock that such securities will be convertible into will be reduced by the number of shares of Common Stock included in such advance for such period that Yorkville holds such shares of common stock covered by such advance and the number of shares of Common Stock covered by such advance will not be reduced; (4) extend the commitment period to February 11, 2026 and (5) make other administrative and drafting changes.

During the three months ended March 31, 2025 and 2024, the Company issued 0 and 5,500 shares of Common Stock under the SEPA for proceeds of $0 and $46,750, respectively. As of both March 31, 2025 and December 31, 2024, the remaining

Table of Contents

Xos, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Unaudited

commitment available under the agreement 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 these financial statements and will not be available until the Company files with the SEC a post-effective amendment to the Registration Statement on Form S-1 filed on July 27, 2023. 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.

Note 11 — Derivative Instruments

Public and Private Placement Warrants

As of March 31, 2025, the Company had 18,633,301 Public Warrants and 199,997 Private Placement Warrants outstanding, with fair values of $0.2 million and $2,000, respectively.

Each Warrant is exercisable to purchase one-thirtieth of one share of Common Stock. The Public Warrants have an exercise price of $345.00 per whole share, subject to adjustments, and will expire on August 20, 2026 or earlier upon redemption or liquidation. The Public Warrants may only be exercised for a whole number of shares. No fractional Public Warrants will be issued upon separation of the units and only whole Public Warrants will trade. The Public Warrants became exercisable; provided that the Company has an effective registration statement under the Securities Act covering the issuance of the Common Stock issuable upon exercise of the Warrants and a current prospectus relating to them is available and such shares are registered, qualified or exempt from registration under the securities, or blue sky, laws of the state of residence of the holder (or the Company permits holders to exercise their Warrants on a cashless basis under the circumstances specified in the warrant agreement). A registration statement was filed with the SEC covering the issuance of the Common Stock issuable upon exercise of the Warrants, and the Company will use its commercially reasonable efforts to maintain the effectiveness of such registration statement and a current prospectus relating to those shares of Common Stock until the Public Warrants expire or are redeemed. If the shares of Common Stock are at the time of any exercise of a Public Warrant not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, requires holders of Public Warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, it will not be required to file or maintain in effect a registration statement.

The Private Placement Warrants are identical to the Public Warrants, except that the Private Placement Warrants and the Common Stock issuable upon exercise of the Private Placement Warrants were not transferable, assignable or salable until September 19, 2021, subject to certain limited exceptions. Additionally, the Private Placement Warrants will be non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the Private Placement Warrants are held by someone other than the initial shareholders or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.

Redemption of Warrants for cash when the price per share of Common Stock equals or exceeds $540.00:

Once the Warrants become exercisable, the Company may redeem the outstanding Warrants (except as described above with respect to the Private Placement Warrants):

•in whole and not in part;

•at a price of $0.01 per Warrant;

•upon not less than 30 days’ prior written notice of redemption to each Warrant holder; and

•if, and only if, the last reported sale price of Common Stock for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the Warrant holders (the “Reference Value”) equals or exceeds $540.00 per share (as adjusted for share sub-divisions, share dividends, rights issuances, consolidations, reorganizations, recapitalizations and the like).

Table of Contents

Xos, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Unaudited

The Company will not redeem the Warrants as described above unless a registration statement under the Securities Act covering the issuance of the Common Stock issuable upon exercise of the Warrants is then effective and a current prospectus relating to those Common Stock is available throughout the 30-day redemption period. If and when the Warrants become redeemable by the Company, it may exercise its redemption right even if the Company is unable to register or qualify the underlying securities for sale under all applicable state securities laws.

Redemption of Warrants for Common Stock when the price per share equals or exceeds $300.00:

Once the Warrants become exercisable, the Company may redeem the outstanding Warrants (including both Public Warrants and Private Placement Warrants):

•in whole and not in part;

•at $0.10 per Warrant upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise their Warrants on a cashless basis prior to redemption and receive that number of shares determined by reference to an agreed table based on the redemption date and the “fair market value” of Common Stock;

•if, and only if, the Reference Value equals or exceeds $300.00 per share (as adjusted for share splits, share dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like); and

•if the Reference Value is less than $540.00 per share (as adjusted), the Private Placement Warrants must also concurrently be called for redemption on the same terms as the outstanding Public Warrants, as described above.

The “fair market value” of Common Stock shall mean the average reported last sale price of Common Stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of Warrants.

In no event will the Company be required to net cash settle any Warrant. The Warrants may also expire worthless.

Note 12 — Share-Based Compensation

2018 Stock Plan

On November 27, 2018, the Legacy Xos’ board of directors and stockholders adopted the 2018 Stock Plan. There are no shares available for issuance under the 2018 Stock Plan; however, the 2018 Stock Plan continues to govern the terms and conditions of the outstanding awards granted under the 2018 Stock Plan.

As of March 31, 2025, there were 1,263 Options outstanding under the 2018 Stock Plan. The amount and terms of Option grants were determined by the board of directors of Legacy Xos. The Options granted under the 2018 Stock Plan generally expire within 10 years from the date of grant and generally vest over four years, at the rate of 25% on the first anniversary of the date of grant and ratably on a monthly basis over the remaining 36-month period thereafter based on continued service.

Table of Contents

Xos, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Unaudited

Stock option activity during the three months ended March 31, 2025 consisted of the following:


	Options	Weighted Average Fair Value Per Share		Weighted Average Exercise Price Per Share		Weighted Average Remaining Years	Aggregate Intrinsic Value
December 31, 2024 — Options outstanding	1,669	$	0.54	$	0.60	4.80	$	4,404
Exercised	(406)	0.73		0.46			2,351
March 31, 2025 — Options outstanding	1,263	$	0.48	$	0.65	4.31	$	2,984
March 31, 2025 - Options vested and exercisable	1,263	$	0.48	$	0.65	4.31	$	2,984

Aggregate intrinsic value represents the difference between the exercise price of the options and the fair value of the Company’s common stock. The aggregate intrinsic value of options exercised during the three months ended March 31, 2025 and 2024 were approximately $2,351 and $141,076, respectively.

The Company estimates the grant date fair value of options utilizing the Black-Scholes option pricing model, which is dependent upon several variables, including expected option term, expected volatility of the Company's share price over the expected term, expected risk-free rate and expected dividend yield rate. There were no option grants during either the three months ended March 31, 2025 or 2024.

2021 Equity Plan

On August 18, 2021 the Company’s stockholders approved the Xos, Inc. 2021 Equity Incentive Plan (the “2021 Equity Plan”), which was ratified by the Company’s board of directors on August 20, 2021. The 2021 Equity Plan provides for the grant of incentive stock options (“ISOs”), within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”) to employees, including employees of any parent or subsidiary, and for the grant of non-statutory stock options (“NSOs”), stock appreciation rights, restricted stock awards, restricted stock units (“RSUs”), performance awards and other forms of awards to employees, directors and consultants, including employees and consultants of Xos’ affiliates. On June 24, 2024, the Company’s stockholders approved the Xos, Inc. Amended and Restated 2021 Equity Incentive Plan (the “A&R 2021 Equity Plan”) to increase the aggregate number of shares of Common Stock reserved for issuance under the 2021 Equity Plan by 1,180,819 shares.

As of March 31, 2025, there were 1,008,936 shares of Common Stock available for issuance under the A&R 2021 Equity Plan.

RSU activity during the three months ended March 31, 2025 consisted of the following:


	RSUs	Weighted Average Grant Date Fair Value		Weighted Average Fair Value
December 31, 2024 — RSU outstanding	1,530,481	$	8.14	$	4,961,551
Granted	166,978	3.36		559,954
Vested	(110,354)	7.89		370,910
Forfeited	(195,520)	9.05		598,293
March 31, 2025 — RSU outstanding	1,391,585	$	7.46	$	4,191,265

Table of Contents

Xos, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Unaudited

The Company recognized stock-based compensation expense (including Earn-out RSUs) in the unaudited condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2025 and 2024, totaling approximately $1.5 million and $2.0 million, respectively, which consisted of the following (in thousands):


	Three Months Ended March 31,
	2025		2024
Cost of goods sold	$	62	$	137
Research and development	354		462
Sales and marketing	231		154
General and administrative	876		1,253
Total	$	1,523	$	2,006

We allocate stock-based compensation expense to cost of goods sold, research and development expense, sales and marketing expense and general and administrative expense, based on the roles of the applicable recipients of such stock-based compensation. The unamortized stock-based compensation expense was $7.3 million as of March 31, 2025, and weighted average remaining amortization period as of March 31, 2025 was 1.68 years.

The aggregate fair value of RSUs that vested was $0.4 million during the three months ended March 31, 2025.

Note 13 — Property and Equipment, net

Property and equipment, net consisted of the following at March 31, 2025 and December 31, 2024 (in thousands):


	March 31, 2025		December 31, 2024
Equipment	$	5,705	$	5,705
Finance lease assets	1,592		1,609
Furniture and fixtures	173		173
Company vehicles(1)	2,204		2,817
Leasehold improvements	1,401		1,401
Computers, software and related equipment	3,128		3,128
Property and equipment, gross	14,203		14,833
Accumulated depreciation	(8,991)		(8,722)
Property and equipment, net	$	5,212	$	6,111

___________

(1)Amounts include operating lease assets (stepvans and Hubs) for which the Company is a lessor. As of March 31, 2025, gross operating lease assets and accumulated depreciation on operating lease assets were $0.3 million and $0.1 million, respectively. As of December 31, 2024 gross operating lease assets and accumulated depreciation on operating lease assets were $0.4 million and $0.1 million, respectively

Depreciation expense during the three months ended March 31, 2025 and 2024, totaled $0.5 million and $0.9 million, respectively.

Note 14 — Commitments and Contingencies

Legal Contingencies

Legal claims may arise from time to time in the normal course of business, the results of which may have a material effect on the Company’s accompanying unaudited condensed consolidated financial statements. As of March 31, 2025 and December 31, 2024, the Company was not a party to any legal proceedings, that individually or in the aggregate, are reasonably expected to have a material adverse effect on the Company’s results of operations, financial condition or cash flows.

Table of Contents

Xos, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Unaudited

Other Contingencies

The Company enters into non-cancellable long-term purchase orders and vendor agreements in the normal course of business. As of March 31, 2025, non-cancellable purchase commitments with two of the Company’s vendors totaled $0.2 million.

Note 15 — Related Party Transactions

The Company has lease agreements with Fitzgerald Manufacturing Partners. The owner of Fitzgerald Manufacturing Partners is a stockholder of the Company. For each of the three months ended March 31, 2025 and 2024, the Company incurred rent expense of $0.2 million and $0.2 million, respectively, related to these agreements.

Note 16 — Income Taxes

The Company’s effective tax rate during the three months ended March 31, 2025 and 2024 was (0.12)% and (0.04)%, respectively. State taxes coupled with losses not benefited resulted in an effective tax rate below the statutory tax rate of 21% for the three months ended March 31, 2025.

The Company recognizes tax benefits related to positions taken, or expected to be taken, on its tax returns, only if the positions are “more-likely-than-not” sustainable. Once this threshold has been met, the Company’s measurement of its expected tax benefits is recognized in its financial statements. The Company does not have any uncertain tax positions that meet this threshold as of March 31, 2025 and December 31, 2024.

The Company is subject to taxation and files income tax returns with the U.S. federal government and various states, as well as Canada and China. The Company is not currently under examination by any tax authorities. The Company generally is not subject to examination for tax years prior to 2020.

At March 31, 2025, the Company’s deferred income taxes were in a net asset position mainly due to deferred tax assets generated by net operating losses. The Company assesses the likelihood that its deferred tax assets will be realized. A full review of all positive and negative evidence needs to be considered, including the Company's current and past performance, the market environments in which the Company operates, the utilization of past tax credits, the length of carryback and carryforward periods, and tax planning strategies that might be implemented. Management believes that, based on a number of factors, it is more likely than not that all or some portion of the deferred tax assets may not be realized; accordingly, the Company has provided a valuation allowance against its net deferred tax assets at March 31, 2025 and December 31, 2024.

Table of Contents

Xos, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Unaudited

Note 17 — Net Loss per Share

Basic and diluted net loss per share during the three months ended March 31, 2025 and 2024 consisted of the following (in thousands, except per share amounts):


	Three Months Ended March 31,
	2025		2024
Numerator:
Net loss	$	(10,186)	$	(11,003)
Net loss attributable to common stockholders, basic	(10,186)		(11,003)
Net loss attributable to common stockholders, diluted	(10,186)		(11,003)
Denominator:
Basic
Weighted average common shares outstanding, basic	8,076		6,108
Basic net loss per share	$	(1.26)	$	(1.80)
Diluted
Weighted average common shares outstanding, diluted	8,076		6,108
Diluted net loss per share	$	(1.26)	$	(1.80)

Potential ending shares outstanding that were excluded from the computation of diluted net loss per share because their effect was anti-dilutive as of March 31, 2025 and 2024 consisted of the following (in thousands):


	Three Months Ended March 31,
	2025	2024
Contingent earn-out shares	547	547
Common stock underlying public and private warrants	628	628
Restricted stock units	1,392	599
Stock options	1	2
If-converted common stock from convertible debt	280	280

Table of Contents

Xos, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Unaudited

Note 18 — Segment Reporting

The following table presents segment revenue, gross profit (loss), and net loss for the periods presented (in thousands):


	March 31, 2025		March 31, 2024
Revenues	$	5,879	$	13,162
Cost of goods sold	4,668		10,374
Gross profit	1,211		2,788
less:
Employee related	4,446		7,913
Facility and rent	1,059		639
Insurance	878		892
Depreciation	447		854
Professional services	636		870
Computer and software as a service	350		620
Research and development materials	337		573
Other(1)	2,327		670
Other (income) expense, net	851		584
Change in fair value of derivative instruments	54		168
Change in fair value of earn-out shares liability	—		3
Provision for income taxes	12		5
Segment net loss	$	(10,186)	$	(11,003)

____________

(1) Other includes $1.9 million of financed equipment lease expense, as well as bad debt expense, travel & entertainment, general and administrative freight, property/franchise taxes, and merchant fees.

Note 19 — Fair Value Measurements

ASC 820, Fair Value Measurements and Disclosures, clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based upon assumptions that market participants would use in pricing an asset or liability.

U.S. GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. As presented in the tables below, this hierarchy consists of three broad levels:

•Level 1: Quoted prices in active markets for identical assets and liabilities.

•Level 2: Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations whose inputs or significant value drivers are observable.

•Level 3: Significant inputs to the valuation model are unobservable and significant to the overall fair value measurement of the assets or liabilities. Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.

Table of Contents

Xos, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Unaudited

The Company’s financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable, other current liabilities, warrants and earn-out shares liability. The fair value of cash, cash equivalents and accounts receivable approximates carrying value due to their short-term maturity.

As required by ASC 820, assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to their fair value measurement. Derivative financial instruments which are required to be measured at fair value on a recurring basis are measured at fair value using Level 3 inputs for all periods presented. Level 3 inputs are unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Assets and liabilities carried at fair value on a recurring basis as of March 31, 2025 and December 31, 2024 consisted of the following (in thousands):


	March 31, 2025
	Fair Value		Level 1		Level 2		Level 3






Financial Liabilities:
Private Placement Warrants	$	2	$	—	$	2	$	—
Public Warrants	173		173		—		—
Total Financial Liabilities	$	175	$	173	$	2	$	—


	December 31, 2024
	Fair Value		Level 1		Level 2		Level 3






Financial Liabilities:
Private Placement Warrants	$	1	$	—	$	1	$	—
Public Warrants	120		120		—		—
Total Financial Liabilities	$	121	$	120	$	1	$	—

There was no change in the fair value of Level 3 financial liabilities during the three months ended March 31, 2025.

____________

Table of Contents

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis provides information which Xos’ 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.

Overview

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.

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

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.

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

We have also developed a fleet management platform called Xosphere™ that interconnects vehicle, maintenance, charging, and service data. The Xosphere™ is aimed at minimizing electric fleet total cost of ownership through fleet management integration. This comprehensive suite of tools allows fleet operators to monitor vehicle and charging performance in real-time with in-depth telematics; reduce charging cost; optimize energy usage; and manage maintenance and support with a single software tool.

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

We believe our growth in the coming years will be supported by the growth of e-commerce and last-mile delivery, and will depend in part on regulatory and consumer interest in reducing the impacts of climate change. E-commerce continues to grow

Table of Contents

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

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.

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.

Recent Developments

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.

Key Factors Affecting Operating Results

We believe that our performance and future success depend on several factors that present significant opportunities for us but also pose risks and challenges, including those discussed in this Report.

Successful Commercialization of our Products and Services

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 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.

Customer Demand

We have sold a limited number of our vehicles to our existing customers, have agreements with future customers and have received interest from other potential customers. The sales of our vehicles and services to our existing and future customers will be an important indicator of our performance.

Supply Chain Disruptions

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.

Table of Contents

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.

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

We are increasingly subject to varying and sometimes conflicting rules, tariffs, and import restrictions that can change with little notice. These regulatory changes may impact our ability to continue sourcing components from certain regions or accessing key suppliers.

Basis of Presentation

The accompanying unaudited condensed 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 ElectraMeccanica. 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.

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 for more information.

Components of Results of Operations

Revenues

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.

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

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

We also earn tradable credits in the operation of our automotive business under various regulations related to emission reduction, clean fuel, and others. We sell these credits to other regulated entities who can use the credits to comply with emission standards and other regulatory requirements. We recognize revenue on the sale of these credits, which have negligible incremental costs associated with them, at the time control of the regulatory credit is transferred to the purchasing party.

Table of Contents

Cost of Goods Sold

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

Cost of goods sold includes reserves for estimated warranty expenses as well as reserves for estimated returns of vehicles. Additionally, cost of goods sold includes adjustments for the results of physical inventory counts. Cost of goods sold also includes reserves to write down the carrying value of our inventory to their net realizable value and to provide for any excess or obsolescence.

We are continuing to undertake efforts to find more cost-effective vendors and sources of parts and raw materials to lower our overall cost of production.

General and Administrative Expense

General and administrative (“G&A”) expense consists of personnel-related expenses, outside professional services, including legal, audit and accounting services, as well as expenses for facilities, non-sales related travel, and general office supplies and expenses. Personnel-related expenses consist of salaries, benefits, allocations of stock-based compensation, and associated payroll taxes. Overhead items including rent, insurance, utilities, and other items are included in G&A expense. G&A expense also includes depreciation expense on property and equipment related to G&A activities, calculated over the estimated useful life of the property and equipment on a straight-line basis. Upon property and equipment retirement or disposal, the cost of the asset disposed, and the related accumulated depreciation from the accounts and any gain or loss is reflected in the unaudited condensed consolidated statements of operations and comprehensive loss, allocated to G&A.

Research and Development Expense

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

•payroll expense for employees primarily engaged in R&D activities, including allocation of stock-based compensation expense;

•expenses related to licenses and subscriptions of software utilized in R&D activities;

•fees paid to third-parties such as consultants and contractors for engineering and computer-aided design work on vehicle designs and other third-party services; and

•expenses related to materials and, supplies consumed in the development and modifications to existing vehicle designs, new vehicle designs contemplated for additional customer offerings, and our battery pack design

Sales and Marketing Expense

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

•payroll expense for employees primarily engaged in S&M activities, including allocation of stock-based compensation expense; and

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

Table of Contents

Other Expense, Net

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

Change in Fair Value of Derivative Instruments

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.

Change in Fair Value of Contingent Earn-out Shares Liability

The contingent earn-out shares liability was established as part of the Business Combination. Changes in the fair value relate to remeasurement to fair value as of each subsequent balance sheet date.

Results of Operations

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

The following table sets forth our historical operating results for the periods indicated:


	For the Three Months Ended March 31,
(dollars in thousands)	2025		2024		$ Change		% Change
Revenues	$	5,879	$	13,162	$	(7,283)	(55)	%
Cost of goods sold	4,668		10,374		(5,706)		(55)	%
Gross profit	1,211		2,788		(1,577)		(57)	%
Operating expenses
General and administrative	7,896		8,959		(1,063)		(12)	%
Research and development	1,930		3,074		(1,144)		(37)	%
Sales and marketing	654		998		(344)		(34)	%
Total operating expenses	10,480		13,031		(2,551)		(20)	%
Loss from operations	(9,269)		(10,243)		974		(10)	%
Other expense, net	(851)		(584)		(267)		46	%
Change in fair value of derivative instruments	(54)		(168)		114		(68)	%
Change in fair value of earn-out shares liability	—		(3)		3		(100)	%
Loss before provision for income taxes	(10,174)		(10,998)		824		(7)	%
Provision for income taxes	12		5		7		140	%
Net Loss	$	(10,186)	$	(11,003)	$	817	(7)	%

___________

Revenues

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

Table of Contents

Revenue for the three months ended March 31, 2025 and 2024 consisted of the following (dollars in thousands):


	Three Months Ended March 31,
	2025		2024		$ Change		% Change (6)
Product and service revenue
Stepvans & vehicle incentives	$	3,584	$	11,585	$	(8,001)	(69)	%
Powertrains & Hubs	1,592		422		1,170		277	%
Other product revenue	467		628		(161)		(26)	%
Total product revenue	5,643		12,635		(6,992)		(55)	%
Ancillary revenue	236		527		(291)		(55)	%
Total revenues	$	5,879	$	13,162	$	(7,283)	(55)	%

Cost of Goods Sold

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

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

General and Administrative

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

Research and Development

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

Sales and Marketing

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

Other Expense, net

Other expense, net increased by $0.3 million, from $0.6 million in the three months ended March 31, 2024 to $0.9 million in the three months ended March 31, 2025. The change was attributable to increases of (i) $0.4 million of impairment losses on property and equipment. This was partially offset by a $0.1 million increase in other income primarily due to sublease income.

Table of Contents

Change in Fair Value of Derivatives

The loss on the change in fair value of derivative instruments decreased by $0.1 million, or 68%, from $0.2 million in the three months ended March 31, 2024 to $0.1 million in the three months ended March 31, 2025. The change in fair value in both periods is primarily attributable to the change in our stock price and the resulting valuation at the respective reporting period.

Change in Fair Value of Contingent Earn-out Interests Liability

The loss on the change in fair value of contingent earn-out shares liability decreased by $3,000 from $3,000 in the three months ended March 31, 2024 to $0 in the three months ended March 31, 2025. The change in fair value in both periods is primarily attributable to the change in our stock price and the resulting valuation at the respective reporting period.

Provision for Income Taxes

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

Liquidity and Capital Resources

General

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

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

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.

Global general economic and political conditions, such as inflation, tariffs (or the threat of tariffs), uncertain credit and global financial markets, supply chain disruption, international currency fluctuations, and geopolitical events have had and could continue to have an adverse impact in our ability to raise additional funds. If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce or eliminate our commercialization, research and development programs and/or other efforts and our ability to continue our operations would be negatively impacted. If we seek additional financing to fund our business activities in the future and there remains substantial doubt about our ability to continue as a going concern, investors or other financing sources may be unwilling to provide funding to us on commercially reasonable terms, if at all. In addition, we may have to liquidate our assets and may receive less than the value at which those assets are carried on our

Table of Contents

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.

Standby Equity Purchase Agreement

On March 23, 2022, we entered into a Standby Equity Purchase Agreement with YA II PN, Ltd. (“Yorkville”), which was subsequently amended on June 22, 2023 (as amended, the "SEPA"), whereby we have the right, but not the obligation, to sell to Yorkville up to $125.0 million of our shares of Common Stock at our request any time until February 11, 2026, subject to certain conditions. As of March 31, 2025, the remaining commitment available under the SEPA was $119.4 million. However, our ability to access the remaining commitment amount may be limited by various factors, including, but not limited to, the availability of an effective registration statement permitting the resale of such shares of Common Stock. In particular, the Company’s access to capital under the SEPA is not available as of the date of this Report and will not be available until the Company files with the SEC a post-effective amendment to the applicable Registration Statement. Moreover, such registration statement only registers the resale of 3,333,333 shares of Common Stock, which is insufficient for us to fully utilize the remaining commitment under the SEPA, given the current market price of our Common Stock. Furthermore, unless extended by mutual agreement of the parties, the SEPA is scheduled to expire on February 11, 2026. We used the net proceeds received from sales of Common Stock pursuant to the SEPA for working capital and general corporate purposes and expect similar uses of any remaining proceeds going forward. See Note 9 — Convertible Notes and Note 10 — Equity — Standby Equity Purchase Agreement in the accompanying unaudited condensed consolidated financial statements for more information regarding the SEPA.

Cash Flow Data

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


	Three Months Ended March 31,
		2025		2024
Net cash used in operating activities		$	(4,756)	$	(14,589)
Net cash provided by investing activities		—		51,325
Net cash used in financing activities		(1,482)		(1,093)
Net decrease in cash and cash equivalents		$	(6,238)	$	35,643

Cash Flow from Operating Activities

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

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.

Net cash used in operating activities was $14.6 million for the three months ended March 31, 2024, primarily consisting of a cash-basis net loss of $7.2 million from normal operations of the Company (after non-cash adjustments of $3.9 million), further driven by unfavorable net working capital changes of $7.4 million, primarily driven by higher accounts receivable and other liabilities, partially offset by inventory usage for vehicle production.

Cash Flow from Investing Activities

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

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

Table of Contents

Cash Flow from Financing Activities

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

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

Contractual Obligations and Commitments

We did not have any material contractual obligations or other commitments as of March 31, 2025, other than as disclosed in the 2024 Form 10-K, and in Note 1 4 - Commitments and Contingencies.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements, as defined under the applicable rules and regulations of the SEC.

Critical Accounting Policies and Estimates

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

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

Recent Accounting Pronouncements

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk

As a smaller reporting company (as defined in Item 10(f)(1) of Regulation S-K), we are not required to provide the information under this Item.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in company reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Principal Executive Officer and Principal Financial Officer, to allow timely decisions regarding required disclosure.

Table of Contents

As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Principal Executive Officer and Principal Financial Officer carried out evaluations of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2025. Based upon each of their evaluations, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were not effective at the reasonable assurance level for the three months ended March 31, 2025, due to the material weaknesses in our internal control over financial reporting discussed below.

Management’s Annual Report on Internal Controls over Financial Reporting

Management is responsible for designing, implementing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Exchange Act. Our management, including the Chief Executive Officer and Chief Financial Officer, recognizes that our disclosure controls or our internal control over financial reporting cannot prevent or detect all possible instances of errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of changes in conditions, the effectiveness of internal control over financial reporting may vary over time.

Our management assessed the effectiveness of our internal control over financial reporting as of March 31, 2025 and, in making this assessment, used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013 framework). Because of the material weaknesses described below, our management believes that, as of March 31, 2025, our internal control over financial reporting was not effective based on those criteria.

Material Weaknesses in Internal Controls Over Financial Reporting

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Accordingly, a material weakness increases the risk that the financial information we report contains material errors. If we fail to remediate these material weaknesses, determine that our internal controls over financial reporting are not effective, discover areas that need improvement in the future or discover additional material weaknesses, these shortcomings could have an adverse effect on our business and financial results, and the price of our Common Stock could be negatively affected.

As disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024, during the financial reporting close process management identified material weaknesses in the design and operation of the Company’s internal controls over financial reporting related to three areas, specifically, inventory management, revenue recognition, and information technology (IT) general controls. We believe these material weaknesses were caused by turnover of accounting, operations and IT positions within the Company’s organization, resulting in the inability of Company accounting personnel who have recently assumed new and additional responsibilities, to identify, evaluate and address technical accounting and disclosure matters that affect our annual and interim unaudited condensed consolidated financial statements on a timely basis. Due to Management’s efforts to reduce costs and preserve liquidity, the Company was not able to develop and retain sufficient resources to fulfill internal control responsibilities, resulting in the lack of a sufficient complement of personnel with an appropriate degree of knowledge and experience. Management has determined that these deficiencies are related to insufficient internal resources in technical accounting and financial reporting impacting our internal control over financial reporting for the year ended December 31, 2024 and the quarter ended March 31, 2025.

Based on the results of our evaluation and the material weaknesses described above, Management concluded that the Company’s internal control over financial reporting was not effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with GAAP as of March 31, 2025.

Notwithstanding these material weaknesses, Management has concluded that our unaudited condensed consolidated financial statements included in this Form 10-Q are fairly stated in all material respects in accordance with U.S. GAAP for each of the periods presented therein.

Remediation of Material Weakness in Internal Control Over Financial Reporting

In order to remediate these material weaknesses in internal control over financial reporting related to the ineffective design and operation of controls related to inventory management, revenue recognition and IT general controls, management is implementing financial reporting control changes to address these material weaknesses. Management is implementing

Table of Contents

remediation steps to improve its disclosure controls and procedures and its internal controls over financial reporting, including further documenting and implementing control procedures to address the identified risks of material misstatements, and implementing monitoring activities over such control procedures. We believe we are on schedule to remediate the material weaknesses during the year ended December 31, 2025. Remediation efforts to date include the following:

•Adding qualified resources and improved training over the inventory management and revenue recognition processes;

•Adding qualified resources to ensure proper segregation of duties over IT systems, processes and controls

•Utilizing internal employees and/or partnering with external consultants specializing in public company control compliance to assess and implement additional controls over the inventory management and revenue recognition processes, and over IT general controls.

To further remediate the material weaknesses, Management, including the Chief Executive Officer and Chief Financial Officer, have reaffirmed and re-emphasized the importance of internal controls, control consciousness and a strong control environment. We also expect to continue to review, optimize and enhance our financial reporting controls and procedures. These material weaknesses will not be considered remediated until the applicable remediated control operates for a sufficient period of time and management has concluded, through testing, that this enhanced control is operating effectively.

Changes in Internal Control over Financial Reporting

Except as noted above, there were no changes in the Company’s internal control over financial reporting that occurred during the three months ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Table of Contents

Part II - Other Information

Item 1. Legal Proceedings

From time to time, we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business. We are not currently a party to any legal proceedings, the outcome of which, if determined adversely to us, would individually or in the aggregate have a material adverse effect on our business, financial condition or results of operations.

Item 1A. Risk Factors

Our risk factors are described in the “Risk Factors” section of our 2024 Form 10-K. There have been no material changes to our risk factors since the filing of the 2024 Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

During our last fiscal quarter, none of our directors or officers, as defined in Rule 16a-f(1), adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” each as defined in Item 408 of Regulation S-K.

Table of Contents

Item 6. Exhibits

(a)Exhibits.


Exhibit Number						Description
3.1						Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed on August 26, 2021).
3.2						Certificate of Amendment to Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed on December 6, 2023).
3.3						Bylaws of the Company (incorporated by reference to Exhibit 3.2 of the Company’s Current Report on Form 8-K filed on August 26, 2021).
31.1						Certification of the Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a).
31.2						Certification of the Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a).
32.1*						Certification of the Chief Executive Officer and Chief Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350.
101.INS						XBRL Instance Document.
101.SCH						XBRL Taxonomy Extension Schema Document.
101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF						XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB						XBRL Taxonomy Extension Label Linkbase Document.
101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document.
104.0						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

* Furnished herewith and not deemed to be “filed” for purposes of Section 18 of the Exchange Act, and shall not be deemed to be incorporated by reference into any filing under the Securities Act, or the Exchange Act (whether made before or after the date of this Report), irrespective of any general incorporation language contained in such filing.

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	XOS, INC.
Date: May 15, 2025	By:	/s/ Dakota Semler
	Name:	Dakota Semler
	Title:	Chief Executive Officer (Principal Executive Officer)

Date: May 15, 2025	By:	/s/ Liana Pogosyan
	Name:	Liana Pogosyan
	Title:	Acting Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

Get the next $XOS alert in real time by email

Date	Price Target	Rating	Analyst
11/25/2024	$5.00	Outperform → Market Perform	Northland Capital
10/23/2024	$15.00	Buy	ROTH MKM
8/16/2024	$17.00 → $9.00	Buy → Neutral	DA Davidson
4/1/2024	$17.00	Neutral → Buy	DA Davidson
3/30/2023	$0.60	Outperform → Market Perform	Northland Capital
6/3/2022	$5.00	Outperform	Northland Capital
12/17/2021	$3.00 → $2.50	Underperform	B of A Securities
12/8/2021	$3.00	Underperform	BofA Securities

SEC Form 10-Q filed by Xos Inc.

Chat with this insight

Recent Analyst Ratings for
$XOS

$XOS
Large Ownership Changes

This live feed shows all institutional transactions in real time.

Amendment: SEC Form SC 13D/A filed by Xos Inc.

Amendment: SEC Form SC 13D/A filed by Xos Inc.

SEC Form SC 13G/A filed by Xos Inc. (Amendment)

$XOS
Press Releases

Fastest customizable press release news feed in the world

Xos Delivers First Quarter Results, Highlighting GAAP Margin Gains

Xos, Inc. Announces First Quarter 2025 Earnings Release Date and Conference Call

Xos, Inc. Reports Record-Breaking 2024 with Growing Unit Deliveries and Highest-Ever Gross Profit

$XOS
Insider Trading

Insider transactions reveal critical sentiment about the company from key stakeholders. See them live in this feed.

Director Ingargiola Luisa sold $15,783 worth of shares (4,773 units at $3.31), decreasing direct ownership by 14% to 28,694 units (SEC Form 4)

Acting Chief Financial Officer Pogosyan Liana covered exercise/tax liability with 911 shares, decreasing direct ownership by 2% to 52,218 units (SEC Form 4)

Chief Operating Officer Sordoni Giordano covered exercise/tax liability with 5,715 shares, decreasing direct ownership by 0.51% to 1,120,342 units (SEC Form 4)

$XOS
SEC Filings