[Part I - Financial Information](index=4&type=section&id=Part%20I%20-%20Financial%20Information) [Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Unaudited Q1 2024 financials report **$13.2 million** revenue, **$2.8 million** gross profit, and a narrowed **$11.0 million** net loss [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets reached **$135.0 million** by March 31, 2024, with cash and equivalents at **$46.2 million** post-acquisition Condensed Consolidated Balance Sheet Highlights (in thousands) | | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $46,168 | $11,640 | | Total current assets | $112,801 | $71,695 | | Total assets | $134,980 | $93,684 | | **Liabilities & Stockholders' Equity** | | | | Total current liabilities | $22,305 | $19,573 | | Total liabilities | $67,174 | $48,488 | | Total stockholders' equity | $67,806 | $45,196 | | Total liabilities and stockholders' equity | $134,980 | $93,684 | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Q1 2024 revenues surged to **$13.2 million**, achieving a **$2.8 million** gross profit and reducing net loss to **$11.0 million** Condensed Consolidated Statements of Operations (in thousands, except per share amounts) | | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Revenues | $13,162 | $4,697 | | Cost of goods sold | $10,374 | $5,574 | | **Gross profit (loss)** | **$2,788** | **($877)** | | Total operating expenses | $13,031 | $19,152 | | **Loss from operations** | **($10,243)** | **($20,029)** | | **Net loss** | **($11,003)** | **($24,331)** | | Net loss per share (Basic & Diluted) | ($1.80) | ($4.32) | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Q1 2024 net cash used in operations was **$14.6 million**, with a **$35.6 million** net cash increase driven by the ElectraMeccanica acquisition Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | ($14,589) | ($15,326) | | Net cash provided by investing activities | $51,325 | $22,812 | | Net cash used in financing activities | ($1,093) | ($9,672) | | **Net increase (decrease) in cash** | **$35,643** | **($2,186)** | | Cash, cash equivalents and restricted cash, end of period | $47,283 | $36,489 | [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail the ElectraMeccanica acquisition, its impact on liquidity, going concern considerations, and key accounting policies - The company designs and manufactures Class 5-8 battery-electric commercial vehicles and offers charging infrastructure and fleet management software under a "Fleet-as-a-Service" model[34](index=34&type=chunk) - On March 26, 2024, Xos acquired ElectraMeccanica, which supplemented its liquidity with approximately **$50.2 million** in cash, accounted for as an asset acquisition[38](index=38&type=chunk)[70](index=70&type=chunk) - Management concluded that conditions raise substantial doubt about the company's ability to continue as a going concern, but believes capital-raising plans and the ElectraMeccanica acquisition alleviate this doubt for at least one year[46](index=46&type=chunk)[50](index=50&type=chunk) - During Q1 2024, one customer accounted for **52%** of revenues, and as of March 31, 2024, two customers accounted for **36%** and **10%** of accounts receivable[62](index=62&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes **180%** Q1 2024 revenue growth to unit sales, achieving **$2.8 million** gross profit, reducing expenses, and boosting liquidity [Results of Operations](index=40&type=section&id=Results%20of%20Operations) Q1 2024 revenues grew **180%** to **$13.2 million**, achieving a **$2.8 million** gross profit and reducing net loss to **$11.0 million** Comparison of Operations (in thousands) | | For the Three Months Ended March 31, | | | | :--- | :--- | :--- | :--- | | | 2024 | 2023 | $ Change | | Revenues | $13,162 | $4,697 | $8,465 | | Gross profit (loss) | $2,788 | ($877) | $3,665 | | Total operating expenses | $13,031 | $19,152 | ($6,121) | | Loss from operations | ($10,243) | ($20,029) | $9,786 | | Net Loss | ($11,003) | ($24,331) | $13,328 | - Revenue growth was driven by an increase in unit sales to **60** stepvans and **2** powertrains in Q1 2024, compared to **30** stepvans and **1** powertrain in Q1 2023[176](index=176&type=chunk)[205](index=205&type=chunk) - The decrease in operating expenses was primarily due to reduced headcount and personnel costs across G&A, R&D, and S&M, along with lower professional fees and insurance costs[209](index=209&type=chunk)[210](index=210&type=chunk)[211](index=211&type=chunk) [Liquidity and Capital Resources](index=42&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity improved to **$46.2 million** cash post-ElectraMeccanica acquisition, alleviating going concern doubts for 12 months - The company's liquidity was significantly enhanced by the acquisition of ElectraMeccanica, which provided approximately **$50.2 million** in cash[180](index=180&type=chunk)[221](index=221&type=chunk) - Management identified substantial doubt about the company's ability to continue as a going concern but believes its plans, including the recent cash acquisition and access to capital markets, are sufficient to fund operations for the next twelve months[217](index=217&type=chunk)[218](index=218&type=chunk)[221](index=221&type=chunk) Summary of Cash Flow Data (in thousands) | | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | ($14,589) | ($15,326) | | Net cash provided by investing activities | $51,325 | $22,812 | | Net cash used in financing activities | ($1,093) | ($9,672) | [Quantitative and Qualitative Disclosures About Market Risk](index=44&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risk primarily from inflation, which could negatively impact operations if higher costs are not offset - The primary market risk identified is inflation, which increases the cost of goods and services; the company's inability to fully offset or mitigate these higher costs could negatively impact its business and financial condition[238](index=238&type=chunk)[239](index=239&type=chunk) [Controls and Procedures](index=45&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls were ineffective as of March 31, 2024, due to material weaknesses in inventory and revenue recognition, with remediation planned by year-end - The Principal Executive Officer and Principal Financial Officer concluded that disclosure controls and procedures were not effective as of March 31, 2024[241](index=241&type=chunk) - The ineffectiveness is due to material weaknesses in internal controls related to inventory management and revenue recognition, identified during the preparation of the 2023 Annual Report[243](index=243&type=chunk) - Remediation efforts are underway, including adding new internal controls and working with external consultants, with a target completion by the end of 2024[244](index=244&type=chunk) [Part II - Other Information](index=47&type=section&id=Part%20II%20-%20Other%20Information) [Legal Proceedings](index=47&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any material legal proceedings that would adversely affect its operations - As of the report date, Xos is not involved in any material legal proceedings[249](index=249&type=chunk) [Risk Factors](index=47&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the company's risk factors have occurred since the 2023 Annual Report on Form 10-K filing - No material changes to risk factors have occurred since the 2023 Form 10-K was filed[250](index=250&type=chunk) [Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities](index=47&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%20and%20Issuer%20Purchases%20of%20Equity%20Securities) On January 24, 2024, the company issued **5,500** Common Stock shares under SEPA, raising **$46,750** in an unregistered sale - On January 24, 2024, the company sold **5,500** shares of Common Stock under the SEPA, raising **$46,750** in an unregistered sale[251](index=251&type=chunk)

Exhibit 99.1 Capital injection and robust margins position Xos, Inc. for a strong 2024 Improved cash position with $50 million from acquisition of ElectraMeccanica Delivered 180% year-over-year revenue growth LOS ANGELES, CA – May 15, 2024 – Xos, Inc. (NASDAQ: XOS) ("Xos" or the "Company"), a leading electric truck manufacturer and fleet services provider, today reported financial results for the first quarter ended March 31, 2024. Includes cash and cash equivalents and restricted cash (for March 31, 2024). ...

[FORM 10-K General Information](index=1&type=section&id=FORM%2010-K%20General%20Information) Essential identification details for XOS, Inc., covering incorporation, offices, Nasdaq listings, and filing status [Registrant Information](index=1&type=section&id=Registrant%20Information) This section provides essential identification details for XOS, Inc., including its incorporation state, principal executive offices, and securities listed on the Nasdaq Capital Market. It also confirms the company's filing status as a non-accelerated filer, smaller reporting company, and emerging growth company Registrant Details | Detail | Value | | :--- | :--- | | Exact Name | XOS, INC. | | Jurisdiction of Incorporation | Delaware | | Principal Executive Offices | 3550 Tyburn Street, Los Angeles, CA 90065 | | Telephone Number | (818) 316-1890 | | Common Stock Trading Symbol | XOS | | Warrants Trading Symbol | XOSWW | | Exchange Registered | Nasdaq Capital Market | | Well-known seasoned issuer | No | | Required to file reports | Yes | | Filed all required reports (past 12 months) | Yes | | Submitted Interactive Data File (past 12 months) | Yes | | Filer Status | Non-accelerated filer, Smaller reporting company, Emerging growth company | | Common Stock Outstanding (as of March 26, 2024) | Approximately 7,750,258 shares | | Market Value of Non-Affiliate Common Stock (June 30, 2023) | Approximately $14,476,000 | [Documents Incorporated by Reference](index=2&type=section&id=Documents%20Incorporated%20by%20Reference) Portions of the registrant's definitive proxy statement for the 2024 Annual Meeting of Stockholders are incorporated by reference into Part III of this Annual Report on Form 10-K - Portions of the 2024 Annual Meeting of Stockholders' definitive proxy statement will be incorporated by reference into Part III of this Form 10-K, to be filed within 120 days of December 31, 2023[10](index=10&type=chunk) [PART I](index=4&type=section&id=PART%20I) [Glossary of Terms](index=4&type=section&id=Glossary%20of%20Terms) This section provides definitions for key terms and acronyms used throughout the Annual Report on Form 10-K, ensuring clarity and consistent understanding of the company's business, products, and corporate transactions - Key terms defined include 'Business Combination', 'Class 5 to 8 Vehicles', 'Fleet-as-a-Service', 'Xos Energy Solutions', 'X-Pack' (proprietary battery system), 'X-Platform' (proprietary chassis), and 'Xosphere' (fleet management platform)[16](index=16&type=chunk)[17](index=17&type=chunk) [Cautionary Note Regarding Forward-Looking Statements](index=7&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This section advises readers that the report contains forward-looking statements, which are based on current expectations and projections and are subject to known and unknown risks, uncertainties, and assumptions - Forward-looking statements are identified by terms such as 'anticipate,' 'believe,' 'expect,' 'plan,' 'will,' and similar expressions[19](index=19&type=chunk) - Key factors that could cause actual results to differ include the impact of the ElectraMeccanica acquisition, ability to commercialize Fleet-as-a-Service, delays in product deployment, market share growth, strategic relationships, changes in business/market conditions, regulatory changes, legal proceedings, financial performance, internal control effectiveness, growth management, profitability, capital access, brand maintenance, supply chain issues, and global economic/political conditions[20](index=20&type=chunk)[24](index=24&type=chunk) [Summary of Risks](index=9&type=section&id=Summary%20of%20Risks) This section provides a concise overview of the principal risks facing the company, emphasizing that these are not exhaustive and investors should review the full 'Risk Factors' section - Principal risks include: limited operating history, unproven novel offerings (Xos Energy Services™, Xosphere™), history of losses, negative operating cash flow, significant capital requirements, substantial debt, delays in product design/manufacturing/deployment, unproven large-scale manufacturing, dependence on suppliers (some single-source), lithium-ion battery safety concerns, and macroeconomic impacts[27](index=27&type=chunk)[28](index=28&type=chunk) - The company previously restated financial statements and identified material weaknesses in internal control over financial reporting, which could affect investor confidence and future capital raising[27](index=27&type=chunk) - The acquisition of ElectraMeccanica may not realize expected opportunities and could lead to contractual modifications or litigation[28](index=28&type=chunk) [Item 1. Business](index=11&type=section&id=Item%201.%20Business) Xos, Inc. provides fleet electrification solutions, including Class 5-8 battery-electric vehicles, charging, and software, recently acquiring ElectraMeccanica to boost capital and growth [Overview](index=11&type=section&id=Overview) - Xos, Inc. is a leading fleet electrification solutions provider focused on decarbonizing commercial transportation[29](index=29&type=chunk) - The company designs and manufactures Class 5-8 battery-electric commercial vehicles for last-mile, back-to-base routes up to 200 miles per day[29](index=29&type=chunk) - Xos offers charging infrastructure (Xos Energy Solutions™) and proprietary fleet management software (Xosphere™) to support electric vehicle fleets[29](index=29&type=chunk) - On March 26, 2024, Xos completed the acquisition of ElectraMeccanica Vehicles Corp., receiving **1,766,388 shares of Common Stock** as total consideration[30](index=30&type=chunk) [Our Products & Services](index=11&type=section&id=Our%20Products%20%26%20Services) - Xos manufactures Class 5-6 Medium Duty Rolling Chassis (MD X-Platform) with multiple body options for parcel delivery, linen, food & beverage, and armored trucks[32](index=32&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk) - The Class 7-8 Heavy Duty Chassis (HD X-Platform) was launched in May 2022, intended for regional haul fleets with box trucks, refrigerated units, and flatbeds[36](index=36&type=chunk) - Powered by Xos™ provides mix-use powertrain solutions for off-highway, industrial, and specialty vehicles, supporting manufacturers like Winnebago and Blue Bird Bus[38](index=38&type=chunk)[53](index=53&type=chunk) - Xos Energy Solutions™ offers mobile and stationary multi-application chargers, mobile energy storage (Xos Hub™), and turnkey energy infrastructure services, including a next-gen Xos Hub™ with **280kWh storage** and up to **160kW charging rates**[39](index=39&type=chunk)[40](index=40&type=chunk) - Xosphere™ is a fleet management platform integrating vehicle, maintenance, charging, and service data to minimize electric fleet Total Cost of Ownership (TCO) through real-time telematics, charging cost reduction, energy optimization, and maintenance management[41](index=41&type=chunk) [Technology Supporting Our Products & Services](index=14&type=section&id=Technology%20Supporting%20Our%20Products%20%26%20Services) - The X-Pack (proprietary battery system) and X-Platform (proprietary chassis) are modular, allowing customization for vehicle body and battery range to meet specific commercial use cases and provide up to **200 miles of range**[42](index=42&type=chunk)[43](index=43&type=chunk)[44](index=44&type=chunk)[45](index=45&type=chunk) - Vehicle control software integrates third-party software with proprietary powertrain controls, body controls, instrument cluster, infotainment, and Xosphere™ software, including ADAS and OTA update capabilities[47](index=47&type=chunk)[52](index=52&type=chunk) - Xos Energy Solutions™ offers DC Fast Chargers (**60kW and 120kW**) and the mobile Xos Hub™ for rapid deployment, capable of simultaneously charging up to four EVs[48](index=48&type=chunk)[49](index=49&type=chunk) [Sales & Marketing](index=15&type=section&id=Sales%20%26%20Marketing) - Sales efforts include direct sales representatives educating fleets on zero-tailpipe emission commercial vehicles and Xos products/services[50](index=50&type=chunk) - Xos partners with select distributors and dealers in key markets to supplement direct sales, offering access to skilled technicians for maintenance and service across the U.S. and Canada[51](index=51&type=chunk) - A specialized sales force for charging infrastructure installations assists customers with project management, permitting, and funding options to facilitate fleet electrification[52](index=52&type=chunk) [Customers](index=16&type=section&id=Customers) - Xos serves large-scale national accounts and small-to-medium-sized fleets, including independent service providers (ISPs) for last-mile routes[54](index=54&type=chunk) Customer Revenue Concentration (Year Ended December 31, 2023) | Customer | % of Company's Revenues | | :--- | :--- | | Customer 1 | 54% | | Customer 2 | 10% | [Competition](index=16&type=section&id=Competition) - Xos faces competition from existing commercial diesel vehicle OEMs (e.g., Freightliner, Ford, General Motors) and disruptive EV manufacturers (e.g., Nikola, Rivian, Workhorse)[55](index=55&type=chunk)[56](index=56&type=chunk) - Primary competitive factors in the medium- and heavy-duty last-mile and return-to-base segments include total cost of ownership, emissions profile, effectiveness in target applications, ease of integration, product performance/uptime, quality, reliability, safety, service/support, technological innovation, and fleet management[56](index=56&type=chunk)[57](index=57&type=chunk) [Service & Maintenance](index=16&type=section&id=Service%20%26%20Maintenance) - Xos is expanding its service network with field service technicians, third-party service partners, and full-line dealer partnerships to provide comprehensive after-sales services and ensure maximum uptime[57](index=57&type=chunk) [Manufacturing & Supply Chain](index=17&type=section&id=Manufacturing%20%26%20Supply%20Chain) - Xos assembles its X-Platform electric chassis and battery systems at its Byrdstown, Tennessee plant, which also handles prototyping and powertrain installation[58](index=58&type=chunk) - Battery production and remanufacturing capabilities, along with R&D initiatives, are maintained in Los Angeles[59](index=59&type=chunk) - The company relies on single or limited-source suppliers for critical components (e.g., CATL for battery packs, BEL Power for power electronics, Dana for motors & inverters) and mitigates risk by qualifying multiple suppliers and maintaining safety inventory[60](index=60&type=chunk) [Governmental Programs, Incentives & Regulations](index=17&type=section&id=Governmental%20Programs,%20Incentives%20%26%20Regulations) - Xos' business is influenced by government programs, credits, incentives, and regulations aimed at promoting clean energy and electric vehicles[61](index=61&type=chunk) - Qualifying Xos customers may receive up to **$40,000 per vehicle** in federal tax credits through 2032 under the Inflation Reduction Act of 2022 (IRA)[63](index=63&type=chunk) - State incentives, such as California's HVIP, provide point-of-sale vouchers for qualifying ZEVs, with approximately **100 Xos vehicles** subsidized by HVIP to date[64](index=64&type=chunk)[65](index=65&type=chunk) - Xos vehicles are subject to EPA and CARB regulations, requiring Certificates of Conformity and Executive Orders, respectively, despite having zero tailpipe emissions[71](index=71&type=chunk)[72](index=72&type=chunk) - Vehicles must comply with NHTSA's Federal Motor Vehicle Safety Standards (FMVSS) and battery packs conform to 'dangerous goods' transport regulations[73](index=73&type=chunk)[76](index=76&type=chunk) [Intellectual Property](index=19&type=section&id=Intellectual%20Property) - Xos protects its intellectual property through patents, copyrights, trade secrets, trademarks, and contractual agreements[79](index=79&type=chunk) - As of December 31, 2023, the company had **seven awarded U.S. patents** and **24 pending or approved U.S. trademark applications**[80](index=80&type=chunk) [Facilities](index=20&type=section&id=Facilities) - Xos' headquarters in Los Angeles, California, is an **85,142 square foot facility** for design, engineering, and development, with a lease expiring in January 2027[82](index=82&type=chunk) - A manufacturing facility is located in Byrdstown, Tennessee, utilizing Fitzgerald Manufacturing Partners, LLC's facilities[83](index=83&type=chunk) [Human Capital](index=20&type=section&id=Human%20Capital) - Xos' human capital strategy focuses on leadership, culture, and talent, with a commitment to diversity, equity, and inclusion, including Employee Resource Groups and inclusive leadership training[84](index=84&type=chunk)[85](index=85&type=chunk)[86](index=86&type=chunk) - The company emphasizes talent attraction, growth, and capability assessment through targeted learning experiences and leadership standards[87](index=87&type=chunk)[88](index=88&type=chunk) - Employee well-being initiatives address financial, social, mental/emotional, physical, and professional needs, using programs to understand employee sentiment[89](index=89&type=chunk)[90](index=90&type=chunk)[91](index=91&type=chunk) Employment Data (as of December 31, 2023) | Category | Count | | :--- | :--- | | Full-time employees | 161 | | Contractors | 25 | | Unionized employees | None | [Corporate Information](index=21&type=section&id=Corporate%20Information) - Xos, Inc. was initially incorporated as NextGen Acquisition Corporation on July 29, 2020, and became the publicly traded entity listed on Nasdaq following the Business Combination on August 20, 2021[93](index=93&type=chunk) [Available Information (Website)](index=21&type=section&id=Available%20Information%20(Website)) - The company's SEC filings (10-K, 10-Q, 8-K) and other material information are available free of charge on its Investor Relations website: https://investors.xostrucks.com/[94](index=94&type=chunk) [Item 1A. Risk Factors](index=21&type=section&id=Item%201A.%20Risk%20Factors) This section details various risks that could materially and adversely affect Xos's business, financial condition, growth prospects, liquidity, and results of operations [Risks Related to our Business and Industry](index=21&type=section&id=Risks%20Related%20to%20our%20Business%20and%20Industry) - Xos has a limited operating history, making it difficult to evaluate its business and future prospects, which increases investment risk[97](index=97&type=chunk) - Novel offerings like Xos Energy Services™ and Xosphere™ are untested long-term, and failure to commercialize them could materially harm operating results and reputation[98](index=98&type=chunk)[99](index=99&type=chunk) [Risks Relating to the Design, Supply and Manufacturing of our Products](index=22&type=section&id=Risks%20Relating%20to%20the%20Design,%20Supply%20and%20Manufacturing%20of%20our%20Products) - Significant delays in product design, manufacturing, and deployment, particularly in battery production, could harm business and growth prospects[100](index=100&type=chunk)[101](index=101&type=chunk) - The ability to develop and manufacture high-quality products on schedule and at scale requires significant capital expenditures and is unproven[103](index=103&type=chunk)[105](index=105&type=chunk) - Xos has no experience in high-volume manufacturing, posing risks of delays, cost overruns, and quality control issues[106](index=106&type=chunk) - Dependence on single or limited-source suppliers for key components (e.g., battery packs, semiconductors) creates supply chain risks and potential disruptions[109](index=109&type=chunk)[110](index=110&type=chunk)[111](index=111&type=chunk) - Lithium-ion battery cells used in Xos products have a risk of catching fire or venting smoke/flame, which could lead to litigation, recalls, and negative publicity[112](index=112&type=chunk)[113](index=113&type=chunk) - Increases in costs or shortages of materials, especially lithium-ion battery cells and semiconductors, have harmed and could continue to harm the business[114](index=114&type=chunk)[117](index=117&type=chunk)[118](index=118&type=chunk) - Delays in providing sufficient charging solutions have resulted in delayed vehicle deliveries to customers, impacting demand[122](index=122&type=chunk) - A significant portion of revenues comes from a small number of customers; a decrease in purchases from these customers could negatively affect results[124](index=124&type=chunk) [Risks Related to our Financial Condition](index=28&type=section&id=Risks%20Related%20to%20our%20Financial%20Condition) - Xos is an early-stage company with a history of significant operating and net losses (**$65.0 million operating loss in 2023**) and expects continuing losses[158](index=158&type=chunk)[159](index=159&type=chunk) - The company has yet to achieve positive operating cash flow (negative **$39.3 million in 2023**) and requires significant capital to develop and grow its business[160](index=160&type=chunk)[161](index=161&type=chunk) - Future capital needs may require selling additional equity or debt securities, potentially diluting stockholders or imposing restrictive covenants[163](index=163&type=chunk)[165](index=165&type=chunk) - The unavailability or reduction of government and economic incentives could materially harm the business[167](index=167&type=chunk) - Xos previously restated financial statements for several prior periods due to inventory and accounting errors, incurring unanticipated costs and potentially affecting investor confidence[173](index=173&type=chunk)[174](index=174&type=chunk) - Material weaknesses in internal control over financial reporting related to inventory management and revenue recognition were identified, which could lead to misstatements or failure to meet reporting obligations[175](index=175&type=chunk)[177](index=177&type=chunk) [Risks Related to Our Indebtedness](index=35&type=section&id=Risks%20Related%20to%20Our%20Indebtedness) - As of December 31, 2023, Xos had approximately **$25.3 million in total indebtedness**, which could impair its flexibility and access to capital[184](index=184&type=chunk) - Servicing this debt requires significant cash flow, and insufficient cash flow could force the company to reduce investments, seek additional capital, or restructure debt[187](index=187&type=chunk)[188](index=188&type=chunk) - Conversion of convertible notes may dilute existing stockholders' ownership interests or depress the Common Stock price[189](index=189&type=chunk) [Risks Related to our Acquisition of ElectraMeccanica](index=36&type=section&id=Risks%20Related%20to%20our%20Acquisition%20of%20ElectraMeccanica) - Xos may not realize the expected growth, operational enhancement, and financial flexibility opportunities from the ElectraMeccanica acquisition[190](index=190&type=chunk) - Contractual counterparties may seek to modify or terminate relationships post-acquisition, harming business operations[191](index=191&type=chunk) - Litigation challenging acquisition disclosures could result in damages, divert management attention, and adversely affect financial condition[192](index=192&type=chunk)[193](index=193&type=chunk) - Significant and potentially unanticipated costs have been incurred and are expected in connection with the acquisition and integration[194](index=194&type=chunk) [Legal and Regulatory Risks](index=37&type=section&id=Legal%20and%20Regulatory%20Risks) - Regulatory limitations on direct vehicle sales, varying by state, could materially affect Xos's ability to sell vehicles and increase business costs[195](index=195&type=chunk)[196](index=196&type=chunk)[197](index=197&type=chunk)[198](index=198&type=chunk) - Xos and its partners are subject to extensive and evolving foreign, federal, state, and local regulations, with non-compliance potentially leading to substantial harm[199](index=199&type=chunk)[200](index=200&type=chunk)[201](index=201&type=chunk)[202](index=202&type=chunk) - Compromises to information technology systems, those of third parties, or data could lead to regulatory actions, litigation, fines, business disruptions, and reputational harm[203](index=203&type=chunk)[217](index=217&type=chunk)[219](index=219&type=chunk) - Changes in tax laws or regulations, such as the capitalization of R&D expenses under TCJA, could adversely affect business operations and financial performance[221](index=221&type=chunk)[222](index=222&type=chunk) - Stringent and evolving data privacy and security obligations (e.g., CCPA, GDPR) pose risks of regulatory investigations, litigation, fines, and business disruptions[223](index=223&type=chunk)[224](index=224&type=chunk)[225](index=225&type=chunk)[226](index=226&type=chunk)[227](index=227&type=chunk)[228](index=228&type=chunk)[229](index=229&type=chunk)[230](index=230&type=chunk)[231](index=231&type=chunk)[232](index=232&type=chunk)[233](index=233&type=chunk)[234](index=234&type=chunk)[235](index=235&type=chunk)[236](index=236&type=chunk) - Expansion into international markets would expose Xos to additional regulatory, political, tax, and labor risks[239](index=239&type=chunk)[240](index=240&type=chunk) - Changes in U.S. trade policy, including tariffs, and export/import controls could adversely affect business and financial results[241](index=241&type=chunk)[242](index=242&type=chunk)[243](index=243&type=chunk)[244](index=244&type=chunk) - Xos is subject to anti-corruption and anti-money laundering laws, with violations potentially leading to criminal liability and serious consequences[245](index=245&type=chunk) - The company may face intellectual property infringement claims, which could be costly and limit its ability to commercialize products[246](index=246&type=chunk)[247](index=247&type=chunk) - Failure to obtain, maintain, enforce, and protect intellectual property rights could result in competitors offering similar products and loss of competitive advantage[248](index=248&type=chunk)[249](index=249&type=chunk)[250](index=250&type=chunk)[251](index=251&type=chunk)[252](index=252&type=chunk)[253](index=253&type=chunk)[254](index=254&type=chunk) - Patent applications for proprietary technology may not issue, or issued patents may not provide sufficient protection[255](index=255&type=chunk) - Labor and union activities, though not currently affecting Xos directly, could impact the business through increased costs or work stoppages[256](index=256&type=chunk) [Risks Related to Operating as a Public Company and Ownership of Our Securities](index=45&type=section&id=Risks%20Related%20to%20Operating%20as%20a%20Public%20Company%20and%20Ownership%20of%20Our%20Securities) - Failure to establish and maintain proper internal control over financial reporting as a public company could impair accurate and timely financial statements, leading to loss of investor confidence and regulatory actions[257](index=257&type=chunk)[258](index=258&type=chunk)[259](index=259&type=chunk)[260](index=260&type=chunk)[261](index=261&type=chunk) - The price of Xos Common Stock and Warrants has been volatile and may continue to fluctuate due to various market and industry factors[262](index=262&type=chunk)[263](index=263&type=chunk) - Xos does not expect to declare any dividends in the foreseeable future, retaining earnings for business development and expansion[264](index=264&type=chunk)[265](index=265&type=chunk) - Warrants may expire worthless if not in the money at the time of exercise, and their terms can be amended adversely to holders with sufficient approval[266](index=266&type=chunk)[267](index=267&type=chunk)[268](index=268&type=chunk) - Xos may redeem unexpired Warrants prior to their exercise at a disadvantageous time for holders, potentially making them worthless[269](index=269&type=chunk)[270](index=270&type=chunk) - Warrants are accounted for as derivative liabilities, with changes in fair value impacting earnings and potentially the market price of securities[271](index=271&type=chunk)[272](index=272&type=chunk) - Issuance of additional shares of Common Stock or Preferred Stock, including under equity incentive plans, would dilute existing stockholders' interests[273](index=273&type=chunk)[274](index=274&type=chunk) - Concentration of ownership among executive officers and directors (approximately **38% as of March 26, 2024**) may prevent other investors from influencing significant corporate decisions[274](index=274&type=chunk) - Investments may be subject to U.S. foreign investment regulations (CFIUS) or other foreign direct investment (FDI) regimes, potentially imposing conditions or limitations on certain investors[275](index=275&type=chunk) [General Risk Factors](index=48&type=section&id=General%20Risk%20Factors) - Xos has been and may continue to be adversely affected by health crises, epidemics, and pandemics, which can cause volatility in the global economy and disrupt supply chains[276](index=276&type=chunk)[277](index=277&type=chunk)[278](index=278&type=chunk) - Catastrophic events such as labor discord, geopolitical events, natural disasters, or cyber-attacks may disrupt business operations, leading to system interruptions, reputational harm, and data security breaches[279](index=279&type=chunk) - Macroeconomic conditions, including rising inflation, uncertain credit markets, potential bank failures, supply chain disruptions, and geopolitical events (e.g., conflicts in Russia-Ukraine and Israel), can negatively impact customer spending and supplier stability[280](index=280&type=chunk)[281](index=281&type=chunk)[282](index=282&type=chunk)[283](index=283&type=chunk) - Anti-takeover provisions in charter documents and Delaware law could make an acquisition more difficult and limit stockholders' ability to influence corporate decisions or receive a premium for their shares[287](index=287&type=chunk)[288](index=288&type=chunk)[289](index=289&type=chunk) [Item 1B. Unresolved Staff Comments](index=51&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company has no unresolved staff comments from the SEC - There are no unresolved staff comments[290](index=290&type=chunk) [Item 1C. Cybersecurity](index=51&type=section&id=Item%201C.%20Cybersecurity) Xos has established policies and processes to assess, identify, and manage cybersecurity risks, integrating them into its overall risk management - Xos employs manual and automated tools, threat analysis, and internal/external audits to routinely assess material cybersecurity risks[291](index=291&type=chunk) - Safeguards include data encryption, network security controls, cybersecurity insurance, asset management, and employee training[292](index=292&type=chunk) - The Director of IT, with over **15 years of experience**, is primarily responsible for cybersecurity risk management and reports to the COO[295](index=295&type=chunk) - The Board and Audit Committee receive periodic briefings on cybersecurity risks and activities[294](index=294&type=chunk)[297](index=297&type=chunk) - No cybersecurity challenges have materially affected the company's business strategy, results of operations, or financial condition to date[293](index=293&type=chunk) [Item 2. Properties](index=52&type=section&id=Item%202.%20Properties) Xos maintains its corporate headquarters in Los Angeles, California, for design, engineering, and development, and leases three properties in Byrdstown, Tennessee, for manufacturing, assembly, and raw material storage - Corporate headquarters: **85,142 sq ft facility** in Los Angeles, California, for design, engineering, and development; lease expires in 2027[298](index=298&type=chunk) - Manufacturing facilities: Three leased properties in Byrdstown, Tennessee, for raw material storage, manufacturing, and assembly; leases expire in 2026 and 2027[298](index=298&type=chunk) - The company does not currently own any real property[299](index=299&type=chunk) [Item 3. Legal Proceedings](index=52&type=section&id=Item%203.%20Legal%20Proceedings) Xos is not currently a party to any legal proceedings that are expected to have a material adverse effect on its business, financial condition, or results of operations - The company is not currently involved in any legal proceedings that would individually or in aggregate have a material adverse effect on its business, financial condition, or results of operations[300](index=300&type=chunk) [Item 4. Mine Safety Disclosures](index=52&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to Xos, Inc.'s operations - This item is not applicable[301](index=301&type=chunk) [PART II](index=53&type=section&id=PART%20II) [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=53&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) This section provides information on the trading market for Xos's common stock and public warrants, the number of record holders, and the company's dividend policy - Xos Common Stock and Public Warrants are listed on Nasdaq under symbols "XOS" and "XOSWW" respectively[304](index=304&type=chunk) Stockholder and Warrant Holder Information (as of March 26, 2024) | Item | Count | | :--- | :--- | | Holders of record of Common Stock | 55 | | Public Warrants outstanding | 18,833,298 | | Holders of record of Public Warrants | 2 | - The company has never declared or paid cash dividends and intends to retain future earnings for business development and expansion[306](index=306&type=chunk) [Item 6. Reserved](index=53&type=section&id=Item%206.%20Reserved) This item is reserved and contains no information - This item is reserved[309](index=309&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=54&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Xos's financial condition and results of operations, highlighting its business model, recent acquisition, key factors affecting performance, and detailed financial comparisons for 2023 and 2022 [Overview](index=54&type=section&id=Overview) - Xos is a fleet electrification solutions provider, manufacturing Class 5-8 battery-electric commercial vehicles for last-mile routes, and offering charging infrastructure (Xos Energy Solutions™) and fleet management software (Xosphere™)[311](index=311&type=chunk) - The company delivered **277 vehicles** (including leases), **5 powertrains**, and **1 hub in 2023**, compared to **257 vehicles** and **18 powertrains in 2022**[316](index=316&type=chunk) Revenue Breakdown (Year Ended December 31) | Revenue Source | 2023 Revenue (in thousands) | % of Total 2023 Revenue | 2022 Revenue (in thousands) | % of Total 2022 Revenue | | :--- | :--- | :--- | :--- | :--- | | Vehicle and Powertrain Sales | $42,200 | 95% | $34,100 | 94% | | Fleet-as-a-Service | $1,200 | 3% | $600 | 2% | | Ancillary Revenue | $1,100 | 2% | $1,700 | 4% | - Growth is supported by increased focus on climate change, e-commerce growth, and last-mile delivery, with commercial trucks being major greenhouse gas emitters[319](index=319&type=chunk) [Recent Developments](index=55&type=section&id=Recent%20Developments) - On March 26, 2024, Xos completed the acquisition of ElectraMeccanica Vehicles Corp., converting each ElectraMeccanica share into **0.0143739 of an Xos Common Stock share**, totaling **1,766,388 shares**[320](index=320&type=chunk) - The acquisition is expected to supplement Xos's liquidity with an estimated **$48.0 million** from ElectraMeccanica's cash balance[320](index=320&type=chunk) [Business Combination and Public Company Costs](index=55&type=section&id=Business%20Combination%20and%20Public%20Company%20Costs) - The Business Combination was completed on August 20, 2021, resulting in Xos becoming an SEC-registered and Nasdaq-listed company[321](index=321&type=chunk) - Becoming a public company has required and will continue to require additional personnel and expenses for regulatory compliance, insurance, director fees, and accounting/legal resources[322](index=322&type=chunk) [Key Factors Affecting Operating Results](index=55&type=section&id=Key%20Factors%20Affecting%20Operating%20Results) - Successful commercialization of products and services, including vehicles and battery systems, is crucial for future revenue[324](index=324&type=chunk) - Customer demand for vehicles and services is a key performance indicator[325](index=325&type=chunk) - Effective supply chain management is critical, especially given disruptions in semiconductor chips, battery cells, vehicle bodies, and aluminum, which impact procurement and production[326](index=326&type=chunk)[327](index=327&type=chunk) [Basis of Presentation](index=56&type=section&id=Basis%20of%20Presentation) - Consolidated financial statements are prepared in accordance with U.S. GAAP and include Xos, Inc. and its wholly-owned subsidiaries[329](index=329&type=chunk) - The company operates as one segment, primarily in North America, with minimal commercial operations as an early-stage growth company[330](index=330&type=chunk) [Components of Results of Operations](index=56&type=section&id=Components%20of%20Results%20of%20Operations) - Revenue is primarily generated from sales of electric step vans, stripped chassis vehicles, and battery systems, with expected expansion into chassis cabs and tractors, and service offerings like Fleet-as-a-Service[331](index=331&type=chunk)[332](index=332&type=chunk)[333](index=333&type=chunk) - Cost of goods sold includes direct materials, labor, manufacturing overhead, warranty expenses, inventory reserves, and freight costs[334](index=334&type=chunk)[335](index=335&type=chunk)[336](index=336&type=chunk) - General and administrative (G&A) expenses cover personnel, professional services, facilities, and other operating costs, expected to decrease due to workforce reduction[337](index=337&type=chunk)[338](index=338&type=chunk) - Research and development (R&D) expenses, primarily for vehicle and battery system design, are expected to decrease due to lower headcount[339](index=339&type=chunk)[340](index=340&type=chunk) - Sales and marketing (S&M) expenses, related to brand initiatives and sales force, are also expected to decrease due to lower headcount[341](index=341&type=chunk) - Other expense, net includes interest income, interest paid on leases, and interest expense on financing obligations[342](index=342&type=chunk) - Changes in fair value of derivative instruments and contingent earn-out shares liability are recognized due to remeasurement at each reporting period[343](index=343&type=chunk)[344](index=344&type=chunk) [Results of Operations](index=59&type=section&id=Results%20of%20Operations) Consolidated Results of Operations (Years Ended December 31, in thousands) | Metric | 2023 | 2022 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenues | $44,523 | $36,376 | $8,147 | 22% | | Cost of goods sold | $45,813 | $66,405 | $(20,592) | (31)% | | Gross loss | $(1,290) | $(30,029) | $28,739 | (96)% | | General and administrative | $37,698 | $41,093 | $(3,395) | (8)% | | Research and development | $19,589 | $30,679 | $(11,090) | (36)% | | Sales and marketing | $6,388 | $9,547 | $(3,159) | (33)% | | Total operating expenses | $63,675 | $81,319 | $(17,644) | (22)% | | Loss from operations | $(64,965) | $(111,348) | $46,383 | (42)% | | Other expense, net | $(12,047) | $(4,835) | $(7,212) | 149% | | Change in fair value of derivative instruments | $671 | $14,184 | $(13,513) | (95)% | | Change in fair value of earn-out shares liability | $519 | $28,682 | $(28,163) | (98)% | | Loss before provision for income taxes | $(75,822) | $(73,317) | $(2,505) | 3% | | Provision for income taxes | $21 | $8 | $13 | 163% | | Net loss | $(75,843) | $(73,325) | $(2,518) | 3% | - Total revenue increased by **22% to $44.5 million** in 2023, driven by increased stepvan deliveries (**283 units in 2023 vs. 275 in 2022**) and higher average selling prices[347](index=347&type=chunk) - Cost of goods sold decreased by **31% to $45.8 million** in 2023, primarily due to decreases in direct materials (**$3.1 million**), direct labor (**$1.8 million**), inventory reserves (**$7.7 million**), and physical inventory adjustments (**$6.8 million**), offset by increased warranty reserves and overhead[349](index=349&type=chunk)[350](index=350&type=chunk)[351](index=351&type=chunk) - Operating expenses decreased by **22% to $63.7 million** in 2023, with G&A down **8% ($3.4 million)**, R&D down **36% ($11.1 million)**, and S&M down **33% ($3.2 million)**, largely due to lower headcount and cost efficiencies[352](index=352&type=chunk)[353](index=353&type=chunk)[354](index=354&type=chunk) - Net loss increased by **3% to $75.8 million** in 2023, primarily due to a **149% increase in other expense, net**, driven by higher interest expense on convertible notes and redemption premiums[346](index=346&type=chunk)[355](index=355&type=chunk) [Liquidity and Capital Resources](index=61&type=section&id=Liquidity%20and%20Capital%20Resources) - As of December 31, 2023, Xos had **$11.6 million in cash and cash equivalents**, with access to capital under the SEPA (Standby Equity Purchase Agreement) of **$119.5 million**, though SEPA access is currently unavailable pending SEC filings[359](index=359&type=chunk)[366](index=366&type=chunk)[367](index=367&type=chunk) - The company has incurred net losses and negative cash outflows since inception, raising substantial doubt about its ability to continue as a going concern[360](index=360&type=chunk)[361](index=361&type=chunk) - To address liquidity concerns, Xos plans to raise additional capital through debt, non-dilutive, and/or equity financing, including asset-based lending and receivable financing[362](index=362&type=chunk) - The acquisition of ElectraMeccanica on March 26, 2024, is expected to supplement liquidity with approximately **$48.0 million in cash**[363](index=363&type=chunk)[364](index=364&type=chunk)[365](index=365&type=chunk) Cash Flow Summary (Years Ended December 31, in thousands) | Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(39,286) | $(127,960) | | Net cash provided by investing activities | $50,630 | $82,710 | | Net cash (used in) provided by financing activities | $(38,379) | $64,749 | | Net (decrease) increase in cash, cash equivalents and restricted cash | $(27,035) | $19,499 | - Net cash used in operating activities decreased significantly from **$128.0 million in 2022 to $39.3 million in 2023**, primarily due to favorable working capital changes related to inventory usage[372](index=372&type=chunk)[373](index=373&type=chunk) - Net cash provided by investing activities was **$50.6 million in 2023**, mainly from the sale of marketable debt securities, compared to **$82.7 million** used in 2022 for property/equipment and marketable debt securities purchases[375](index=375&type=chunk)[376](index=376&type=chunk) - Net cash used in financing activities was **$38.4 million in 2023**, primarily due to payments for convertible notes (**$34.4 million**) and equipment leases, offset by proceeds from common stock issuance under SEPA (**$1.2 million**)[377](index=377&type=chunk) [Contractual Obligations and Commitments](index=63&type=section&id=Contractual%20Obligations%20and%20Commitments) As of December 31, 2023, Xos had no material contractual obligations or commitments other than those disclosed in Note 14 (Commitments and Contingencies) and Note 6 (Leases) - As of December 31, 2023, Xos had no material contractual obligations or commitments other than those disclosed in Note 14 (Commitments and Contingencies) and Note 6 (Leases)[379](index=379&type=chunk) [Off-Balance Sheet Arrangements](index=63&type=section&id=Off-Balance%20Sheet%20Arrangements) Xos does not have any off-balance sheet arrangements - Xos does not have any off-balance sheet arrangements[380](index=380&type=chunk) [Critical Accounting Policies and Estimates](index=63&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Critical accounting policies involve significant management judgments and estimates, including valuation of stock-based compensation, fair value of common stock, convertible notes payable, and derivative liability - Critical accounting policies involve significant management judgments and estimates, including valuation of stock-based compensation, fair value of common stock, convertible notes payable, and derivative liability[381](index=381&type=chunk)[382](index=382&type=chunk)[383](index=383&type=chunk) - Revenue recognition follows ASC 606, involving identifying contracts, performance obligations, transaction price allocation, and recognizing revenue as obligations are satisfied[384](index=384&type=chunk)[385](index=385&type=chunk)[386](index=386&type=chunk) - Inventories are valued at the lower of cost or net realizable value using average costing, with periodic evaluations for damage, obsolescence, and write-downs[388](index=388&type=chunk)[389](index=389&type=chunk)[390](index=390&type=chunk) - Income taxes are accounted for using the asset and liability method, with deferred tax assets and liabilities recognized for temporary differences and net operating losses, and a valuation allowance established when realization is not more likely than not[391](index=391&type=chunk)[392](index=392&type=chunk)[393](index=393&type=chunk) - Warranty liability is accrued based on the best estimate of projected costs to repair or replace items under warranties and recalls, considering actual claims and future claim estimates[394](index=394&type=chunk)[395](index=395&type=chunk) - Investments in marketable debt securities are classified as available-for-sale and recorded at fair value, with interest and amortization included in other expense, net[396](index=396&type=chunk)[397](index=397&type=chunk) - Public and Private Placement Warrants are recognized as derivative liabilities and measured at fair value (Level 1 for Public, Level 2 for Private)[398](index=398&type=chunk)[399](index=399&type=chunk)[400](index=400&type=chunk) - Contingent earn-out shares liability is a freestanding financial instrument classified as a liability and adjusted to fair value at each reporting date using Level 3 inputs[401](index=401&type=chunk)[402](index=402&type=chunk)[403](index=403&type=chunk) - Convertible debt is accounted for under ASC 815, with embedded features evaluated for bifurcation and separate periodic valuation[404](index=404&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=66&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section outlines Xos's exposure to various market risks, including interest rate risk and inflation risk - Xos is exposed to market risks from changes in interest rates, inflation, and foreign currency exchange rates[407](index=407&type=chunk) - The company maintains a portfolio of fixed and variable rate debt securities (e.g., U.S. treasuries, corporate debt), with a primary objective of principal safety and future liquidity, not for trading or speculation[408](index=408&type=chunk) - As of December 31, 2023, the fair value of investments in marketable debt securities, available-for-sale, was **$0.0 million**[408](index=408&type=chunk) - Xos monitors inflation, which increases the cost of goods and services, and an inability to offset higher costs through price increases or alternative solutions could harm the business[409](index=409&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=67&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the audited consolidated financial statements of Xos, Inc. and its subsidiaries for the years ended December 31, 2023, and 2022, along with the independent auditor's report and detailed notes [Report of Independent Registered Public Accounting Firm](index=68&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) - Grant Thornton LLP, the independent registered public accounting firm, issued an unqualified opinion, stating that the consolidated financial statements for 2023 and 2022 present fairly, in all material respects, the financial position, results of operations, and cash flows in conformity with U.S. GAAP[413](index=413&type=chunk) - The audit was conducted in accordance with PCAOB standards, assessing risks of material misstatement but not expressing an opinion on the effectiveness of internal control over financial reporting[415](index=415&type=chunk) [Consolidated Balance Sheets](index=69&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheets (as of December 31, in thousands) | Asset/Liability/Equity | 2023 | 2022 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $11,640 | $35,631 | | Restricted cash | $— | $3,044 | | Accounts receivable, net | $15,142 | $8,238 | | Marketable debt securities, available-for-sale | $— | $50,648 | | Inventories | $37,843 | $57,540 | | Prepaid expenses and other current assets | $7,070 | $8,100 | | Total current assets | $71,695 | $163,201 | | Property and equipment, net | $14,660 | $18,581 | | Operating lease right-of-use assets, net | $4,991 | $6,555 | | Other non-current assets | $2,338 | $1,599 | | **Total assets** | **$93,684** | **$189,936** | | **Liabilities** | | | | Accounts payable | $2,756 | $2,896 | | Convertible debt, current | $— | $26,849 | | Derivative liabilities | $— | $405 | | Other current liabilities | $16,817 | $15,616 | | Total current liabilities | $19,573 | $45,766 | | Convertible debt, non-current | $19,920 | $19,870 | | Earn-out shares liability | $39 | $564 | | Common stock warrant liability | $395 | $661 | | Other non-current liabilities | $8,561 | $11,000 | | **Total liabilities** | **$48,488** | **$77,861** | | **Stockholders' Equity** | | | | Common Stock | $1 | $1 | | Additional paid-in capital | $198,456 | $190,231 | | Accumulated deficit | $(153,261) | $(77,418) | | Accumulated other comprehensive loss | $— | $(739) | | **Total stockholders' equity** | **$45,196** | **$112,075** | | **Total liabilities and stockholders' equity** | **$93,684** | **$189,936** | - Total assets decreased by **50.7% from $189.9 million in 2022 to $93.7 million in 2023**, primarily driven by reductions in cash, marketable debt securities, and inventories[419](index=419&type=chunk) - Total liabilities decreased by **37.7% from $77.9 million in 2022 to $48.5 million in 2023**, mainly due to the repayment of current convertible debt[419](index=419&type=chunk) - Total stockholders' equity decreased by **59.7% from $112.1 million in 2022 to $45.2 million in 2023**, largely due to an increase in accumulated deficit[419](index=419&type=chunk) [Consolidated Statements of Operations and Comprehensive Loss](index=70&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Consolidated Statements of Operations and Comprehensive Loss (Years Ended December 31, in thousands, except per share amounts) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Revenues | $44,523 | $36,376 | | Cost of goods sold | $45,813 | $66,405 | | Gross loss | $(1,290) | $(30,029) | | Total operating expenses | $63,675 | $81,319 | | Loss from operations | $(64,965) | $(111,348) | | Other expense, net | $(12,047) | $(4,835) | | Change in fair value of derivative instruments | $671 | $14,184 | | Change in fair value of earn-out shares liability | $519 | $28,682 | | Loss before provision for income taxes | $(75,822) | $(73,317) | | Provision for income taxes | $21 | $8 | | Net loss | $(75,843) | $(73,325) | | Total comprehensive loss | $(75,104) | $(73,683) | | Net loss per share (Basic) | $(13.11) | $(13.31) | | Net loss per share (Diluted) | $(13.11) | $(13.32) | | Weighted average shares outstanding (Basic) | 5,787 | 5,508 | | Weighted average shares outstanding (Diluted) | 5,787 | 5,812 | - Revenues increased by **22% to $44.5 million** in 2023, while gross loss significantly narrowed by **96% to $(1.3) million**[421](index=421&type=chunk) - Loss from operations improved by **42% to $(65.0) million** in 2023, but net loss slightly increased by **3% to $(75.8) million** due to higher other expenses[421](index=421&type=chunk) - Basic and diluted net loss per share were **$(13.11)** in 2023, a slight improvement from **$(13.31)** and **$(13.32)** respectively in 2022[421](index=421&type=chunk) [Consolidated Statements of Stockholders' Equity](index=71&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) Consolidated Statements of Stockholders' Equity (Years Ended December 31, in thousands) | Item | 2023 | 2022 | | :--- | :--- | :--- | | Balance at December 31, 2021 | $174,393 | $174,393 | | Stock based compensation expense | $7,863 | $5,313 | | Issuance of Common Stock under SEPA | $1,201 | $4,372 | | Net and comprehensive loss | $(75,104) | $(73,683) | | Balance at December 31, 2023 | $45,196 | $112,075 | - Total stockholders' equity decreased from **$112.1 million in 2022 to $45.2 million in 2023**, primarily due to a net and comprehensive loss of **$(75.1) million**[423](index=423&type=chunk) - Stock-based compensation expense increased from **$5.3 million in 2022 to $7.9 million in 2023**[423](index=423&type=chunk) - Proceeds from the issuance of Common Stock under the Standby Equity Purchase Agreement (SEPA) decreased from **$4.4 million in 2022 to $1.2 million in 2023**[423](index=423&type=chunk) [Consolidated Statements of Cash Flows](index=72&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statements of Cash Flows (Years Ended December 31, in thousands) | Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(39,286) | $(127,960) | | Net cash provided by investing activities | $50,630 | $82,710 | | Net cash (used in) provided by financing activities | $(38,379) | $64,749 | | Net (decrease) increase in cash, cash equivalents and restricted cash | $(27,035) | $19,499 | | Cash, cash equivalents and restricted cash, end of year | $11,640 | $38,675 | - Net cash used in operating activities significantly decreased from **$(128.0) million in 2022 to $(39.3) million in 2023**, primarily due to favorable working capital changes related to inventory[425](index=425&type=chunk)[426](index=426&type=chunk) - Net cash provided by investing activities was **$50.6 million in 2023**, mainly from the sale of marketable debt securities, a shift from net cash used of **$(82.7) million in 2022**[425](index=425&type=chunk)[426](index=426&type=chunk) - Net cash used in financing activities was **$(38.4) million in 2023**, primarily due to payments for convertible notes and equipment leases, contrasting with **$64.7 million** provided in 2022 from convertible debt and equipment financing[425](index=425&type=chunk)[426](index=426&type=chunk) - Cash, cash equivalents, and restricted cash decreased by **$27.0 million in 2023**, ending the year at **$11.6 million**[425](index=425&type=chunk)[426](index=426&type=chunk) [Notes to Consolidated Financial Statement](index=74&type=section&id=Notes%20to%20Consolidated%20Financial%20Statement) [Note 1 — Description of Business](index=74&type=section&id=Note%201%20%E2%80%94%20Description%20of%20Business) - Xos is a fleet electrification solutions provider, designing and manufacturing Class 5-8 battery-electric commercial vehicles and offering charging infrastructure (Xos Energy Solutions™) and fleet management software (Xosphere™)[428](index=428&type=chunk) - The company's business combination was completed on August 20, 2021, with NextGen Acquisition Corporation merging into Xos, Inc. (now Xos Fleet, Inc.)[428](index=428&type=chunk) - Xos faces risks and uncertainties from global economic conditions, including recessions, inflation, supply chain disruptions, and geopolitical events (e.g., conflicts in Russia-Ukraine and Israel), which could materially impact its business[429](index=429&type=chunk)[430](index=430&type=chunk)[431](index=431&type=chunk) - The company has incurred net losses and cash outflows since inception, raising substantial doubt about its ability to continue as a going concern, but plans to secure additional funding and the ElectraMeccanica acquisition are expected to provide sufficient liquidity for the next twelve months[434](index=434&type=chunk)[435](index=435&type=chunk)[436](index=436&type=chunk)[437](index=437&type=chunk)[438](index=438&type=chunk)[439](index=439&type=chunk) - Supply chain disruptions, particularly for power electronics, harnesses, and battery components, continue to impact the company, despite mitigation efforts[440](index=440&type=chunk)[441](index=441&type=chunk)[442](index=442&type=chunk)[443](index=443&type=chunk) [Note 2 — Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements](index=76&type=section&id=Note%202%20%E2%80%94%20Basis%20of%20Presentation,%20Summary%20of%20Significant%20Accounting%20Policies%20and%20Recent%20Accounting%20Pronouncements) - Consolidated financial statements are prepared in accordance with U.S. GAAP, requiring management to make estimates and assumptions in areas like inventory valuation, lease liabilities, stock-based compensation, and derivative valuations[444](index=444&type=chunk)[445](index=445&type=chunk) - Revenue recognition follows ASC 606, identifying contracts, performance obligations, transaction price, allocation, and recognizing revenue upon transfer of control, typically at product delivery to the carrier[446](index=446&type=chunk) - Inventories are carried at the lower of cost or net realizable value using average costing, with write-downs for damage, obsolescence, or when carrying value exceeds NRV[454](index=454&type=chunk)[456](index=456&type=chunk)[457](index=457&type=chunk) - Income taxes use the asset and liability method, recognizing deferred taxes for temporary differences and NOLs, with a valuation allowance applied when realization is not more likely than not[460](index=460&type=chunk)[461](index=461&type=chunk)[462](index=462&type=chunk) - Property and equipment are stated at cost less accumulated depreciation, calculated using the straight-line method over estimated useful lives, with construction in progress not depreciated until ready for use[463](index=463&type=chunk)[465](index=465&type=chunk)[466](index=466&type=chunk) - A warranty reserve is accrued for products sold, based on estimated costs to repair or replace items under warranties and recalls[468](index=468&type=chunk)[469](index=469&type=chunk) - Public and Private Placement Warrants are recognized as derivative liabilities (Level 1 and Level 2, respectively) and contingent earn-out shares liability as a freestanding financial instrument (Level 3 liability)[470](index=470&type=chunk)[472](index=472&type=chunk)[473](index=473&type=chunk)[474](index=474&type=chunk)[475](index=475&type=chunk)[476](index=476&type=chunk)[477](index=477&type=chunk) - Convertible debt is accounted for under ASC 815, with embedded features evaluated for bifurcation and separate periodic valuation[478](index=478&type=chunk) - Leases are recognized as right-of-use (ROU) assets and lease liabilities, measured at the present value of unpaid lease payments, with lease expense recognized straight-line over the lease term[479](index=479&type=chunk)[480](index=480&type=chunk)[481](index=481&type=chunk)[482](index=482&type=chunk)[483](index=483&type=chunk)[484](index=484&type=chunk) - Stock-based compensation is recognized as expense based on fair value for equity-classified awards, using Black-Scholes for options and grant date closing price for RSUs[487](index=487&type=chunk)[488](index=488&type=chunk)[489](index=489&type=chunk)[490](index=490&type=chunk) - The company adopted ASU 2016-13 (Credit Losses) on January 1, 2023, with no material impact, and is evaluating ASU 2023-07 (Segment Reporting) and ASU 2023-09 (Income Tax Disclosures) for future impact[498](index=498&type=chunk)[500](index=500&type=chunk)[501](index=501&type=chunk)[502](index=502&type=chunk)[503](index=503&type=chunk) [Note 3 — Revenue Recognition](index=83&type=section&id=Note%203%20%E2%80%94%20Revenue%20Recognition) Disaggregated Revenues by Major Source (Years Ended December 31, in thousands) | Revenue Source | 2023 | 2022 | | :--- | :--- | :--- | | Stepvans & vehicle incentives | $41,385 | $31,829 | | Powertrains | $795 | $2,226 | | Fleet-as-a-Service | $1,206 | $606 | | Total product and service revenue | $43,386 | $34,661 | | Ancillary revenue | $1,137 | $1,715 | | Total revenues | $44,523 | $36,376 | - Stepvans & vehicle incentives revenue increased by **30% in 2023**, while Powertrains revenue decreased by **64%**[504](index=504&type=chunk) - Fleet-as-a-Service revenue nearly doubled in 2023, growing by **99%**[504](index=504&type=chunk) - The company recognized **$37,000 in operating lease revenues** and **$1.5 million in sales-type leasing revenue** (with **$1.3 million in associated costs**) in 2023[506](index=506&type=chunk)[507](index=507&type=chunk) [Note 4 — Inventories](index=84&type=section&id=Note%204%20%E2%80%94%20Inventories) Inventory Breakdown (as of December 31, in thousands) | Category | 2023 | 2022 | | :--- | :--- | :--- | | Raw materials | $30,357 | $40,271 | | Work in process | $3,033 | $4,618 | | Finished goods | $4,453 | $12,651 | | Total inventories | $37,843 | $57,540 | - Total inventories decreased by **34.2% from $57.5 million in 2022 to $37.8 million in 2023**[508](index=508&type=chunk) - In 2023, the company recorded inventory recoveries of **$1.9 million**, compared to write-downs of **$5.7 million in 2022**, reflecting inventories at their net realizable values[509](index=509&type=chunk) [Note 5 — Selected Balance Sheet Data](index=84&type=section&id=Note%205%20%E2%80%94%20Selected%20Balance%20Sheet%20Data) Prepaid Expenses and Other Current Assets (as of December 31, in thousands) | Category | 2023 | 2022 | | :--- | :--- | :--- | | Prepaid inventories | $1,745 | $2,372 | | Prepaid expenses and other | $2,796 | $1,299 | | Contract assets | $811 | $290 | | Financed insurance premiums | $1,310 | $2,289 | | Assets held for sale | $408 | $1,850 | | Total prepaid expenses and other current assets | $7,070 | $8,100 | Other Current Liabilities (as of December 31, in thousands) | Category | 2023 | 2022 | | :--- | :--- | :--- | | Accrued expenses and other | $7,435 | $7,589 | | Contract liabilities | $690 | $193 | | Customer deposits | $2,364 | $721 | | Warranty liability | $1,306 | $1,099 | | Equipment notes payable, current | $350 | $303 | | Short-term insurance financing notes | $1,003 | $2,065 | | Operating lease liabilities, current | $1,664 | $1,530 | | Finance lease liabilities, current | $2,005 | $2,116 | | Total other current liabilities | $16,817 | $15,616 | Other Non-Current Liabilities (as of December 31, in thousands) | Category | 2023 | 2022 | | :--- | :--- | :--- | | Accrued interest expense and other | $2,985 | $784 | | Equipment notes payable, non-current | $593 | $942 | | Operating lease liabilities, non-current | $3,511 | $5,174 | | Finance lease liabilities, non-current | $1,472 | $4,100 | | Total other non-current liabilities | $8,561 | $11,000 | - Customer deposits increased significantly from **$721 thousand in 2022 to $2.4 million in 2023**[512](index=512&type=chunk) - Accrued interest expense and other non-current liabilities increased from **$784 thousand in 2022 to $3.0 million in 2023**[513](index=513&type=chunk) [Note 6 — Leases](index=86&type=section&id=Note%206%20%E2%80%94%20Leases) Lease Assets and Liabilities (as of December 31, in thousands) | Category | 2023 | 2022 | | :--- | :--- | :--- | | Operating lease right-of-use assets, net | $4,991 | $6,555 | | Equipment finance leases (Property and equipment, net) | $5,931 | $7,979 | | Total lease assets | $10,922 | $14,534 | | Operating lease liabilities, current | $1,664 | $1,530 | | Equipment finance leases, current | $2,005 | $2,116 | | Operating lease liabilities, non-current | $3,511 | $5,174 | | Equipment finance leases, non-current | $1,472 | $4,100 | | Total lease liabilities | $8,652 | $12,920 | - Total lease assets decreased by **24.8% to $10.9 million in 2023**, and total lease liabilities decreased by **33% to $8.7 million**[515](index=515&type=chunk) - Total operating lease expense was **$2.2 million in 2023**, down from **$2.5 million in 2022**[516](index=516&type=chunk) - Finance lease cost was **$1.8 million in 2023**, up from **$1.3 million in 2022**, including amortization and interest accretion[518](index=518&type=chunk) Weighted-Average Lease Terms and Discount Rates (as of December 31) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Weighted average remaining operating lease term | 2.9 years | 3.9 years | | Weighted average remaining equipment finance lease term | 1.5 years | 2.4 years | | Weighted average operating lease discount rate (IBR) | 5.5% | 5.5% | | Weighted average equipment finance lease implicit rate | 6.5% | 6.9% | [Note 7 — Earn-out Shares Liability](index=88&type=section&id=Note%207%20%E2%80%94%20Earn-out%20Shares%20Liability) - Xos has a contingent obligation to issue **540,000 Earn-out Shares** and grant **8,700 Earn-out RSUs** based on achieving specific volume-weighted average share price (VWAP) milestones or a change of control within five years of the Business Combination[524](index=524&type=chunk)[525](index=525&type=chunk) - The Earn-out Shares liability is classified as a Level 3 fair value measurement liability, with fair value estimated using a Monte Carlo simulation[525](index=525&type=chunk) - The fair value of the Earn-out Shares liability decreased from **$0.6 million in 2022 to $39,000 in 2023**, resulting in a gain on change in fair value of **$0.5 million in 2023**[526](index=526&type=chunk) [Note 8 — Convertible Notes](index=88&type=section&id=Note%208%20%E2%80%94%20Convertible%20Notes) - Xos issued Convertible Debentures totaling **$35.0 million to Yorkville in 2022**, which were fully repaid on December 4, 2023, including **$32.8 million in principal payments** and **$1.6 million in redemption premiums**[528](index=528&type=chunk)[534](index=534&type=chunk)[539](index=539&type=chunk) - The Convertible Debentures had a **6% annual interest rate** (increasing to **10% upon default** or **7.5% during a 'Registration Event'**) and a conversion right into Common Stock at a price based on VWAP, subject to a floor price[531](index=531&type=chunk) - Xos also issued a **$20.0 million Convertible Promissory Note to Aljomaih Automotive Co. on August 11, 2022**, maturing on August 11, 2025, with a **10.0% annual interest rate** payable in Interest Shares[543](index=543&type=chunk)[544](index=544&type=chunk) - As of December 31, 2023, the principal balance outstanding on the Convertible Promissory Note was **$20.0 million**[551](index=551&type=chunk) - Interest expense related to the Convertible Promissory Note was **$2.0 million in 2023**, up from **$0.8 million in 2022**[551](index=551&type=chunk) [Note 9 — Investments in Marketable Debt Securities, Available-for-Sale](index=91&type=section&id=Note%209%20%E2%80%94%20Investments%20in%20Marketable%20Debt%20Securities,%20Available-for-Sale) - As of December 31, 2023, Xos had no investments in marketable debt securities available-for-sale[552](index=552&type=chunk) Marketable Debt Securities, Available-for-Sale (as of December 31, 2022, in thousands) | Type of Security | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | | :--- | :--- | :--- | :--- | :--- | | Corporate debt security | $40,177 | $— | $(612) | $39,565 | | U.S. treasuries | $2,201 | $— | $(21) | $2,180 | | Asset-backed security and other | $5,324 | $— | $(76) | $5,248 | | Non-U.S. government and supranational bonds | $3,685 | $— | $(30) | $3,655 | | Total | $51,387 | $— | $(739) | $50,648 | - Gross realized losses from sales of marketable debt securities were **$91,000 in 2023**, down from **$147,000 in 2022**[554](ind

Financial Data and Key Metrics Changes - In 2023, the company generated revenues of $44.5 million, with Q4 revenue increasing to $18.4 million from $16.7 million in Q3 [2][21] - The cost of goods sold in Q4 rose to $17 million from $14.7 million in the prior quarter, resulting in a GAAP gross margin profit of $1.3 million compared to $2 million in Q3 [21][22] - Full year non-GAAP operating loss was $58.1 million, with Q4 loss at $10.9 million [23] - Cash and cash equivalents at year-end were $11.6 million, down from $22.6 million at the end of Q3 [51] Business Line Data and Key Metrics Changes - The new Stepvan platform contributed to improved financial results, achieving gross margins between 6% to 23% [8][16] - Over 170 units of the new Stepvan were delivered in the second half of the year, alongside prior generation inventory [9] - The company expects to deliver between 400 to 600 units in 2024, with a focus on Stepvan and related powertrain products [26] Market Data and Key Metrics Changes - Direct sales accounted for over 90% of 2023 sales, with significant orders from established customers like Loomis and new customers including UPS and Canada Post [34] - The company anticipates that regulatory pressures and customer incentives will drive EV adoption in at least 10 states [40] Company Strategy and Development Direction - The company plans to leverage the success of the Stepvan platform into other sectors as customer demand grows [12] - The anticipated acquisition of ElectraMeccanica is expected to provide over $45 million in additional capital, enhancing the company's financial stability [11][27] - The focus remains on increasing Stepvan deliveries, with unchanged CapEx and R&D budgets post-acquisition [12] Management's Comments on Operating Environment and Future Outlook - Management highlighted the importance of addressing infrastructure challenges for EV charging to improve delivery timelines [64] - The company expects to achieve positive gross margins in each quarter of 2024, supported by improved liquidity from the ElectraMeccanica acquisition [26][27] - Management expressed confidence in the company's ability to navigate challenges and deliver strong results in the coming years [20][48] Other Important Information - The company reduced operating expenses by 43% from their peak in Q4 2021, reflecting improved financial discipline [37] - Inventory decreased to $37.8 million from $48.9 million in Q3, indicating effective inventory management [52] Q&A Session All Questions and Answers Question: Can you clarify the gross margin changes from Q3 to Q4? - Management noted that gross margins were impacted by overhead cost absorption and a one-time change in estimate, which is not expected to recur [31][59] Question: What are the key factors affecting delivery rates? - Infrastructure remains the primary bottleneck for increasing deliveries, with improvements expected as the hub product ramps up production [88][89] Question: What drives the variability in gross margins for the new Stepvans? - Variability is driven by customer model mix and configurations, with longer-range options generally yielding higher margins [90] Question: Can you provide an update on EV charging infrastructure for customers? - Management acknowledged that infrastructure remains a significant challenge but is working closely with customers to improve deployment timelines [64][65] Question: Will 2024 deliveries be back half weighted like in 2023? - Yes, deliveries are expected to be back half weighted due to seasonal factors affecting customer procurement cycles [106][118]

[Financial and Operational Highlights](index=1&type=section&id=Financial%20and%20Operational%20Highlights) This section presents Xos's key financial and operational achievements and challenges for 2023, including revenue growth and profitability shifts [Full Year 2023 Highlights](index=1&type=section&id=Full%20Year%202023%20Highlights) Xos achieved significant milestones in 2023, including a 22% revenue increase, positive gross margins in H2, and a 43% reduction in quarterly operating expenses over two years 2023 vs 2022 Revenue (in millions) | Year | Revenue | | :--- | :--- | | 2023 | $44.5 | | 2022 | $36.4 | - Achieved positive gross margins in the third and fourth quarters of 2023, supported by the release of an updated stepvan platform[4](index=4&type=chunk) - Delivered **283 EV stepvan units** to major fleets including FedEx Ground, UPS, Loomis, Canada Post, UniFirst, and Penske[4](index=4&type=chunk) - Entered into a definitive agreement to acquire ElectraMeccanica, an all-stock transaction expected to add over **$45 million in cash** to support operations[4](index=4&type=chunk) - Announced the updated Xos Hub™, a rapidly deployable charging unit with **280kWh capacity** and charging rates up to **160kW**[4](index=4&type=chunk) [Fourth Quarter and Full Year 2023 Financial Highlights](index=2&type=section&id=Fourth%20Quarter%20and%20Full%20Year%202023%20Financial%20Highlights) Xos reported Q4 2023 revenues of **$18.4 million** and full-year revenues of **$44.5 million**, achieving a **$1.3 million** gross profit in Q4 despite a full-year gross loss Key Financial Metrics (in millions) | Metric | Q4 2023 | Q3 2023 | FY 2023 | FY 2022 | | :--- | :--- | :--- | :--- | :--- | | **Revenues** | $18.4 | $16.7 | $44.5 | $36.4 | | **Gross profit (loss)** | $1.3 | $2.0 | $(1.3) | $(30.0) | | **Net loss** | $(13.8) | $(14.1) | $(75.8) | $(73.3) | | **Loss from operations** | $(11.8) | $(12.6) | $(65.0) | $(111.3) | | **Cash equivalents & marketable securities** | $11.6 | $23.4 | $11.6 | $89.3 | [2024 Outlook](index=2&type=section&id=2024%20Outlook) Xos projects strong 2024 growth with revenues between **$66.7 million** and **$100.4 million**, aiming for 400-600 unit deliveries and reduced non-GAAP operating loss 2024 Full Year Guidance | Metric | Outlook | | :--- | :--- | | Revenue | $66.7 to $100.4 million | | Non-GAAP operating loss | $48.7 to $43.7 million | | Unit Deliveries | 400 to 600 units | - The company expects strong revenue growth of approximately **88% year-over-year** at the midpoint of its guidance range[6](index=6&type=chunk) - The unit delivery forecast for 2024 includes stepvans, powertrain products, and the new Xos Hub charging units[6](index=6&type=chunk) [Financial Statements](index=7&type=section&id=Financial%20Statements) This section presents Xos's consolidated balance sheets and statements of operations, detailing the company's financial position and performance [Consolidated Balance Sheets](index=7&type=section&id=Consolidated%20Balance%20Sheets) As of December 31, 2023, Xos's total assets decreased to **$93.7 million** from **$189.9 million** in 2022, driven by reduced cash and marketable securities Balance Sheet Comparison (in thousands) | Account | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | **Cash and cash equivalents** | $11,640 | $35,631 | | **Total current assets** | $71,695 | $163,201 | | **Total assets** | $93,684 | $189,936 | | **Total current liabilities** | $19,573 | $45,766 | | **Total liabilities** | $48,488 | $77,861 | | **Total stockholders' equity** | $45,196 | $112,075 | [Consolidated Statements of Operations and Comprehensive Loss](index=9&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Xos reported 2023 revenues of **$44.5 million**, significantly improving gross loss to **$(1.3) million** and reducing operating loss to **$(65.0) million**, with a net loss of **$(75.8) million** Full Year Statement of Operations (in thousands, except per share) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | **Revenues** | $44,523 | $36,376 | | **Gross profit (loss)** | $(1,290) | $(30,029) | | **Total operating expenses** | $63,675 | $81,319 | | **Loss from operations** | $(64,965) | $(111,348) | | **Net loss** | $(75,843) | $(73,325) | | **Net loss per share (Basic)** | $(13.11) | $(13.31) | Q4 Statement of Operations (in thousands) | Metric | Q4 2023 | Q4 2022 | | :--- | :--- | :--- | | **Revenues** | $18,376 | $8,571 | | **Gross profit (loss)** | $1,327 | $(7,975) | | **Loss from operations** | $(11,828) | $(25,919) | | **Net loss** | $(13,827) | $(19,687) | [Non-GAAP Financial Measures and Reconciliations](index=4&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) This section defines and reconciles Xos's non-GAAP financial measures to their most directly comparable GAAP counterparts, providing adjusted performance views [Definition of Non-GAAP Measures](index=4&type=section&id=Definition%20of%20Non-GAAP%20Measures) Xos uses non-GAAP measures like "Operating cash flow less CapEx", "Non-GAAP operating loss", and "Non-GAAP gross profit (loss)" to provide a clearer view of operational trends - "Non-GAAP operating loss" is defined as loss from operations adjusted for stock-based compensation, inventory write-downs, physical inventory and other adjustments, and ElectraMeccanica transaction costs[14](index=14&type=chunk) - "Non-GAAP gross profit (loss)" is defined as gross profit (loss) minus inventory write-downs and physical inventory and other adjustments[14](index=14&type=chunk) - "Operating cash flow less CapEx (Free Cash Flow)" is defined as net cash used in operating activities minus purchases of property and equipment[13](index=13&type=chunk) [Reconciliation of GAAP to Non-GAAP Measures](index=11&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Measures) Xos's Non-GAAP Operating Loss improved to **$(58.1) million** in 2023, with Non-GAAP Gross Loss narrowing to **$(2.3) million** and Free Cash Flow improving to **$(40.7) million** Non-GAAP Operating Loss Reconciliation (in thousands) | Description | Twelve Months Ended Dec 31, 2023 | Twelve Months Ended Dec 31, 2022 | | :--- | :--- | :--- | | **Loss from Operations (GAAP)** | $(64,965) | $(111,348) | | Stock-based compensation | $7,906 | $5,222 | | Inventory reserves | $(1,876) | $5,661 | | Physical inventory and other adjustments | $864 | $7,948 | | **Non-GAAP Operating Loss** | **$(58,071)** | **$(92,517)** | Non-GAAP Gross Profit (Loss) Reconciliation (in thousands) | Description | Twelve Months Ended Dec 31, 2023 | Twelve Months Ended Dec 31, 2022 | | :--- | :--- | :--- | | **Gross profit (loss) (GAAP)** | $(1,290) | $(30,029) | | Inventory reserves | $(1,876) | $5,661 | | Physical inventory and other adjustments | $864 | $7,948 | | **Non-GAAP Gross Profit (Loss)** | **$(2,302)** | **$(16,420)** | [Other Information](index=4&type=section&id=Other%20Information) This section includes details on the earnings conference call and a cautionary statement regarding forward-looking information [Conference Call and Webcast Details](index=4&type=section&id=Conference%20Call%20and%20Webcast%20Details) Details for the Q4 and full-year 2023 earnings conference call and webcast, held on March 21, 2024, are provided, including audio replay access - The earnings conference call was held on Thursday, March 21, 2024, at **4:30 p.m. EDT**[9](index=9&type=chunk) - An audio replay of the call is available through April 4, 2024[10](index=10&type=chunk) [Cautionary Statement Regarding Forward-Looking Statements](index=5&type=section&id=Cautionary%20Statement%20Regarding%20Forward-Looking%20Statements) This section outlines forward-looking statements regarding 2024 projections and growth strategy, subject to risks like supply chain issues and competition - Forward-looking statements include projections for 2024, expectations on product deliveries, customer demand, and long-term strategy[17](index=17&type=chunk) - Actual results may differ materially due to risks such as supply chain shortages, ability to meet production milestones, industry competition, and other factors listed in the company's SEC filings[18](index=18&type=chunk)

Xos, Inc. (NASDAQ:XOS) Xos & Electrameccanica Joint Investor Conference Call January 24, 2024 9:15 AM ET Company Participants Dakota Semler - Chief Executive Officer, Xos Susan Docherty - Chief Executive Officer, ElectraMeccanica Christen Romero - General Counsel, Xos Operator Thank you everyone for joining us. Joining the call with me today are Xos’ Chairman and Chief Executive Officer, Dakota Semler; and ElectraMeccanica’s CEO, Susan Docherty. Earlier this month Xos and ElectraMeccanica each issued a pres ...

Xos, Inc. (NASDAQ:XOS) Q2 2023 Earnings Conference Call November 9, 2023 4:30 PM ET Company Participants Christen Romero - General Counsel Dakota Semler - CEO Giordano Sordoni - COO Liana Pogosyan - Acting CFO Conference Call Participants Mike Shlisky - D.A. Davidson Donovan Schafer - Northland Capital Markets Operator Greetings, and welcome to Xos’s Third Quarter 2023 Earnings Call. At this time, all participants’ lines are in a listen-only mode. For those of you participating in the conference call, there ...

Part I - Financial Information This part presents Xos's unaudited condensed consolidated financial statements and management's discussion and analysis of its financial condition and results of operations [Glossary of Terms](index=5&type=section&id=Glossary%20of%20Terms) This section defines key terms central to Xos's fleet electrification business model, including proprietary offerings and strategic approaches - Energy Services: Infrastructure-as-a-service offering including charging infrastructure deployment, energy procurement and management, and the Xos Hub™ mobile charging unit[17](index=17&type=chunk) - Fleet-as-a-Service: Comprehensive suite of products and services facilitating commercial battery-electric fleet operations through proprietary technology and turnkey solutions, including X-Pack battery system, X-Platform modular chassis, Energy Services, service and maintenance, and digital fleet management products[17](index=17&type=chunk) - Flex Manufacturing Strategy: Leverages smaller, existing facilities and labor talent through strategic manufacturing partnerships to assemble vehicles, while the Company manages supply chain logistics, quality control, and manufacturing engineering[17](index=17&type=chunk) - X-Pack: Proprietary battery system[21](index=21&type=chunk) - X-Platform: Proprietary, purpose-built vehicle chassis platform[21](index=21&type=chunk) - Xosphere Intelligence Platform: Advanced connected vehicle ecosystem combining proprietary hardware and embedded software with a user platform[21](index=21&type=chunk) [Item 1. Financial Statements (Unaudited)](index=8&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents Xos's unaudited condensed consolidated financial statements, including balance sheets, statements of operations, equity, and cash flows, with detailed explanatory notes [Condensed Consolidated Balance Sheets](index=9&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of Xos's financial position, detailing assets, liabilities, and equity at specific reporting dates Condensed Consolidated Balance Sheets (in thousands) | Metric | Sep 30, 2023 (in thousands) | Dec 31, 2022 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------- | :------- | | Cash and cash equivalents | $22,570 | $35,631 | $(13,061) | -36.65% | | Total current assets | $91,475 | $163,201 | $(71,726) | -43.95% | | Total assets | $114,185 | $189,936 | $(75,751) | -39.88% | | Total current liabilities | $27,169 | $45,766 | $(18,597) | -40.64% | | Total liabilities | $56,625 | $77,861 | $(21,236) | -27.27% | | Total stockholders' equity | $57,560 | $112,075 | $(54,515) | -48.64% | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) This section outlines Xos's financial performance over specific periods, detailing revenues, costs, and net loss Condensed Consolidated Statements of Operations and Comprehensive Loss (3 Months Ended Sep 30) | Metric (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | Change ($) | Change (%) | | :-------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Revenues | $16,696 | $11,008 | $5,688 | 51.67% | | Cost of goods sold | $14,711 | $21,759 | $(7,048) | -32.39% | | Gross profit (loss) | $1,985 | $(10,751) | $12,736 | -118.46% | | Operating expenses | $14,610 | $20,388 | $(5,778) | -28.34% | | Loss from operations | $(12,625) | $(31,139) | $18,514 | -59.45% | | Net loss | $(14,107) | $(19,962) | $5,855 | -29.33% | | Basic EPS | $(0.08) | $(0.12) | $0.04 | -33.33% | | Diluted EPS | $(0.08) | $(0.13) | $0.05 | -38.46% | Condensed Consolidated Statements of Operations and Comprehensive Loss (9 Months Ended Sep 30) | Metric (in thousands) | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | Change ($) | Change (%) | | :-------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Revenues | $26,147 | $27,805 | $(1,658) | -5.96% | | Cost of goods sold | $28,764 | $49,859 | $(21,095) | -42.31% | | Gross loss | $(2,617) | $(22,054) | $19,437 | -88.13% | | Operating expenses | $50,520 | $63,375 | $(12,855) | -20.28% | | Loss from operations | $(53,137) | $(85,429) | $32,292 | -37.79% | | Net loss | $(62,016) | $(53,638) | $(8,378) | 15.62% | | Basic EPS | $(0.36) | $(0.33) | $(0.03) | 9.09% | | Diluted EPS | $(0.36) | $(0.34) | $(0.02) | 5.88% | [Condensed Consolidated Statements of Stockholders' Equity](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This section tracks changes in Xos's equity, including accumulated deficit, over the reporting periods Condensed Consolidated Statements of Stockholders' Equity (in thousands) | Metric (in thousands) | Dec 31, 2022 | Sep 30, 2023 | Change ($) | Change (%) | | :-------------------- | :----------- | :----------- | :--------- | :--------- | | Total Stockholders' Equity | $112,075 | $57,560 | $(54,515) | -48.64% | | Accumulated Deficit | $(77,418) | $(139,434) | $(62,016) | 80.11% | [Condensed Consolidated Statements of Cash Flows](index=14&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section details the sources and uses of Xos's cash across operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (in thousands) | Metric (in thousands) | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | Change ($) | Change (%) | | :-------------------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Net cash used in operating activities | $(38,655) | $(105,597) | $66,942 | -63.40% | | Net cash provided by investing activities | $50,851 | $75,515 | $(24,664) | -32.66% | | Net cash (used in) provided by financing activities | $(27,509) | $60,376 | $(87,885) | -145.56% | | Net (decrease) increase in cash, cash equivalents and restricted cash | $(15,313) | $30,294 | $(45,607) | -150.55% | [Notes to Condensed Consolidated Financial Statements](index=16&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the unaudited condensed consolidated financial statements [Note 1 — Description of Business](index=16&type=section&id=Note%201%20%E2%80%94%20Description%20of%20Business) This note describes Xos's business as a fleet electrification provider, highlighting operational risks and going concern uncertainty - Xos designs and manufactures Class 5-8 battery-electric commercial vehicles for last-mile, back-to-base routes, offering charging infrastructure through Xos Energy Solutions™ and proprietary fleet management software, Xosphere™[36](index=36&type=chunk) - The Company faces significant risks from uncertain global economic conditions, geopolitical events (e.g., Russia-Ukraine and Israel conflicts), and supply chain disruptions, which could materially negatively impact its business, operating results, cash flows, liquidity, and financial condition[38](index=38&type=chunk)[40](index=40&type=chunk) - As an early-stage growth company, Xos continues to incur net losses and cash outflows, leading to **substantial doubt about its ability to continue as a going concern** for the next 12 months and a critical need to raise additional capital[43](index=43&type=chunk)[47](index=47&type=chunk) - Supply chain disruptions persist, impacting the sourcing of critical inventory items such as Power Electronics, Harnesses, battery cells, vehicle bodies, and aluminum, despite efforts to find alternative solutions and sources[48](index=48&type=chunk) [Note 2 — Basis of Presentation and Summary of Significant Accounting Policies](index=18&type=section&id=Note%202%20%E2%80%94%20Basis%20of%20Presentation%20and%20Summary%20of%20Significant%20Accounting%20Policies) This note details the financial statement presentation, key accounting policies, and significant concentrations of risk Warranty Liability (in thousands) | Metric (in thousands) | Sep 30, 2023 | Dec 31, 2022 | Change ($) | Change (%) | | :-------------------- | :----------- | :----------- | :--------- | :--------- | | Warranty liability | $1,330 | $1,099 | $231 | 21.02% | - Customer Concentration (9 Months Ended Sep 30, 2023): Three customers accounted for **45%**, **18%**, and **12% of revenues** For the three months ended September 30, 2023, one customer accounted for **70% of revenues**[62](index=62&type=chunk) - Supply Risk: The Company is highly dependent on single-source suppliers, and any inability of these suppliers to deliver components on schedule, at acceptable prices, or quality levels could materially adversely affect operations and financial condition[64](index=64&type=chunk) - Adoption of ASU 2016-13: The Company adopted ASU 2016-13, Financial Instruments — Credit Losses, on January 1, 2023, using the modified retrospective approach, which had **no material impact** on its financial statements[65](index=65&type=chunk)[66](index=66&type=chunk) [Note 3 — Revenue Recognition](index=20&type=section&id=Note%203%20%E2%80%94%20Revenue%20Recognition) This note disaggregates Xos's revenues by major source, primarily product and service offerings Revenue by Source (3 Months Ended Sep 30, in thousands) | Revenue Source (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | Change ($) | Change (%) | | :---------------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Stepvans & vehicle incentives | $15,774 | $9,952 | $5,822 | 58.50% | | Powertrains | $220 | $382 | $(162) | -42.41% | | Fleet-as-a-Service | $129 | $285 | $(156) | -54.74% | | Total product revenue | $16,123 | $10,619 | $5,504 | 51.83% | | Ancillary revenue | $573 | $389 | $184 | 47.30% | | Total revenues | $16,696 | $11,008 | $5,688 | 51.67% | Revenue by Source (9 Months Ended Sep 30, in thousands) | Revenue Source (in thousands) | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | Change ($) | Change (%) | | :---------------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Stepvans & vehicle incentives | $24,323 | $25,376 | $(1,053) | -4.15% | | Powertrains | $448 | $1,052 | $(604) | -57.41% | | Fleet-as-a-Service | $422 | $418 | $4 | 0.96% | | Total product revenue | $25,193 | $26,846 | $(1,653) | -6.16% | | Ancillary revenue | $954 | $959 | $(5) | -0.52% | | Total revenues | $26,147 | $27,805 | $(1,658) | -5.96% | [Note 4 — Inventories](index=21&type=section&id=Note%204%20%E2%80%94%20Inventories) This note provides a breakdown of Xos's inventory types and their changes over the reporting period Inventories (in thousands) | Inventory Type (in thousands) | Sep 30, 2023 | Dec 31, 2022 | Change ($) | Change (%) | | :---------------------------- | :----------- | :----------- | :--------- | :--------- | | Raw materials | $39,618 | $40,271 | $(653) | -1.62% | | Work in process | $2,894 | $4,618 | $(1,724) | -37.33% | | Finished goods | $6,391 | $12,651 | $(6,260) | -49.48% | | Total Inventories | $48,903 | $57,540 | $(8,637) | -15.01% | [Note 5 — Selected Balance Sheet Data](index=21&type=section&id=Note%205%20%E2%80%94%20Selected%20Balance%20Sheet%20Data) This note presents a detailed breakdown of selected prepaid expenses, other current assets, and liabilities Selected Balance Sheet Data (in thousands) | Metric (in thousands) | Sep 30, 2023 | Dec 31, 2022 | Change ($) | Change (%) | | :-------------------- | :----------- | :----------- | :--------- | :--------- | | Total prepaid expenses and other current assets | $7,827 | $8,100 | $(273) | -3.37% | | Total other current liabilities | $16,785 | $15,616 | $1,169 | 7.49% | | Customer deposits | $2,682 | $721 | $1,961 | 271.98% | | Total other non-current liabilities | $8,907 | $11,000 | $(2,093) | -19.03% | [Note 6 — Earn-out Shares Liability](index=22&type=section&id=Note%206%20%E2%80%94%20Earn-out%20Shares%20Liability) This note details the fair value and changes in Xos's contingent earn-out shares liability Earn-out Shares Liability (in thousands) | Metric (in thousands) | Sep 30, 2023 | Dec 31, 2022 | Change ($) | Change (%) | | :-------------------- | :----------- | :----------- | :--------- | :--------- | | Fair value of Earn-out Shares liability | $115 | $564 | $(449) | -79.61% | Gain on Change in Fair Value of Earn-out Shares Liability (in thousands) | Metric (in thousands) | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | Change ($) | Change (%) | | :-------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Gain on change in fair value of Earn-out Shares liability | $443 | $24,148 | $(23,705) | -98.12% | [Note 7 — Convertible Notes](index=24&type=section&id=Note%207%20%E2%80%94%20Convertible%20Notes) This note describes Xos's convertible debt instruments, including principal balances and derivative liabilities - Convertible Debentures with Yorkville: Principal amount up to **$35 million**, bearing **6% annual interest** (increasing to 7.5% or 10% under certain conditions), with a maturity date extended to February 11, 2024 Conversion price is the lower of **$2.4733** or 97% of the lowest daily VWAP (not below **$0.59** as of Sep 30, 2023)[79](index=79&type=chunk)[80](index=80&type=chunk) - Prepayments on Convertible Debentures: During the nine months ended September 30, 2023, the Company made prepayments totaling **$23.8 million in principal**, **$1.2 million in redemption premiums**, and **$1.4 million in accrued interest**, triggered by the daily VWAP falling below the Floor Price[84](index=84&type=chunk) Convertible Notes and Derivative Liabilities (in thousands) | Metric (in thousands) | Sep 30, 2023 | Dec 31, 2022 | Change ($) | Change (%) | | :-------------------- | :----------- | :----------- | :--------- | :--------- | | Derivative liabilities on Convertible Debentures | $14 | $405 | $(391) | -96.54% | | Convertible Debentures outstanding principal (net) | $9,000 | $33,000 | $(24,000) | -72.73% | | Convertible Promissory Note outstanding principal (net) | $20,000 | $20,000 | $0 | 0.00% | Gain on Change in Fair Value of Derivative Liabilities (in thousands) | Metric (in thousands) | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | Change ($) | Change (%) | | :-------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Gain on change in fair value of derivative liabilities | $525 | $9,125 | $(8,600) | -94.25% | [Note 8 — Investments](index=27&type=section&id=Note%208%20%E2%80%94%20Investments) This note details Xos's marketable debt securities, showing a significant decrease in holdings Marketable Debt Securities (in thousands) | Metric (in thousands) | Sep 30, 2023 | Dec 31, 2022 | Change ($) | Change (%) | | :-------------------- | :----------- | :----------- | :--------- | :--------- | | Marketable debt securities, available-for-sale | $0 | $50,648 | $(50,648) | -100.00% | [Note 9 — Equity](index=28&type=section&id=Note%209%20%E2%80%94%20Equity) This note outlines Xos's equity structure, Nasdaq compliance status, and Standby Equity Purchase Agreement - Nasdaq Listing Deficiency: The Company received a deficiency letter on December 28, 2022, for failing to meet the **$1.00 minimum bid price requirement** It was granted an additional 180-calendar day grace period until December 26, 2023, to regain compliance and plans to implement a reverse stock split[110](index=110&type=chunk)[113](index=113&type=chunk) SEPA Remaining Commitment (in millions) | Metric (in millions) | Sep 30, 2023 | Dec 31, 2022 | Change ($) | Change (%) | | :------------------- | :----------- | :----------- | :--------- | :--------- | | SEPA remaining commitment | $119.5 | $120.7 | $(1.2) | -0.99% | [Note 10 — Derivative Instruments](index=30&type=section&id=Note%2010%20%E2%80%94%20Derivative%20Instruments) This note details Xos's outstanding warrants and embedded derivative liabilities, including their fair values Derivative Instruments (in thousands) | Metric (in thousands) | Sep 30, 2023 | Dec 31, 2022 | Change ($) | Change (%) | | :-------------------- | :----------- | :----------- | :--------- | :--------- | | Public Warrants (fair value) | $522 | $654 | $(132) | -20.18% | | Private Placement Warrants (fair value) | $5 | $7 | $(2) | -28.57% | | Derivative Liabilities (fair value) | $14 | $405 | $(391) | -96.54% | - Public Warrants: **18,633,301 outstanding** with an exercise price of **$11.50 per share**, expiring on August 20, 2026 Redeemable by the Company under certain conditions[121](index=121&type=chunk)[122](index=122&type=chunk) - Private Placement Warrants: **199,997 outstanding**, identical to Public Warrants but non-transferable/assignable until September 19, 2021, and non-redeemable if held by initial purchasers[121](index=121&type=chunk)[123](index=123&type=chunk) [Note 11 — Share-Based Compensation](index=32&type=section&id=Note%2011%20%E2%80%94%20Share-Based%20Compensation) This note describes Xos's share-based compensation plans and related expenses Total Stock-Based Compensation Expense (3 Months Ended Sep 30, in thousands) | Metric (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | Change ($) | Change (%) | | :-------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Total stock-based compensation expense | $2,242 | $1,281 | $961 | 75.02% | Total Stock-Based Compensation Expense (9 Months Ended Sep 30, in thousands) | Metric (in thousands) | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | Change ($) | Change (%) | | :-------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Total stock-based compensation expense | $6,308 | $3,751 | $2,557 | 68.17% | - As of September 30, 2023, there were **697,388 options outstanding** under the 2018 Stock Plan and **6,739,555 shares available for issuance** under the 2021 Equity Plan[132](index=132&type=chunk)[138](index=138&type=chunk) [Note 12 — Property and Equipment, net](index=34&type=section&id=Note%2012%20%E2%80%94%20Property%20and%20Equipment,%20net) This note details the net value of Xos's property and equipment, including depreciation Property and Equipment, Net (in thousands) | Metric (in thousands) | Sep 30, 2023 | Dec 31, 2022 | Change ($) | Change (%) | | :-------------------- | :----------- | :----------- | :--------- | :--------- | | Property and equipment, net | $15,541 | $18,581 | $(3,040) | -16.36% | | Accumulated depreciation | $(6,978) | $(4,471) | $(2,507) | 56.07% | [Note 13 — Commitments and Contingencies](index=34&type=section&id=Note%2013%20%E2%80%94%20Commitments%20and%20Contingencies) This note confirms the absence of material legal proceedings or significant commitments for Xos - No material legal proceedings: The Company is not currently involved in any legal proceedings that are expected to have a material adverse effect on its business[142](index=142&type=chunk) [Note 14 — Related Party Transactions](index=34&type=section&id=Note%2014%20%E2%80%94%20Related%20Party%20Transactions) This note details Xos's lease agreements and rent expenses with related parties Rent Expense (3 Months Ended Sep 30, in thousands) | Metric (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | Change ($) | Change (%) | | :-------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Rent expense (Valley Industrial Properties) | $0 | $35 | $(35) | -100.00% | | Rent expense (Fitzgerald Manufacturing Partners) | $200 | $200 | $0 | 0.00% | Rent Expense (9 Months Ended Sep 30, in thousands) | Metric (in thousands) | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | Change ($) | Change (%) | | :-------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Rent expense (Valley Industrial Properties) | $0 | $106 | $(106) | -100.00% | | Rent expense (Fitzgerald Manufacturing Partners) | $500 | $500 | $0 | 0.00% | [Note 15 — Income Taxes](index=34&type=section&id=Note%2015%20%E2%80%94%20Income%20Taxes) This note outlines Xos's income tax provision and the valuation allowance against deferred tax assets Provision for Income Taxes (3 Months Ended Sep 30, in thousands) | Metric (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | Change ($) | Change (%) | | :-------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Provision for income taxes | $3 | $0 | $3 | 100.00% | Provision for Income Taxes (9 Months Ended Sep 30, in thousands) | Metric (in thousands) | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | Change ($) | Change (%) | | :-------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Provision for income taxes | $7 | $3 | $4 | 133.33% | - Valuation Allowance: The Company has provided a **full valuation allowance** against its net deferred tax assets as of September 30, 2023, and December 31, 2022, due to the unlikelihood of their realization[149](index=149&type=chunk) [Note 16 — Net Loss per Share](index=35&type=section&id=Note%2016%20%E2%80%94%20Net%20Loss%20per%20Share) This note presents Xos's basic and diluted net loss per share, including anti-dilutive share exclusions Net Loss per Share (3 Months Ended Sep 30) | Metric | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | Change | Change (%) | | :----- | :-------------------------- | :-------------------------- | :----- | :--------- | | Basic Net Loss per Share | $(0.08) | $(0.12) | $0.04 | -33.33% | | Diluted Net Loss per Share | $(0.08) | $(0.13) | $0.05 | -38.46% | Net Loss per Share (9 Months Ended Sep 30) | Metric | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | Change | Change (%) | | :----- | :-------------------------- | :-------------------------- | :----- | :--------- | | Basic Net Loss per Share | $(0.36) | $(0.33) | $(0.03)| 9.09% | | Diluted Net Loss per Share | $(0.36) | $(0.34) | $(0.02)| 5.88% | - Anti-dilutive Shares: Potential shares from contingent earn-out shares (**16.4 million**), warrants (**18.8 million**), restricted stock units (**19.3 million**), stock options (**0.7 million**), and convertible debt (**59.1 million for Q3 2023, 71.0 million for 9M 2023**) were excluded from diluted EPS calculations because their effect was anti-dilutive[152](index=152&type=chunk) [Note 17 — Fair Value Measurements](index=36&type=section&id=Note%2017%20%E2%80%94%20Fair%20Value%20Measurements) This note categorizes Xos's financial instruments by fair value hierarchy, focusing on Level 3 liabilities Level 3 Financial Liabilities (in thousands) | Level 3 Financial Liabilities (in thousands) | Sep 30, 2023 | Dec 31, 2022 | Change ($) | Change (%) | | :------------------------------------------- | :----------- | :----------- | :--------- | :--------- | | Derivative Liabilities | $14 | $405 | $(391) | -96.54% | | Contingent Earn-out Shares liability | $115 | $564 | $(449) | -79.61% | - Fair Value Hierarchy: Financial instruments are classified into Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1), and Level 3 (significant unobservable inputs) Derivative financial instruments and earn-out shares liability are measured using Level 3 inputs[156](index=156&type=chunk)[155](index=155&type=chunk) - Significant Unobservable Inputs for Level 3 Liabilities (Sep 30, 2023): Stock price (**$0.34**), stock price volatility (**80%**), expected term (**2.89 years for earn-out, 0.37 years for derivatives**), and risk-free interest rate (**4.8% for earn-out, 5.4% for derivatives**)[161](index=161&type=chunk) [Note 18 — Subsequent Events](index=38&type=section&id=Note%2018%20%E2%80%94%20Subsequent%20Events) This note discloses Xos's convertible debenture prepayments made after the reporting period - Convertible Debentures Prepayments: The Company made prepayments of **$3.2 million** on October 4, 2023, and **$3.2 million** on November 6, 2023, to Yorkville, as the daily VWAP of its Common Stock fell below the Floor Price[162](index=162&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=39&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's analysis of Xos's financial performance, liquidity, and operational challenges [Overview](index=39&type=section&id=Overview) This section provides an overview of Xos's business model, manufacturing strategy, and recent operational changes - Xos designs and manufactures Class 5-8 battery-electric commercial vehicles for last-mile routes, offering charging infrastructure (Xos Energy Solutions™) and fleet management software (Xosphere™) to provide a comprehensive 'Fleet-as-a-Service' offering[164](index=164&type=chunk)[170](index=170&type=chunk) Vehicles and Powertrains Delivered (9 Months Ended Sep 30) | Metric | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | Change | Change (%) | | :----- | :-------------------------- | :-------------------------- | :----- | :--------- | | Vehicles delivered (including leases) | 171 | 211 | -40 | -18.96% | | Powertrains delivered | 3 | 6 | -3 | -50.00% | Vehicles and Powertrains Delivered (3 Months Ended Sep 30) | Metric | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | Change | Change (%) | | :----- | :-------------------------- | :-------------------------- | :----- | :--------- | | Vehicles delivered | 104 | 84 | 20 | 23.81% | | Powertrains delivered | 1 | 4 | -3 | -75.00% | - Flex Manufacturing Strategy: The Company utilizes a capital-efficient Flex manufacturing strategy, leveraging strategic partners' existing facilities (e.g., Fitzgerald Manufacturing Partners, LLC) to assemble products, with a designed capacity of **5,000 vehicles per year**[173](index=173&type=chunk) - Workforce Reduction: In October 2023, Xos conducted a reduction in force, cutting approximately **17% of its employees** to reduce costs, streamline its organizational structure, and focus on key strategic initiatives and unit deliveries[176](index=176&type=chunk) [Key Factors Affecting Operating Results](index=41&type=section&id=Key%20Factors%20Affecting%20Operating%20Results) This section discusses critical factors impacting Xos's operating results, including commercialization, capital needs, and supply chain issues - Successful Commercialization: Future revenue depends on sales of vehicles, battery systems, and Fleet-as-a-Service, requiring **substantial additional capital** for development and commercialization[178](index=178&type=chunk) - Supply Chain Disruptions: Ongoing global economic conditions and the COVID-19 pandemic continue to impact the procurement of critical inventory items, including semiconductor chips, battery cells, vehicle bodies, and aluminum, leading to increased lead times and supply limitations[181](index=181&type=chunk) - Mitigation Efforts: The Company's supply chain team is actively working with vendors to find alternative sources and placing orders in advance to mitigate disruptions, but uncertainty remains regarding timely inventory delivery for production plans[181](index=181&type=chunk) [Components of Results of Operations](index=43&type=section&id=Components%20of%20Results%20of%20Operations) This section defines Xos's revenue, cost of goods sold, and operating expense components, along with future outlook - Revenue Sources: Primarily from sales of electric step vans, stripped chassis vehicles, and battery systems, with expected expansion into chassis cabs and tractors, alongside service offerings like Fleet-as-a-Service, Xos Energy Solutions™, and Xosphere™[186](index=186&type=chunk) - Cost of Goods Sold: Includes direct materials, direct labor, manufacturing overhead, and reserves for warranty expenses and inventory write-downs Efforts are underway to find more cost-effective vendors[188](index=188&type=chunk)[189](index=189&type=chunk)[190](index=190&type=chunk) - Operating Expenses Outlook: General and administrative (G&A), research and development (R&D), and sales and marketing (S&M) expenses are all expected to decrease in the foreseeable future, primarily due to lower headcount resulting from the recent workforce reduction[192](index=192&type=chunk)[193](index=193&type=chunk)[194](index=194&type=chunk) [Results of Operations](index=45&type=section&id=Results%20of%20Operations) This section analyzes Xos's financial performance, detailing revenue, gross profit, operating expenses, and net loss trends Results of Operations (3 Months Ended Sep 30, in thousands) | Metric (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | Change ($) | Change (%) | | :-------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Revenues | $16,696 | $11,008 | $5,688 | 52% | | Cost of goods sold | $14,711 | $21,759 | $(7,048) | -32% | | Gross profit (loss) | $1,985 | $(10,751) | $12,736 | -118% | | Total operating expenses | $14,610 | $20,388 | $(5,778) | -28% | | Loss from operations | $(12,625) | $(31,139) | $18,514 | -59% | | Net Loss | $(14,107) | $(19,962) | $5,855 | -29% | Results of Operations (9 Months Ended Sep 30, in thousands) | Metric (in thousands) | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | Change ($) | Change (%) | | :-------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Revenues | $26,147 | $27,805 | $(1,658) | -6% | | Cost of goods sold | $28,764 | $49,859 | $(21,095) | -42% | | Gross loss | $(2,617) | $(22,054) | $19,437 | -88% | | Total operating expenses | $50,520 | $63,375 | $(12,855) | -20% | | Loss from operations | $(53,137) | $(85,429) | $32,292 | -38% | | Net Loss | $(62,016) | $(53,638) | $(8,378) | 16% | - Revenue Drivers: Q3 2023 revenue increase was primarily due to higher unit sales (**104 stepvans vs 84 in Q3 2022**) and an increase in average selling price 9M 2023 revenue decrease was due to lower unit sales (**171 stepvans vs 211 in 9M 2022**), partially offset by higher average selling price[200](index=200&type=chunk)[201](index=201&type=chunk) - Operating Expense Reductions: General and administrative, research and development, and sales and marketing expenses all decreased significantly in both the three and nine months ended September 30, 2023, primarily due to lower headcount and personnel costs, as well as reduced professional fees and consulting costs[205](index=205&type=chunk)[206](index=206&type=chunk)[207](index=207&type=chunk)[209](index=209&type=chunk)[210](index=210&type=chunk)[211](index=211&type=chunk) [Liquidity and Capital Resources](index=49&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses Xos's cash position, capital access, going concern uncertainty, and cash flow trends - Liquidity Sources: As of September 30, 2023, principal liquidity sources were **$22.6 million in cash and cash equivalents** and access to capital under the Standby Equity Purchase Agreement (SEPA)[219](index=219&type=chunk) - Going Concern Uncertainty: **Substantial doubt exists** about the Company's ability to continue as a going concern for the next 12 months due to incurred net losses and cash outflows, requiring additional capital to fund and scale operations[220](index=220&type=chunk)[221](index=221&type=chunk) Cash Flow Activity (9 Months Ended Sep 30, in thousands) | Cash Flow Activity (in thousands) | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | Change ($) | Change (%) | | :-------------------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Net cash used in operating activities | $(38,655) | $(105,597) | $66,942 | -63.40% | | Net cash provided by investing activities | $50,851 | $75,515 | $(24,664) | -32.66% | | Net cash (used in) provided by financing activities | $(27,509) | $60,376 | $(87,885) | -145.56% | - Financing Activities: Net cash used in financing activities for 9M 2023 was **$(27.5) million**, primarily due to **$25.0 million in payments for convertible notes** (including prepayment premium), a significant shift from **$60.4 million provided in 9M 2022**[232](index=232&type=chunk)[233](index=233&type=chunk) [Contractual Obligations and Commitments](index=51&type=section&id=Contractual%20Obligations%20and%20Commitments) This section confirms no material contractual obligations beyond previously disclosed information [Off-Balance Sheet Arrangements](index=51&type=section&id=Off-Balance%20Sheet%20Arrangements) This section confirms the absence of off-balance sheet arrangements for Xos [Critical Accounting Policies and Estimates](index=51&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section states no material changes to Xos's critical accounting policies and estimates [Recent Accounting Pronouncements](index=51&type=section&id=Recent%20Accounting%20Pronouncements) This section refers to Note 2 for details on recent accounting pronouncements [Internal Control Over Financial Reporting](index=51&type=section&id=Internal%20Control%20Over%20Financial%20Reporting) This section details the remediation of a material weakness in Xos's internal controls and management's effectiveness conclusion - Material Weakness Remediation: The material weakness in internal controls related to inventory management, identified in the 2022 Form 10-K, was **remediated as of June 30, 2023** Remediation efforts included adding controls, implementing new software, and partnering with external consultants[240](index=240&type=chunk)[241](index=241&type=chunk) - Effectiveness Conclusion: Management concluded that its internal control over financial reporting was **effective as of September 30, 2023**[241](index=241&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=46&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses Xos's exposure to market risks, specifically interest rate and inflation risks [Interest Rate Risk](index=52&type=section&id=Interest%20Rate%20Risk) This section details Xos's interest rate risk management, focusing on its investment portfolio and liquidity objectives - Investment Portfolio: The Company maintains a portfolio of fixed and variable rate debt securities, including corporate debt and asset-backed securities, but had **$0.0 million in marketable debt securities** available-for-sale as of September 30, 2023[245](index=245&type=chunk) - Risk Management: The primary objective is to maintain principal safety and future liquidity The Company does not use derivatives to manage interest rate risk and invests in highly-rated debt securities[245](index=245&type=chunk) [Inflation Risk](index=52&type=section&id=Inflation%20Risk) This section addresses the impact of inflation on Xos's costs and the potential adverse effects if not mitigated - Inflation Impact: Inflation increases the cost of goods and services The Company's inability to fully offset these higher costs through price increases or mitigation strategies could harm its business, financial condition, and results of operations[246](index=246&type=chunk) [Item 4. Controls and Procedures](index=46&type=section&id=Item%204.%20Controls%20and%20Procedures) This section outlines Xos's disclosure controls and internal control over financial reporting, including remediation efforts [Evaluation of Disclosure Controls and Procedures](index=52&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section confirms the effectiveness of Xos's disclosure controls and procedures, including remediated weaknesses - Effectiveness: As of September 30, 2023, the Company's disclosure controls and procedures were deemed **effective at the reasonable assurance level**, including the remediated controls for inventory management[249](index=249&type=chunk) [Management's Annual Report on Internal Controls over Financial Reporting](index=53&type=section&id=Management's%20Annual%20Report%20on%20Internal%20Controls%20over%20Financial%20Reporting) This section states management's conclusion on the effectiveness of Xos's internal control over financial reporting - Effectiveness: Management concluded that the Company's internal controls over financial reporting were **effective as of September 30, 2023**, based on the COSO 2013 framework[251](index=251&type=chunk) [Material Weaknesses in Internal Controls Over Financial Reporting](index=53&type=section&id=Material%20Weaknesses%20in%20Internal%20Controls%20Over%20Financial%20Reporting) This section acknowledges a previously identified material weakness while affirming financial statement reliability - Identified Weakness: A material weakness in internal controls related to the ineffective operation of controls related to inventory management was previously identified[253](index=253&type=chunk) - Financial Statement Reliability: Notwithstanding the material weakness, management concluded that the unaudited condensed consolidated financial statements are **fairly stated in all material respects**[254](index=254&type=chunk) [Remediation of Material Weakness in Internal Control Over Financial Reporting](index=53&type=section&id=Remediation%20of%20Material%20Weakness%20in%20Internal%20Control%20Over%20Financial%20Reporting) This section details the successful remediation of Xos's material weakness in inventory management controls - Remediation Actions: Remediation steps included adding additional internal controls over the inventory process, implementing new software tools for automated controls, and partnering with external consultants specializing in public company control compliance[255](index=255&type=chunk)[256](index=256&type=chunk) - Completion: The material weakness was **remediated as of June 30, 2023**, following testing of the effectiveness of the remediated controls[257](index=257&type=chunk) [Changes in Internal Control over Financial Reporting](index=54&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section confirms no material changes in Xos's internal control over financial reporting during the period Part II - Other Information This part provides additional information, including legal proceedings, risk factors, equity sales, and exhibits [Item 1. Legal Proceedings](index=49&type=section&id=Item%201.%20Legal%20Proceedings) This section confirms that Xos is not involved in any material legal proceedings - No Material Legal Proceedings: The Company is not a party to any legal proceedings that, individually or in aggregate, are reasonably expected to have a material adverse effect on its business, financial condition, or results of operations[260](index=260&type=chunk) [Item 1A. Risk Factors](index=49&type=section&id=Item%201A.%20Risk%20Factors) This section highlights the substantial doubt about Xos's going concern ability due to capital needs and market conditions - Going Concern Doubt: There is **substantial doubt** about the Company's ability to continue as a going concern for the next 12 months due to ongoing capital requirements for operations and development programs[262](index=262&type=chunk)[266](index=266&type=chunk) - Capital Access Risks: The ability to access additional capital is not assured and depends on factors like trading volumes and market price of Common Stock (for SEPA), with potential for dilutive equity financing or restrictive debt covenants Global economic and geopolitical conditions could further hinder fundraising efforts[262](index=262&type=chunk)[263](index=263&type=chunk) - Consequences of Insufficient Capital: Failure to raise needed capital could force delays, scaling back, or abandonment of operations and development programs, materially harming the business and potentially leading to liquidation or bankruptcy[265](index=265&type=chunk)[266](index=266&type=chunk) [Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities](index=55&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities,%20Use%20of%20Proceeds%20and%20Issuer%20Purchases%20of%20Equity%20Securities) This section details Xos's unregistered common stock sales under SEPA and the use of proceeds - Unregistered Sales: During Q3 2023, the Company issued **1,176,844 shares of common stock** under the SEPA, generating **$0.3 million in cash proceeds**[267](index=267&type=chunk) - Exemption and Use of Proceeds: The issuance relied on the Section 4(a)(2) exemption from registration under the Securities Act, with proceeds designated for working capital and general corporate purposes[268](index=268&type=chunk) [Item 3. Defaults Upon Senior Securities](index=56&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section confirms no defaults on senior securities for Xos during the period [Item 4. Mine Safety Disclosures](index=56&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to Xos's business operations [Item 5. Other Information](index=56&type=section&id=Item%205.%20Other%20Information) This section states that no other information is reported for this item [Item 6. Exhibits](index=56&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of the Form 10-Q [Signatures](index=57&type=section&id=Signatures) This section provides the official signatures for the report

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 June 30, 2023 OR ☐ 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 ...

Xos, Inc. (NASDAQ:XOS) Q2 2023 Earnings Conference Call August 10, 2023 4:30 PM ET Company Participants Christen Romero - General Counsel Dakota Semler - CEO Giordano Sordoni - COO Liana Pogosyan - Acting CFO Conference Call Participants Donovan Schafer - Northland Capital Mike Shlisky - D.A. Davidson. Jerry Revich - Goldman Sachs Sherif El-Sabbahy - Bank of America Operator Greetings, and welcome to Xos. Inc.'s Second Quarter 2023 Earnings Call. At this time, all participants’ lines are in a listen-only mo ...