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 ...

[Part I - Financial Information](index=7&type=section&id=Part%20I%20-%20Financial%20Information) [Item 1. Financial Statements (Unaudited)](index=7&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Presents the company's unaudited condensed consolidated financial statements for the first quarter of 2023 [Condensed Consolidated Balance Sheets](index=11&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to $162.2 million as of March 31, 2023, reflecting a decline in stockholders' equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $36,489 | $35,631 | | Marketable debt securities | $27,528 | $50,648 | | Inventories | $57,007 | $57,540 | | **Total Assets** | **$162,215** | **$189,936** | | Convertible debt, current & non-current | $39,517 | $46,719 | | **Total Liabilities** | **$72,464** | **$77,861** | | **Total Stockholders' Equity** | **$89,751** | **$112,075** | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Revenues decreased to $4.7 million in Q1 2023, though the net loss remained stable at $24.3 million Q1 2023 Statement of Operations Summary (in thousands, except per share amounts) | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Revenues | $4,697 | $7,031 | | Cost of goods sold | $5,574 | $13,030 | | **Gross loss** | **($877)** | **($5,999)** | | Total operating expenses | $19,152 | $20,299 | | **Loss from operations** | **($20,029)** | **($26,298)** | | **Net loss** | **($24,331)** | **($24,030)** | | Net loss per share (Basic & Diluted) | ($0.14) | ($0.15) | [Condensed Consolidated Statements of Cash Flows](index=14&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities improved to $15.3 million, with a net cash decrease of $2.2 million Q1 2023 Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($15,326) | ($31,304) | | Net cash provided by investing activities | $22,812 | $27,153 | | Net cash used in financing activities | ($9,672) | ($181) | | **Net decrease in cash** | **($2,186)** | **($4,332)** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=16&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Details the company's accounting policies, financial statement items, and key business risks and liquidity - Xos is a fleet electrification solutions provider for Class 5-8 commercial vehicles, offering vehicles, charging infrastructure (Xos Energy Solutions™), and fleet management software (Xosphere™)[35](index=35&type=chunk) - The company faces risks from capital market volatility, inflation, interest rate increases, and supply chain disruptions but believes existing cash resources of **$64.0 million** are sufficient for the next 12 months[37](index=37&type=chunk)[44](index=44&type=chunk)[45](index=45&type=chunk) Disaggregated Revenues (in thousands) | Revenue Source | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Stepvans & vehicle incentives | $4,262 | $6,863 | | Powertrains | $5 | $14 | | Fleet-as-a-Service | $166 | $95 | | Ancillary revenue | $264 | $59 | | **Total revenues** | **$4,697** | **$7,031** | - The company has convertible debentures with Yorkville (**$24.0M principal outstanding**) and a convertible promissory note with Aljomaih (**$20.0M principal outstanding**) as of March 31, 2023[92](index=92&type=chunk)[101](index=101&type=chunk) - On December 28, 2022, the company received a **deficiency letter from Nasdaq** for its stock price falling below the $1.00 minimum bid price requirement[111](index=111&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=38&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Discusses a 33% year-over-year revenue decrease, improved gross loss, and sufficient liquidity for the next 12 months [Results of Operations](index=43&type=section&id=Results%20of%20Operations) Q1 2023 revenue fell 33% to $4.7 million due to lower unit sales, but gross loss improved significantly Comparison of Operations for the Three Months Ended March 31 (in thousands) | Metric | 2023 | 2022 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenue | $4,697 | $7,031 | ($2,334) | (33%) | | Gross loss | ($877) | ($5,999) | $5,122 | (85%) | | Loss from operations | ($20,029) | ($26,298) | $6,269 | (24%) | | Net Loss | ($24,331) | ($24,030) | ($301) | 1% | - The decrease in revenue was primarily due to a decrease in unit sales (**30 stepvans in Q1 2023 vs. 56 in Q1 2022**), partially offset by a higher average selling price[207](index=207&type=chunk) - The significant decrease in cost of goods sold was attributed to lower product revenue, a **$1.5 million decrease in inventory reserves**, and a **$1.3 million decrease in unfavorable physical inventory count adjustments**[208](index=208&type=chunk) [Liquidity and Capital Resources](index=44&type=section&id=Liquidity%20and%20Capital%20Resources) The company holds $64.0 million in liquid assets, which management deems sufficient for the next 12 months - Principal sources of liquidity as of March 31, 2023, were cash and marketable securities aggregating to **$64.0 million**[219](index=219&type=chunk) - Management believes existing cash resources are **sufficient to support planned operations for the next 12 months**[220](index=220&type=chunk) - The company plans to seek stockholder approval to issue shares exceeding Nasdaq limits under its SEPA and convertible debt agreements, which is necessary to fully access these capital sources[224](index=224&type=chunk) Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($15,326) | ($31,304) | | Net cash provided by investing activities | $22,812 | $27,153 | | Net cash used in financing activities | ($9,672) | ($181) | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=48&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is primarily exposed to interest rate risk on its investment portfolio and broader inflation risk - The company's primary market risks are from changes in **interest rates and inflation**[243](index=243&type=chunk) Interest Rate Sensitivity on Investment Portfolio (as of March 31, 2023) | Change in Interest Rate | Approximate Change in Fair Value | | :--- | :--- | | 1% Increase | ($65,000) | | 1% Decrease | $65,000 | - Inflation increases the cost of goods and services, and an inability to offset these higher costs could harm the business's financial condition and results of operations[246](index=246&type=chunk) [Item 4. Controls and Procedures](index=48&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls were deemed ineffective due to a material weakness in internal controls over inventory management - The Principal Executive Officer and Principal Financial Officer concluded that **disclosure controls and procedures were not effective** as of March 31, 2023[248](index=248&type=chunk)[249](index=249&type=chunk) - A **material weakness in internal controls** related to the ineffective operation of controls over inventory management has been identified[253](index=253&type=chunk) - Remediation efforts are underway, including adding internal controls, implementing new software tools, and partnering with external consultants, with the company expecting to remediate the weakness during the year ended December 31, 2023[255](index=255&type=chunk) [Part II - Other Information](index=51&type=section&id=Part%20II%20-%20Other%20Information) [Item 1. Legal Proceedings](index=51&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any material legal proceedings - As of the reporting date, the company is **not involved in any material legal proceedings**[258](index=258&type=chunk) [Item 1A. Risk Factors](index=51&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors have occurred since the 2022 Annual Report - **No material changes to risk factors** have occurred since the filing of the 2022 Form 10-K[259](index=259&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=51&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period - None[260](index=260&type=chunk) [Item 3. Defaults Upon Senior Securities](index=51&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities during the period - None[261](index=261&type=chunk) [Item 4. Mine Safety Disclosures](index=51&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[262](index=262&type=chunk) [Item 5. Other Information](index=51&type=section&id=Item%205.%20Other%20Information) The company reported no other information for the period - None[263](index=263&type=chunk) [Item 6. Exhibits](index=51&type=section&id=Item%206.%20Exhibits) Lists the exhibits filed with the Form 10-Q, including certifications and XBRL data - Exhibits filed include corporate governance documents, officer certifications (Rule 13a-14(a) and 13a-14(b)), and XBRL interactive data files[265](index=265&type=chunk)

Xos, Inc. (NASDAQ:XOS) Q1 2023 Earnings Conference Call May 10, 2023 4:30 PM ET Company Participants Christen Romero - General Counsel Dakota Semler - CEO Giordano Sordoni - COO Kingsley Afemikhe - CFO Conference Call Participants Donovan Schafer - Northland Capital Markets Mike Shlisky - D.A. Davidson Sherif El-Sabbahy - Bank of America Operator Greetings, and welcome to Xos Inc.'s First Quarter 2023 Earnings Call. [Operator Instructions] Please note that this conference is being recorded. At this time, I ...

PART I [Item 1. Business](index=7&type=section&id=Item%201.%20Business) Xos, Inc. electrifies commercial fleets with Class 5-8 battery-electric vehicles, charging, and fleet management software - Xos is a leading fleet electrification solutions provider focused on decarbonizing commercial transportation by designing and manufacturing Class 5-8 battery-electric commercial vehicles for last-mile, back-to-base routes[26](index=26&type=chunk) - The company utilizes a flexible manufacturing approach, leveraging partnerships for vehicle assembly, with its current facility in Byrdstown, Tennessee, designed to produce up to **5,000 vehicles per year**[53](index=53&type=chunk)[56](index=56&type=chunk)[57](index=57&type=chunk) - Government programs and incentives, such as federal tax credits up to **$40,000 per vehicle** under the Inflation Reduction Act and state incentives like California's HVIP, are significant drivers for electric vehicle adoption[61](index=61&type=chunk)[63](index=63&type=chunk) Total Full-time Employees and Revenue Concentration (as of Dec 31, 2022) | Metric | Value | | :----- | :---- | | Total Full-time Employees | 272 | | Revenue Concentration (one customer) | 42% | [Overview](index=8&type=section&id=Overview) Xos provides fleet electrification solutions, manufacturing Class 5-8 battery-electric commercial vehicles for last-mile routes - Xos is a leading fleet electrification solutions provider focused on decarbonizing commercial transportation by designing and manufacturing Class 5-8 battery-electric commercial vehicles for last-mile, back-to-base routes[26](index=26&type=chunk) - The company offers integrated charging infrastructure products and services, along with proprietary fleet management software, to provide cost-efficient vehicle ownership for commercial fleet operators[26](index=26&type=chunk) [Our Products & Services](index=9&type=section&id=Our%20Products%20%26%20Services) Xos offers proprietary vehicle platforms, battery systems, powertrain solutions, charging infrastructure, and fleet management software - Xos manufactures Class 5-6 Medium Duty Rolling Chassis (MD X-Platform) for various customer use cases like stepvans and armored trucks, and launched a Class 7-8 Heavy Duty Chassis (HD X-Platform) in May 2022 for regional haul fleets[27](index=27&type=chunk)[28](index=28&type=chunk)[29](index=29&type=chunk) - The 'Powered by Xos™' business provides mix-use powertrain solutions for off-highway and industrial equipment, including high-voltage batteries, power distribution, and electric traction motors[31](index=31&type=chunk) - Xos Energy Solutions™ offers comprehensive charging infrastructure, including DC Fast Chargers and the mobile Xos Hub™, along with turnkey services to accelerate electric fleet transition[32](index=32&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk) - Xosphere™ is a fleet management platform that integrates vehicle, maintenance, charging, and service data to minimize electric fleet Total Cost of Ownership (TCO) through real-time monitoring, cost reduction, and remote diagnostics[33](index=33&type=chunk) - The 'Fleet-as-a-Service' offering bundles charging solutions, vehicle telematics, service, risk mitigation, and financing to facilitate the transition to and operation of battery-electric fleets, aiming to increase lifetime revenue per vehicle[35](index=35&type=chunk) [Technology Supporting Our Products & Services](index=11&type=section&id=Technology%20Supporting%20Our%20Products%20%26%20Services) Xos leverages proprietary X-Pack battery systems, X-Platform chassis, and vehicle control software for modular, customizable, and integrated fleet solutions - Xos' proprietary X-Pack battery systems and X-Platform chassis are modular, allowing fleet operators to customize vehicle bodies and battery range (up to **270 miles**) for specific commercial applications[36](index=36&type=chunk)[37](index=37&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk) - The company develops on-board vehicle control software that integrates proprietary powertrain and body controls, instrument cluster, infotainment, and Xosphere™ software for enhanced vehicle operation and safety[40](index=40&type=chunk)[47](index=47&type=chunk) - Xos Energy Solutions™ provides a range of DC Fast Chargers (**30kW to 300kW**) and the mobile Xos Hub™ for flexible, on-demand charging, all monitorable via the Xosphere™ platform[41](index=41&type=chunk)[42](index=42&type=chunk) [Sales & Marketing](index=12&type=section&id=Sales%20%26%20Marketing) Xos employs a dual sales strategy through direct representatives and dealer partnerships, supported by a dedicated sales force for charging infrastructure - Xos employs a dual sales strategy: direct sales representatives educate fleets on electric truck benefits, and partnerships with distributors and dealers provide established relationships and service support[43](index=43&type=chunk)[44](index=44&type=chunk) - A dedicated sales force with expertise in charging and infrastructure installations assists customers in transitioning to electric vehicles, including project management, permitting, and securing funding[45](index=45&type=chunk) - The 'Powered by Xos' division actively seeks opportunities to supply OEMs with powertrain kits for industrial and off-highway equipment electrification[46](index=46&type=chunk) [Customers](index=12&type=section&id=Customers) Xos serves large national accounts and small-to-medium fleets, with one customer accounting for **42% of 2022 revenues** - Xos serves large-scale national accounts and small-to-medium-sized fleets, including independent service providers for last-mile delivery, and partners with distributors like Thompson Truck Centers[48](index=48&type=chunk) 2022 Revenue Concentration | Metric | Value | | :----- | :---- | | One customer accounted for | 42% of total revenues | [Competition](index=13&type=section&id=Competition) Xos faces competition from traditional diesel OEMs transitioning to EVs and disruptive EV manufacturers, with key factors including TCO, emissions, and product performance - Xos faces competition from traditional diesel vehicle OEMs (e.g., Freightliner, Ford) transitioning to zero-tailpipe emissions solutions, and disruptive EV manufacturers (e.g., Nikola, Rivian, BYD Motors)[49](index=49&type=chunk)[50](index=50&type=chunk) - Key competitive factors in the commercial vehicle market include total cost of ownership, emissions profile, effectiveness in target applications, ease of integration, product performance, quality, service, technological innovation, and fleet management[51](index=51&type=chunk)[54](index=54&type=chunk) [Service & Maintenance](index=13&type=section&id=Service%20%26%20Maintenance) Xos is expanding its service network through field technicians, third-party partners, and full-line dealer partnerships for comprehensive after-sales support - Xos is expanding its service network through Xos field service technicians, third-party service partners (e.g., W.W. Williams, Hwy 7 & 50), and full-line dealer partnerships (e.g., Foley Equipment, Ventura Truck Sales) to provide comprehensive after-sales support[52](index=52&type=chunk) [Manufacturing & Supply Chain](index=13&type=section&id=Manufacturing%20%26%20Supply%20Chain) Xos employs a flexible manufacturing approach leveraging partnerships for vehicle assembly and battery production, managing a supply chain with key single-source suppliers - Xos employs a 'flexible manufacturing approach' that leverages smaller, adaptable existing facilities and labor through strategic partnerships, coordinating supply chain, quality control, and manufacturing engineering[53](index=53&type=chunk) - The current flex facility in Byrdstown, Tennessee, operated with Fitzgerald Manufacturing Partners, LLC, is designed to manufacture up to **5,000 vehicles per year**, complemented by a battery production line in Los Angeles[57](index=57&type=chunk) - Key suppliers include CATL (battery packs), BEL Power (power electronics), and Dana (motors & inverters), with efforts to qualify multiple suppliers and maintain safety inventory to mitigate production risks from single-source components[58](index=58&type=chunk) [Governmental Programs, Incentives & Regulations](index=15&type=section&id=Governmental%20Programs%2C%20Incentives%20%26%20Regulations) Government programs like the IRA offer significant tax credits for EV purchases, while state incentives and regulatory compliance (EPA, CARB) also influence adoption and sales - The Inflation Reduction Act of 2022 (IRA) offers qualifying Xos customers up to **$40,000 per vehicle** in federal tax credits for electric vehicle purchases through 2032[61](index=61&type=chunk) - State programs like California's HVIP provide point-of-sale vouchers for zero-emission medium- and heavy-duty trucks and buses, with varying amounts based on vehicle type and location[63](index=63&type=chunk) - Xos vehicles, despite having zero tailpipe emissions, require EPA Certificates of Conformity and California Air Resources Board (CARB) Executive Orders for sales in respective states, with CARB approval expected in H2 2023[70](index=70&type=chunk)[71](index=71&type=chunk) [Seasonality](index=18&type=section&id=Seasonality) The automotive industry typically sees higher revenue in spring and summer, with Xos expecting lower winter sales and a peak season for parcel and delivery customers - The automotive industry typically sees higher revenue in spring and summer. Xos expects lower commercial vehicle sales in winter, with a 'peak season' for parcel and delivery customers between Thanksgiving and Christmas leading to preparatory fleet expansions[77](index=77&type=chunk) - Deliveries of the 2023 Stepvan are expected to be weighted towards the second half of fiscal 2022[77](index=77&type=chunk) [Intellectual Property](index=18&type=section&id=Intellectual%20Property) Xos protects its intellectual property through patents, copyrights, trade secrets, trademarks, and non-disclosure agreements, with five awarded U.S. patents - Xos protects its intellectual property through patents, copyrights, trade secrets, trademarks, and non-disclosure agreements, with **five awarded U.S. patents** and **26 pending or approved U.S. trademark applications** as of December 31, 2022[78](index=78&type=chunk)[79](index=79&type=chunk) [Facilities](index=19&type=section&id=Facilities) Xos's headquarters in Los Angeles serves for design and engineering, complemented by a flex manufacturing facility in Byrdstown, Tennessee - Xos' headquarters in Los Angeles, California, is an **85,142 sq ft facility** for design, engineering, and development, under a lease expiring January 31, 2027[80](index=80&type=chunk) - The company also operates a flex manufacturing facility in Byrdstown, Tennessee, utilizing Fitzgerald Manufacturing Partners, LLC's facilities[81](index=81&type=chunk) [Human Capital](index=19&type=section&id=Human%20Capital) Xos focuses on a 'People Strategy' encompassing leadership, culture, and talent, committed to Diversity, Equity, and Inclusion, with **272 full-time employees** - Xos focuses on a 'People Strategy' encompassing leadership, culture, and talent, with an 'Employee Experience Team' and 'Sustainability and Innovation Committee' overseeing human capital policies[82](index=82&type=chunk) - The company is committed to Diversity, Equity, and Inclusion, administering Employee Resource Groups and providing inclusive leadership training[83](index=83&type=chunk)[84](index=84&type=chunk) Employee Count (as of Dec 31, 2022) | Metric | Count | | :----- | :---- | | Full-time employees | 272 | | Contractors | 25 | | Interns | 3 | | Unionized employees | None | [Corporate Information](index=20&type=section&id=Corporate%20Information) Xos, Inc. became a publicly traded entity on Nasdaq on August 20, 2021, following its Business Combination - Xos, Inc. was initially incorporated as NextGen Acquisition Corporation in July 2020 and became the publicly traded entity listed on Nasdaq Global Market following the Business Combination on August 20, 2021[91](index=91&type=chunk) [Available Information (Website)](index=20&type=section&id=Available%20Information%20(Website)) Xos's SEC filings are available free of charge on its Investor Relations website, used for disclosing material information - The company's SEC filings (10-K, 10-Q, 8-K) are available free of charge on its Investor Relations website (https://investors.xostrucks.com/), which is used for disclosing material information[92](index=92&type=chunk) [Item 1A. Risk Factors](index=20&type=section&id=Item%201A.%20Risk%20Factors) Xos faces significant risks from its limited operating history, ongoing losses, substantial debt, supply chain dependencies, and internal control weaknesses, alongside market and regulatory challenges - Xos has a limited operating history, a history of losses, and expects to incur significant expenses and continuing losses for the foreseeable future, requiring substantial capital[97](index=97&type=chunk)[98](index=98&type=chunk)[159](index=159&type=chunk)[160](index=160&type=chunk)[162](index=162&type=chunk) - The company's novel offerings (Fleet-as-a-Service, Xos Energy Services™, Xosphere™) are untested long-term, and failure to commercialize them successfully could materially harm operating results and reputation[99](index=99&type=chunk)[100](index=100&type=chunk) - Xos relies heavily on third-party contract manufacturing partners and single/limited-source suppliers for critical components like lithium-ion battery cells and semiconductors, exposing it to risks of delays, disruptions, and cost increases[108](index=108&type=chunk)[112](index=112&type=chunk)[117](index=117&type=chunk) - Xos recently restated financial statements for prior periods due to inventory accounting errors and identified a material weakness in internal control over financial reporting, which may affect investor confidence and ability to raise capital[176](index=176&type=chunk)[177](index=177&type=chunk)[178](index=178&type=chunk)[180](index=180&type=chunk) - The company has substantial debt (**$56.2 million** as of Dec 31, 2022), which could impair financial flexibility and access to capital, and servicing this debt requires significant cash flow[187](index=187&type=chunk)[188](index=188&type=chunk)[189](index=189&type=chunk)[190](index=190&type=chunk) - The price of Xos Common Stock has been volatile and currently does not meet Nasdaq's minimum bid price requirement, risking delisting[242](index=242&type=chunk)[244](index=244&type=chunk)[247](index=247&type=chunk) [Summary of Risks](index=20&type=section&id=Summary%20of%20Risks) Key risks include limited operating history, unproven novel offerings, history of losses, significant capital needs, substantial debt, and potential delays in product deployment - Key risks include limited operating history, unproven novel offerings (Fleet-as-a-Service), history of losses, significant capital needs, substantial debt, and potential delays in product deployment[97](index=97&type=chunk)[98](index=98&type=chunk) - Other risks involve dependence on suppliers, challenges in building brand, managing growth, battery safety, supply chain disruptions (e.g., semiconductors), and potential product recalls[98](index=98&type=chunk) - Financial statement restatements and material weaknesses in internal controls are also highlighted as significant risks[98](index=98&type=chunk) [Risks Related to our Business and Industry](index=22&type=section&id=Risks%20Related%20to%20our%20Business%20and%20Industry) Xos faces risks from its limited operating history, unproven novel offerings, intense competition, and dependence on the evolving adoption of electric vehicles - Xos's limited operating history makes business evaluation difficult and increases investment risk, with no assurance of retaining existing or securing future customer business[98](index=98&type=chunk) - The company's novel offerings like Fleet-as-a-Service, Xos Energy Services™, and Xosphere™ are untested at scale, posing substantial risk due to significant expenditures before revenue generation[99](index=99&type=chunk)[100](index=100&type=chunk) - Xos faces intense competition from both traditional and new electric commercial vehicle OEMs, many of whom have greater resources and brand recognition[146](index=146&type=chunk) - Growth is highly dependent on the adoption of electric vehicles in the last-mile and return-to-base segments, which is an evolving market influenced by technology, price, regulations, and charging infrastructure[148](index=148&type=chunk)[149](index=149&type=chunk) [Risks Relating to the Design, Supply and Manufacturing of our Products](index=23&type=section&id=Risks%20Relating%20to%20the%20Design%2C%20Supply%20and%20Manufacturing%20of%20our%20Products) Xos faces significant delays in product design, manufacturing, and deployment due to reliance on third-party suppliers, untested flex manufacturing, and supply chain disruptions - Xos has experienced and may continue to experience significant delays in the design, manufacturing, and deployment of products, particularly due to battery production backlog and reliance on third-party contract manufacturers and suppliers[101](index=101&type=chunk) - The company's flex manufacturing approach is novel and untested at large scale, requiring significant capital expenditures and facing risks related to equipment installation, durability, compliance, and supply chain disruptions[104](index=104&type=chunk)[105](index=105&type=chunk)[107](index=107&type=chunk) - Dependence on single or limited-source suppliers for critical components like lithium-ion battery cells and semiconductors exposes Xos to supply disruptions, cost increases, and potential adverse impacts on business[112](index=112&type=chunk)[113](index=113&type=chunk)[117](index=117&type=chunk) - Delays in providing sufficient charging solutions have led to delayed vehicle deliveries, as customer demand and willingness to take delivery are contingent on adequate charging infrastructure[124](index=124&type=chunk) [Risks Related to our Financial Condition](index=33&type=section&id=Risks%20Related%20to%20our%20Financial%20Condition) Xos faces financial risks from significant capital requirements, uncertain cash flow, dependence on government incentives, recent financial restatements, and material weaknesses in internal controls Operating Loss (2022) | Metric | Amount (Millions USD) | | :----- | :-------------------- | | Operating Loss (Year Ended Dec 31, 2022) | (111.3) | Cash Flow from Operating Activities (2022) | Metric | Amount (Millions USD) | | :----- | :-------------------- | | Net Cash Used in Operating Activities (Year Ended Dec 31, 2022) | (128.0) | - Xos requires significant capital to develop and grow its business, with future capital needs potentially requiring additional equity or debt securities that could dilute stockholders or restrict operations[162](index=162&type=chunk)[165](index=165&type=chunk)[168](index=168&type=chunk) - The unavailability, reduction, or elimination of government and economic incentives (e.g., Inflation Reduction Act credits) could materially and adversely affect Xos's business and financial position[170](index=170&type=chunk) - Xos recently restated financial statements for several prior periods due to inventory accounting errors, incurring unanticipated costs and potentially eroding investor confidence and stock price[176](index=176&type=chunk)[177](index=177&type=chunk) - A material weakness in internal control over financial reporting related to inventory management was identified, which could lead to failure in meeting reporting obligations or material misstatements[178](index=178&type=chunk)[180](index=180&type=chunk) Total Indebtedness (as of Dec 31, 2022) | Metric | Amount (Millions USD) | | :----- | :-------------------- | | Total Indebtedness | 56.2 | [Legal and Regulatory Risks](index=38&type=section&id=Legal%20and%20Regulatory%20Risks) Xos faces legal and regulatory risks from direct sales limitations, evolving environmental laws, data security breaches, intellectual property claims, and changes in tax laws - Xos faces regulatory limitations on direct vehicle sales to consumers, as state laws often require dealer licenses and may prohibit manufacturers from acting as dealers, potentially impacting sales and service[195](index=195&type=chunk)[196](index=196&type=chunk)[198](index=198&type=chunk) - The company is subject to substantial and evolving foreign, federal, state, and local environmental laws and regulations, with compliance costs and potential liabilities for non-compliance[199](index=199&type=chunk)[223](index=223&type=chunk) - Compromises to information technology systems or data could harm Xos's reputation, expose it to liability, litigation, regulatory investigations, and disrupt business operations, with remote work increasing these risks[203](index=203&type=chunk)[204](index=204&type=chunk)[205](index=205&type=chunk)[207](index=207&type=chunk) - Xos may need to defend against intellectual property infringement or misappropriation claims, which are costly and could limit its ability to commercialize products[231](index=231&type=chunk)[232](index=232&type=chunk) - Changes in tax laws, such as the TCJA's requirement to capitalize R&D expenses, could adversely affect Xos's business operations and financial performance by increasing future tax obligations[214](index=214&type=chunk)[215](index=215&type=chunk) [Risks Related to Operating as a Public Company and Ownership of Our Securities](index=46&type=section&id=Risks%20Related%20to%20Operating%20as%20a%20Public%20Company%20and%20Ownership%20of%20Our%20Securities) Xos faces risks from its Common Stock bid price being below Nasdaq's minimum, stock price volatility, potential future resales of shares, and no anticipated dividend payments - Xos's Common Stock bid price has been below **$1.00** for **30 consecutive business days**, putting it at risk of delisting from the Nasdaq Global Market if compliance is not regained by June 26, 2023[244](index=244&type=chunk) - The price of Xos Common Stock and Warrants has been volatile and may fluctuate due to industry changes, competition, operating results, analyst reports, and macroeconomic conditions[247](index=247&type=chunk) - Future resales of Common Stock, especially after lock-up agreements expire (approximately **48% of outstanding shares** as of March 28, 2023), could significantly depress the market price[249](index=249&type=chunk)[250](index=250&type=chunk)[251](index=251&type=chunk) - The company does not expect to declare dividends in the foreseeable future, intending to retain earnings for business development and expansion[248](index=248&type=chunk) [General Risk Factors](index=49&type=section&id=General%20Risk%20Factors) Xos is exposed to general risks including health epidemics, macroeconomic conditions (inflation, supply chain), and anti-takeover provisions that could limit stockholder influence - Xos has been and may continue to be adversely affected by health epidemics and pandemics, including COVID-19, which can cause volatility in the global economy, supply chain disruptions, and decreased demand for electric vehicles[261](index=261&type=chunk)[263](index=263&type=chunk)[264](index=264&type=chunk) - Macroeconomic conditions, such as rising inflation, uncertain credit markets, bank failures, supply chain disruptions, and geopolitical events (e.g., Russia-Ukraine war), make forecasting difficult and could reduce customer spending and strain suppliers[267](index=267&type=chunk)[269](index=269&type=chunk) - Anti-takeover provisions in Xos's charter documents and Delaware law could make company acquisition more difficult and limit stockholders' ability to influence corporate decisions or replace management[273](index=273&type=chunk)[274](index=274&type=chunk)[275](index=275&type=chunk) [Item 1B. Unresolved Staff Comments](index=52&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments to report for the fiscal year ended December 31, 2022 - No unresolved staff comments were reported[276](index=276&type=chunk) [Item 2. Properties](index=52&type=section&id=Item%202.%20Properties) Xos's corporate headquarters in Los Angeles and three leased properties in Byrdstown, Tennessee, are used for design, engineering, manufacturing, and assembly - Xos's corporate headquarters is an **85,142 square foot** leased facility in Los Angeles, California, expiring in 2027, dedicated to product design, engineering, and development[277](index=277&type=chunk) - The company leases three properties in Byrdstown, Tennessee, with leases expiring in 2026 and 2027, for raw material storage, manufacturing, and product assembly[277](index=277&type=chunk) - Existing facilities are considered well-maintained and adequate for current needs, with plans to obtain additional space for continued expansion[278](index=278&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 expected to have a material adverse effect on its business or financial condition - Xos 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[279](index=279&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 - Mine Safety Disclosures are not applicable to the company[280](index=280&type=chunk) PART II [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%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Xos Common Stock and Public Warrants are listed on Nasdaq, with **61 record holders** of Common Stock. The company has never paid cash dividends and issued convertible debentures in 2022 - Xos Common Stock and Public Warrants are listed on Nasdaq under the symbols "XOS" and "XOSWW" respectively[282](index=282&type=chunk) Common Stock and Public Warrants Holders (as of March 23, 2023) | Security | Holders of Record | | :------- | :---------------- | | Common Stock | 61 | | Public Warrants | 21 | | Public Warrants Outstanding | 18,833,298 | - Xos has never declared or paid cash dividends and plans to retain all future earnings for business operations, with debt instruments potentially restricting dividend payments[284](index=284&type=chunk) - In 2022, Xos issued **$35.0 million** in convertible debentures to Yorkville and **21,000 restricted shares** to FON Consulting, LLC, relying on the Section 4(a)(2) exemption from registration[285](index=285&type=chunk)[287](index=287&type=chunk)[288](index=288&type=chunk) - No equity securities were purchased by the issuer or affiliated purchasers[289](index=289&type=chunk) [Item 6. Reserved](index=53&type=section&id=Item%206.%20Reserved) This item is reserved and contains no information - Item 6 is reserved[290](index=290&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=54&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes Xos's financial condition and results for 2022 and 2021, highlighting revenue growth, gross losses, operating expenses, and liquidity strategies amid market challenges - Xos is a fleet electrification solutions provider designing and manufacturing Class 5-8 battery-electric commercial vehicles, offering charging infrastructure and fleet management software[292](index=292&type=chunk) Revenue Breakdown (Years Ended December 31) | Revenue Source | 2022 (Millions USD) | % of Total 2022 Revenue | 2021 (Millions USD) | % of Total 2021 Revenue | | :--------------- | :------------------ | :---------------------- | :------------------ | :---------------------- | | Vehicle & Powertrain Sales | 34.1 | 94% | 4.9 | 97% | | Fleet-as-a-Service | 0.6 | 2% | — | 0% | | Ancillary Revenue | 1.7 | 4% | 0.1 | 3% | | **Total Revenue** | **36.4** | **100%** | **5.0** | **100%** | - Total revenue increased by **$31.3 million** (from **$5.0 million** in 2021 to **$36.4 million** in 2022), driven by increased deliveries of **275 units** (257 stepvans, 18 powertrains) in 2022, compared to **44 units** in 2021[332](index=332&type=chunk) Key Financial Highlights (Years Ended December 31) | Metric | 2022 (Millions USD) | 2021 (Millions USD) | Change (Millions USD) | % Change | | :------------------------------------ | :------------------ | :------------------ | :-------------------- | :------- | | Revenues | 36.376 | 5.048 | 31.328 | nm | | Cost of goods sold | 66.405 | 7.410 | 58.995 | nm | | Gross loss | (30.029) | (2.362) | (27.667) | nm | | General and administrative expenses | 41.093 | 27.197 | 13.896 | 51% | | Research and development expenses | 30.679 | 20.077 | 10.602 | 53% | | Sales and marketing expenses | 9.547 | 3.519 | 6.028 | 171% | | Loss from operations | (111.348) | (53.155) | (58.193) | 109% | | Net (loss) income | (73.325) | 23.401 | (96.726) | nm | - Net cash used in operating activities was **$128.0 million** in 2022, primarily due to a cash-basis net loss of **$96.3 million** and **$31.7 million** in working capital movements for inventory build-up[354](index=354&type=chunk) - As of December 31, 2022, Xos had **$86.3 million** in cash, cash equivalents, and marketable debt securities, believing these resources are sufficient for planned operations for the next 12 months[346](index=346&type=chunk)[347](index=347&type=chunk) [Overview](index=54&type=section&id=Overview) Xos provides fleet electrification solutions, designing and manufacturing Class 5-8 battery-electric commercial vehicles, charging infrastructure, and fleet management software - Xos is a fleet electrification solutions provider, designing and manufacturing Class 5-8 battery-electric commercial vehicles for last-mile routes, and offering charging infrastructure and fleet management software[292](index=292&type=chunk) - The X-Platform and X-Pack provide modular features for customization, aiming for a lower total cost of ownership compared to traditional diesel fleets[294](index=294&type=chunk)[298](index=298&type=chunk) - In 2022, Xos sold **257 vehicles** and **18 powertrains**, totaling **346 combined units** since inception, with current year sales below anticipation due to battery production delays[300](index=300&type=chunk) - The company's Flex manufacturing strategy, leveraging partners' facilities, aims for capital-efficient scaling, with the Byrdstown, Tennessee facility designed for **5,000 vehicles annually**[301](index=301&type=chunk) [Business Combination and Public Company Costs](index=55&type=section&id=Business%20Combination%20and%20Public%20Company%20Costs) The Business Combination on August 20, 2021, made Xos a publicly traded entity, incurring increased annual expenses for personnel, insurance, and professional services - The Business Combination was consummated on August 20, 2021, with Legacy Xos merging into a NextGen subsidiary, and NextGen changing its name to Xos, Inc., becoming a publicly traded entity on Nasdaq[305](index=305&type=chunk) - Becoming a public company has required Xos to hire additional personnel and implement new procedures, incurring increased annual expenses for D&O insurance, director fees, and accounting/legal resources[306](index=306&type=chunk) [Key Factors Affecting Operating Results](index=56&type=section&id=Key%20Factors%20Affecting%20Operating%20Results) Future revenue depends on successful product commercialization, customer demand, achieving positive gross margins, and effective supply chain management amid global economic disruptions - Future revenue depends on successful commercialization of products and Fleet-as-a-Service, requiring substantial capital for development and operations[308](index=308&type=chunk) - Customer demand and the ability to achieve positive gross margins by mid-2023 through strategic price increases, operational optimization, and cost reduction are critical performance indicators[309](index=309&type=chunk) - Supply chain management is crucial, with global economic conditions and the COVID-19 pandemic causing disruptions in sourcing critical items like semiconductor chips, battery cells, and vehicle bodies[310](index=310&type=chunk)[311](index=311&type=chunk) - The COVID-19 pandemic's impact on business, operating results, and liquidity remains uncertain, though Xos continued full operations in 2022 with enhanced health and safety practices[314](index=314&type=chunk) [Basis of Presentation](index=57&type=section&id=Basis%20of%20Presentation) The consolidated financial statements include Xos, Inc. and its wholly-owned subsidiaries, operating as one segment exclusively within North America - The consolidated financial statements include Xos, Inc. and its wholly-owned subsidiaries, with all significant intercompany accounts and transactions eliminated[315](index=315&type=chunk) - Xos operates as one segment, with activities conducted exclusively within North America as an early-stage growth company with minimal commercial operations[316](index=316&type=chunk) [Components of Results of Operations](index=57&type=section&id=Components%20of%20Results%20of%20Operations) This section details revenue sources, cost of goods sold, and operating expenses (G&A, R&D, S&M), along with other income/expense items, and their expected trends - Revenues are primarily from 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[316](index=316&type=chunk) - Cost of goods sold includes direct materials, labor, manufacturing overhead, and inventory write-downs, expected to increase with production volume[318](index=318&type=chunk)[319](index=319&type=chunk)[321](index=321&type=chunk) - General and administrative (G&A) expenses consist of personnel, professional services, facilities, and office costs, expected to decrease due to workforce reduction[322](index=322&type=chunk)[323](index=323&type=chunk) - Research and development (R&D) expenses cover design and development of vehicles and battery systems, also expected to decrease due to lower headcount[324](index=324&type=chunk) - Sales and marketing (S&M) expenses include marketing, brand initiatives, travel, and personnel costs, anticipated to decrease due to workforce reduction[325](index=325&type=chunk)[327](index=327&type=chunk) - Other income (expense), net, includes interest income/expense, and changes in fair value of derivative instruments and contingent earn-out shares liability reflect mark-to-market adjustments[328](index=328&type=chunk)[329](index=329&type=chunk)[330](index=330&type=chunk) [Results of Operations](index=59&type=section&id=Results%20of%20Operations) Xos experienced significant revenue growth in 2022, but also incurred substantial gross losses and increased operating expenses, resulting in a net loss of **$73.3 million** Consolidated Statements of Operations (Years Ended December 31) | Metric (in thousands) | 2022 | 2021 | $ Change | % Change | | :------------------------------------ | :----- | :----- | :------- | :------- | | Revenues | $36,376 | $5,048 | $31,328 | nm | | Cost of goods sold | $66,405 | $7,410 | $58,995 | nm | | Gross loss | $(30,029) | $(2,362) | $(27,667) | nm | | General and administrative | $41,093 | $27,197 | $13,896 | 51% | | Research and development | $30,679 | $20,077 | $10,602 | 53% | | Sales and marketing | $9,547 | $3,519 | $6,028 | 171% | | Total operating expenses | $81,319 | $50,793 | $30,526 | 60% | | Loss from operations | $(111,348) | $(53,155) | $(58,193) | 109% | | Other (expense) income, net | $(4,835) | $38 | $(4,873) | nm | | Change in fair value of derivative instruments | $14,184 | $18,498 | $(4,314) | (23)% | | Change in fair value of earn-out shares liability | $28,682 | $72,505 | $(43,823) | (60)% | | Net (loss) income | $(73,325) | $23,401 | $(96,726) | nm | - Revenue growth in 2022 was primarily due to increased deliveries of **275 units** (257 stepvans, 18 powertrains), up from **44 units** in 2021[332](index=332&type=chunk) - Cost of goods sold increased by **$59.0 million**, driven by higher revenues, **$5.7 million** in inventory write-downs, **$7.9 million** in inventory adjustments, and **$45.4 million** in direct materials, labor, and manufacturing overhead[333](index=333&type=chunk) - General and administrative expenses rose by **$13.9 million (51%)** due to increased headcount, insurance costs, and consulting fees for ERP implementation and financial processes[335](index=335&type=chunk) - Research and development expenses increased by **$10.6 million (53%)** mainly due to higher personnel costs in engineering, including stock-based compensation[336](index=336&type=chunk) - Sales and marketing expenses grew by **$6.0 million (171%)** due to increased headcount and public relations/marketing efforts[337](index=337&type=chunk) - Other (expense) income, net, shifted to a **$(4.8) million** expense in 2022, primarily due to increased interest expense on convertible notes and debentures, and asset impairment[338](index=338&type=chunk) - Gain on change in fair value of derivative instruments decreased by **$4.3 million**, mainly reflecting changes in stock price valuation for warrants and convertible debenture derivatives[339](index=339&type=chunk) - Gain on change in fair value of contingent earn-out shares liability decreased by **$43.8 million**, primarily due to changes in stock price valuation[340](index=340&type=chunk) [Liquidity and Capital Resources](index=61&type=section&id=Liquidity%20and%20Capital%20Resources) Xos, an early-stage growth company, requires robust access to capital to fund operations, relying on existing cash, marketable securities, and potential future equity or debt financing - Xos, as an early-stage growth company, continues to incur net losses and cash outflows, requiring robust access to capital through debt, equity, or other financing to fund and scale operations[344](index=344&type=chunk) Liquidity Sources (as of Dec 31, 2022) | Source | Amount (Millions USD) | | :----- | :-------------------- | | Cash and cash equivalents (excluding restricted cash) | 35.631 | | Investments in marketable debt securities, available-for-sale | 50.648 | | **Total** | **86.279** | - The company believes existing cash resources are sufficient for the next **12 months** and plans to meet longer-term needs through operating cash flows, available balances, and advances under the Standby Equity Purchase Agreement (SEPA)[347](index=347&type=chunk) - Xos has a SEPA with Yorkville for up to **$125.0 million** in Common Stock sales, with **$120.7 million** remaining as of December 31, 2022, but subject to limitations due to convertible debentures[348](index=348&type=chunk) - In 2022, Xos issued **$35.0 million** in convertible debentures to Yorkville and a **$20.0 million** convertible promissory note to Aljomaih Automotive Co. for operational liquidity and working capital[349](index=349&type=chunk) - Nasdaq rules impose limitations on Common Stock issuance under SEPA and convertible debt without stockholder approval, which Xos's Board of Directors plans to seek[351](index=351&type=chunk) Cash Flow Summary (Years Ended December 31, in thousands) | Activity | 2022 | 2021 | | :-------------------------------- | :------- | :------- | | Net cash used in operating activities | $(127,960) | $(88,895) | | Net cash provided by (used in) investing activities | $82,710 | $(155,143) | | Net cash provided by financing activities | $64,749 | $252,855 | | Net increase in cash, cash equivalents and restricted cash | $19,499 | $8,817 | [Critical Accounting Policies and Estimates](index=64&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Critical accounting policies involve significant management estimates for revenue recognition, inventory valuation, income taxes, warranty liability, and fair value measurements of financial instruments - Critical accounting policies involve significant management estimates and judgments, particularly in valuing stock-based compensation, convertible notes, SAFE, and derivative liabilities[361](index=361&type=chunk) - Revenue recognition follows ASC 606, recognizing revenue when performance obligations are satisfied, typically upon product delivery and title transfer[364](index=364&type=chunk) - Inventories are valued at the lower of cost or net realizable value using average costing, with write-downs for damage, obsolescence, or price changes[366](index=366&type=chunk)[368](index=368&type=chunk) - Income taxes are accounted for using the asset and liability method, with deferred tax assets and liabilities recognized for temporary differences and a valuation allowance established when realization is uncertain[370](index=370&type=chunk)[371](index=371&type=chunk) - Warranty liability is accrued based on best estimates of projected repair/replacement costs under warranties and recalls, considering actual claims and future claim frequency/costs[373](index=373&type=chunk) - Public Warrants are classified as Level 1 financial instruments, and Private Placement Warrants as Level 2, with fair value changes included in earnings[378](index=378&type=chunk) - Contingent earn-out shares liability is a freestanding financial instrument classified as a Level 3 liability, adjusted to fair value at each reporting date with changes recorded in the income statement[379](index=379&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) Xos is exposed to market risks from interest rate fluctuations, inflation, and foreign currency exchange rates, managing interest rate risk through investment in high-quality debt securities - Xos is exposed to market risks from changes in interest rates, inflation, and foreign currency exchange rates[385](index=385&type=chunk) - The company manages interest rate risk by investing in a portfolio of high-quality, investment-grade fixed and variable rate debt securities (e.g., U.S. treasuries, corporate debt), with a primary objective of principal safety and future liquidity[386](index=386&type=chunk) Impact of Interest Rate Changes on Fair Value of Investments (as of Dec 31, 2022, in thousands) | Change in Interest Rate | Approximate Change in Fair Value of Investments | | :---------------------- | :-------------------------------------------- | | 2% Decrease | $318 | | 1% Decrease | $159 | | 1% Increase | $(159) | | 2% Increase | $(318) | - There was no material foreign currency risk for the years ended December 31, 2022 and 2021, as all investments are denominated in U.S. Dollars[388](index=388&type=chunk) - Inflation increases the cost of goods and services; if significant inflationary pressures cannot be offset by price increases or alternative solutions, it could harm Xos's business and financial results[389](index=389&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=68&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents Xos's audited consolidated financial statements for 2022 and 2021, prepared under U.S. GAAP, with detailed notes on accounting policies and financial instruments - The consolidated financial statements for Xos, Inc. and subsidiaries as of December 31, 2022, and for the years ended December 31, 2022 and 2021, are presented in conformity with U.S. GAAP[394](index=394&type=chunk)[400](index=400&type=chunk)[429](index=429&type=chunk) - Grant Thornton LLP served as the company's auditor for 2022, and WithumSmith+Brown, PC served as the predecessor auditor for 2021[399](index=399&type=chunk)[404](index=404&type=chunk) - The company changed its method of accounting for leases on January 1, 2022, due to the adoption of ASC 842, Leases[395](index=395&type=chunk)[495](index=495&type=chunk) Consolidated Balance Sheet Highlights (as of Dec 31, in thousands) | Asset/Liability | 2022 | 2021 | | :------------------------------------ | :----- | :----- | | Cash and cash equivalents | $35,631 | $16,142 | | Total current assets | $163,201 | $165,958 | | Total assets | $189,936 | $228,706 | | Total current liabilities | $45,766 | $15,983 | | Total liabilities | $77,861 | $54,313 | | Total stockholders' equity | $112,075 | $174,393 | Consolidated Statements of Operations Highlights (Years Ended Dec 31, in thousands) | Metric | 2022 | 2021 | | :------------------------------------ | :----- | :----- | | Revenues | $36,376 | $5,048 | | Gross loss | $(30,029) | $(2,362) | | Loss from operations | $(111,348) | $(53,155) | | Net (loss) income | $(73,325) | $23,401 | | Basic Net (loss) income per share | $(0.44) | $0.22 | | Diluted Net (loss) income per share | $(0.44) | $0.22 | Consolidated Statements of Cash Flows Highlights (Years Ended Dec 31, in thousands) | Activity | 2022 | 2021 | | :-------------------------------- | :------- | :------- | | Net cash used in operating activities | $(127,960) | $(88,895) | | Net cash provided by (used in) investing activities | $82,710 | $(155,143) | | Net cash provided by financing activities | $64,749 | $252,855 | | Net increase in cash, cash equivalents and restricted cash | $19,499 | $8,817 | [Report of Independent Registered Public Accounting Firm](index=69&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Grant Thornton LLP issued an unqualified opinion on Xos's 2022 consolidated financial statements, noting a change in accounting principle for leases - Grant Thornton LLP audited Xos, Inc.'s consolidated financial statements for the year ended December 31, 2022, and expressed an unqualified opinion that they present fairly, in all material respects, the financial position and results of operations[394](index=394&type=chunk) - The audit noted a change in accounting principle for leases on January 1, 2022, due to the adoption of ASC 842[395](index=395&type=chunk) [Report of Predecessor Independent Registered Public Accounting Firm](index=70&type=section&id=Report%20of%20Predecessor%20Independent%20Registered%20Public%20Accounting%20Firm) WithumSmith+Brown, PC issued an unqualified opinion on Xos's 2021 consolidated financial statements, confirming fair presentation of financial position and results - WithumSmith+Brown, PC audited Xos, Inc.'s consolidated financial statements for the year ended December 31, 2021, and expressed an unqualified opinion that they present fairly, in all material respects, the financial position and results of operations[400](index=400&type=chunk) [Consolidated Balance Sheets](index=71&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheets present Xos's financial position as of December 31, 2022 and 2021, detailing assets, liabilities, and stockholders' equity Consolidated Balance Sheets (as of Dec 31, in thousands) | Asset/Liability | 2022 | 2021 | | :------------------------------------ | :----- | :----- | | Cash and cash equivalents | $35,631 | $16,142 | | Restricted cash | $3,044 | $3,034 | | Accounts receivable, net | $8,238 | $3,353 | | Marketable debt securities, available-for-sale — short-term | $50,648 | $94,696 | | Inventories | $57,540 | $30,883 | | Prepaid expenses and other current assets | $8,100 | $17,850 | | Total current assets | $163,201 | $165,958 | | Property and equipment, net | $18,581 | $7,426 | | Operating lease right-of-use assets, net | $6,555 | $— | | Marketable debt securities, available-for-sale — long-term | $— | $54,816 | | Other non-current assets | $1,599 | $506 | | Total assets | $189,936 | $228,706 | | Accounts payable | $2,896 | $10,122 | | Convertible debt, current | $26,849 | $— | | Derivative liabilities | $405 | $— | | Other current liabilities | $15,616 | $5,861 | | Total current liabilities | $45,766 | $15,983 | | Convertible debt, non-current | $19,870 | $— | | Earn-out shares liability | $564 | $29,240 | | Common stock warrant liability | $661 | $7,496 | | Other non-current liabilities | $11,000 | $1,594 | | Total liabilities | $77,861 | $54,313 | | Total stockholders' equity | $112,075 | $174,393 | | Total liabilities and stockholders' equity | $189,936 | $228,706 | [Consolidated Statements of Operations and Comprehensive Income (Loss)](index=72&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)) The consolidated statements present Xos's revenues, expenses, and net income (loss) for 2022 and 2021, showing a net loss of **$73.3 million** in 2022 Consolidated Statements of Operations and Comprehensive Income (Loss) (Years Ended Dec 31, in thousands, except per share amounts) | Metric | 2022 | 2021 | | :------------------------------------ | :----- | :----- | | Revenues | $36,376 | $5,048 | | Cost of goods sold | $66,405 | $7,410 | | Gross loss | $(30,029) | $(2,362) | | General and administrative | $41,093 | $27,197 | | Research and development | $30,679 | $20,077 | | Sales and marketing | $9,547 | $3,519 | | Total operating expenses | $81,319 | $50,793 | | Loss from operations | $(111,348) | $(53,155) | | Other (expense) income, net | $(4,835) | $38 | | Change in fair value of derivative instruments | $14,184 | $18,498 | | Change in fair value of earn-out shares liability | $28,682 | $72,505 | | Net (loss) income | $(73,325) | $23,401 | | Total comprehensive (loss) income | $(73,683) | $23,020 | | Basic Net (loss) income per share | $(0.44) | $0.22 | | Diluted Net (loss) income per share | $(0.44) | $0.22 | | Weighted average shares outstanding (Basic) | 165,253 | 105,568 | | Weighted average shares outstanding (Diluted) | 174,382 | 107,786 | [Consolidated Statements of Stockholders' Equity](index=73&type=section&id=Consolidated%20Statements%20of%20Stockholders%27%20Equity) The consolidated statements detail changes in Xos's stockholders' equity for 2022 and 2021, including common stock, additional paid-in capital, and accumulated deficit Consolidated Statements of Stockholders' Equity (Years Ended Dec 31, in thousands) | Metric | 2022 | 2021 | | :------------------------------------ | :----- | :----- | | Common Stock Par Value | $17 | $16 | | Additional Paid-in Capital | $190,215 | $178,851 | | Accumulated Deficit | $(77,418) | $(4,093) | | Accumulated Other Comprehensive Loss | $(739) | $(381) | | Total Stockholders' Equity | $112,075 | $174,393 | - The statement details changes in stockholders' equity, including stock options exercised, RSU vesting, stock-based compensation expense, and the impact of the Business Combination and convertible note conversions[409](index=409&type=chunk) [Consolidated Statements of Cash Flows](index=75&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) The consolidated statements present Xos's cash flows from operating, investing, and financing activities for 2022 and 2021, showing a net increase in cash Consolidated Statements of Cash Flows (Years Ended Dec 31, in thousands) | Activity | 2022 | 2021 | | :-------------------------------- | :------- | :------- | | Net cash used in operating activities | $(127,960) | $(88,895) | | Net cash provided by (used in) investing activities | $82,710 | $(155,143) | | Net cash provided by financing activities | $64,749 | $252,855 | | Net increase in cash, cash equivalents and restricted cash | $19,499 | $8,817 | | Cash, cash equivalents and restricted cash, end of year | $38,675 | $19,176 | - Non-cash financing activities in 2022 included **$7.7 million** for ROU asset recognition upon ASC 842 adoption and **$2.0 million** for convertible debenture conversion to Common Stock[414](index=414&type=chunk) - In 2021, significant non-cash activities included **$79.7 million** for Legacy Xos Preferred Stock conversion to Common Stock, **$17.9 million** for warrant assumption, and **$101.7 million** for earn-out shares liability recognition[414](index=414&type=chunk) [Notes to Consolidated Financial Statements](index=78&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes provide detailed information on Xos's business, risks, liquidity strategy, key accounting policies, and financial instruments, including derivative liabilities and stock-based compensation - Notes provide detailed information on Xos's business, including its role as a fleet electrification solutions provider and the Business Combination on August 20, 2021, which made it a publicly traded entity[417](index=417&type=chunk) - The company faces risks and uncertainties from global economic conditions, including inflation, interest rate increases, bank failures, supply chain disruptions, and geopolitical events like the Russia-Ukraine war[418](index=418&type=chunk)[420](index=420&type=chunk) - Xos's liquidity strategy involves maintaining access to capital through debt, equity, and other financing, with existing cash and marketable securities totaling **$86.3 million** as of December 31, 2022, deemed sufficient for the next **12 months**[424](index=424&type=chunk)[425](index=425&type=chunk)[426](index=426&type=chunk) - Key accounting policies include revenue recognition (ASC 606), inventory valuation (lower of cost or NRV), income taxes (asset and liability method with valuation allowance), and accounting for leases (ASC 842 adopted Jan 1, 2022)[434](index=434&type=chunk)[442](index=442&type=chunk)[447](index=447&type=chunk)[495](index=495&type=chunk) - The company's financial instruments include Public and Private Placement Warrants (derivative liabilities), Convertible Debentures, and a Convertible Promissory Note, with fair value changes impacting earnings[460](index=460&type=chunk)[461](index=461&type=chunk)[463](index=463&type=chunk)[467](index=467&type=chunk) - Stock-based compensation expense for 2022 was **$5.2 million**, primarily from RSUs under the 2021 Equity Plan, with **$13.5 million** in unamortized compensation remaining[608](index=608&type=chunk)[610](index=610&type=chunk) [Item 9. Changes In and Disagreement With Accountants on Accounting and Financial Disclosure](index=114&type=section&id=Item%209.%20Changes%20In%20and%20Disagreement%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) Xos, Inc. reported no changes in or disagreements with accountants on accounting and financial disclosure for the fiscal year ended December 31, 2022 - There were no changes in or disagreements with accountants on accounting and financial disclosure[648](index=648&type=chunk) [Item 9A. Controls and Procedures](index=114&type=section&id=Item%209A.%20Controls%20and%20Procedures) Xos's disclosure controls were not effective as of December 31, 2022, due to a material weakness in inventory management, with remediation efforts underway for 2023 - As of December 31, 2022, Xos's disclosure controls and procedures were deemed not effective due to a material weakness in internal control over financial reporting[650](index=650&type=chunk) - The identified material weakness relates to the ineffective operation of controls concerning inventory management, which led to errors in financial statements for prior periods[180](index=180&type=chunk)[654](index=654&type=chunk) - Management is implementing remediation steps, including adding internal controls, implementing new software tools, and partnering with external consultants, with remediation expected during 2023[656](index=656&type=chunk)[657](index=657&type=chunk) - Despite the material weakness, management concluded that the audited consolidated financial statements in the Form 10-K are fairly stated in all material respects[655](index=655&type=chunk) [Item 9B. Other Information](index=115&type=section&id=Item%209B.%20Other%20Information) This item contains no other information - No other information is reported under this item[659](index=659&type=chunk) [Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=115&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to Xos, Inc - Disclosure regarding foreign jurisdictions that prevent inspections is not applicable[660](index=660&type=chunk) PART III [Item 10. Directors, Executive Officers and Corporate Governance](index=116&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2023 Annual Meeting proxy statement - Information on directors, executive officers, and corporate governance is incorporated by reference from the definitive proxy statement for the 2023 Annual Meeting of Stockholders[663](index=663&type=chunk) - Xos has a Code of Conduct for directors, officers, and employees, accessible on its investor relations website[664](index=664&type=chunk) [Item 11. Executive Compensation](index=116&type=section&id=Item%2011.%20Executive%20Compensation) Executive compensation information is incorporated by reference from the definitive proxy statement for the 2023 Annual Meeting of Stockholders - Executive compensation information is incorporated by reference from the definitive proxy statement for the 2023 Annual Meeting of Stockholders[665](index=665&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=116&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership of certain beneficial owners and management is incorporated by reference from the 2023 Annual Meeting proxy statement - Information on security ownership of certain beneficial owners and management is incorporated by reference from the definitive proxy statement for the 2023 Annual Meeting of Stockholders[666](index=666&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=116&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on certain relationships, related transactions, and director independence is incorporated by reference from the 2023 Annual Meeting proxy statement - Information on certain relationships, related transactions, and director independence is incorporated by reference from the definitive proxy statement for the 2023 Annual Meeting of Stockholders[667](index=667&type=chunk) [Item 14. Principal Accounting Fees and Services](index=116&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information on principal accounting fees and services is incorporated by reference from the definitive proxy statement for the 2023 Annual Meeting of Stockholders - Information on principal accounting fees and services is incorporated by reference from the definitive proxy statement for the 2023 Annual Meeting of Stockholders[668](index=668&type=chunk) PART IV [Item 15. Exhibits, Financial Statement Schedules](index=116&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists financial statements and exhibits filed as part of the Form 10-K, including corporate governance documents, equity plans, and debt agreements - The Index to Consolidated Financial Statements from Item 8 is included, and all financial statement schedules are omitted as not applicable or already presented[670](index=670&type=chunk) - A list of exhibits is provided, including the Agreement and Plan of Merger, Certificate of Incorporation, Bylaws, Warrant Agreement, various offer letters, and debt agreements (e.g., Convertible Promissory Note, Securities Purchase Agreement with Yorkville)[671](index=671&type=chunk)[673](index=673&type=chunk)[677](index=677&type=chunk) - Many exhibits are incorporated by reference from previous SEC filings, such as Current Reports on Form 8-K and Registration Statements on Form S-1[671](index=671&type=chunk)[673](index=673&type=chunk)[677](index=677&type=chunk) [Item 16. Form 10-K Summary](index=119&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item is not applicable to Xos, Inc - Form 10-K Summary is not applicable[676](index=676&type=chunk) [Signatures](index=120&type=section&id=Signatures) The Annual Report on Form 10-K for 2022 was signed on March 31, 2023, by the CEO, CFO, and other directors and officers - The report was signed on March 31, 2023, by Dakota Semler (CEO and Principal Executive Officer) and Kingsley E. Afemikhe (CFO, Principal Financial Officer, and Principal Accounting Officer)[679](index=679&type=chunk)[680](index=680&type=chunk)[684](index=684&type=chunk) - Other directors and officers also signed, granting power of attorney to Dakota Semler and Kingsley Afemikhe for signing amendments and supplements to the report[682](index=682&type=chunk)[683](index=683&type=chunk)[684](index=684&type=chunk)

Xos, Inc. (NASDAQ:XOS) Q4 2022 Earnings Conference Call March 29, 2023 4:30 PM ET Company Participants Christen Romero - General Counsel Dakota Semler - CEO and Chairman Giordano Sordoni - COO Scott Zion - Head, Engineering Kingsley Afemikhe - CFO Conference Call Participants Michael Shlisky - D.A. Davidson Adam Bubes - Goldman Sachs Michael Ward - The Benchmark Company Donovan Schafer - Northland Capital Operator Greetings and welcome to Xos Inc.'s Fourth Quarter and Full Year 2022 Earnings Call. At this t ...

Xos, Inc. (NASDAQ:XOS) Q3 2022 Earnings Conference Call November 11, 2022 4:30 PM ET Company Participants Christen Romero - General Counsel Dakota Semler - Chief Executive Officer and Chairman Giordano Sordoni - Chief Operating Officer and Director Kingsley Afemikhe - Chief Financial Officer Conference Call Participants Donovan Schafer - Northland Capital Michael Shlisky - D.A. Davidson Jerry Revich - Goldman Sachs Operator Greetings, and welcome to Xos Inc.'s Third Quarter 2022 Earnings Call. At this time, ...

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 September 30, 2022 Securities registered pursuant to Section 12(b) of the Act: | Title of each class | Trading | | | --- | --- | --- | | | Symbol | Name of exchange on which registered | | Common Stoc ...

Xos, Inc. (NASDAQ:XOS) Q2 2022 Earnings Conference Call August 11, 2022 4:30 PM ET Company Participants Christen Romero - General Counsel Dakota Semler - Chief Executive Officer Gio Sordoni - Chief Operating Officer Kingsley Afemikhe - Chief Financial Officer Conference Call Participants Mike Shlisky - D.A. Davidson Jerry Revich - Goldman Sachs Sam Brandeis - Wedbush Securities Donovan Schafer - Northland Capital Markets Sherif El-Sabbahy - Bank of America Operator Greetings and welcome to Xos Inc's Second ...