[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 ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For transition period from to Commission File Number 001-39598 XOS, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) Del ...

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 ...

Xos, Inc. Q2 2022 Earnings Call August 11th, 2022 © Copyright Xos Fleet, Inc. 2022. All rights reserved. DISCLAIMER Forward-Looking Statements This presentation includes "forward-looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements regarding projected financial and performance information for the second half of 2022 and sequential quarterly gro ...

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, 2022 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 ...

[Company Information](index=1&type=section&id=Company%20Information) [Registrant Details](index=1&type=section&id=Registrant%20Details) XOS, Inc. is a Delaware corporation listed on Nasdaq, classified as a non-accelerated filer, small reporting company, and emerging growth company, with 163,637,247 shares outstanding as of May 4, 2022 | Metric | Detail | | :--- | :--- | | Company Name | XOS, INC. | | Jurisdiction | Delaware | | Stock Ticker | XOS (Common Stock), XOSWW (Warrants) | | Exchange | Nasdaq Global Market | | Filer Type | Non-accelerated Filer, Smaller Reporting Company, Emerging Growth Company | | Common Stock Outstanding as of May 4, 2022 | 163,637,247 shares | [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) [Nature of Forward-Looking Statements](index=3&type=section&id=Nature%20of%20Forward-Looking%20Statements) This report contains forward-looking statements based on current expectations and projections, subject to known and unknown risks, uncertainties, and assumptions that may cause actual results to differ materially - Forward-looking statements are based on current expectations and projections, and actual results may differ materially due to known and unknown risks, uncertainties, and assumptions[7](index=7&type=chunk) [Risk Factors](index=3&type=section&id=Risk%20Factors) The company faces various risks and uncertainties that could cause actual results to differ significantly from forward-looking statements, including commercialization, deployment delays, market growth, strategic partnerships, economic conditions, legal proceedings, and supply chain disruptions - Key risks include commercialization capability, vehicle deployment delays, market share growth, strategic collaborations and acquisitions, business combination benefits, changes in domestic and international business, market, financial, political, and legal conditions, changes in applicable laws and regulations, legal proceedings outcomes, financial and business performance, strategy, future operations, financial condition, projected revenues and losses, projected costs, prospects and plans changes, ability to maintain effective internal control over financial reporting, ability to respond to general economic conditions including supply chain delays or disruptions, ability to effectively manage growth, ability to achieve and maintain future profitability, ability to obtain capital sources, ability to maintain and enhance products and brand and attract customers, ability to execute business model (including market acceptance of planned products and services and achieving sufficient production volume at acceptable quality levels and prices), ability to procure key inventory items (including battery cells, semiconductor chips, and body and aluminum), ability to manage supply shortages and disruptions, ability to scale cost-effectively (including hiring qualified personnel), competitor and industry developments and projections, general economic and political conditions (such as the COVID-19 pandemic, recession, interest rates, fuel prices, international currency fluctuations, corruption, political instability, and acts of war or military conflict, including the recent Russia-Ukraine military conflict's effects), ability to obtain and maintain intellectual property protection, and the duration of emerging growth company status[8](index=8&type=chunk)[10](index=10&type=chunk)[14](index=14&type=chunk) [Glossary of Terms](index=4&type=section&id=Glossary%20of%20Terms) [Key Definitions](index=4&type=section&id=Key%20Definitions) This section defines key terms used in the report, such as "Business Combination," "Class 5 to 8 Vehicles," "Energy Services," "Fleet-as-a-Service," "Flex Manufacturing Strategy," "X-Pack," and "X-Platform," essential for understanding the company's business model and financial reporting - "Business Combination" refers to NextGen's re-domestication and change of jurisdiction, its continuation and domestication as a Delaware corporation, and the merger and other transactions contemplated by the merger agreement, including the PIPE financing[15](index=15&type=chunk) - "Fleet-as-a-Service" is a comprehensive suite of products and services offered by the company to facilitate commercial battery-electric fleet operations through in-house proprietary technology and industry-leading partner turnkey solutions, including the X-Pack battery system, X-Platform modular chassis, energy services, maintenance, digital fleet management products, OTA software update technology, and various additional service offerings[17](index=17&type=chunk) - "Flex Manufacturing Strategy" refers to assembling vehicles using smaller, more flexible existing facilities and labor talent through strategic manufacturing partnerships, while the company coordinates other aspects of the manufacturing process, including supply chain logistics, quality control, and manufacturing engineering[17](index=17&type=chunk) [Part I - Financial Information](index=7&type=section&id=Part%20I%20-%20Financial%20Information) [Item 1. Financial Statements](index=7&type=section&id=Item%201.%20Financial%20Statements) This section presents the company's unaudited condensed consolidated financial statements as of March 31, 2022, including balance sheets, statements of operations and comprehensive loss, stockholders' equity, and cash flows, with detailed notes on business, accounting policies, revenue, inventory, leases, recapitalization, investments, equity, derivatives, share-based compensation, property and equipment, commitments, related party transactions, income taxes, net loss per share, and fair value measurements [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2022, total assets decreased to $215.975 million from $228.706 million, with reduced cash and equivalents, increased net inventory, and higher total liabilities leading to a decrease in stockholders' equity | Metric (in thousands) | March 31, 2022 (Unaudited) | December 31, 2021 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | 11,810 | 16,142 | | Restricted cash | 3,034 | 3,034 | | Accounts receivable | 6,848 | 3,353 | | Short-term available-for-sale debt securities | 89,823 | 94,696 | | Inventories, net | 40,303 | 30,883 | | Prepaid expenses and other current assets | 17,570 | 17,850 | | **Total current assets** | **169,388** | **165,958** | | Long-term available-for-sale debt securities | 28,063 | 54,816 | | Property and equipment, net | 10,253 | 7,426 | | Operating lease right-of-use assets, net | 7,765 | — | | Other assets | 506 | 506 | | **Total assets** | **215,975** | **228,706** | | **Liabilities and Stockholders' Equity** | | | | Accounts payable | 7,941 | 10,122 | | Other current liabilities | 11,857 | 5,861 | | **Total current liabilities** | **19,798** | **15,983** | | Earn-out shares liability | 26,938 | 29,240 | | Common stock warrant liability | 7,930 | 7,496 | | Other non-current liabilities | 7,895 | 1,594 | | **Total liabilities** | **62,561** | **54,313** | | **Stockholders' Equity** | | | | Common stock | 16 | 16 | | Additional paid-in capital | 179,884 | 178,851 | | Accumulated deficit | (25,279) | (4,093) | | Accumulated other comprehensive loss | (1,207) | (381) | | **Total stockholders' equity** | **153,414** | **174,393** | | **Total liabilities and stockholders' equity** | **215,975** | **228,706** | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) For the three months ended March 31, 2022, revenue significantly increased to $7.031 million, but higher cost of sales and operating expenses resulted in a negative gross margin and expanded operating and net losses year-over-year | Metric (in thousands) | March 31, 2022 | March 31, 2021 | | :--- | :--- | :--- | | Revenue | 7,031 | 793 | | Cost of sales | 10,186 | 672 | | **Gross Margin** | **(3,155)** | **121** | | **Operating Expenses** | | | | General and administrative | 11,322 | 2,354 | | Research and development | 6,949 | 2,999 | | Sales and marketing | 2,028 | 312 | | **Total Operating Expenses** | **20,299** | **5,665** | | **Operating Loss** | **(23,454)** | **(5,544)** | | Other income (expense) net | 81 | (217) | | Fair value change in derivative instruments | (435) | 6,394 | | Fair value change in earn-out shares liability | 2,624 | — | | Write-off of subscription receivable | — | (379) | | Realized loss on debt extinguishment | — | (14,104) | | **Loss Before Income Taxes** | **(21,184)** | **(13,850)** | | Income tax provision | 2 | — | | **Net Loss** | **(21,186)** | **(13,850)** | | Other comprehensive loss | (826) | — | | **Total Comprehensive Loss** | **(22,012)** | **(13,850)** | | Net Loss Per Share (Basic and Diluted) | (0.13) | (0.19) | | Weighted Average Shares Outstanding (Basic and Diluted) | 163,165 | 72,354 | [Condensed Consolidated Statements of Legacy Xos Preferred Stock and Stockholders' Equity (Deficit)](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Legacy%20Xos%20Preferred%20Stock%20and%20Stockholders'%20Equity%20(Deficit)) As of March 31, 2022, total stockholders' equity decreased to $153.414 million from $174.393 million, primarily due to net and comprehensive losses, despite share-based compensation and common stock issuance | Metric (in thousands) | December 31, 2021 | March 31, 2022 (Unaudited) | | :--- | :--- | :--- | | Total Stockholders' Equity | 174,393 | 153,414 | | Additional Paid-in Capital | 178,851 | 179,884 | | Accumulated Deficit | (4,093) | (25,279) | | Accumulated Other Comprehensive Loss | (381) | (1,207) | | Share-based Compensation Expense | — | 1,068 | | Net and Comprehensive Loss | — | (22,012) | [Condensed Consolidated Statements of Cash Flows](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the three months ended March 31, 2022, cash outflow from operating activities significantly increased to $31.304 million, investing activities generated $27.153 million, and financing activities used $0.181 million, resulting in a net decrease of $4.332 million in cash, cash equivalents, and restricted cash | Cash Flow Category (in thousands) | March 31, 2022 | March 31, 2021 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (31,304) | (8,782) | | Net Cash Provided by (Used in) Investing Activities | 27,153 | (202) | | Net Cash Provided by (Used in) Financing Activities | (181) | 34,153 | | Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash | (4,332) | 25,169 | | Cash, Cash Equivalents, and Restricted Cash at End of Period | 14,844 | 35,528 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=14&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed notes to the company's unaudited condensed consolidated financial statements, covering business description, accounting policies, revenue, inventory, leases, recapitalization, investments, equity, derivatives, share-based compensation, property and equipment, commitments, related party transactions, income taxes, net loss per share, and fair value measurements [Note 1 — Description of Business](index=14&type=section&id=Note%201%20%E2%80%94%20Description%20of%20Business) Xos, Inc. is a mobile solutions company manufacturing Class 5 to 8 battery-electric commercial vehicles, facilitating fleet electrification through its X-Platform chassis, X-Pack battery system, and "Fleet-as-a-Service" offerings, while facing risks from COVID-19, the Russia-Ukraine conflict, and supply chain disruptions - Xos focuses on manufacturing Class 5 to 8 battery-electric commercial vehicles, offering "Fleet-as-a-Service" solutions, including the X-Platform chassis and X-Pack battery system[36](index=36&type=chunk) - The company completed its business combination on **August 20, 2021**, becoming a Nasdaq-listed company and electing to operate as an emerging growth company, adopting an extended transition period for accounting standards[38](index=38&type=chunk)[39](index=39&type=chunk) - The company faces risks from the COVID-19 pandemic, the Russia-Ukraine conflict, and supply chain disruptions for key inventory items like semiconductor chips, battery cells, body, and aluminum[40](index=40&type=chunk)[42](index=42&type=chunk)[44](index=44&type=chunk) [Note 2 — Basis of Presentation and Summary of Significant Accounting Policies](index=15&type=section&id=Note%202%20%E2%80%94%20Basis%20of%20Presentation%20and%20Summary%20of%20Significant%20Accounting%20Policies) This section outlines the basis of presentation and significant accounting policies, including U.S. GAAP and SEC compliance, management estimates, and the adoption of ASC 842 Leases on January 1, 2022, which led to the recognition of operating lease right-of-use assets and lease liabilities, with an ongoing assessment of ASU 2016-13 - The company's financial statements adhere to U.S. GAAP and SEC regulations, incorporating significant management estimates and judgments regarding earn-out shares liability, share-based compensation, common stock warrant liability, and product warranty liability[46](index=46&type=chunk)[48](index=48&type=chunk) - The company adopted ASC 842 Leases on **January 1, 2022**, recognizing an initial operating lease right-of-use asset and corresponding operating lease liability of **$7.7 million**[59](index=59&type=chunk)[60](index=60&type=chunk) - The company is evaluating the impact of ASU 2016-13 Financial Instruments—Credit Losses, which is effective **January 1, 2023**, and does not expect a material impact on its financial statements[62](index=62&type=chunk) [Note 3 — Revenue Recognition](index=18&type=section&id=Note%203%20%E2%80%94%20Revenue%20Recognition) For the three months ended March 31, 2022, total revenue significantly increased to $7.031 million from $0.793 million in the prior year, primarily driven by a substantial rise in Stepvans and vehicle incentives, as well as Fleet-as-a-Service revenue | Revenue Source (in thousands) | March 31, 2022 | March 31, 2021 | | :--- | :--- | :--- | | Stepvans & Vehicle Incentives | 6,863 | 674 | | Powertrains | 14 | 119 | | Fleet-as-a-Service | 95 | — | | **Total Product and Service Revenue** | **6,972** | **793** | | Ancillary Revenue | 59 | — | | **Total Revenue** | **7,031** | **793** | [Note 4 — Inventories](index=18&type=section&id=Note%204%20%E2%80%94%20Inventories) As of March 31, 2022, net inventory increased to $40.303 million, primarily driven by higher raw materials and work-in-progress, alongside an increase in inventory reserves | Inventory Category (in thousands) | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Raw Materials | 24,008 | 20,382 | | Work-in-Process | 18,602 | 10,659 | | Finished Goods | — | 901 | | Total Inventory (before reserves) | 42,610 | 31,942 | | Less: Inventory Reserves | (2,307) | (1,059) | | **Net Inventory** | **40,303** | **30,883** | [Note 5 — Selected Balance Sheet Data](index=18&type=section&id=Note%205%20%E2%80%94%20Selected%20Balance%20Sheet%20Data) As of March 31, 2022, prepaid expenses and other current assets totaled $17.570 million, while other current liabilities increased to $11.857 million, mainly due to higher accrued expenses and lease liabilities | Item (in thousands) | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Prepaid Expenses and Other Current Assets** | | | | Prepaid Inventory | 8,415 | 7,303 | | Prepaid Insurance | 3,040 | 4,996 | | Deposits | 3,203 | 2,783 | | Assets Held for Sale | 1,848 | 1,848 | | Prepaid Licenses and Subscriptions | 706 | 801 | | Other | 358 | 119 | | **Total** | **17,570** | **17,850** | | **Other Current Liabilities** | | | | Accrued Expenses | 8,120 | 3,997 | | Lease Liabilities (Current) | 1,958 | 482 | | Customer Deposits | 1,026 | 899 | | Warranty Liabilities | 475 | 177 | | Other | 278 | 306 | | **Total** | **11,857** | **5,861** | [Note 6 — Leases](index=19&type=section&id=Note%206%20%E2%80%94%20Leases) As of March 31, 2022, total lease assets were $9.921 million and total lease liabilities were $9.853 million, with lease expenses for the period totaling $0.4 million, primarily from operating and equipment finance leases, following the adoption of ASC 842 on January 1, 2022 | Lease Assets and Liabilities (in thousands) | March 31, 2022 | | :--- | :--- | | Net Operating Lease Right-of-Use Assets | 7,765 | | Net Equipment Finance Lease Assets | 2,156 | | **Total Lease Assets** | **9,921** | | Operating Lease Liabilities (Current) | 1,465 | | Equipment Finance Lease Liabilities (Current) | 493 | | Operating Lease Liabilities (Non-current) | 6,353 | | Equipment Finance Lease Liabilities (Non-current) | 1,542 | | **Total Lease Liabilities** | **9,853** | - Total lease expense for the three months ended March 31, 2022, was **$0.4 million**, compared to **$0.2 million** for the same period in 2021[71](index=71&type=chunk) | Lease Information | Detail | | :--- | :--- | | Weighted-Average Remaining Lease Term - Operating Leases | 5.3 years | | Weighted-Average Remaining Lease Term - Equipment Finance Leases | 3.7 years | | Weighted-Average Discount Rate - Operating Leases | 5.5 % | | Weighted-Average Discount Rate - Equipment Finance Leases | 7.0 % | [Note 7 — Recapitalization and Earn-out Shares Liability](index=21&type=section&id=Note%207%20%E2%80%94%20Recapitalization%20and%20Earn-out%20Shares%20Liability) The company completed its business combination on August 20, 2021, treated as a reverse recapitalization, and assumed contingent obligations to issue 16.2 million common shares and 261,000 restricted stock units upon achieving specific market share price milestones, with the earn-out shares liability fair value at $26.938 million as of March 31, 2022, recognizing a $2.6 million gain from fair value changes - The company completed its business combination on **August 20, 2021**, and was identified as the accounting acquirer, treated as a reverse recapitalization[79](index=79&type=chunk) - The company is obligated to issue **16.2 million** shares of common stock and **261,000** restricted stock units to certain stockholders and employees upon achieving specific market share price milestones[82](index=82&type=chunk) | Metric (in thousands) | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Fair Value of Earn-out Shares Liability | 26,938 | 29,240 | | Gain from Fair Value Change in Earn-out Shares Liability (for the three months ended March 31, 2022) | 2,624 | — | [Note 8 — Investments](index=23&type=section&id=Note%208%20%E2%80%94%20Investments) As of March 31, 2022, the fair value of available-for-sale debt securities decreased to $117.9 million from $149.5 million as of December 31, 2021, resulting in an accumulated other comprehensive loss of $1.207 million and a realized loss of $6 thousand | Investment Category (in thousands) | Fair Value as of March 31, 2022 | Fair Value as of December 31, 2021 | | :--- | :--- | :--- | | Short-term Investments | 89,823 | 94,696 | | Long-term Investments | 28,063 | 54,816 | | **Total Available-for-Sale Debt Securities** | **117,886** | **149,512** | | Accumulated Other Comprehensive Loss | (1,207) | (381) | | Realized Loss (for the three months ended March 31, 2022) | (6) | — | [Note 9 — Equity](index=26&type=section&id=Note%209%20%E2%80%94%20Equity) The company is authorized to issue 1 billion shares of common stock and 10 million shares of preferred stock, and on March 23, 2022, entered into a Standby Equity Purchase Agreement (SEPA) with YA II PN, Ltd., allowing it to sell up to $125 million of common stock over 36 months, having already issued 18,582 common shares as commitment consideration - The company is authorized to issue **1 billion** shares of common stock and **10 million** shares of preferred stock, each with a par value of **$0.0001** per share[94](index=94&type=chunk) - The company entered into a Standby Equity Purchase Agreement (SEPA) with YA II PN, Ltd., granting the right to sell up to **$125 million** of common stock over **36 months**, and has issued **18,582** common shares as commitment consideration[102](index=102&type=chunk)[103](index=103&type=chunk) [Note 10 — Derivative Instruments](index=27&type=section&id=Note%2010%20%E2%80%94%20Derivative%20Instruments) As of March 31, 2022, the company had 18,563,297 public warrants and 270,001 private warrants outstanding, with fair values of $7.8 million and $0.1 million, respectively, exercisable at $11.50 per share and redeemable by the company under specific conditions | Warrant Type | Quantity | Fair Value (in thousands) | | :--- | :--- | :--- | | Public Warrants | 18,563,297 | 7,800 | | Private Warrants | 270,001 | 100 | | Exercise Price | $11.50/share | | - The company may redeem public warrants at **$0.01** per warrant if the common stock price reaches or exceeds **$18.00**, or all warrants (including private warrants) at **$0.10** per warrant if the common stock price reaches or exceeds **$10.00**[107](index=107&type=chunk)[110](index=110&type=chunk) [Note 11 — Share-Based Compensation](index=28&type=section&id=Note%2011%20%E2%80%94%20Share-Based%20Compensation) As of March 31, 2022, the company had 1,834,681 options outstanding under its 2018 Stock Plan and 20,947,440 common shares available for issuance under its 2021 Equity Incentive Plan, with total share-based compensation expense (including earn-out RSUs) of $1.4 million for the period and $9.2 million in unrecognized share-based compensation expense | Share-Based Compensation Metrics (in thousands) | For the Three Months Ended March 31, 2022 | For the Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Total Share-Based Compensation Expense | 1,391 | 2 | | Unrecognized Share-Based Compensation Expense (as of March 31, 2022) | 9,200 | — | | Common Shares Available for Issuance under 2021 Equity Incentive Plan (as of March 31, 2022) | 20,947,440 shares | — | | Restricted Stock Units (RSUs) Outstanding (as of March 31, 2022) | 3,212,381 units | — | [Note 12 — Property and Equipment, net](index=30&type=section&id=Note%2012%20%E2%80%94%20Property%20and%20Equipment,%20net) As of March 31, 2022, net property and equipment increased to $10.253 million, primarily due to additions in equipment and construction in progress, with depreciation expense for the period totaling $0.3 million | Category (in thousands) | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Equipment | 6,241 | 5,244 | | Furniture and Fixtures | 168 | 141 | | Company Vehicles | 497 | 153 | | Leasehold Improvements | 626 | 626 | | Computer, Software and Related Equipment | 1,431 | 1,289 | | Construction in Progress | 3,144 | 1,444 | | **Total Property and Equipment** | **12,107** | **8,897** | | Accumulated Depreciation | (1,854) | (1,471) | | **Property and Equipment, net** | **10,253** | **7,426** | | Depreciation Expense (for the three months ended March 31, 2022) | 300 | 100 | [Note 13 — Commitments and Contingencies](index=30&type=section&id=Note%2013%20%E2%80%94%20Commitments%20and%20Contingencies) As of March 31, 2022, the company had no material contractual obligations or commitments other than lease commitments, and no legal proceedings that could materially adversely affect its operations, financial condition, or cash flows - As of **March 31, 2022**, the company had no material contractual obligations or commitments other than lease commitments[125](index=125&type=chunk) - The company is not currently involved in any legal proceedings that, if determined adversely to it, would individually or in the aggregate have a material adverse effect on its business, financial condition, or results of operations[126](index=126&type=chunk) [Note 14 — Related Party Transactions](index=31&type=section&id=Note%2014%20%E2%80%94%20Related%20Party%20Transactions) The company engages in various related party transactions, including property leases from the CEO's mother's trust, contract manufacturing agreements with Metalsa S.A. de C.V. and Fitzgerald Manufacturing Partners (a stockholder), the forgiveness of a COO's promissory note in Q1 2021, and the conversion of $18.9 million in related party notes payable into preferred stock - The company leases property from the CEO's mother's trust, with rent expenses of **$35,000** for both the three months ended March 31, 2022, and 2021[128](index=128&type=chunk) - The company has contract manufacturing agreements with Metalsa S.A. de C.V. and Fitzgerald Manufacturing Partners (a stockholder), paying **$172,000** in rent to Fitzgerald in the first quarter of 2022[129](index=129&type=chunk) - In the first quarter of 2021, the company forgave a promissory note from COO Giordano Sordoni, totaling **$364,000** in principal and **$15,000** in interest[130](index=130&type=chunk) - The company converted **$18.9 million** in related party notes payable into **19,664,000** shares of preferred stock[131](index=131&type=chunk) [Note 15 — Income Taxes](index=31&type=section&id=Note%2015%20%E2%80%94%20Income%20Taxes) For the three months ended March 31, 2022, the company's effective tax rate was (0.01)%, primarily due to state taxes and unbenefited losses, and a full valuation allowance has been provided against net U.S. deferred tax assets, as realization is uncertain | Metric | For the Three Months Ended March 31, 2022 | For the Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Effective Tax Rate | (0.01)% | 0% | | Income Tax Provision | 2 thousand dollars | — | - The company has provided a full valuation allowance against its net U.S. deferred tax assets, as management believes it is more likely than not that some or all of these assets will not be realized[136](index=136&type=chunk) [Note 16 — Net Loss per Share](index=32&type=section&id=Note%2016%20%E2%80%94%20Net%20Loss%20per%20Share) For the three months ended March 31, 2022, basic and diluted net loss per share was $0.13, an improvement from $0.19 in the prior year, despite an increased net loss, due to a significant increase in outstanding shares | Metric (in thousands, except per share amounts) | March 31, 2022 | March 31, 2021 | | :--- | :--- | :--- | | Net Loss | (21,186) | (13,850) | | Weighted Average Common Shares Outstanding (Basic and Diluted) | 163,165 | 72,354 | | Net Loss Per Share (Basic and Diluted) | (0.13) | (0.19) | - Potential weighted-average shares, including contingent earn-out shares, public and private common stock warrants, restricted stock units, and stock options, were excluded from the diluted net loss per share calculation due to their anti-dilutive effect[138](index=138&type=chunk) [Note 17 — Fair Value Measurements](index=32&type=section&id=Note%2017%20%E2%80%94%20Fair%20Value%20Measurements) The company measures financial instruments at fair value according to ASC 820, categorizing them into three levels, with total financial liabilities at $34.868 million as of March 31, 2022, including $26.938 million for contingent earn-out shares liability (Level 3), which relies on unobservable inputs like stock price, volatility, expected term, and risk-free rate - The company's fair value measurements for financial instruments adhere to ASC 820, categorizing them into Level 1, Level 2, and Level 3[139](index=139&type=chunk)[140](index=140&type=chunk) | Financial Liability Category (in thousands) | Fair Value as of March 31, 2022 | Fair Value as of December 31, 2021 | | :--- | :--- | :--- | | Private Warrants | 114 | 140 | | Public Warrants | 7,816 | 7,356 | | Contingent Earn-out Shares Liability | 26,938 | 29,240 | | **Total Financial Liabilities** | **34,868** | **36,736** | | Key Unobservable Inputs for Contingent Earn-out Shares Liability (Level 3) | March 31, 2022 | | :--- | :--- | | Stock Price | $2.99 | | Stock Price Volatility | 80.0% | | Expected Term | 4.39 years | | Risk-Free Rate | 2.4% | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=36&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section discusses the company's financial condition and results of operations for the three months ended March 31, 2022, highlighting its business overview, recent developments, business combination impact, key factors affecting operations, COVID-19 impact, revenue and cost components, operating results comparison, non-GAAP financial measures, liquidity and capital resources, cash flows, and critical accounting policies and internal controls [Overview](index=36&type=section&id=Overview) Xos is a mobile solutions company manufacturing Class 5 to 8 battery-electric commercial vehicles, facilitating fleet electrification through its X-Platform chassis, X-Pack battery system, and "Fleet-as-a-Service" offerings, selling 56 vehicles in Q1 2022, and employing a flexible manufacturing strategy to scale production efficiently, anticipating strong growth from climate change concerns and e-commerce - Xos focuses on manufacturing Class 5 to 8 battery-electric commercial vehicles, offering "Fleet-as-a-Service" solutions, with its X-Platform and X-Pack technologies designed to reduce total cost of ownership[152](index=152&type=chunk)[153](index=153&type=chunk) | Sales Volume | For the Three Months Ended March 31, 2022 | For the Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Vehicle Sales | 56 vehicles | 3 vehicles | | Powertrain Sales | — | 1 unit | - The company employs a "Flex Manufacturing Strategy," utilizing existing facilities and labor from strategic partners for vehicle assembly, aiming for up to **5,000** vehicles per facility annually, with current total capacity around **2,000** vehicles[154](index=154&type=chunk) [Recent Development](index=37&type=section&id=Recent%20Development) On March 23, 2022, the company entered into a Standby Equity Purchase Agreement (SEPA) with YA II PN, Ltd., allowing it to sell up to $125 million of common stock over 36 months for working capital and general corporate purposes - The company entered into a Standby Equity Purchase Agreement (SEPA) with YA II PN, Ltd., granting the right to sell up to **$125 million** of common stock over **36 months** for working capital and general corporate purposes[157](index=157&type=chunk) [Business Combination and Public Company Costs](index=37&type=section&id=Business%20Combination%20and%20Public%20Company%20Costs) The business combination, completed on August 20, 2021, was accounted for as a reverse recapitalization, resulting in a net cash increase of $216.7 million but incurring approximately $55.4 million in non-recurring transaction costs, with additional annual expenses expected as a public company for compliance, insurance, and administrative resources - The business combination was accounted for as a reverse recapitalization, resulting in a net cash increase of **$216.7 million** but incurring approximately **$55.4 million** in non-recurring transaction costs[159](index=159&type=chunk) - As a public company, additional annual expenses are anticipated for regulatory compliance, directors' and officers' liability insurance, director fees, and increased accounting, legal, and administrative resources[160](index=160&type=chunk) [Key Factors Affecting Operating Results](index=38&type=section&id=Key%20Factors%20Affecting%20Operating%20Results) The company's future success hinges on product and service commercialization, customer demand, Lyra series battery pack production, and supply chain management, with Lyra offering enhanced energy density, while the supply chain faces ongoing shortages of semiconductor chips, battery cells, body, and aluminum, exacerbated by the Russia-Ukraine conflict, potentially impacting financial performance - The Lyra series battery packs offer a **52%** increase in gravimetric energy density and a **45%** increase in volumetric energy density, compatible with all Xos on-highway vehicles, available in **29.4 kWh** (Lyra 30) and **61.8 kWh** (Lyra 60) configurations[164](index=164&type=chunk) - Supply chain management faces challenges, including semiconductor chip shortages, tight battery cell supply, and limitations in body and aluminum materials[165](index=165&type=chunk)[166](index=166&type=chunk) - The Russia-Ukraine conflict may exacerbate supply chain disruptions, potentially having a material adverse impact on the company's business, results of operations, cash flows, liquidity, and financial condition[167](index=167&type=chunk) [Impact of COVID-19](index=39&type=section&id=Impact%20of%20COVID-19) The extent of COVID-19's impact on the company's business, results of operations, cash flows, liquidity, and financial condition depends on the pandemic's severity and duration, and its effects on the U.S. and global economies, though the company maintained full operations in Q1 2022 with enhanced health and safety measures - The extent of the COVID-19 pandemic's impact on the company's business depends on its severity, duration, and economic effects, but the company maintained full operations in the first quarter of 2022[170](index=170&type=chunk) [Basis of Presentation](index=39&type=section&id=Basis%20of%20Presentation) The company's condensed consolidated financial statements include Xos and its wholly-owned subsidiaries, Legacy Xos and Xos Services, with all significant intercompany accounts and transactions eliminated, operating through a single segment with all long-lived assets and losses attributable to the U.S - The company's condensed consolidated financial statements include Xos and its wholly-owned subsidiaries, Legacy Xos and Xos Services, with all significant intercompany accounts and transactions eliminated[171](index=171&type=chunk) - The company currently operates through a single operating segment, with all long-lived assets held in the U.S. and all losses attributable to the U.S[172](index=172&type=chunk) [Components of Results of Operations](index=39&type=section&id=Components%20of%20Results%20of%20Operations) This section details the components of the company's operating results, including revenue, cost of sales, general and administrative expenses, research and development expenses, and sales and marketing expenses, with revenue primarily from electric stepvans and chassis vehicle sales and battery system licensing, expanding to other vehicle products and full services, and all expenses projected to rise significantly with business growth and production volume - Revenue primarily derives from electric stepvan and chassis vehicle sales and battery system licensing, with future expansion into other vehicle products like chassis cabs and tractors, and comprehensive services including energy services, maintenance, telematics, and financing[173](index=173&type=chunk) - Cost of sales includes materials, components, batteries, direct labor, and manufacturing overhead, expected to increase with higher production volumes[175](index=175&type=chunk)[177](index=177&type=chunk) - General and administrative expenses are projected to increase with business growth and public company operations, encompassing personnel costs, professional services, insurance, and equipment investments[178](index=178&type=chunk)[179](index=179&type=chunk) - Research and development expenses are expected to rise significantly, supporting ongoing investments in battery systems, chassis design, and other technologies[180](index=180&type=chunk) - Sales and marketing expenses are anticipated to increase with the expansion of the sales team and marketing activities, supporting both direct and indirect distribution strategies[181](index=181&type=chunk)[183](index=183&type=chunk) [Results of Operations](index=41&type=section&id=Results%20of%20Operations) For the three months ended March 31, 2022, total revenue grew 787% year-over-year to $7.031 million, driven by increased unit sales; however, substantial increases in cost of sales, general and administrative, research and development, and sales and marketing expenses led to a negative gross margin and expanded operating and net losses, while other income (expense) net improved, and fair value changes in derivatives and debt extinguishment losses had varying impacts on net loss | Metric (in thousands) | March 31, 2022 | March 31, 2021 | Change Amount | Change Percentage | | :--- | :--- | :--- | :--- | :--- | | Revenue | 7,031 | 793 | 6,238 | 787 % | | Cost of Sales | 10,186 | 672 | 9,514 | nm | | Gross Margin | (3,155) | 121 | (3,276) | nm | | Operating Expenses | 20,299 | 5,665 | 14,634 | 258 % | | Operating Loss | (23,454) | (5,544) | (17,910) | 323 % | | Other Income (Expense) Net | 81 | (217) | 298 | (137) % | | Fair Value Change in Derivative Instruments | (435) | 6,394 | (6,829) | (107) % | | Fair Value Change in Earn-out Shares Liability | 2,624 | — | 2,624 | 100 % | | Realized Loss on Debt Extinguishment | — | (14,104) | 14,104 | (100) % | | Net Loss | (21,186) | (13,850) | (7,336) | 53 % | - Revenue growth was primarily driven by increased unit sales, with **56** stepvans sold in the first quarter of 2022, compared to **3** stepvans and **1** powertrain in the same period of 2021[187](index=187&type=chunk) - Cost of sales increased by **$9.5 million**, primarily due to higher product revenue, **$1.2 million** in inventory reserves, and **$8.3 million** in increased direct materials, direct labor, and manufacturing overhead[188](index=188&type=chunk) - General and administrative expenses increased by **$9.0 million**, mainly due to higher personnel costs, insurance expenses, consulting and professional fees, and investments in equipment and technology[190](index=190&type=chunk) - Research and development expenses increased by **$4.0 million**, primarily due to higher engineering personnel costs (including share-based compensation) and increased procurement of equipment and materials for R&D purposes[191](index=191&type=chunk) - Sales and marketing expenses increased by **$1.7 million**, mainly due to higher personnel costs (including share-based compensation), consulting fees, public relations expenses, and branding activities[192](index=192&type=chunk) [Non-GAAP Financial Measures](index=43&type=section&id=Non-GAAP%20Financial%20Measures) The company uses EBITDA and Adjusted EBITDA as supplementary non-GAAP financial measures to assess performance; for the three months ended March 31, 2022, EBITDA was negative $20.997 million and Adjusted EBITDA was negative $21.795 million, both deteriorating from the prior year - EBITDA is defined as net loss adjusted for other non-operating expenses or income, income tax expense or benefit, and depreciation and amortization[199](index=199&type=chunk) - Adjusted EBITDA is defined as EBITDA adjusted for share-based compensation and other non-recurring items identified by management[199](index=199&type=chunk) | Metric (in thousands) | For the Three Months Ended March 31, 2022 | For the Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net Loss | (21,186) | (13,850) | | EBITDA | (20,997) | (13,544) | | Adjusted EBITDA | (21,795) | (19,936) | [Liquidity and Capital Resources](index=44&type=section&id=Liquidity%20and%20Capital%20Resources) As of March 31, 2022, the company held $129.7 million in cash, cash equivalents, and available-for-sale debt securities, having gained approximately $216.7 million in net cash from the business combination, and anticipates continued net losses and cash outflows over the next 12 months for R&D and operational expansion, but believes existing cash resources, including a potential $125 million from SEPA, are sufficient for the next 12 months - As of **March 31, 2022**, the company's primary liquidity sources were cash and cash equivalents (excluding restricted cash) and available-for-sale debt securities, totaling **$129.7 million**[203](index=203&type=chunk) - The company received approximately **$216.7 million** in net cash proceeds from the business combination[203](index=203&type=chunk) - The company anticipates continued net losses and cash outflows over the next **12 months** to support research and development and operational expansion[204](index=204&type=chunk) - The company believes its existing financial resources, including the potential **$125 million** from the Standby Equity Purchase Agreement (SEPA), are sufficient to support operations for the next **12 months**[205](index=205&type=chunk) [Cash Flows Summary](index=44&type=section&id=Cash%20Flows%20Summary) For the three months ended March 31, 2022, operating activities used $31.304 million in cash, primarily due to net loss and changes in working capital; investing activities provided $27.153 million, mainly from sales of available-for-sale debt securities; and financing activities used $0.181 million, primarily for tax payments related to share-based compensation and equipment lease principal payments, resulting in a net decrease of $4.332 million in cash and cash equivalents | Cash Flow Category (in thousands) | For the Three Months Ended March 31, 2022 | For the Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (31,304) | (8,782) | | Net Cash Provided by (Used in) Investing Activities | 27,153 | (202) | | Net Cash Provided by (Used in) Financing Activities | (181) | 34,153 | | Net Increase (Decrease) in Cash and Cash Equivalents | (4,332) | 25,169 | - Cash outflow from operating activities in Q1 2022 was **$31.304 million**, comprising a net loss adjusted for **$19.4 million** in non-cash expenses and gains, and **$11.9 million** in net changes in operating assets and liabilities, which included **$10.7 million** in inventory cost accumulation[208](index=208&type=chunk) - Cash inflow from investing activities in Q1 2022 was **$27.153 million**, primarily from **$30.2 million** in net sales of available-for-sale debt securities, partially offset by **$3.0 million** in property and equipment purchases[211](index=211&type=chunk) - Cash outflow from financing activities in Q1 2022 was **$0.181 million**, mainly for tax payments related to share-based compensation and principal payments on equipment leases[212](index=212&type=chunk) [Contractual Obligations and Commitments](index=45&type=section&id=Contractual%20Obligations%20and%20Commitments) As of March 31, 2022, the company had no material contractual obligations or commitments other than the lease commitments disclosed in its annual report - As of **March 31, 2022**, the company had no material contractual obligations or commitments other than the lease commitments disclosed in its annual report[214](index=214&type=chunk) [Off-Balance Sheet Arrangements](index=45&type=section&id=Off-Balance%20Sheet%20Arrangements) The company has no off-balance sheet arrangements as defined by applicable SEC rules and regulations - The company has no off-balance sheet arrangements as defined by applicable SEC rules and regulations[215](index=215&type=chunk) [Critical Accounting Policies and Estimates](index=45&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) The company's financial statements, prepared under U.S. GAAP, require significant management estimates and assumptions, primarily concerning the valuation of share-based compensation, common stock fair value, and convertible notes, SAFEs, and derivative liabilities, with no material changes to critical accounting policies disclosed in the annual report as of December 31, 2021 - The company's critical accounting policies and estimates primarily involve the valuation of share-based compensation, the fair value of common stock, and the valuation of convertible notes, SAFEs, and derivative liabilities[216](index=216&type=chunk) - There have been no material changes to the critical accounting policies disclosed in the annual report as of **December 31, 2021**[217](index=217&type=chunk) [Recent Accounting Pronouncements](index=46&type=section&id=Recent%20Accounting%20Pronouncements) For details on recent accounting pronouncements, their adoption dates, and the company's assessment of their potential impact on financial condition and results of operations, refer to Note 2 of the unaudited condensed consolidated financial statements in this document - For detailed information on recent accounting pronouncements, refer to Note 2 of the unaudited condensed consolidated financial statements[218](index=218&type=chunk) [Internal Control Over Financial Reporting](index=46&type=section&id=Internal%20Control%20Over%20Financial%20Reporting) The company is designing and implementing internal control over financial reporting systems commensurate with its post-business combination operational scale; while the CEO and CFO deemed disclosure controls and procedures effective as of March 31, 2022, the company is addressing identified areas for improvement and plans its first annual assessment after December 31, 2022 - The company is designing and implementing internal control over financial reporting systems commensurate with its post-business combination operational scale[229](index=229&type=chunk) - The CEO and CFO concluded that the disclosure controls and procedures were effective as of **March 31, 2022**[228](index=228&type=chunk) - The company will conduct its first annual assessment of internal control over financial reporting after **December 31, 2022**, and is addressing identified areas for improvement in its preliminary internal control system[219](index=219&type=chunk)[220](index=220&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) The company faces interest rate, foreign currency, and inflation risks; as of March 31, 2022, it held $117.9 million in available-for-sale debt securities, primarily high-quality fixed and floating-rate instruments, does not use derivatives for interest rate risk, has no significant foreign currency risk, and inflation could adversely impact costs if not offset - The company faces interest rate risk; as of **March 31, 2022**, available-for-sale debt securities had a fair value of **$117.9 million**, primarily invested in U.S. Treasury securities, corporate bonds, and asset-backed securities, with a weighted-average rating of **AA-**[223](index=223&type=chunk) | Interest Rate Change | Approximate Change in Fair Value of Investments (in thousands) | | :--- | :--- | | 2% Decrease | 1,501 | | 1% Decrease | 750 | | 1% Increase | (708) | | 2% Increase | (1,289) | - The company did not have significant foreign currency risk for the three months ended **March 31, 2022**, and **March 31, 2021**[225](index=225&type=chunk) - Inflation may increase the cost of goods and services, potentially adversely affecting the business, financial condition, and results of operations if the company cannot offset these increases through price adjustments or alternative solutions[226](index=226&type=chunk) [Item 4. Controls and Procedures](index=47&type=section&id=Item%204.%20Controls%20and%20Procedures) As of March 31, 2022, the CEO and CFO assessed and concluded that disclosure controls and procedures were effective; the company is continuously designing and implementing internal control over financial reporting systems to match its post-business combination operational scale and plans its first annual assessment after December 31, 2022 - As of **March 31, 2022**, the CEO and CFO assessed and concluded that the disclosure controls and procedures were effective[228](index=228&type=chunk) - The company is continuously designing and implementing internal control over financial reporting systems to match its post-business combination operational scale[229](index=229&type=chunk) - Internal control systems have inherent limitations, providing only reasonable assurance, and may become inadequate due to changing conditions or declining compliance[230](index=230&type=chunk) [Part II - Other Information](index=46&type=section&id=Part%20II%20-%20Other%20Information) [Item 1. Legal Proceedings](index=48&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any legal proceedings that, if determined adversely, would individually or in aggregate have a material adverse effect on its business, financial condition, or results of operations - The company is not currently involved in any legal proceedings that could materially adversely affect its business, financial condition, or results of operations[231](index=231&type=chunk) [Item 1A. Risk Factors](index=48&type=section&id=Item%201A.%20Risk%20Factors) The company's risk factors are described in its 2021 Form 10-K annual report, with no material changes since that filing - The company's risk factors are described in its **2021 Form 10-K** annual report, and there have been no material changes since that filing[232](index=232&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=48&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) On March 23, 2022, the company issued 18,582 common shares to Yorkville as consideration for the Standby Equity Purchase Agreement (SEPA), receiving no cash proceeds, with the issuance exempt under Section 4(a)(2) of the Securities Act - On **March 23, 2022**, the company issued **18,582** common shares to Yorkville as consideration for the Standby Equity Purchase Agreement (SEPA), receiving no cash proceeds[233](index=233&type=chunk) - This securities issuance was made under the exemption provided by Section 4(a)(2) of the Securities Act[233](index=233&type=chunk) [Item 3. Defaults Upon Senior Securities](index=48&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company did not experience any defaults upon senior securities during this reporting period - The company did not experience any defaults upon senior securities[234](index=234&type=chunk) [Item 4. Mine Safety Disclosures](index=48&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This disclosure is not applicable - Mine safety disclosures are not applicable[235](index=235&type=chunk) [Item 5. Other Information](index=48&type=section&id=Item%205.%20Other%20Information) The company has no other information to disclose for this reporting period - The company has no other information to disclose[236](index=236&type=chunk) [Item 6. Exhibits](index=48&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the report, including the certificate of incorporation, bylaws, equity purchase agreement, and certifications from the CEO and CFO | Exhibit Number | Description | | :--- | :--- | | 3.1 | Certificate of Incorporation | | 3.2 | Bylaws | | 10.1 | Equity Purchase Agreement | | 31.1 | CEO Certification | | 31.2 | CFO Certification | | 32.1 | CEO and CFO Certification | | 101.INS | XBRL Instance Document | | 101.SCH | XBRL Taxonomy Extension Schema Document | | 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | | 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | | 101.LAB | XBRL Taxonomy Extension Label Linkbase Document | | 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | [Signatures](index=50&type=section&id=Signatures) [Authorized Signatures](index=50&type=section&id=Authorized%20Signatures) This report was officially signed by Dakota Semler, Chief Executive Officer, and Kingsley E. Afemikhe, Chief Financial Officer of XOS, Inc., on May 9, 2022 - This report was signed by CEO Dakota Semler and CFO Kingsley E. Afemikhe on **May 9, 2022**[242](index=242&type=chunk)