Xos(XOS) - 2021 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION This section provides the unaudited condensed financial statements and management's discussion and analysis for NextGen Acquisition Corporation, covering the period ended March 31, 2021 Item 1. Financial Statements This section presents NextGen Acquisition Corporation's unaudited condensed financial statements, including balance sheets, statements of operations, equity, and cash flows, with detailed notes on accounting policies and financial instrument valuations Condensed Balance Sheets The condensed balance sheets show the company's financial position as of March 31, 2021, compared to December 31, 2020, highlighting changes in assets, liabilities, and equity, particularly a decrease in cash and an increase in derivative warrant liabilities Balance Sheet Metrics | Metric | March 31, 2021 (Unaudited) | December 31, 2020 | | :--------------------------------------- | :--------------------------- | :------------------ | | Cash | $123,845 | $821,331 | | Total current assets | $564,400 | $1,264,496 | | Investments held in Trust Account | $375,017,221 | $375,007,974 | | Total Assets | $375,581,621 | $376,272,470 | | Accounts payable | $119,197 | $5,497 | | Total current liabilities | $206,477 | $122,735 | | Derivative warrant liabilities | $36,124,190 | $28,500,590 | | Total liabilities | $49,455,667 | $41,748,325 | | Total Shareholders' equity | $5,000,004 | $5,000,005 | Unaudited Condensed Statement of Operations The statement of operations for the three months ended March 31, 2021, indicates a net loss primarily driven by a significant change in the fair value of derivative warrant liabilities Statement of Operations Metrics | Metric | Three Months Ended March 31, 2021 | | :------------------------------------------------ | :-------------------------------- | | General and administrative expenses | $753,838 | | General and administrative expenses - related party | $30,000 | | Total operating expenses | ($783,838) | | Change in fair value of derivative warrant liabilities | ($7,623,600) | | Net gain from cash equivalents held in Trust Account | $9,248 | | Net loss | ($8,398,190) | | Basic and diluted net loss per share, non-redeemable ordinary shares | ($0.60) | Unaudited Condensed Statement of Changes in Shareholders' Equity This statement details the changes in shareholders' equity for the three months ended March 31, 2021, showing the impact of shares subject to possible redemption and the net loss on the overall equity balance Shareholders' Equity Changes | Metric | December 31, 2020 | March 31, 2021 (Unaudited) | | :-------------------------------- | :------------------ | :--------------------------- | | Total Shareholders' Equity | $5,000,005 | $5,000,004 | | Shares subject to possible redemption | - | $8,398,189 | | Net loss | - | ($8,398,190) | Unaudited Condensed Statement of Cash Flows The cash flow statement for the three months ended March 31, 2021, indicates a net cash outflow from operating activities, primarily due to the net loss, resulting in a significant decrease in cash balance Cash Flow Metrics | Metric | Three Months Ended March 31, 2021 | | :------------------------------------------ | :-------------------------------- | | Net loss | ($8,398,190) | | Change in fair value of derivative warrant liabilities | $7,623,600 | | Net cash used in operating activities | ($697,486) | | Cash - beginning of the period | $821,331 | | Cash - ending of the period | $123,845 | Notes to Unaudited Condensed Financial Statements These notes provide essential context and detailed information regarding the company's financial statements, covering its formation, IPO, proposed business combination, accounting policies, and financial instrument valuations Note 1—Description of Organization, Business Operations and Basis of Presentation NextGen Acquisition Corporation, a blank check company, completed its IPO and Private Placement, and announced a proposed merger with Xos, Inc - NextGen Acquisition Corporation was incorporated on July 29, 2020, as a blank check company to pursue a business combination[19] Capital Raised Events | Event | Date | Gross Proceeds | | :-------------------- | :----------- | :------------- | | Initial Public Offering | Oct 9, 2020 | $350.0 million | | Over-Allotment Units | Nov 17, 2020 | $25.0 million | | Private Placement | Oct 9, 2020 | $9.0 million | | Second Private Placement | Nov 17, 2020 | $0.5 million | - A total of $375.0 million from the IPO and Private Placement proceeds were placed in a Trust Account[23] - The company entered into a Merger Agreement with Xos, Inc. on February 21, 2021, for a proposed business combination, which includes a domestication to Delaware and a PIPE investment of $220 million[38][41][44] - The company's ability to complete an initial Business Combination may be materially adversely affected by the COVID-19 outbreak[33] Note 2—Summary of Significant Accounting Policies This note outlines key accounting policies, including fair value measurement, derivative warrant liabilities, redeemable shares, income taxes, and net loss per share, noting the company's emerging growth status - Investments held in the Trust Account are classified as trading securities and measured at fair value, primarily in money market funds investing in U.S. government obligations[50] - Derivative warrant liabilities (Public and Private Placement Warrants) are recognized as liabilities at fair value and re-measured each reporting period, with changes recognized in the statement of operations[58][59] - Class A ordinary shares subject to possible redemption are classified as temporary equity due to redemption rights outside the company's control[60] - The company adopted ASU 2020-06 on January 1, 2021, which did not impact its financial position, results of operations, or cash flows[69] - The company is an 'emerging growth company' and has elected to use the extended transition period for complying with new or revised financial accounting standards[71][72] Note 3—Initial Public Offering The company completed its IPO on October 9, 2020, issuing 35,000,000 units at $10.00 each, generating $350.0 million, with additional units from an over-allotment option Initial Public Offering Details | Event | Units Sold | Price Per Unit | Gross Proceeds | | :-------------------- | :----------- | :------------- | :------------- | | Initial Public Offering | 35,000,000 | $10.00 | $350.0 million | | Over-Allotment Units | 2,500,000 | $10.00 | $25.0 million | - Offering costs amounted to approximately $19.8 million, including $12.3 million in deferred underwriting commissions, with additional costs of $1.4 million for the over-allotment[75] Note 4—Private Placement Concurrently with the IPO, the company completed a private placement of 6,000,000 Private Placement Warrants at $1.50 each, generating $9.0 million, with additional warrants sold during the over-allotment Private Placement Details | Event | Warrants Sold | Price Per Warrant | Gross Proceeds | | :-------------------- | :------------ | :---------------- | :------------- | | Initial Private Placement | 6,000,000 | $1.50 | $9.0 million | | Second Private Placement | 333,334 | $1.50 | $0.5 million | - Private Placement Warrants are non-redeemable for cash and exercisable on a cashless basis if held by the Sponsor or permitted transferees, and will expire worthless if a Business Combination is not completed within the Combination Period[79] Note 5—Related Party Transactions This note details transactions with the Sponsor, including Founder Shares, transfer restrictions, a non-interest bearing promissory note, and potential Working Capital Loans - The Sponsor paid $25,000 for 10,062,500 Class B ordinary shares (Founder Shares), with 687,500 shares forfeited due to the partial exercise of the over-allotment option[81] - Founder Shares are subject to transfer restrictions until one year after the business combination or until certain stock price thresholds are met[82] - A non-interest bearing promissory note allows the company to borrow up to $1,000,000 from the Sponsor, with $0 outstanding as of March 31, 2021[83] - Working Capital Loans from related parties may be provided to finance transaction costs, repayable upon business combination or convertible into warrants[84] Note 6—Commitments and Contingencies This note details commitments including registration rights for warrant holders and underwriting agreements, with deferred fees contingent upon business combination completion - Holders of Founder Shares, Private Placement Warrants, and warrants from Working Capital Loans have registration rights[86] Underwriting Fees | Underwriting Fees | Amount | | :-------------------------------- | :------------- | | Upfront underwriting discount | $7.00 million | | Deferred underwriting commissions | $12.25 million | | Additional upfront fee (Over-Allotment) | $0.50 million | | Additional deferred commissions (Over-Allotment) | $0.875 million | - Deferred legal fees exceeding $250,000 are contingent upon the consummation of an initial Business Combination[90] Note 7—Shareholders' Equity The company's authorized and outstanding shares include preference, Class A, and Class B ordinary shares, with Class B shares converting to Class A upon business combination Share Capital Structure | Share Class | Authorized Shares | Issued/Outstanding (March 31, 2021) | | :-------------------- | :---------------- | :---------------------------------- | | Preference Shares | 5,000,000 | 0 | | Class A Ordinary Shares | 500,000,000 | 37,500,000 (32,112,595 redeemable) | | Class B Ordinary Shares | 50,000,000 | 9,375,000 | - Class B ordinary shares convert into Class A ordinary shares on a one-for-one basis at the time of the initial Business Combination, subject to anti-dilution adjustments[97] Note 8—Warrants This note details outstanding Public and Private Placement Warrants, their exercisability, exercise price, and conditions under which the company may redeem Public Warrants Outstanding Warrants | Warrant Type | Outstanding (March 31, 2021) | | :---------------------- | :--------------------------- | | Public Warrants | 12,500,000 | | Private Placement Warrants | 6,333,334 | - Public Warrants become exercisable on the later of 30 days after a Business Combination or 12 months from the IPO closing, with an exercise price of $11.50 per share[99][100] - The company may redeem Public Warrants for cash if the Class A ordinary share price equals or exceeds $18.00, or for Class A ordinary shares if the price equals or exceeds $10.00[103][104] - Private Placement Warrants are non-transferable, non-assignable, and non-redeemable as long as held by initial purchasers or permitted transferees[102] Note 9—Fair Value Measurements This note provides a fair value hierarchy for financial instruments, categorizing them into Level 1, Level 2, and Level 3, with Private Placement Warrants valued using a Monte Carlo simulation Fair Value of Financial Instruments | Financial Instrument | Fair Value (March 31, 2021) | Fair Value (December 31, 2020) | Fair Value Level | | :-------------------------------- | :-------------------------- | :--------------------------- | :--------------- | | Investments held in Trust Account | $375,017,221 | $375,007,974 | Level 1 | | Derivative warrant liabilities Public Warrants | $23,394,190 | $18,683,920 | Level 1 | | Derivative warrant liabilities Private Warrants | $12,730,000 | $9,816,670 | Level 3 | | Total fair value | $411,141,411 | $403,508,564 | | - The fair value of Private Placement Warrants is determined using a Monte Carlo simulation model (Level 3 inputs), while Public Warrants are based on listed market prices (Level 1)[111][112] - The change in fair value of derivative warrant liabilities resulted in a $2.9 million charge to the statement of operations for the three months ended March 31, 2021[111][114] Note 10—Subsequent Events Management has evaluated subsequent events through the financial statement issuance date and concluded that all events requiring recognition or disclosure have been appropriately addressed - Management has evaluated subsequent events and concluded that all such events requiring recognition or disclosure have been recognized or disclosed[115] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and operational results, emphasizing its status as a blank check company focused on a business combination Overview NextGen Acquisition Corporation, a blank check company, completed its IPO and Private Placement in late 2020, raising $375.0 million for a Trust Account to pursue a business combination - NextGen Acquisition Corporation is a blank check company formed on July 29, 2020, to effect a business combination[119] - The company raised $350.0 million from its IPO and $9.0 million from a private placement, with $375.0 million placed in a Trust Account[120][121][122] - The company must complete a Business Combination by October 9, 2022, or it will cease operations and redeem public shares[124] Proposed Xos Business Combination On February 21, 2021, the company entered into a Merger Agreement with Xos, Inc., involving a domestication to Delaware and a $220 million PIPE investment - The company entered into a Merger Agreement with Xos, Inc. on February 21, 2021, for a business combination[125] - The merger will result in Xos becoming a wholly-owned subsidiary, with Xos shareholders receiving 127,626,116 shares of new Xos common stock, representing a pre-transaction equity value of $1,276,261,160[125] - Prior to closing, the company will deregister from the Cayman Islands and domesticate to Delaware, converting existing shares and warrants into NextGen Common Stock and Domesticated NextGen Warrants[126][127] - A PIPE Investment of $220,000,000 for 22,000,000 shares of NextGen Common Stock will be consummated concurrently with the closing[128] Results of Operations For the three months ended March 31, 2021, the company reported a net loss of approximately $8.4 million, primarily due to changes in derivative warrant liabilities Operating Results Summary | Metric | Three Months Ended March 31, 2021 | | :------------------------------------------ | :-------------------------------- | | Net loss | ($8.4 million) | | Change in fair value of derivative warrant liabilities | ($7.6 million) | | General and administrative expenses | ($754,000) | | General and administrative expenses - related party | ($30,000) | | Net gain from cash equivalents held in Trust Account | $9,000 | Liquidity and Capital Resources Liquidity is met by initial funding and Private Placement proceeds, with sufficient working capital and borrowing capacity until a business combination Liquidity and Capital Resources Summary | Metric | As of March 31, 2021 | | :-------------------------------- | :------------------- | | Cash in operating bank account | ~$124,000 | | Working capital | ~$358,000 | | Promissory note outstanding | $0 (up to $1,000,000 available) | - Management believes the company has sufficient working capital and borrowing capacity to meet its needs through the earlier of a Business Combination or one year from filing[37][135] Contractual Obligations The company has no long-term debt, capital lease, operating lease, purchase obligations, or long-term liabilities - The company does not have any long-term debt obligations, capital lease obligations, operating lease obligations, purchase obligations, or long-term liabilities[137] Critical Accounting Policies Critical accounting policies include derivative warrant valuation, redeemable share classification, net loss per share calculation, and the company's status as an emerging growth company - Derivative warrant liabilities are recognized at fair value and re-measured each reporting period, with changes impacting the statement of operations[140][141] - Class A ordinary shares subject to possible redemption are classified as temporary equity[142] - Net loss per ordinary share is computed using the two-class method, excluding redeemable Class A ordinary shares from basic loss per share calculation[143][145][146] - The company adopted ASU 2020-06 on January 1, 2021, with no material impact on financial statements[147] - As an 'emerging growth company,' the company benefits from relaxed reporting requirements, including delaying adoption of new accounting standards[150][151] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, NextGen Acquisition Corporation is not required to provide quantitative and qualitative disclosures about market risk - The company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[153] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were ineffective as of March 31, 2021, due to a material weakness in warrant accounting, leading to a restatement - Disclosure controls and procedures were not effective as of March 31, 2021[154] - A material weakness in internal controls related to the accounting for warrants was identified, leading to a restatement of financial statements[155] PART II. OTHER INFORMATION This section covers other information including legal proceedings, risk factors, unregistered sales of equity securities, and exhibits for NextGen Acquisition Corporation Item 1. Legal Proceedings The company has no legal proceedings to report - There are no legal proceedings[157] Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Form 10-K/A - No material changes from the risk factors previously disclosed in the Company's Form 10-K/A[158] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities Unregistered sales of 22,000,000 common shares to PIPE Investors for $220,000,000 occurred, with no material change in IPO proceeds' planned use - Unregistered sales of 22,000,000 shares of common stock to PIPE Investors for $220,000,000 were made concurrently with the Merger Agreement[159] - No underwriting discounts or commissions were paid for these unregistered sales[160] - No material change in the planned use of proceeds from the Initial Public Offering and Private Placement[162] Item 3. Defaults Upon Senior Securities The company has no defaults upon senior securities to report - There are no defaults upon senior securities[163] Item 4. Mine Safety Disclosures This item is not applicable to the company - Mine Safety Disclosures are not applicable[164] Item 5. Other Information The company has no other information to report under this item - There is no other information to report[165] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications of the principal executive and financial officers and XBRL taxonomy documents - Exhibits include certifications of Principal Executive Officer and Principal Financial Officer (31.1, 32.1) and XBRL Instance and Taxonomy documents (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE)[167] SIGNATURES The report is duly signed on behalf of NextGen Acquisition Corporation by Patrick T. Ford, Chief Financial Officer and Secretary, on May 26, 2021 - The report was signed by Patrick T. Ford, Chief Financial Officer and Secretary, on May 26, 2021[170][171]