Xos (XOS) doubles Q1 revenue but flags serious going concern risk
Filing Impact
Filing Sentiment
Form Type
10-Q
Rhea-AI Filing Summary
Xos, Inc., a commercial EV fleet and charging solutions provider, reported sharply higher revenue but continued losses for the three months ended March 31, 2026. Revenues rose to $11,225 thousand from $5,879 thousand, lifting gross profit to $4,334 thousand from $1,211 thousand.
Operating loss narrowed to $4,677 thousand and net loss to $4,953 thousand from $10,186 thousand, or $(0.43) per share versus $(1.26). Cash and cash equivalents declined to $9,849 thousand while total convertible debt stood at $17,000 thousand. Management discloses substantial doubt about Xos’s ability to continue as a going concern and warns that absent new capital, collections, or refinancing, it may need to seek bankruptcy protection.
Positive
- Improving operating performance: Revenue increased to $11,225 thousand from $5,879 thousand and gross profit rose to $4,334 thousand from $1,211 thousand, while net loss roughly halved to $4,953 thousand, indicating better scale and cost management in the quarter.
Negative
- Material going concern risk: Management states there is substantial doubt about Xos’s ability to continue as a going concern and notes that, without additional capital, collections, or refinancing, it may need to seek protection under Chapters 7 or 11 of the U.S. Bankruptcy Code.
- Thin liquidity versus debt obligations: Cash and cash equivalents of $9,849 thousand at March 31, 2026 compare with $17,000 thousand of convertible debt and scheduled mandatory prepayments totaling $5,000 thousand in 2026 and $9,000 thousand in 2027.
Insights
Revenue is growing, but going concern risk and debt pressure dominate.
Xos more than doubled quarterly revenue to $11,225 thousand and improved gross profit to $4,334 thousand, cutting its net loss to $4,953 thousand. Operating cash outflow also narrowed to $1,588 thousand, showing better cost control and working capital management.
However, cash fell to $9,849 thousand against total assets of $54,417 thousand and convertible debt of $17,000 thousand. The company explicitly states that these conditions raise substantial doubt about its ability to continue as a going concern and notes potential Chapter 7 or 11 protection if it cannot raise capital, collect receivables, or refinance debt.
The mandatory principal schedule on the Convertible Promissory Note totals $5,000 thousand in 2026, $9,000 thousand in 2027, and $3,000 thousand in 2028, creating meaningful near-term funding needs. Future filings for periods after March 31, 2026 will show whether new financing or improved cash generation eases this pressure.
Key Figures
Revenue (in thousands): $11,225
Net loss (in thousands): $4,953
Basic and diluted EPS: $(0.43)
+5 more
8 metrics
Revenue (in thousands)
$11,225
Three months ended March 31, 2026
Net loss (in thousands)
$4,953
Three months ended March 31, 2026
Basic and diluted EPS
$(0.43)
Three months ended March 31, 2026
Cash and cash equivalents (in thousands)
$9,849
As of March 31, 2026
Convertible debt principal (in thousands)
$17,000
As of March 31, 2026
Net cash used in operating activities (in thousands)
$1,588
Three months ended March 31, 2026
Total assets (in thousands)
$54,417
As of March 31, 2026
Inventories (in thousands)
$23,664
As of March 31, 2026
Key Terms
going concern, Convertible Promissory Note, Standby Equity Purchase Agreement, at-the-market offering, +2 more
6 terms
going concern financial
"These conditions and events raise substantial doubt about the Company’s ability to continue as a going concern."
A going concern is a business that is expected to continue its operations and meet its obligations for the foreseeable future, rather than shutting down or selling off assets. This assumption matters to investors because it indicates stability and ongoing profitability, making the business a more reliable investment. Think of it as believing a restaurant will stay open and serve customers, rather than closing down suddenly.
Convertible Promissory Note financial
"Convertible Promissory Note (as amended the “Convertible Note”) outstanding as of May 14, 2026 made to the order of Aljomaih Automotive Co."
A convertible promissory note is a loan a company takes now that can later be turned into shares instead of being repaid in cash. Think of it as lending money with the option to accept ownership in the business down the road; that matters to investors because it affects who gets paid first, how much ownership existing shareholders keep, and the company’s future valuation and cash needs. Terms such as conversion price, interest and maturity determine the financial impact.
Standby Equity Purchase Agreement financial
"the Company entered into a Standby Equity Purchase Agreement with YA II PN, Ltd. (“Yorkville”), which was subsequently amended on June 22, 2023"
A standby equity purchase agreement is a contract in which an investor or group agrees to buy a company’s newly issued shares on demand, giving the company a ready source of cash it can tap when needed. Think of it like a line of credit made with stock instead of a loan: it provides financial backup but can increase the number of shares outstanding, diluting existing owners and affecting per‑share value, so investors watch these deals for their impact on ownership and earnings per share.
at-the-market offering financial
"for an at-the-market offering by the Company of up to $5.4 million of its Common Stock (the “ATM Offering”)."
An at-the-market offering is a method companies use to sell new shares of stock directly into the open market over time, rather than all at once. This allows them to raise money gradually, similar to selling small pieces of a product instead of a large batch. For investors, it means the company can access funding more flexibly, but it may also increase the supply of shares and influence the stock’s price.
warrants financial
"Public Warrants means the redeemable warrants to purchase shares of Common Stock at an exercise price of $345 per share"
Warrants are special documents that give you the right to buy a company's stock at a set price before a certain date. They are often used as a way for companies to attract investors or raise money, and their value can increase if the company's stock price goes up.
Earnings Snapshot
Revenue (in thousands): $11,225
Q1 2026
Revenue (in thousands)
$11,225
Net loss (in thousands)
$4,953
Basic and diluted EPS
$(0.43)
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________________________________________________
FORM 10-Q
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended March 31, 2026
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
______________________________________________________________________________
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
(Address of Principal Executive Offices) | (Zip Code) | |||||||
Registrant’s telephone number, including area code: (818 ) 316-1890
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of exchange on which registered | ||||||
The | ||||||||
The | ||||||||
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:
| Large accelerated filer | ☐ | Accelerated filer | ☐ | ||||||||
| ☒ | Smaller reporting company | ||||||||||
| Emerging growth company | |||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
The registrant had outstanding 12,122,736 shares of Common Stock, $0.0001 par value as of May 11, 2026.
Table of Contents
TABLE OF CONTENTS
| Page | |||||
Part I - Financial Information | 3 | ||||
Item 1. Financial Statements (Unaudited) | 6 | ||||
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations | 32 | ||||
Item 3. Quantitative and Qualitative Disclosures About Market Risk | 41 | ||||
Item 4. Controls and Procedures | 41 | ||||
Part II - Other Information | 44 | ||||
Item 1. Legal Proceedings | 44 | ||||
Item 1A. Risk Factors | 44 | ||||
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 44 | ||||
Item 3. Defaults Upon Senior Securities | 44 | ||||
Item 4. Mine Safety Disclosures | 44 | ||||
Item 5. Other Information | 45 | ||||
Item 6. Exhibits | 45 | ||||
Signatures | 46 | ||||
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Forward-Looking Statements
This Quarterly Report on Form 10-Q (this “Report”), including, without limitation, statements under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”). We have based these forward-looking statements on our current expectations and projections about future events. All statements, other than statements of present or historical fact included in this Report are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “seek,” “should,” “will,” “would” or the negative of such terms or other similar expressions. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. We caution you that these forward-looking statements are subject to numerous risks and uncertainties, most of which are difficult to predict and many of which are beyond our control. We claim the protection of the safe harbor contained in the Private Securities Litigation Reform Act of 1995.
As a result of a number of known and unknown risks and uncertainties, our actual results or performance may be materially different from those expressed or implied by forward-looking statements. Some factors that could cause actual results to differ include:
•There is substantial doubt about our ability to continue as a going concern through the next 12 months from the date of the unaudited condensed consolidated financial statements in this Report.
•Our limited operating history makes evaluating our business and future prospects difficult and may increase the risk of your investment.
•Our mix of offerings is novel in the industry and has yet to be tested in the long term.
•We are an early-stage company with a history of losses and may incur significant expenses and continuing losses for the foreseeable future.
•Our ability to generate or maintain positive cash flow is uncertain.
•Our financial results may vary significantly from period to period due to fluctuations in our product development cycle and operating costs, product demand and other factors.
•Our business plans require a significant amount of capital. In addition, our future capital needs may require us to sell additional equity or debt securities that may dilute our stockholders or introduce covenants that may restrict our operations or our ability to pay dividends.
•We have incurred substantial debt, including $15.5 million principal amount of an Convertible Promissory Note (as amended the “Convertible Note”) outstanding as of May 14, 2026 made to the order of Aljomaih Automotive Co. (“Aljomaih”), together with accrued interest thereon, which is due in quarterly installments. The Convertible Note could impair our flexibility and access to capital and adversely affect our financial position, and our business would be adversely affected if we are unable to service our debt obligations and are subject to default.
•We have experienced and may in the future experience significant delays in the design, manufacturing and wide-spread deployment of our products.
•We previously restated our financial statements for several prior periods, which resulted in unanticipated costs and such restatement, or the perception that our results may again need to be restated, may adversely affect investor confidence, our stock price, our ability to raise capital in the future and our reputation.
•We identified material weaknesses in our internal control over financial reporting, and we may identify additional material weaknesses in the future that may cause us to fail to meet our reporting obligations or result in material misstatements of our financial statements. If we fail to remediate any material weaknesses or if we otherwise fail to establish and maintain effective control over financial reporting, our ability to accurately and timely report our financial results could be adversely affected.
•If we fail to successfully tool our manufacturing facilities or if our manufacturing facilities become inoperable, we will be unable to produce our vehicles and our business will be harmed.
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•We are or may be subject to risks associated with strategic alliances or acquisitions and may not be able to identify adequate strategic relationship opportunities, or form strategic relationships, in the future.
•We derive a significant portion of our revenue from a small number of customers; if revenue derived from these customers decreases or the timing of such revenue fluctuates, our business and results of operations could be negatively affected.
•Our delay in providing sufficient charging solutions for our vehicles has resulted in the delay of the delivery of our vehicles to customers.
•We are dependent on our suppliers, some of which are limited source or single-source suppliers, and their inability or unwillingness to deliver necessary components and materials used in our products at prices and volumes, performance and specifications acceptable to us could harm our business.
•Our business and prospects depend significantly on our ability to build the Xos brand. We may not successfully establish, maintain and strengthen the Xos brand, and our brand and reputation could be harmed by negative publicity regarding Xos or our products.
•If we fail to manage our growth effectively, we may not be able to further design, develop, manufacture and market our products successfully.
•Our battery packs use lithium-ion battery cells, a class of batteries which have been observed to catch fire or vent smoke and flame.
•We have experienced, and may again experience increases in costs, disruption of supply or shortage of materials, in particular for lithium-ion battery cells, semiconductors and other key components.
•We rely on complex machinery for the manufacture of our products, which involves a significant degree of risk and uncertainty in terms of operational performance and costs.
•We may be unable to realize the opportunities expected from the acquisition of ElectraMeccanica Vehicles Corp. (“ElectraMeccanica”).
•We may face regulatory limitations on our ability to sell vehicles directly to consumers, including restrictions in tax incentive policies.
•Compliance obligations and/or the actual or perceived failure to comply with existing or future laws, regulations, contracts, self-regulatory schemes, standards, and other obligations related to data privacy and security (including security incidents) could harm our business.
•The performance characteristics of our products may vary, due to factors outside of our control, which could harm our ability to develop, market and deploy our products.
•We may have insufficient reserves to cover future warranty or part replacement needs or other vehicle, powertrain and battery pack repair requirements, including any potential software upgrades.
•We have experienced product recalls and may experience future product recalls.
•We are highly dependent on the services of Dakota Semler and Giordano Sordoni, our co-founders, as well as our key personnel and senior management, and if we are unable to attract and retain key personnel and hire qualified management, technical and electric vehicle engineering personnel, our ability to compete could be materially and adversely affected.
•The commercial vehicle market is highly competitive, and we may not be successful in competing in this industry.
•Our growth depends on the last-mile and return-to-base segment’s willingness to adopt electric vehicles.
•We have been and may continue to be impacted by macroeconomic conditions, including supply chain disruption, trade policies and tariffs, health crises, inflation, uncertain credit and global financial market, including potential bank failures, labor discord, and geopolitical events, such as the ongoing conflicts between Russia and Ukraine and in the Middle East, and political tensions with China, including potential for economic downturns as a result of the conflict with Iran and shortages of access to oil, energy and other key industrial inputs.
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A discussion of these and other factors affecting our business and prospects is set forth in Part II, Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the Securities and Exchange Commission (the “SEC”) on March 30, 2026 (as amended by Amendment No. 1 thereto, filed with the SEC on April 21, 2026, the “2025 Form 10-K”). We encourage investors to review these risk factors.
Although we believe that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore such statements included in this Report may not prove to be accurate. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results and plans could differ materially from those expressed in any forward-looking statements. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that the results or conditions described in such statements or our objectives and plans will be achieved.
Forward-looking statements and such risks, uncertainties and other factors speak only as of the date of this Report, and we expressly disclaim any obligation or undertaking to update or revise any forward-looking statement contained herein to reflect any change in our expectations with regard thereto, or any other change in events, conditions or circumstances on which any such statement is based, except to the extent otherwise required by law.
Part I - Financial Information
Glossary of Terms
Unless otherwise stated in this Report or the context otherwise requires, reference to:
•“Business Combination” means the Domestication, the Merger and the other transactions contemplated by the Merger Agreement, collectively;
•“Closing” means the closing of the Business Combination;
•“Common Stock” means the shares of common stock, par value $0.0001 per share, of Xos;
•“Domestication” means the transfer by way of continuation and deregistration of NextGen from the Cayman Islands and the continuation and domestication of NextGen as a corporation incorporated in the State of Delaware;
•“Hub” means our rapid-deployment mobile charger designed to expedite fleet transitions to electric vehicles;
•“Legacy Xos” means Xos, Inc., a Delaware corporation, prior to the consummation of the Business Combination, now known as Xos Fleet, Inc.;
•“Merger” means the merger of NextGen Merger Sub with and into Legacy Xos pursuant to the Merger Agreement, with Legacy Xos as the surviving company in the Merger and, after giving effect to such Merger, Legacy Xos becoming a wholly owned subsidiary of Xos;
•“Merger Agreement” means that certain Merger Agreement, dated as of February 21, 2021, as amended on May 14, 2021, by and among NextGen, Sky Merger Sub I, Inc., a Delaware corporation and direct wholly owned subsidiary of NextGen, and Legacy Xos;
•“NextGen” means NextGen Acquisition Corp., a Cayman Islands exempted company, prior to the consummation of the Domestication;
•“Powertrain” means an assembly of every component that pushes a vehicle forward. A vehicle’s powertrain creates power from the engine and delivers it to the wheels on the ground. The key components of a powertrain include an engine, transmission, driveshaft, axles, and differential;
•“Preferred Stock” means preferred stock, par value $0.0001 per share, authorized under the Certificate of Incorporation of Xos;
•“Private Placement Warrants” means the warrants to purchase Common Stock originally issued in a private placement in connection with the initial public offering of NextGen;
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•“Public Warrants” means the redeemable warrants to purchase shares of Common Stock at an exercise price of $345 per share originally issued in connection with the initial public offering of NextGen;
•“Warrants” means Private Placement Warrants and Public Warrants;
•“X-Platform” means our proprietary, purpose-built vehicle chassis platform;
•“Xos” means the reporting issuer, Xos, Inc. (formerly known as NextGen Acquisition Corporation), together with its consolidated subsidiaries;
•“Xos Energy Solutions” means our comprehensive charging infrastructure business through which we offer mobile and stationary multi-application chargers, mobile energy storage and turnkey energy infrastructure services to accelerate client transitions to electric fleets; and
•“Xosphere” means our proprietary fleet management platform.
Item 1. Financial Statements
Index to Unaudited Condensed Consolidated Financial Statements
| Page | |||||
Condensed Consolidated Balance Sheets as of March 31, 2026 (Unaudited) and December 31, 2025 | 7 | ||||
Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2026 (Unaudited) and 2025 (Unaudited) | 8 | ||||
Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2026 (Unaudited) and 2025 (Unaudited) | 9 | ||||
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2026 (Unaudited) and 2025 (Unaudited) | 10 | ||||
Notes to Condensed Consolidated Financial Statements (Unaudited) | 12 | ||||
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Xos, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
Unaudited
(in thousands, except par value)
March 31, 2026 | December 31, 2025 | ||||||||||
| Assets | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
Accounts receivable, net | |||||||||||
Inventories | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Total current assets | |||||||||||
| Property and equipment, net | |||||||||||
| Operating lease right-of-use assets, net | |||||||||||
Other non-current assets | |||||||||||
| Total assets | $ | $ | |||||||||
Liabilities and Stockholders’ Equity | |||||||||||
| Accounts payable | $ | $ | |||||||||
Convertible debt, current | |||||||||||
| Other current liabilities | |||||||||||
| Total current liabilities | |||||||||||
Common stock warrant liability | |||||||||||
Other non-current liabilities | |||||||||||
Convertible debt, non-current | |||||||||||
| Total liabilities | |||||||||||
Commitments and contingencies (Note 13) | |||||||||||
Stockholders’ Equity | |||||||||||
Common stock $ | |||||||||||
Preferred stock $ | |||||||||||
Additional paid-in capital | |||||||||||
| Accumulated deficit | ( | ( | |||||||||
Total stockholders’ equity | |||||||||||
| Total liabilities and stockholders’ equity | $ | $ | |||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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Xos, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
Unaudited
(in thousands, except per share amounts)
Three Months Ended March 31, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| Revenues | $ | $ | ||||||||||||
Cost of goods sold | ||||||||||||||
Gross profit | ||||||||||||||
Operating expenses | ||||||||||||||
General and administrative | ||||||||||||||
Research and development | ||||||||||||||
Sales and marketing | ||||||||||||||
Total operating expenses | ||||||||||||||
Loss from operations | ( | ( | ||||||||||||
Other expense, net | ( | ( | ||||||||||||
Change in fair value of derivative instruments | ( | |||||||||||||
Loss before provision for income taxes | ( | ( | ||||||||||||
Provision for income taxes | ||||||||||||||
Net loss | $ | ( | $ | ( | ||||||||||
Net loss per share | ||||||||||||||
Basic | $ | ( | $ | ( | ||||||||||
Diluted | $ | ( | $ | ( | ||||||||||
Weighted average shares outstanding | ||||||||||||||
| Basic | ||||||||||||||
| Diluted | ||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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Xos, Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders’ Equity
Unaudited
(in thousands)
| Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total Stockholders’ Equity | |||||||||||||||||||||||||||||
| Shares | Par Value | |||||||||||||||||||||||||||||||
Balance at December 31, 2024 | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
| Stock options exercised | — | — | — | — | — | |||||||||||||||||||||||||||
| Stock based compensation expense | — | — | — | |||||||||||||||||||||||||||||
| Issuance of common stock for vesting of restricted stock units | — | — | — | — | ||||||||||||||||||||||||||||
| Shares withheld related to net share settlement of stock-based awards | ( | — | ( | — | ( | |||||||||||||||||||||||||||
| Net loss | — | — | — | ( | ( | |||||||||||||||||||||||||||
Balance at March 31, 2025 | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
| Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total Stockholders’ Equity | |||||||||||||||||||||||||||||
| Shares | Par Value | |||||||||||||||||||||||||||||||
| Balance at December 31, 2025 | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
| Stock based compensation expense | — | — | — | |||||||||||||||||||||||||||||
| Issuance of common stock for vesting of restricted stock units | — | — | — | — | ||||||||||||||||||||||||||||
| Shares withheld related to net share settlement of stock-based awards | ( | — | ( | — | ( | |||||||||||||||||||||||||||
| Net loss | — | — | — | ( | ( | |||||||||||||||||||||||||||
| Balance at March 31, 2026 | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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Xos, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
Unaudited
(in thousands, unaudited)
Three Months Ended March 31, | |||||||||||
2026 | 2025 | ||||||||||
| OPERATING ACTIVITIES: | |||||||||||
Net loss | $ | ( | $ | ( | |||||||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||
| Depreciation | |||||||||||
Amortization of right-of-use assets | |||||||||||
| Amortization of debt discounts and issuance costs | |||||||||||
| Amortization of insurance premiums | |||||||||||
Inventory reserve | ( | ( | |||||||||
Impairment of property and equipment | |||||||||||
Change in fair value of derivative instruments | ( | ||||||||||
| Stock-based compensation expense | |||||||||||
Bad debt expense (benefit) | ( | ||||||||||
Other non-cash items | ( | ( | |||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Accounts receivable | ( | ||||||||||
| Inventories | ( | ||||||||||
| Prepaid expenses and other current assets | ( | ( | |||||||||
| Other assets | |||||||||||
| Accounts payable | ( | ( | |||||||||
Other liabilities | |||||||||||
Net cash used in operating activities | ( | ( | |||||||||
| INVESTING ACTIVITIES: | |||||||||||
Proceeds from the disposal of assets held for sale and other assets | |||||||||||
| Purchase of property and equipment | ( | ||||||||||
Net cash provided by investing activities | |||||||||||
| FINANCING ACTIVITIES: | |||||||||||
Payments on convertible notes | ( | ||||||||||
| Payment for short-term insurance financing note | ( | ( | |||||||||
Taxes paid related to net share settlement of stock-based awards | ( | ( | |||||||||
| Principal payment of equipment leases | ( | ( | |||||||||
| Proceeds from short-term insurance financing note | |||||||||||
Stock options exercised | |||||||||||
Net cash used in financing activities | ( | ( | |||||||||
Net decrease in cash and cash equivalents | ( | ( | |||||||||
Cash and cash equivalents, beginning of period | |||||||||||
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Cash and cash equivalents, end of period | $ | $ | |||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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Xos, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
Unaudited
Note 1— Description of Business
Xos, Inc., together with its wholly owned subsidiaries (collectively, the “Company” or “Xos”) is a leading fleet electrification solutions provider committed to the decarbonization of commercial transportation. Xos designs and manufactures Classes 5 through 8 battery-electric commercial vehicles designed to travel on last-mile, back-to-base routes of up to 200 miles per day. Xos also offers charging infrastructure products and services through Xos Energy Solutions™ to support electric vehicle fleets. The Company’s proprietary fleet management software, Xosphere™, integrates vehicle operation and vehicle charging aimed at providing commercial fleet operators a more seamless and cost-efficient vehicle ownership experience than traditional internal combustion engine counterparts. Xos developed the X-Platform (its proprietary, purpose-built vehicle chassis platform) specifically for the medium-duty commercial vehicle segment with a focus on last-mile commercial fleet operations. Xos seeks to offer customers a suite of commercial products and services to facilitate electric fleet operations and seamlessly transition their traditional combustion-engine fleets to battery-electric vehicles.
Business Combination
Xos, Inc. was initially incorporated on July 29, 2020, as a Cayman Islands exempted company under the name “NextGen Acquisition Corporation” (“NextGen”). On August 20, 2021, the transactions contemplated by the Agreement and Plan of Merger, as amended on May 14, 2021, by and among NextGen, Sky Merger Sub I, Inc., a Delaware corporation and a direct wholly owned subsidiary of NextGen (“Merger Sub”), and Xos, Inc., a Delaware corporation (now known as Xos Fleet, Inc., “Legacy Xos”), were consummated (the “Closing”), whereby Merger Sub merged with and into Legacy Xos, the separate corporate existence of Merger Sub ceased and Legacy Xos became the surviving corporation and a wholly owned subsidiary of NextGen (such transaction the “Merger” and, collectively with the Domestication, the “Business Combination”), and Xos became the publicly traded entity listed on Nasdaq.
Risks and Uncertainties
In recent years, the United States and other significant markets have experienced cyclical downturns and worldwide economic conditions remain uncertain. Global general economic and political conditions, such as recession, inflation, uncertain credit and global financial markets, including potential future bank failures, health crises, supply chain disruption, fuel prices, international currency fluctuations, changes to trade policies and tariffs (or the perception that such changes may occur), and geopolitical events such as local and national elections, corruption, political instability and acts of war or military conflict, or terrorism, make it difficult for our customers and us to accurately forecast and plan future business activities, and could cause our customers to slow spending on our products and services or impact their ability to make timely payments. A weak or declining economy could also strain our suppliers, possibly resulting in supply disruption. In addition, there is a risk that our current or future suppliers, service providers, manufacturers or other partners may not survive such difficult economic times, which would directly affect our ability to attain our operating goals on schedule and on budget. The ultimate impact of current economic conditions on the Company is uncertain, but it may have a material negative impact on the Company’s business, operating results, cash flows, liquidity and financial condition.
Additionally, ongoing geopolitical events, such as the military conflicts between Russia and Ukraine, in Israel and with Iran or tensions with China and related sanctions and export control restrictions, may increase the severity of supply chain disruptions and further hinder our ability to source inventory for our vehicles. These conflicts continue to evolve and the ultimate impact on the Company is uncertain, but any prolonged conflict may have a material negative impact on the Company’s business, operating results, cash flows, liquidity and financial condition.
Although the Company has used the best current information available to it in its estimates, actual results could materially differ from the estimates and assumptions developed by management.
Liquidity
As an early-stage company, the Company has incurred net losses and cash outflows since its inception. The Company may continue to incur net losses and cash outflows in accordance with its operating plan as the Company continues to scale its operations to meet anticipated demand and establish its product and service offerings. As a result, the Company’s ability to access capital is critical and until the Company can generate sufficient revenue to cover its operating expenses, working capital and capital expenditures, the Company will need to raise additional capital in order to fund and scale its operations. The
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Company may raise additional capital through a combination of debt financing, other non-dilutive financing and/or equity financing, including through asset-based lending and/or receivable financing and collecting on its outstanding receivables. The Company’s ability to raise or access capital when needed is not assured and, if capital is not available to the Company when, and in the amounts needed, the Company could be required to delay, scale back or abandon some or all of its development programs and other operations, which could materially harm its business, prospects, financial condition and operating results. Global general economic conditions continue to be unpredictable and challenging in many sectors, with disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from the effects of potential recessions, rising inflation rates, potential bank failures, supply chain disruption, fuel prices, international currency fluctuations, changes to trade policies and tariffs, and geopolitical events such as local and national elections, corruption, political instability and acts of war or military conflicts including repercussions of the wars between Russia and Ukraine and in Israel, conflicts with Iran and tensions with China, or terrorism.
As of March 31, 2026, the Company’s principal sources of liquidity were its cash and cash equivalents aggregating to $9.8 million. The Company’s short- and long-term uses of cash are for working capital and to pay interest and principal on its debt. The Company has incurred losses in nearly every period since inception and had net cash used in operating activities of $1.6 million and $4.8 million for both the three months ended March 31, 2026 and 2025, and net cash provided by operating activities of $5.4 million for the year ended December 31, 2025.
As an early-stage growth company, the Company's ability to access capital is critical. However, there can be no assurance such capital will be available to the Company when needed, on favorable terms or at all. The consolidated financial information does not include any adjustments that might result from the outcome of this uncertainty. These conditions and events raise substantial doubt about the Company’s ability to continue as a going concern.
The Company intends to employ various strategies to obtain the required funding for future operations, which may include capital raising strategies such as debt financing, other non-dilutive financing and/or equity financing, including through asset-based lending and/or receivable financing and collecting on its outstanding receivables. The Company may sell additional shares of its common stock pursuant to the ATM Offering (as defined below in Note 9 — Equity), subject to certain limitations on the amount of proceeds that may be raised. The Company also had the SEPA (as defined below in Note 9 — Equity), although its ability to access the SEPA was contingent upon specified conditions, including having a post-effective amendment to the Registration Statement on Form S-1, filed on July 27, 2023 filed with the SEC and declared effective. Moreover, the SEPA expired on February 11, 2026.
On August 9, 2022, the Company entered into a note purchase agreement (as amended on September 28, 2022, the “Note Purchase Agreement”) with Aljomaih Automotive Co. (“Aljomaih”) under which the Company agreed to sell and issue to Aljomaih a convertible promissory note with a principal amount of $20.0 million and a maturity date of August 11, 2025. On August 8, 2025, the Company and Aljomaih entered into Amendment Number One to the Note Purchase Agreement and amended and restated the Convertible Note issued thereunder. On August 14, 2025, the Company and Aljomaih entered into a Letter Agreement regarding certain restrictions on convertibility of the Convertible Note (Amendment Number One to the Note Purchase Agreement, the amendment and restatement of the Convertible Note and the Letter Agreement are referred to collectively as the “Aljomaih Amendments”). Among other things, the Aljomaih Amendments extended the maturity of the Convertible Note such that it is now due in ten quarterly installments payable between November 11, 2025 and February 11, 2028. The first four such installments are $1.5 million each, the fifth through eighth installments are $2.0 million each and the final two installments are $3.0 million each; provided that such installments may be increased in the event certain financing activities result in proceeds to the Company in excess of four times the aggregate amount of Convertible Note principal payments otherwise required on or prior to any installment date. Pursuant to the Aljomaih Amendments, and notwithstanding the postponement of maturity of the Convertible Note, interest that had accrued on the Convertible Note through August 11, 2025, of approximately $6.0 million in the aggregate, was converted into 1,803,262 shares of Common Stock at the 10 -day VWAP (as defined in the Convertible Note) on August 25, 2025.
Based on the Company’s strategies to raise funds as described above and Xos’s cash and cash equivalents as of March 31, 2026, the Company believes there is substantial doubt about such resources providing sufficient liquidity for the next twelve months following the date of the issuance of the unaudited condensed consolidated financial statements in this Report. Management is presently exploring options to increase liquidity to resolve this concern and facilitate further growth. As a result, it is not probable that Xos’s plans alleviate the substantial doubt about the Company’s ability to continue as a going concern for at least one year from the issuance of the unaudited condensed consolidated financial statements in this Report based on plans Management has been able to execute through the date of the issuance of the unaudited condensed consolidated financial statements in this Report, although additional actions are under review. Absent the Company being able to collect on its outstanding accounts receivable, obtain a sufficient level of new capital in the near-term and/or obtain replacement financing
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for, or further extend the maturity of, existing debt, the Company could be required to seek protection under Chapters 7 or 11 of the United States Bankruptcy Code. This could potentially cause the Company to cease operations.
Supply Chain Disruptions
While the Company’s ability to source certain critical inventory items has been steadily improving, it continues to experience the effects of global economic conditions, which have impacted the availability, cost, and lead times of certain components. The Company has also observed intermittent shortages of specific components, primarily in power electronics and harnesses, and disruptions to the supply of components.
Fluctuating tariff regimes—particularly those targeting imports of power electronics, battery components, semiconductors, and structural materials—have introduced variability in the Company’s cost structure and procurement planning. During the period, tariffs implemented under Section 232 of the Trade Expansion Act of 1962 and Section 301 of the Trade Act of 1974 remained in effect and applied to certain imported components used by the Company. In addition, a temporary global import surcharge implemented under Section 122 of the Trade Act of 1974 was in effect during the period and is currently scheduled to expire in July 2026. Ongoing and potential future trade actions, including active investigations under Sections 232 and 301, may result in additional tariffs affecting components within the Company’s supply chain.
The Company has taken actions to mitigate these impacts, including qualifying alternative suppliers, renegotiating pricing and delivery terms, and managing inventory levels of critical components. However, ongoing supply chain disruptions, tariff measures, and supplier constraints may continue to affect the Company’s cost structure, production schedules, and ability to source components on commercially reasonable terms.
Note 2— Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements
The following is a summary of the significant accounting policies consistently applied in the preparation of the accompanying unaudited condensed consolidated financial statements:
Basis of Presentation
The Company’s unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial information. They do not include all of the information and footnotes required by U.S. GAAP for complete audited financial statements. The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
In the opinion of management, all adjustments (primarily consisting of normal accruals) considered for a fair presentation have been included. Operating results for the three months ended March 31, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of and for the years ended December 31, 2025 and 2024 presented in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on March 30, 2026, as amended by Amendment No. 1 thereto on Form 10-K/A filed with the SEC on April 21, 2026.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the balance sheet date, as well as reported amounts of revenues and expenses during the reporting periods. The areas with significant estimates and judgments include, among others, inventory valuation, incremental borrowing rates for assessing operating and financing lease liabilities, useful lives of property and equipment, stock-based compensation, and product warranty liability. Management bases its estimates on historical experience and on various other assumptions believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from those estimates, and such differences could be material to the Company’s financial statements.
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Reclassifications
Certain prior period balances have been reclassified to conform to the current period presentation in the unaudited condensed consolidated financial statements and the accompanying notes, including (i) classification of amounts comprising employee-related costs and stock-based compensation as described in Note 17 — Segment Reporting and (ii) classification of amounts comprising contract liabilities as described in Note 6 — Selected Balance Sheet Data. These reclassifications have no effect on previously reported total assets, total liabilities or net loss.
Warranty Liability
The Company provides customers with a product warranty that assures that the products meet standard specifications and is free for periods typically between 2 to 5 years. The Company accrues warranty reserve for the products sold, which includes its best estimate of the projected costs to repair or replace items under warranties and recalls if identified. These estimates are based on actual claims incurred to date and an estimate of the nature, frequency and costs of future claims. These estimates are inherently uncertain given the Company’s relatively short history of sales, and changes to its historical or projected warranty experience may cause material changes to the warranty reserve in the future. Claims incurred under the Company’s standard product warranty programs are recorded based on open claims. The Company recorded warranty liability within other current liabilities in the consolidated balance sheets as of March 31, 2026 and December 31, 2025.
The reconciliation of the change in the Company’s product liability balances during the three months ended March 31, 2026 and 2025 consisted of the following (in thousands):
Three Months Ended March 31, | ||||||||||||||
2026 | 2025 | |||||||||||||
| Warranty liability, beginning of period | $ | $ | ||||||||||||
| Reduction in liability (payments) | ( | ( | ||||||||||||
Increase in liability | ||||||||||||||
| Warranty liability, end of period | $ | $ | ||||||||||||
Concentrations of Credit and Business Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times, may exceed the Federal Depository Insurance Corporation coverage limit of $250,000. As of March 31, 2026 and 2025, the Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.
During the three months ended March 31, 2026, three customers accounted for 49 %, 20 %, and 12 % of the Company’s revenues. During the three months ended March 31, 2025, one customer accounted 22 % and three customers accounted for 14
Accounts receivable totaled $7.4 million, net of allowance of $59,000 , and $6.0 million, net of allowance of $49,000 , as of March 31, 2026 and December 31, 2025, respectively. As of March 31, 2026, six customers accounted for 26 %, 15 %, 13 %, 12 %, 10 %, and 10 % of the Company’s accounts receivable. As of December 31, 2025, four customers accounted for 17 %, 14 %, 12 %, and 10 % of the Company’s accounts receivable.
Concentration of Supply Risk
The Company is dependent on its suppliers, the majority of which are single-source suppliers, and the inability of these suppliers to deliver necessary components of its products according to the schedule and at prices, quality levels and volumes acceptable to the Company, or its inability to efficiently manage these components, could have a material adverse effect on the Company’s results of operations and financial condition.
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As of March 31, 2026, two vendors accounted for 20 % and 11 % of the Company’s accounts payable. As of December 31, 2025, two vendors accounted for 12 %, and 11 %, of the Company’s accounts payable.
Segment Information
The Company operates under one
Recent Accounting Pronouncements Issued and Adopted:
In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments – Credit Losses (Topic 326), to allow entities to elect a practical expedient that assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset when estimating expected credit losses for current accounts receivable and current contract assets. These amendments are effective for the Company for annual and interim periods in 2026 applied prospectively, with early adoption permitted. We adopted this ASU on a prospective basis effective January 1, 2026 and elected the practical expedient permitted under this ASU. The impact of the adoption of the amendments in this update was not material to the Company’s unaudited condensed consolidated financial statements.
Recent Accounting Pronouncements Issued and not yet Adopted:
In November 2024, the FASB issued ASU No. 2024-03, Income Statement -Reporting Comprehensive Income - Expense Disaggregation Disclosures, and in January 2025, the FASB issued ASU 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date, to improve the disclosures about a public business entity’s expenses and address requests from investors for more detailed information about the types of expenses including purchases of inventory, employee compensation, depreciation and intangible asset amortization in commonly presented expense captions such as cost of sales, selling, general and administrative expense, and research and development. As clarified, these amendments are effective for the Company for annual periods in 2027, applied prospectively, with early adoption permitted, and interim periods beginning in 2028. The Company intends to adopt the amendments in this update prospectively in 2027 for annual periods and in 2028 for interim periods. The impact of the adoption of the amendments in this update is not expected to be material to the Company’s consolidated financial position and results of operations, as the requirements only require more detailed disclosures in the footnotes to the Company’s consolidated financial statements.
In September 2025, the FASB issued ASU No. 2025-06, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, to update the accounting for software developed for internal use to better align with software development as it has evolved from a sequential development method to incremental and iterative development methods. The amendments in this update require an entity to begin capitalizing internal-use software costs when management has authorized and committed to funding the software project and it is probable that the project will be completed and the software will be used to perform the function intended. These amendments are effective for the Company for annual and interim periods in 2028, applied either prospectively, retrospectively, or by a modified approach, with early adoption permitted. As the Company does not currently have a material amount of software developed for internal use, the impact of the adoption of the amendments in this update is not expected to be material to the Company’s consolidated financial position and results of operations.
In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, to update the disclosure requirements for interim reporting periods. The amendments in this update require additional disclosure of events since the end of since the end of the prior annual reporting period that have a material impact on the entity. The amendments are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027,
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applied either prospectively, with early adoption permitted, or by a retrospective approach. The impact of the adoption of the amendments in this update is not expected to be material to the Company’s consolidated financial position and results of operations, as the requirements only require more detailed disclosures in the footnotes to the Company’s consolidated financial statements. The Company intends to adopt the amendments in this update prospectives for interim periods in 2028. The impact of the adoption of the amendments in this update is not expected to be material to the Company’s unaudited condensed consolidated financial position and results of operations, as the requirements only require more detailed disclosures in the Company’s interim unaudited condensed consolidated financial statements and accompanying footnotes .
In December 2025, the FASB issued ASU No. 2025-12, Codification Improvements, to address thirty-four items that clarify, correct errors, or make minor improvements to existing topics. Generally, the amendments in this update are not intended to result in significant changes for most entities. The amendments are effective for interim reporting periods within annual reporting periods beginning after December 15, 2026, applied either prospectively, with early adoption permitted, or by a retrospective approach on an issue-by-issue basis. The Company is currently evaluating the provisions of this amendment and do not expect this amendment to have a material impact on our consolidated financial statements.
The Company is still evaluating all other applicable recently issued accounting pronouncements to evaluate the impact of the adoption of such pronouncements on its consolidated financial statements or notes thereto.
Note 3— Revenue Recognition
Disaggregated revenues by major source for the three months ended March 31, 2026 and 2025 consisted of the following (in thousands):
Three Months Ended March 31, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| Product and service revenue | ||||||||||||||
Stepvans & vehicle incentives(1) | $ | $ | ||||||||||||
Powertrains & hubs(1) | ||||||||||||||
Other product revenue(2) | ||||||||||||||
| Total product revenue | ||||||||||||||
| Ancillary revenue | ||||||||||||||
| Total revenues | $ | $ | ||||||||||||
___________
(1)Amounts are net of returns and allowances. Stepvans & vehicle incentives and powertrains & hubs include revenue generated from operating and sales-type leases.
(2) Other product revenue for the three months ended March 31, 2026 includes revenue related to non-recurring powertrain engineering services of $0.1 million and revenue related to software services of $0.1 million. The remaining performance obligations for non-recurring engineering services total $39,000 as of March 31, 2026 and are expected to be satisfied in 2026. The remaining performance obligations for software services total $0.5 million as March 31, 2026 and $0.1 million are expected to be satisfied in 2026 with the remaining $0.4 million expected to be satisfied in 2027 and beyond.
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Note 4 — Lease Receivable
For deferred equipment agreements that contain embedded operating leases, upon lease commencement, the Company defers and records the equipment cost of operating lease assets within property and equipment, net of accumulated depreciation. These operating lease assets are subsequently amortized to cost of goods sold over the lease term on a straight-line basis.
For deferred equipment agreements that contain embedded sales-type leases, the Company recognizes lease revenue and costs, as well as a lease receivable, at the time the lease commences. Lease revenue related to both operating and sales-type leases for the three months ended March 31, 2026 and 2025 was approximately $29,000 and $7,000 , respectively. Costs related to embedded leases within the Company’s deferred equipment agreements are included in cost of goods sold in the accompanying unaudited condensed consolidated statement of operations. Interest on the lease receivable was immaterial to the unaudited condensed consolidated financial statements for the three months ended March 31, 2026 and 2025.
| (in thousands) | Balance Sheet Location | March 31, 2026 | December 31, 2025 | ||||||||||||||
| Lease receivable | $ | $ | |||||||||||||||
| Less: current portion of lease receivable | Prepaid expenses and other current assets | ( | ( | ||||||||||||||
| Lease receivable, non-current | Other non-current assets | $ | $ | ||||||||||||||
As of March 31, 2026, estimated future maturities of customer sales-type lease receivable and operating lease payments for each of the following fiscal years are as follows:
| Future Lease Receivables/Payments (in thousands) | |||||||||||
Fiscal year | Sales-Type Leases | Operating Leases | |||||||||
Remainder of 2026 | $ | $ | |||||||||
| 2027 | |||||||||||
| 2028 | |||||||||||
Thereafter | |||||||||||
Total lease payments | $ | $ | |||||||||
Note 5 — Inventories
Inventory amounted to $23.7 million and $25.0 million, respectively, as of March 31, 2026 and December 31, 2025 and consisted of the following (in thousands):
March 31, 2026 | December 31, 2025 | |||||||||||||
| Raw materials | $ | $ | ||||||||||||
| Work in process | ||||||||||||||
Finished goods | ||||||||||||||
Total inventories | $ | $ | ||||||||||||
Inventories as of March 31, 2026 and December 31, 2025 were comprised of raw materials, work in process and finished goods related to the production of stepvans, powertrains, hubs, and other products for sale and finished goods inventory including vehicles in transit to fulfill customer orders, new vehicles, new vehicles awaiting final pre-delivery quality review inspection, and Xos Energy Solutions products available for sale. The remaining capitalized labor and overhead cost remaining in work in process and finished goods inventory is $0.7 million and $0.6 million as of March 31, 2026 and December 31, 2025, respectively.
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Inventories are stated at the lower of cost or net realizable value. Cost is computed using average cost. Inventory write-downs are based on reviews for excess and obsolescence determined primarily by current and future demand forecasts. During the three months ended March 31, 2026 and 2025, the Company recorded a favorable change in our inventory reserves of $0.2 million and $0.5 million, respectively, to reflect inventories at their net realizable values and provide an allowance for any excess or obsolete inventories.
Note 6 — Selected Balance Sheet Data
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets as of March 31, 2026 and December 31, 2025 consisted of the following (in thousands):
March 31, 2026 | December 31, 2025 | |||||||||||||
Prepaid inventories | $ | $ | ||||||||||||
Prepaid expenses and other(1) | ||||||||||||||
Lease receivable | ||||||||||||||
Contract assets | ||||||||||||||
Financed insurance premiums | ||||||||||||||
Assets held for sale(2) | ||||||||||||||
Total prepaid expenses and other current assets | $ | $ | ||||||||||||
(1) Primarily relates to prepayments for energy services projects, prepaid insurance, prepaid licenses and subscriptions, and other receivables.
(2) Assets held for sale are comprised of manufacturing equipment no longer used in production and intended to be sold.
Other Non-Current Assets
Other non-current assets as of March 31, 2026 and December 31, 2025 consisted of the following (in thousands):
March 31, 2026 | December 31, 2025 | |||||||||||||
Security deposits(1) | $ | $ | ||||||||||||
Duty drawback receivable(2) | ||||||||||||||
Lease receivable, non-current | ||||||||||||||
| Other non-current assets | ||||||||||||||
| Total other non-current assets | $ | $ | ||||||||||||
___________
(1) Primarily relates to security deposits for operating leases.
(1) Primarily relates to security deposits for operating leases.
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Other Current Liabilities
Other current liabilities as of March 31, 2026 and December 31, 2025 consisted of the following (in thousands):
| March 31, 2026 | December 31, 2025 | |||||||||||||
Accrued expenses and other(1) | $ | $ | ||||||||||||
| Contract liabilities, current | ||||||||||||||
Accrued interest⁽²⁾ | ||||||||||||||
Accrued payroll⁽³⁾ | ||||||||||||||
Customer deposits | ||||||||||||||
Warranty liability | ||||||||||||||
Short-term insurance financing notes | ||||||||||||||
Operating lease liabilities, current(4) | ||||||||||||||
Finance lease liabilities, current | ||||||||||||||
Total other current liabilities | $ | $ | ||||||||||||
____________
(1) Primarily relates to other accrued expenses, accrued inventory purchases, remaining lease termination payments related to the Mesa Lease, and accrued professional fees.
(2) Represents accrued interest on the Convertible Promissory Note, which interest is convertible into shares of our common stock at maturity.
(3) Primarily relates to payroll liabilities such as accrued payroll, accrued vacation, accrued bonuses and other payroll liabilities.
Revenue recognized from the customer deposits and contract liabilities balance for the three months ended March 31, 2026 and 2025 was $0.5 million and $0.3 million, respectively.
Other Non-Current Liabilities
Other non-current liabilities as of March 31, 2026 and December 31, 2025 consisted of the following (in thousands):
| March 31, 2026 | December 31, 2025 | |||||||||||||
Accrued interest expense and other | $ | $ | ||||||||||||
Contract liabilities, non-current | ||||||||||||||
Operating lease liabilities, non-current(1) | ||||||||||||||
Finance lease liabilities, non-current | ||||||||||||||
Total other non-current liabilities | $ | $ | ||||||||||||
Note 7 — Earn-out Shares Liability
The Company has a contingent obligation to issue 547,000 shares (the “Earn-out Shares”) of Common Stock and grant 8,700 restricted stock units (“Earn-out RSUs”) to certain stockholders and employees upon the achievement of certain market share price milestones within specified periods following the Business Combination on August 20, 2021.
The Earn-out Shares will be issued in tranches based on the following conditions:
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i.If the volume-weighted average closing share price (“VWAP”) of the Common Stock equals or exceeds $420.00 per share for any 10 trading days within any consecutive 20 -trading day period between the Merger closing date and the five year anniversary of such closing date (“Earn-out Period”), then the Company is required to issue an aggregate of 180,000 shares (“Tranche 1 Earn-out Shares”) of Common Stock to holders with the contingent right to receive Earn-out Shares (excluding any Earn-out RSUs). If after Closing and during the Earn-out Period, there is a Change in Control (as defined in the Merger Agreement), the Company is required to issue Tranche 1 Earn-out Shares when the value per share of the Company is equal to or greater than $420.00 per share, but less than $600.00 . If there is a change in control where the value per share of common stock is less than $420.00 , then the Earn-out Shares shall terminate prior to the end of the Earn-out Period and no Common Stock shall be issuable.
ii.If the VWAP of the Common Stock equals or exceeds $600.00 per share for any 10 trading days within any consecutive 20 -trading day period during the Earn-out Period, then the Company is required to issue an aggregate of 180,000 shares (“Tranche 2 Earn-out Shares”) of Common Stock to holders with the contingent right to receive Earn-out Shares (excluding any Earn-out RSUs). If after Closing and during the Earn-out Period, there is a Change in Control (as defined in the Merger Agreement), the Company is required to issue Tranche 2 Earn-out Shares when the value per share of the Company is equal to or greater than $600.00 per share, but less than $750.00 .
iii.If the VWAP of the Common Stock equals or exceeds $750.00 per share for any 10 trading days within any consecutive 20 -trading day period during the Earn-out Period, then the Company is required to issue an aggregate of 180,000 shares (“Tranche 3 Earn-out Shares”) of Common Stock to holders with the contingent right to receive Earn-out Shares (excluding any Earn-out RSUs). If after Closing and during the Earn-out Period, there is a Change in Control (as defined in the Merger Agreement), the Company is required to issue Tranche 3 Earn-out Shares when the value per share of the Company is equal to or greater than $750.00 per share.
Pursuant to the guidance under ASC 815, Derivatives and Hedging, the right to Earn-out Shares was classified as a Level 3 fair value measurement liability, and the increase or decrease in the fair value during the reporting period is recognized in the unaudited condensed consolidated statement of operations accordingly. The fair value of the Earn-out Shares liability was estimated using the Monte Carlo simulation of the stock prices based on historical and implied market volatility of a peer group of public companies.
For each of the periods ended March 31, 2026 and December 31, 2025, the fair value of the Earn-out Shares liability was estimated to be $0 0
The allocated fair value to the Earn-out RSU component, which is covered by ASU 718, Compensation — Stock Compensation, is recognized as stock-based compensation expense over the vesting period commencing on the grant date of the award.
Note 8 — Convertible Notes
Convertible Promissory Note
On August 9, 2022, the Company entered into the Note Purchase Agreement with Aljomaih under which the Company agreed to sell and issue to Aljomaih a convertible promissory note with a principal amount of $20.0 million. On August 11, 2022, pursuant to the Note Purchase Agreement, the Company sold and issued $20.0 million in principal amount of a convertible promissory note (the “Original Note”) to Aljomaih. On September 28, 2022, the Company and Aljomaih agreed to amend and restate the Original Note (as amended and restated, the “Note”) to, among other things, adjust the calculation of the shares of the Company’s Common Stock issuable as interest, as described further below.
The Note, which was initially scheduled to mature on August 11, 2025, bears interest at a rate of 10.0 % per annum, payable at maturity in validly issued, fully paid and non-assessable shares of Common Stock (“Interest Shares”), unless earlier converted or paid. If the 10 -day VWAP ending on the trading day immediately prior to the applicable payment date is greater than or equal to the Minimum Price (as defined in Nasdaq Rule 5635(d)) or the Company has received the requisite approval from its stockholders (which it has), the number of Interest Shares to be issued will be calculated based on such 10 -day VWAP; otherwise, the number of Interest Shares to be issued would have been based on the Nasdaq Minimum Price. The conversion price for the Note is initially equal to $71.451 per share, subject to adjustment in some events pursuant to the terms of the Note. The Company will have the right, in its sole discretion and exercisable at its election by sending notice of such exercise to Aljomaih, to irrevocably fix the method of settlement that will apply to all conversions of Notes. Methods of settlement include
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(i) physical settlement in shares of Common Stock, (ii) cash settlement determined by multiplying the principal being converted by the 10 -day VWAP ending on the trading day immediately prior to the conversion date and dividing by the conversion price, or (iii) a combination of Common Stock and cash.
On August 8, 2025, the Company and Aljomaih entered into Amendment Number One to the Note Purchase Agreement and amended and restated the Convertible Note issued thereunder. On August 14, 2025, the Company and Aljomaih entered into a Letter Agreement regarding certain restrictions on convertibility of the Convertible Note. Among other things, the Aljomaih Amendments extended the maturity of the Convertible Note so that it is now due in ten quarterly installments payable between November 11, 2025 and February 11, 2028. The first four such installments are $1.5 million each, the fifth through eighth installments are $2.0 million each and the final two installments are $3.0 million each; provided that such installments may be increased in the event certain financing activities result in proceeds to the Company in excess of four times the aggregate amount of Convertible Note principal payments otherwise required on or prior to any installment date. Pursuant to the Aljomaih Amendments, and notwithstanding the postponement of maturity of the Convertible Note, the interest accrued on the Convertible Note through August 11, 2025, of approximately $6.0 million in the aggregate, was converted into 1,803,262 shares of Common Stock at the 10 -day VWAP (as defined in the Convertible Note) on August 25, 2025.
The future scheduled mandatory prepayments of principal as of March 31, 2026 were as follows (in thousands):
| Mandatory Prepayments | |||||
| 2026 | $ | ||||
| 2027 | |||||
| 2028 | |||||
| Total | $ | ||||
The Note also includes an optional redemption feature that provides the Company, on or after August 11, 2024, or as otherwise agreed to between the Company and Aljomaih in writing, the right to redeem the outstanding principal and accrued and unpaid interest, upon written notice not less than 5 trading days prior to exercise of the option, in full or in part and without penalty.
The Company accounts for the Note in accordance with the guidance contained in ASC 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity, under which the Note was analyzed for the identification of material embedded features that meet the criteria for equity treatment and/or bifurcation and must be recorded as a liability. The Company initially classified the Note as a non-current liability given a maturity date of greater than one year, however, during the quarter ended September 30, 2024, the Note was reclassified as a current liability since its maturity date is less than one year from September 30, 2024. On August 8, 2025, the Note was amended subject to Amendment Number One, and as a result of such amendment, a portion of the Note has been reclassified as a non-current liability at June 30, 2025, due to a change in the principal repayment schedule of the Note.
The Note will not be included in the computation of either basic or diluted EPS for the three months ended March 31, 2026 in Note 16 — Net Loss per Share. This financial instrument is not included in basic EPS because it does not represent participating securities. Further, the Note is not included in diluted EPS because including these financial instruments would have an antidilutive effect on EPS for the three months ended March 31, 2026.
As of March 31, 2026, the Company had a principal balance of $17.0 million. As of December 31, 2025, the Company had a principal balance of $18.5 million outstanding. The Company recorded interest expense of $0.4 million and $0.5 million in other expense, net, related to the Note during the three months ended March 31, 2026 and 2025, respectively.
Note 9 — Equity
Xos Common and Preferred Stock
The Company is authorized to issue two classes of stock to be designated, respectively, “Common Stock” and “Preferred Stock.” The total number of shares which the Company is authorized to issue is 1,010,000,000 shares. 1,000,000,000 shares shall be Common Stock, each having a par value of one-hundredth of one cent ($0.0001 ). 10,000,000 shares shall be Preferred Stock, each having a par value of one-hundredth of one cent ($0.0001 ).
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Voting Rights: Each outstanding share of Common Stock shall entitle the holder thereof to one vote on each matter properly submitted to the stockholders of the Company for their vote; provided, however, that, except as otherwise required by law, holders of Common Stock shall not be entitled to vote on any amendment to this Certificate of Incorporation (including any certificate of designation filed with respect to any series of Preferred Stock) that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together as a class with the holders of one or more other such series, to vote thereon by law or pursuant to this Certificate of Incorporation (including any certificate of designation filed with respect to any series of Preferred Stock).
Preferred Stock: The Preferred Stock may be issued from time to time in one or more series. The Board of Directors of the Company (the “Board of Directors”) is expressly authorized to provide for the issue of all or any number of the shares of the Preferred Stock in one or more series, and to fix the number of shares and to determine or alter for each such series, such voting powers, full or limited, or no voting powers, and such designation, preferences, and relative, participating, optional, or other rights and such qualifications, limitations, or restrictions thereof, as shall be stated and expressed in the resolution or resolutions adopted by the Board of Directors providing for the issuance of such shares and as may be permitted by the Delaware General Corporation Law (the “DGCL”). The Board of Directors is also expressly authorized to increase (but not above the total number of authorized shares of the class) or decrease (but not below the number of shares of such series then outstanding) the number of shares of any series subsequent to the issuance of shares of that series. In case the number of shares of any series shall be decreased in accordance with the foregoing sentence, the shares constituting such decrease shall resume the status that they had prior to the adoption of the resolution originally fixing the number of shares of such series.
Standby Equity Purchase Agreement
On March 23, 2022, the Company entered into a Standby Equity Purchase Agreement with YA II PN, Ltd. (“Yorkville”), which was subsequently amended on June 22, 2023 (as amended, the “SEPA”), whereby the Company had the right, but not the obligation, to sell to Yorkville up to $125.0 million of shares of its Common Stock at its request any time until February 11, 2026, subject to certain conditions.
As consideration for Yorkville’s commitment to purchase shares of Common Stock at the Company’s direction upon the terms and subject to the conditions set forth in the SEPA, upon execution of the SEPA, the Company issued 619 shares of Common Stock to Yorkville.
On June 22, 2023, the Company and Yorkville entered into the First Amendment to Standby Equity Purchase Agreement (the “SEPA Amendment”), in which the Company and Yorkville amended the SEPA to: (1) change the calculation of the purchase price of an Option 1 Advance (as defined in the SEPA) from an average of the daily VWAP of the Common Stock during a three-day pricing period to the lowest VWAP during such three-day pricing period; (2) change the denomination of any requested advances from the Company to Yorkville under the SEPA from dollars to shares; (3) increase Yorkville’s beneficial ownership limitation under the SEPA from 4.99 % to 9.99 % of the outstanding Common Stock, provided that if any portion of an advance under the SEPA would cause Yorkville to exceed the beneficial ownership limitation due to Yorkville’s ownership of the Company’s securities convertible into Common Stock, then the maximum number of shares of Common Stock that such securities will be convertible into will be reduced by the number of shares of Common Stock included in such advance for such period that Yorkville holds such shares of common stock covered by such advance and the number of shares of Common Stock covered by such advance would not be reduced; (4) extend the commitment period to February 11, 2026 and (5) make other administrative and drafting changes.
During both of the three months ended March 31, 2026 and 2025, the Company issued 0 119.4 million, However, our ability to utilize the remaining commitment amount was limited by various factors, including, but not limited to, the availability of an effective registration statement permitting the resale of such shares of Common Stock. Ultimately, the Company did not cause the effectiveness of any such registration statement during 2025 or thereafter, and the SEPA expired on February 11, 2026.
Common Stock Offering
On May 30, 2023, the Company filed a Registration Statement on Form S-3 (File No. 333-272284), to issue and sell from time to time, together or separately, certain securities at an aggregate public offering price that will not exceed $100 million. Such registration statement was declared effective on June 8, 2023. On August 14, 2025, the Company filed a prospectus supplement
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to the prospectus included in such registration statement for an at-the-market offering by the Company of up to $5.4 million of its Common Stock (the “ATM Offering”). The Sales Agreement, dated August 14, 2025, with respect to the Company’s ATM Offering (the “Sales Agreement”) provides for the sale of the Company’s stock in at-the-market sales up to $20 million, subject to the amount available to be sold by the Company pursuant to its registration statement.
During both of the three months ended March 31, 2026 and 2025, no 2.5 million of shares of Common Stock available for future issuance under the ATM Offering pursuant to the Company’s prospectus supplement with respect to the ATM Offering, and $17.2 million remaining under the terms of the Sales Agreement.
Note 10 — Derivative Instruments
Public and Private Placement Warrants
As of March 31, 2026, the Company had 18,633,301 Public Warrants and 199,997 Private Placement Warrants outstanding, with fair values of $0.1 million and $680 , respectively.
Each Warrant is exercisable to purchase one-thirtieth of one share of Common Stock. The Public Warrants have an exercise price of $345.00 per whole share, subject to adjustments, and will expire on August 20, 2026 or earlier upon redemption or liquidation. The Public Warrants may only be exercised for a whole number of shares. No fractional Public Warrants were issued upon separation of the units and only whole Public Warrants trade. The Public Warrants became exercisable; provided that the Company has an effective registration statement under the Securities Act covering the issuance of the Common Stock issuable upon exercise of the Warrants and a current prospectus relating to them is available and such shares are registered, qualified or exempt from registration under the securities, or blue sky, laws of the state of residence of the holder (or the Company permits holders to exercise their Warrants on a cashless basis under the circumstances specified in the warrant agreement). A registration statement was filed with the SEC covering the issuance of the Common Stock issuable upon exercise of the Warrants, and the Company undertook use its commercially reasonable efforts to maintain the effectiveness of such registration statement and a current prospectus relating to those shares of Common Stock until the Public Warrants expire or are redeemed. If the shares of Common Stock are at the time of any exercise of a Public Warrant not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, it will not be required to file or maintain in effect a registration statement.
The Private Placement Warrants are identical to the Public Warrants, except that the Private Placement Warrants and the Common Stock issuable upon exercise of the Private Placement Warrants were not transferable, assignable or salable until September 19, 2021, subject to certain limited exceptions. Additionally, the Private Placement Warrants will be non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the Private Placement Warrants are held by someone other than the initial shareholders or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
Redemption of Warrants for cash when the price per share of Common Stock equals or exceeds $540.00 :
At any time that the Warrants are exercisable, the Company may redeem the outstanding Warrants (except as described above with respect to the Private Placement Warrants):
•in whole and not in part;
•at a price of $0.01 per Warrant;
•upon not less than 30 days’ prior written notice of redemption to each Warrant holder; and
•if, and only if, the last reported sale price of Common Stock for any 20 trading days within a 30 -trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the Warrant holders (the “Reference Value”) equals or exceeds $540.00 per share (as adjusted for share sub-divisions, share dividends, rights issuances, consolidations, reorganizations, recapitalizations and the like).
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The Company will not redeem the Warrants as described above unless a registration statement under the Securities Act covering the issuance of the Common Stock issuable upon exercise of the Warrants is then effective and a current prospectus relating to those Common Stock is available throughout the 30-day redemption period. If and when the Warrants become redeemable by the Company, it may exercise its redemption right even if the Company is unable to register or qualify the underlying securities for sale under all applicable state securities laws.
Redemption of Warrants for Common Stock when the price per share equals or exceeds $300.00 :
At any time that the Warrants are exercisable, the Company may redeem the outstanding Warrants (including both Public Warrants and Private Placement Warrants):
•in whole and not in part;
•at $0.10 per Warrant upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise their Warrants on a cashless basis prior to redemption and receive that number of shares determined by reference to an agreed table based on the redemption date and the “fair market value” of Common Stock;
•if, and only if, the Reference Value equals or exceeds $300.00 per share (as adjusted for share splits, share dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like); and
•if the Reference Value is less than $540.00 per share (as adjusted), the Private Placement Warrants must also concurrently be called for redemption on the same terms as the outstanding Public Warrants, as described above.
The “fair market value” of Common Stock shall mean the average reported last sale price of Common Stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of Warrants.
In no event will the Company be required to net cash settle any Warrant. The Warrants may also expire worthless.
Note 11 — Share-Based Compensation
2018 Stock Plan
On November 27, 2018, the Legacy Xos’s board of directors and stockholders adopted the 2018 Stock Plan. There are no shares available for issuance under the 2018 Stock Plan; however, the 2018 Stock Plan continues to govern the terms and conditions of the outstanding awards granted under the 2018 Stock Plan.
As of March 31, 2026, there were 1,188 Options outstanding under the 2018 Stock Plan. The amount and terms of Option grants were determined by the board of directors of Legacy Xos. The Options granted under the 2018 Stock Plan generally expire within 10 years from the date of grant and generally vest over four years , at the rate of 25 % on the first anniversary of the date of grant and ratably on a monthly basis over the remaining 36 -month period thereafter based on continued service.
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Stock option activity during the three months ended March 31, 2026 consisted of the following:
| Options | Weighted Average Fair Value Per Share | Weighted Average Exercise Price Per Share | Weighted Average Remaining Years | Aggregate Intrinsic Value | |||||||||||||||||||||||||
December 31, 2025 — Options outstanding | $ | $ | $ | ||||||||||||||||||||||||||
Granted | — | ||||||||||||||||||||||||||||
| Exercised | |||||||||||||||||||||||||||||
Forfeited | ( | ||||||||||||||||||||||||||||
March 31, 2026 — Options outstanding | $ | $ | $ | ||||||||||||||||||||||||||
Aggregate intrinsic value represents the difference between the exercise price of the options and the fair value of the Company’s Common Stock. The aggregate intrinsic value of options exercised during the three months ended March 31, 2026 and 2025 were approximately $0 and $2,351 , respectively.
The Company estimates the grant date fair value of options utilizing the Black-Scholes option pricing model, which is dependent upon several variables, including expected option term, expected volatility of the Company's share price over the expected term, expected risk-free rate and expected dividend yield rate. There were no
2021 Equity Plan
On August 19, 2021 the Company’s stockholders approved the 2021 Equity Incentive Plan (the “2021 Equity Plan”), which was ratified by the Company’s board of directors on August 20, 2021. The 2021 Equity Plan provides for the grant of incentive stock options (“ISOs”), within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”) to employees, including employees of any parent or subsidiary, and for the grant of non-statutory stock options (“NSOs”), stock appreciation rights, restricted stock awards, restricted stock units (“RSUs”), performance awards and other forms of awards to employees, directors and consultants, including employees and consultants of Xos’s affiliates. On June 24, 2024, the Company’s stockholders approved the Xos, Inc. Amended and Restated 2021 Equity Incentive Plan (the “A&R 2021 Equity Plan”) to increase the aggregate number of shares of Common Stock reserved for issuance under the 2021 Equity Plan by 1,180,819 shares. On June 24, 2025, the Company’s stockholders approved the 2025 Amendment to the Xos, Inc. Amended and Restated 2021 Equity Incentive Plan (the “2025 Amendment”) to increase the aggregate number of shares of Common Stock reserved for issuance under the 2021 Equity Plan by 3,100,000 shares.
As of March 31, 2026, there were 2,518,036 shares of Common Stock available for issuance under the A&R 2021 Equity Plan, as amended.
RSU activity during the three months ended March 31, 2026 consisted of the following:
| RSUs | Weighted Average Grant Date Fair Value | Weighted Average Fair Value | |||||||||||||||
December 31, 2025 — RSU outstanding | $ | $ | |||||||||||||||
| Granted | |||||||||||||||||
| Vested | ( | ||||||||||||||||
| Forfeited | |||||||||||||||||
March 31, 2026 — RSU outstanding | $ | $ | |||||||||||||||
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The Company recognized stock-based compensation expense (including Earn-out RSUs) in the unaudited condensed consolidated statements of operations for the three months ended March 31, 2026 and March 31, 2025 totaling approximately $2.1 million and $1.5 million, respectively, which consisted of the following (in thousands):
Three Months Ended March 31, | ||||||||||||||
2026 | 2025 | |||||||||||||
Cost of goods sold | $ | $ | ||||||||||||
Research and development | ||||||||||||||
Sales and marketing | ||||||||||||||
General and administrative | ||||||||||||||
Total | $ | $ | ||||||||||||
We allocate stock-based compensation expense to cost of goods sold, research and development expense, sales and marketing expense and general and administrative expense, based on the roles of the applicable recipients of such stock-based compensation. The unamortized stock-based compensation expense was $7.4 million as of March 31, 2026, and weighted average remaining amortization period as of March 31, 2026 was 1.47 years.
The aggregate fair value of RSUs that vested was $1.9 million during the three months ended March 31, 2026.
Note 12 — Property and Equipment, net
Property and equipment, net consisted of the following at March 31, 2026 and December 31, 2025 (in thousands):
| March 31, 2026 | December 31, 2025 | |||||||||||||
| Equipment | $ | $ | ||||||||||||
| Finance lease assets | ||||||||||||||
| Furniture and fixtures | ||||||||||||||
Company vehicles(1) | ||||||||||||||
| Leasehold improvements | ||||||||||||||
| Computers, software and related equipment | ||||||||||||||
| Property and equipment, gross | ||||||||||||||
Accumulated depreciation | ( | ( | ||||||||||||
Property and equipment, net | $ | $ | ||||||||||||
(1)Amounts include operating lease assets (stepvans and hubs) for which the Company is a lessor. As of March 31, 2026, gross operating lease assets and accumulated depreciation on operating lease assets were $0.4 million and $0.2 million, respectively. As of December 31, 2025, gross operating lease assets and accumulated depreciation on operating lease assets were $0.3 million and $0.1 million, respectively.
Depreciation expense during the three months ended March 31, 2026 and 2025 totaled $0.6 million and $0.5 million, respectively.
Note 13 — Commitments and Contingencies
Legal Contingencies
Legal claims may arise from time to time in the normal course of business, the results of which may have a material effect on the Company’s accompanying unaudited condensed consolidated financial statements. As of March 31, 2026 and December 31, 2025, the Company was not a party to any legal proceedings, that individually or in the aggregate, are reasonably expected to have a material adverse effect on the Company’s results of operations, financial condition or cash flows. On October 10, 2025,
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the Supreme Court of British Columbia (the “BC Court”) issued a judgment in favor of a former employee of EMV for the enforcement of a putative settlement agreement with respect to the employee’s severance arrangements, which required aggregate payments of approximately $0.5 million, including approximately $0.2 million paid in the first quarter of 2026.
A former employee has claimed certain amounts are due to such employee under a contract with the Company related to such former employee’s separation from the Company. Subsequent to the quarter-end, the Company entered into a Separation Agreement and General Release with such former employee (the “Separation Agreement”) that included a settlement and release of such claims. The Separation Agreement provides, among other things, that the Company will pay a lump sum of $110,000 , accelerate 120,000 RSUs previously granted to such employee, and reimburse such employee up to $9,500 of attorney’s fees in connection with the Separation Agreement. The Separation Agreement also provides that, if certain liquidity targets or transactions are achieved the Company within the three-year period following its effectiveness, the Company shall pay such employee an additional $50,000 in cash. As of March 31, 2026, an accrual of $0.3 million is included within the Company’s other current liabilities.
Other Contingencies
Note 14 — Related Party Transactions
Note 15 — Income Taxes
The Company’s effective tax rate during the three months ended March 31, 2026 and 2025 was (0.10 )% and (0.12 )%, respectively. State taxes coupled with losses not benefited resulted in an effective tax rate below the statutory tax rate of 21% for the three months ended March 31, 2026.
The Company recognizes tax benefits related to positions taken, or expected to be taken, on its tax returns, only if the positions are “more-likely-than-not” sustainable. Once this threshold has been met, the Company’s measurement of its expected tax benefits is recognized in its financial statements. The Company does not have any uncertain tax positions that meet this threshold as of March 31, 2026 and December 31, 2025.
The Company is subject to income taxation and files tax returns with the U.S. Internal Revenue Service and various state jurisdictions. The Company is not currently under audit or examination by any income tax authorities, except for an audit of its 2020 California state income tax return by the California Franchise Tax Board. Management does not believe that any uncertain tax benefits require recognition. Generally, the Company is no longer subject to examination for tax years prior to 2021, except for California.
At March 31, 2026, the Company’s deferred income taxes were in a net asset position mainly due to deferred tax assets generated by net operating losses. The Company assesses the likelihood that its deferred tax assets will be realized. A full review of all positive and negative evidence needs to be considered, including the Company's current and past performance, the market environments in which the Company operates, the utilization of past tax credits, the length of carryback and carryforward periods, and tax planning strategies that might be implemented. Management believes that, based on a number of factors, it is more likely than not that all or some portion of the deferred tax assets may not be realized; accordingly, the Company has provided a valuation allowance against its net deferred tax assets at March 31, 2026 and December 31, 2025.
One Big Beautiful Bill Act
On July 4, 2025, the President signed H.R. 1, the “One Big Beautiful Bill Act,” into law. The legislation includes several changes to federal tax law that generally allow for more favorable deductibility of certain business expenses beginning in 2025, including the restoration of immediate expensing of domestic R&D expenditures, reinstatement of 100% bonus depreciation, and more favorable rules for determining the limitation on business interest expense . The Act modifies various energy credits
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to accelerate the phase out of these credits. The Act also includes certain changes to the US taxation of foreign activity, including changes to foreign tax credits, Global Intangible Low-Taxed Income (GILTI), Foreign-Derived Intangible Income (FDII), and Base Erosion and Anti-Abuse Tax (BEAT), amongst other changes. These changes are generally effective for tax years beginning after December 31, 2025. The Company evaluated the impact of the legislation in accordance with ASC 740 and determined that it did not have a material effect on the Company’s unaudited condensed consolidated financial statements for the period ended March 31, 2026 and the legislation did not result in the recognition or remeasurement of deferred tax liabilities or current income taxes.
Note 16 — Net Loss per Share
Basic and diluted net loss per share during the three months ended March 31, 2026 and 2025 consisted of the following (in thousands, except per share amounts):
| Three Months Ended March 31, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
Numerator: | ||||||||||||||
Net loss | $ | ( | $ | ( | ||||||||||
Net loss attributable to common stockholders, basic | ( | ( | ||||||||||||
Net loss attributable to common stockholders, diluted(1) | ( | ( | ||||||||||||
Denominator: | ||||||||||||||
Basic | ||||||||||||||
Weighted average common shares outstanding, basic | ||||||||||||||
Basic net loss per share | $ | ( | $ | ( | ||||||||||
Diluted | ||||||||||||||
Weighted average common shares outstanding, diluted(1) | ||||||||||||||
Diluted net loss per share | $ | ( | $ | ( | ||||||||||
____________
(1) Net loss attributable to common stockholders, diluted during the three months ended March 31, 2026 and 2025, excludes adjustments related to the change in fair value of derivative liabilities, interest expense and amortization of discounts and issuance costs related to Convertible Note. These adjustments were excluded from the calculation of diluted net loss per share as they would have an antidilutive effect (see Note 8 — Convertible Notes).
Potential ending shares outstanding that were excluded from the computation of diluted net income (loss) per share because their effect was anti-dilutive as of March 31, 2026 and 2025 consisted of the following (in thousands):
Three Months Ended March 31, | ||||||||||||||
2026 | 2025 | |||||||||||||
Contingent earn-out shares | ||||||||||||||
Common stock underlying public and private warrants | ||||||||||||||
Restricted stock units | ||||||||||||||
Stock options | ||||||||||||||
If-converted common stock from convertible debt | ||||||||||||||
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Note 17 — Segment Reporting
The following table presents segment revenue, gross profit, and net loss for the periods presented (in thousands):
Three Months Ended March 31, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| Revenues | $ | $ | ||||||||||||
Cost of goods sold | ||||||||||||||
Gross profit | ||||||||||||||
| less: | ||||||||||||||
Employee related | ||||||||||||||
Stock-based compensation(1) | ||||||||||||||
Facility and rent | ||||||||||||||
| Insurance | ||||||||||||||
| Depreciation | ||||||||||||||
Professional services | ||||||||||||||
Computer and software as a service | ||||||||||||||
Research and development materials | ||||||||||||||
Other(2) | ||||||||||||||
Other expense, net | ||||||||||||||
| Change in fair value of derivative instruments | ( | |||||||||||||
| Provision for income taxes | ||||||||||||||
Segment net loss | $ | ( | $ | ( | ||||||||||
____________
(1) Stock-based compensation includes general and administrative, sales and marketing, and research and development-related stock-based compensation that was previously consolidated in employee related costs.
(2) Other includes general and administrative freight, as well as travel & entertainment, property/franchise taxes, merchant fees, and bad debt expense.
Note 18 — Fair Value Measurements
ASC 820, Fair Value Measurements and Disclosures, clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based upon assumptions that market participants would use in pricing an asset or liability.
U.S. GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. As presented in the tables below, this hierarchy consists of three broad levels:
•Level 1: Quoted prices in active markets for identical assets and liabilities.
•Level 2: Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations whose inputs or significant value drivers are observable.
•Level 3: Significant inputs to the valuation model are unobservable and significant to the overall fair value measurement of the assets or liabilities. Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.
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Xos, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
Unaudited
The Company’s financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable, other current liabilities, warrants and earn-out shares liability. The fair value of cash, cash equivalents, accounts receivable, accounts payable, other current liabilities, and convertible debt approximates carrying value due to their short-term maturity.
As required by ASC 820, assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to their fair value measurement. Level 3 inputs are unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
Assets and liabilities carried at fair value on a recurring basis as of March 31, 2026 and December 31, 2025 consisted of the following (in thousands):
March 31, 2026 | |||||||||||||||||||||||
| Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
| Financial Liabilities: | |||||||||||||||||||||||
| Private Placement Warrants | $ | $ | $ | $ | |||||||||||||||||||
| Public Warrants | |||||||||||||||||||||||
| Total Financial Liabilities | $ | $ | $ | $ | |||||||||||||||||||
December 31, 2025 | |||||||||||||||||||||||
| Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
| Financial Liabilities: | |||||||||||||||||||||||
| Private Placement Warrants | $ | $ | $ | $ | |||||||||||||||||||
| Public Warrants | |||||||||||||||||||||||
| Total Financial Liabilities | $ | $ | $ | $ | |||||||||||||||||||
There was no change in the fair value of Level 3 financial liabilities during the three months ended March 31, 2026. The fair value of Earn-out Shares liability was immaterial to the consolidated financial statements for each of the periods ended March 31, 2026 and December 31, 2025.
____________
Note 19 — Subsequent Events
Convertible Promissory Note
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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis provides information which Xos’s management believes is relevant to an assessment and understanding of our consolidated results of operations and financial condition. You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and the related notes included elsewhere in this Report and our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on March 30, 2026 (as amended by Amendment No. 1 thereto, filed with the SEC on April 21, 2026, the “2025 Form 10-K”). This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in this Item 2 (including in the sections entitled “Overview” and “Liquidity and Capital Resources” below), in the accompanying unaudited notes to condensed consolidated financial statements in this Report, under the section entitled “Risk Factors” of this Report, and under the heading “Risk Factors” in the 2025 Form 10-K. Unless the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to “we”, “us”, “our”, and “the Company” are intended to mean the business and operations of Xos and its consolidated subsidiaries.
Recent Developments
On August 8, 2025, the Company and Aljomaih Automotive Co. (“Aljomaih”) amended the Convertible Promissory Note (as amended from time to time, the “Convertible Note”) primarily (i) to provide for payment of Interest Shares (as defined in the Convertible Note) with respect to all interest accrued through the initial maturity date, and (ii) to change the scheduled repayment of principal from in full on August 11, 2025, to spread over ten quarterly installments beginning November 11, 2025 and ending February 11, 2028. See Note 8 — Convertible Notes of this Report.
On May 8, 2026, the Company and Aljomaih further amended the Convertible Note to reduce the conversion price from $71.451 per share to $12.00 per share of Common Stock (subject to customary proportional adjustment), and to add a mandatory conversion feature pursuant to which the Company may compel the conversion of the Convertible Note if the Daily VWAP (as defined in the Convertible Note) of the Common Stock exceeds $16.00 per share (subject to customary proportional adjustment) for at least twenty out of thirty consecutive trading days.
Key Factors Affecting Operating Results
We believe that our performance and future success depend on several factors that present significant opportunities for us but also pose risks and challenges, including those discussed in this Report.
Successful Commercialization of our Products and Services
We expect to derive future revenue from sales of our vehicles, energy-storage systems and other product and service offerings. As many of these products are in development, we will require substantial additional capital to continue developing our products and services and bring them to full commercialization as well as fund our operations for the foreseeable future. Until we can generate sufficient revenue from product sales, we expect to finance a substantial portion of our operations through commercialization and production and any future capital raising efforts. The amount and timing of our future funding requirements, if any, will depend on many factors, including the pace and results of our commercialization efforts.
Customer Demand
We have sold a limited number of our vehicles to our existing customers, have agreements with future customers and have received interest from other potential customers. The sales of our vehicles and services to our existing and future customers will be an important indicator of our performance.
Supply Chain Disruptions
While our ability to source certain critical inventory items has been steadily improving, we are still experiencing long-standing negative effects from global economic conditions, and management expects such effects to continue to varying degrees for the foreseeable future. We have also observed, and expect to be impacted by, sporadic and unpredictable shortages for specific components, primarily in power electronics and harnesses, and disruptions to the supply of components.
The U.S. trade policy environment has shifted materially since our last filing. The U.S. Supreme Court's February 2026 ruling invalidating the U.S. International Emergency Economic Powers Act (“IEEPA”) based tariffs has prompted the Administration to re-anchor tariff measures under different statutory authorities, including Section 232 (national security) and Section 301
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(unfair trade practices), supplemented in the near term by a 15% temporary global import surcharge (non-automotive) under Section 122 of the Trade Act of 1974 currently set to expire on or around July 24, 2026. Tariffs imposed under Section 232, including a 25% duty on certain semiconductors and advanced electronics components effective January 2026, and Section 301 remain fully operative and may have more durable statutory footing than prior IEEPA-based measures. In addition, active or recently initiated investigations under Section 232 and Section 301 may result in additional tariffs covering metals, semiconductors, batteries, power and grid equipment, and components sourced from key manufacturing economies, creating material forward-looking risk to our cost structure.
These overlapping and evolving tariff regimes have introduced significant volatility into our cost structure and procurement planning, particularly with respect to power electronics, battery components, and structural materials. The uncertainty around tariff implementation timelines, the scope of new investigations, and the expiration and potential replacement of the current Section 122 surcharge has necessitated frequent adjustments to sourcing strategies, supplier selection, and contract terms. To mitigate these impacts, we have undertaken the following measures:
•diversification of supply base to include alternate suppliers in tariff-exempt or trade-friendly regions;
•renegotiation of pricing and delivery terms to account for tariff exposure and cost passthroughs;
•reclassification and compliance reviews to ensure correct harmonized tariff schedule (HTS) codes and leverage tariff exemptions or reduced duty programs, where applicable;
•strategic stockpiling of high-risk components to reduce exposure to near-term tariff hikes;
•monitoring pending Section 232 and Section 301 investigations for components in our supply chain and evaluating pre-buy, qualification of alternative sources, and contract re-pricing provisions in anticipation of potential new tariff actions;
•pursuing refund claims with the U.S. Customs and Border Protection for duties previously paid under IEEPA authority, consistent with the Supreme Court's February 2026 ruling; and
•evaluating the impact of the expiration of the current Section 122 surcharge (anticipated on or around July 24, 2026) and the tariff measures that may replace it on our sourcing and cost assumptions.
We have been closely monitoring potential changes to trade policies and tariffs in order to proactively adjust and refine our strategy. These actions are aimed at preserving cost competitiveness and securing uninterrupted supply amid a fluid and unpredictable trade policy environment. Notwithstanding these efforts, the ongoing tariffs and regulatory changes may affect our ability to source components from specific regions or maintain access to critical suppliers, and we do not expect the tariff environment to normalize in the near to medium term. The migration of tariff authority from emergency executive powers to Section 232 and Section 301, authorities that are expected to be more legally durable and carry broader industry and country coverage, means that tariff-driven cost pressure and supply chain disruption are likely to remain a persistent feature of our operating environment.
Overview
We are a leading energy storage and fleet electrification solutions provider committed to the decarbonization of commercial transportation. We offer, through Xos Energy Solutions™, mobile charging and energy storage products, such as the Xos Hub™, and have from time to time offered services to support electric vehicle fleets, including fixed charging infrastructure products. We design and manufacture Classes 5 and 6 battery-electric commercial vehicles that travel on last-mile, back-to-base routes of up to 200 miles per day. We developed our proprietary, purpose-built vehicle chassis platform and high-voltage architecture with a focus on the medium-duty commercial vehicle segment and, in particular, last-mile commercial fleet operations.
Xos Energy Solutions™ is our charging infrastructure business through which we offer mobile and stationary multi-application chargers, including the Xos Hub, and mobile energy storage to accelerate transitions to electric fleets by maximizing incentive capture and reducing implementation lead times and costs.
Our X-Platform provides modular features that allow us to accommodate a wide range of last-mile applications and enable us to offer clients vehicles at a lower total cost of ownership compared to traditional diesel fleets. The X-Platform was engineered to be modular in nature to allow fleet operators to customize their vehicles to fit their commercial applications (e.g., upfitting with a specific vehicle body and/or tailoring battery range).
Through our Powered by Xos™ business we also provide mixed-use powertrain solutions for off-highway, industrial and other specialty vehicles, such as forklifts, school buses, medical and dental clinics, blood donation vehicles, and mobile command vehicles. Our powertrain offerings encompass a broad range of solutions, including high-voltage batteries, power distribution and management componentry, battery management systems, system controls, inverters, electric traction motors and auxiliary drive systems.
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We have also developed a fleet management platform called Xosphere™ that interconnects vehicle, maintenance, charging, and service data. The Xosphere™ is aimed at minimizing electric fleet total cost of ownership through fleet management integration. This comprehensive suite of tools allows fleet operators to monitor vehicle and charging performance in real-time with in-depth telematics; reduce charging cost; optimize energy usage; and manage maintenance and support with a single software tool.
In the first quarter of 2026, we entered into an agreement to serve as a dealer for Windrose Technology, Inc.’s electric long-haul truck products (the “Windrose Dealer Agreement”). We believe this relationship will enable us to address customer and prospect demand for heavy-duty long-range electric trucks that our own manufactured vehicles do not meet. The Windrose Dealer Agreement does not include any minimum volume requirements, and we cannot estimate what volumes or revenues we might achieve from this arrangement, if any.
During the three months ended March 31, 2026, we delivered 13 vehicles (including leases) and 82 powertrains & hubs. During the three months ended March 31, 2025, we delivered 22 vehicles and 7 powertrains & hubs. During the three months ended March 31, 2026, we generated $1.6 million in revenue (or 14% of revenue) in vehicle sales, $9.1 million (or 81% of revenue) in powertrain & Hub sales, $0.3 million (or 3% of revenue) in other product revenue, and $0.2 million (or 2% of revenue) in ancillary revenue. During the three months ended March 31, 2025, we generated $3.6 million in revenue (or 61% of revenue) from vehicle sales, $1.6 million (or 27% of revenue) in powertrain & Hub sales, $0.5 million (or 8% of revenue) in other product revenue, and $0.2 million (or 4% of revenue) from ancillary revenue.
We believe our growth in the coming years will be supported by the growth of e-commerce and last-mile delivery, and will depend in part on regulatory and consumer interest in reducing the impacts of climate change. E-commerce continues to grow rapidly and has been accelerated by changes in consumer purchasing behavior as a result of the COVID-19 pandemic. Commercial trucks are the largest emitters of greenhouse gasses per capita in the transportation industry. Although there can be no assurance such goals will be maintained, the U.S. federal, state and foreign governments, along with corporations such as FedEx, UPS and Amazon, have set ambitious goals to reduce greenhouse gas emissions. We believe regulation relating to commercial vehicles, sustainability initiatives from leading financial and corporate institutions and growth of last-mile logistics will be important factors in establishing the level of demand for, and adoption of, our products worldwide.
Xos is an early-stage company, and as such has incurred net losses and cash outflows since its inception. As an early-stage company, the Company's ability to access capital is critical. However, there can be no assurance such capital will be available to the Company when needed, on favorable terms or at all. If we are unable to collect on our outstanding accounts receivable, obtain a sufficient level of new capital in the near-term and/or obtain replacement financing for or extend the maturity of existing debt, we could be required to dissolve and liquidate our assets under bankruptcy laws or otherwise.
As an early-stage company, we have incurred net losses and cash outflows since our inception. We will continue to incur net losses and cash outflows in accordance with our operating plan as we continue to scale our operations to meet anticipated demand and seek to establish our product and service offerings. As a result, our ability to access capital is critical and until we can generate sufficient revenue to cover our operating expenses, working capital and capital expenditures, we will need to raise additional capital in order to fund and scale our operations. If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce or eliminate our commercialization, research and development programs and/or other efforts and our ability to continue our operations would be negatively impacted. If we seek additional financing to fund our business activities in the future and there remains substantial doubt about our ability to continue as a going concern, investors or other financing sources may be unwilling to provide funding to us on commercially reasonable terms, if at all. In addition, we may have to liquidate our assets and may receive less than the value at which those assets are carried on our unaudited condensed consolidated financial statements and/or seek protection under Chapters 7 or 11 of the United States Bankruptcy Code. This could potentially cause us to cease operations and result in a complete or partial loss of your investment in our Common Stock.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements include the accounts of Xos and its wholly owned subsidiaries, Xos Fleet, Inc. and Xos Services, Inc. (f/k/a Rivordak, Inc.), as well as the entities acquired pursuant to the Arrangement with ElectraMeccanica. All significant intercompany accounts and transactions have been eliminated in consolidation. All long-lived assets are maintained in, and all losses are attributable to, the United States.
Currently, we conduct business through one operating segment. We are an early-stage company with minimal commercial operations and our activities to date have been conducted primarily within North America. For more information about our basis of operations, refer to Note 1 - Description of Business in the accompanying unaudited notes to condensed consolidated financial statements.
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Components of Results of Operations
Revenue
To date, we have primarily generated revenue from the sale of electric stepvans, stripped chassis vehicles and battery systems. Our stripped chassis is our vehicle offering that consists of our X-Platform electric vehicle base and battery systems, which customers can upfit with their preferred vehicle body. As we continue to expand our commercialization, we expect our revenue to come from these products and other vehicle offerings including chassis cabs, which will feature our chassis and powertrain with the inclusion of a proprietary designed cab, and tractors, a shortened version of the chassis cab designed to haul trailers (also known as “day cabs”), that travel in last-mile use cases. Through Xos Energy Solutions™, we have provided charging infrastructure, including our Xos Hub, as well as certain energy services. In addition, we offer Xosphere™, our fleet management platform.
Revenue consists of product sales, inclusive of shipping and handling charges, net of estimates for customer allowances, service offerings, and leasing. Revenue is measured as the amount of consideration we expect to receive in exchange for delivering products. All revenue is recognized when we satisfy the performance obligations under the contract. We recognize revenue by delivering the promised products to the customer, with the revenue recognized at the point in time the customer takes control of the products. For shipping and handling charges, revenue is recognized at the time the products are delivered to or picked up by the customer. For operating leases which are accounted for under ASC 842, Leases, revenue is recognized on a straight-line basis over the term of the lease agreement. The majority of our current contracts have a single performance obligation, which is met at the point in time that the product is delivered, and title passes, to the customer, and are short term in nature.
Revenue also consists of sales-type leases which are accounted for under ASC 842, Leases. Revenue is the lower of the fair value of the asset leased or the present value of the lease receivable and prepayments.
We also earn tradable credits in the operation of our automotive business under various regulations related to emission reduction, clean fuel, and others. We sell these credits to other regulated entities who can use the credits to comply with emission standards and other regulatory requirements. We recognize revenue on the sale of these credits, which have negligible incremental costs associated with them, at the time control of the regulatory credit is transferred to the purchasing party.
Cost of Goods Sold
Cost of goods sold includes materials and other direct costs related to production of our vehicles, including components and parts, batteries, direct labor costs and manufacturing overhead, among others. Cost of goods sold also includes material and other direct costs related to the production and assembly of hubs, powertrains and battery packs as well as materials and other costs incurred related to charging infrastructure installation. Materials include inventory purchased from suppliers, as well as assembly components that are assembled by company personnel, including allocation of stock-based compensation expense. Direct labor costs relate to the wages of those individuals responsible for the assembly of vehicles, powertrain units, hubs and batteries delivered to customers. Cost of goods sold also includes depreciation expense on property and equipment related to cost of goods sold activities, calculated over the estimated useful life of the property and equipment on a straight-line basis. Upon property and equipment retirement or disposal, the cost of the asset disposed, and the related accumulated depreciation from the accounts and any gain or loss is reflected in the unaudited condensed consolidated statements of operations, allocated to cost of goods sold.
Cost of goods sold includes reserves for estimated warranty expenses as well as reserves for estimated returns of vehicles. Additionally, cost of goods sold includes adjustments for the results of physical inventory counts. Cost of goods sold also includes reserves to write down the carrying value of our inventory to their net realizable value and to provide for any excess or obsolescence.
Costs of goods sold includes the impact of identifiable tariff costs related to the production of our vehicles. Tariffs implemented to date in the United States have caused significant disruption, increased costs (both directly and indirectly), and driven uncertainty in the automotive industry for OEMs, suppliers, and dealers, as well as customers. Additional tariffs implemented in the United States and elsewhere in the future may exacerbate these impacts.
We are continuing to undertake efforts to find more cost-effective vendors and sources of parts and raw materials to lower our overall cost of production.
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General and Administrative Expense
General and administrative (“G&A”) expense consists of personnel-related expenses, outside professional services, including legal, audit and accounting services, as well as expenses for facilities, non-sales related travel, and general office supplies and expenses. Personnel-related expenses consist of salaries, benefits, allocations of stock-based compensation, and associated payroll taxes. Overhead items including rent, insurance, utilities, and other items are included in G&A expense. G&A expense also includes depreciation expense on property and equipment related to G&A activities, calculated over the estimated useful life of the property and equipment on a straight-line basis. Upon property and equipment retirement or disposal, the cost of the asset disposed, and the related accumulated depreciation from the accounts and any gain or loss is reflected in the unaudited condensed consolidated statements of operations, allocated to G&A.
Research and Development Expense
Research and development (“R&D”) expense consists primarily of costs incurred for the design and development of our vehicles and energy-storage systems, including the Hub, which include:
•payroll expense for employees primarily engaged in R&D activities, including allocation of stock-based compensation expense;
•expenses related to licenses and subscriptions of software utilized in R&D activities;
•fees paid to third-parties such as consultants and contractors for engineering and computer-aided design work on vehicle designs and other third-party services; and
•expenses related to materials and supplies consumed in the development and modifications to existing vehicle designs, new vehicle designs contemplated for additional customer offerings, and our battery pack design.
Sales and Marketing Expense
Sales and marketing (“S&M”) expense consists primarily of expenses related to our marketing of products and brand initiatives, which includes:
•payroll expense for employees primarily engaged in S&M activities, including allocation of stock-based compensation expense; and
•web design, marketing and promotional items, and consultants who assist in the marketing of our products, services, and brand.
Other Expense, Net
Other expense, net primarily includes interest expense related to our financing obligations and interest expense for our equipment leases, offset by income from the sublease of our Los Angeles, California, office space.
Change in Fair Value of Derivative Instruments
Change in fair value of derivative instruments relates to Common Stock warrant liability assumed as part of the Business Combination. Changes in the fair value relate to remeasurement of our Public and Private Placement Warrants to fair value as of any respective exercise date and as of each subsequent balance sheet date and mark-to-market adjustments for these derivative liabilities each measurement period.
Change in Fair Value of Contingent Earn-out Shares Liability
The contingent earn-out shares liability was established as part of the Business Combination. Changes in the fair value relate to remeasurement to fair value as of each subsequent balance sheet date.
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Results of Operations
Comparison of the Three Months Ended March 31, 2026 and 2025
The following table sets forth our historical operating results for the periods indicated:
For the Three Months Ended March 31, | ||||||||||||||||||||||||||
(dollars in thousands) | 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||||
| Revenues | $ | 11,225 | $ | 5,879 | $ | 5,346 | 91 | % | ||||||||||||||||||
| Cost of goods sold | 6,891 | 4,668 | 2,223 | 48 | % | |||||||||||||||||||||
Gross profit | 4,334 | 1,211 | 3,123 | 258 | % | |||||||||||||||||||||
Operating expenses | ||||||||||||||||||||||||||
General and administrative | 6,065 | 7,896 | (1,831) | (23) | % | |||||||||||||||||||||
Research and development | 2,030 | 1,930 | 100 | 5 | % | |||||||||||||||||||||
Sales and marketing | 916 | 654 | 262 | 40 | % | |||||||||||||||||||||
Total operating expenses | 9,011 | 10,480 | (1,469) | (14) | % | |||||||||||||||||||||
Loss from operations | (4,677) | (9,269) | 4,592 | (50) | % | |||||||||||||||||||||
Other expense, net | (280) | (851) | 571 | (67) | % | |||||||||||||||||||||
| Change in fair value of derivative instruments | 9 | (54) | 63 | (117) | % | |||||||||||||||||||||
Loss before provision for income taxes | (4,948) | (10,174) | 5,226 | (51) | % | |||||||||||||||||||||
Provision for income taxes | 5 | 12 | (7) | (58) | % | |||||||||||||||||||||
Net loss | $ | (4,953) | $ | (10,186) | $ | 5,233 | (51) | % | ||||||||||||||||||
Revenues
Our total revenues increased by $5.3 million, or 91%, from $5.9 million in the three months ended March 31, 2025 to $11.2 million in the three months ended March 31, 2026, primarily driven by an increase in unit sales. During the three months ended March 31, 2026, we sold 13 vehicles and 82 powertrains & hubs, compared to 22 vehicles and 7 powertrains & hubs during the three months ended March 31, 2025.
Revenue for the three months ended March 31, 2026 and 2025 consisted of the following (dollars in thousands):
Three Months Ended March 31, | ||||||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change (6) | |||||||||||||||||||||||
| Product and service revenue | ||||||||||||||||||||||||||
Stepvans & vehicle incentives(1) | $ | 1,620 | $ | 3,584 | $ | (1,964) | (55) | % | ||||||||||||||||||
Powertrains & hubs(1) | 9,116 | 1,592 | 7,524 | 473 | % | |||||||||||||||||||||
Other product revenue(2) | 292 | 467 | (175) | (37) | % | |||||||||||||||||||||
| Total product revenue | 11,028 | 5,643 | 5,385 | 95 | % | |||||||||||||||||||||
Ancillary revenue | 197 | 236 | (39) | (17) | % | |||||||||||||||||||||
| Total revenues | $ | 11,225 | $ | 5,879 | $ | 5,346 | 91 | % | ||||||||||||||||||
___________
(1)Amounts are net of returns and allowances. Stepvans & vehicle incentives and powertrains & hubs include revenue generated from operating and sales-type leases.
(2)Other product revenue for the three months ended March 31, 2026 includes revenue related to non-recurring powertrain engineering services of $0.1 million. The remaining performance obligations for non-recurring engineering services total $39,000 as of March 31, 2026 and are expected to be satisfied in 2026.
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Cost of Goods Sold
Cost of goods sold increased by $2.2 million, or 48%, from $4.7 million in the three months ended March 31, 2025 to $6.9 million in the three months ended March 31, 2026. The increase in cost of goods sold is directly attributable to the increase in our product revenue and associated increases of (i) $1.3 million in direct materials, (ii) $0.4 million in identifiable tariff charges, (iii) $0.2 million in direct labor, (iv) $0.2 in manufacturing overhead, (v) $0.2 million related to a smaller favorable adjustment of inventory reserves and (vi) $0.1 million for warranty reserve. These increases were offset by decreases of (i) $0.1 million less in unfavorable physical inventory count and other adjustments and (ii) $0.1 million less in freight costs related to product deliveries.
The increases in direct material, direct labor, and manufacturing overhead costs are driven by an increase in units sold. A significant portion of the overhead costs incurred include freight, tariff charges, indirect salaries, facility rent, utilities, and depreciation of production equipment, which are primarily fixed in nature and allocated based on production levels. Accordingly, these costs increase correspondingly with an increase in production volume and units sold.
General and Administrative
General and administrative expenses decreased by $1.8 million, or 23%, from $7.9 million in the three months ended March 31, 2025 to $6.1 million in the three months ended March 31, 2026, attributable to decreases of (i) $1.9 million in financed equipment lease expense with no such comparable expense for the three months ended March 31, 2026, (ii) $0.5 million in facility expenses connected to the termination of the Mesa Lease (as defined below), and (iii) $0.1 million in insurance costs. These decreases were offset by increases of (i) $0.4 million in stock-based compensation expense, (ii) in $0.1 million in personnel costs for legal, finance, accounting, information technology and general and administrative functions (iii) $0.1 million in other operating expenses including professional services and computer software costs, and (iv) $0.1 million in depreciation expense due to the allocation of more overhead costs.
Research and Development
Research and development expenses increased by $0.1 million, or 5%, from $1.9 million in the three months ended March 31, 2025 to $2.0 million in the three months ended March 31, 2026. The change was primarily due to increases of (i) $0.2 million from expenses related to software subscriptions, certifications and professional services, and (ii) $0.1 million in materials purchases related to Hub development. These increases were offset by a decrease of $0.2 million in allocation of personnel costs, including stock-based compensation expense.
Sales and Marketing
Sales and marketing expense increased by $0.2 million, or 40% from 0.7 million in the three months ended March 31, 2025 to 0.9 million in the three months ended March 31, 2026. The change was primarily due to increase of $0.2 million in stock-based compensation expense.
Other Expense, net
Other expense, net decreased by $0.6 million, from $0.9 million in the three months ended March 31, 2025 to $0.3 million in the three months ended March 31, 2026. The change was attributable to (i) $0.4 million less in impairment losses on property and equipment, (ii) $0.1 million less in interest expense, and (iii) $0.1 million related to intercompany accounts payable and currency revaluation reversal in the three months ended March 31, 2025.
Change in Fair Value of Derivatives
The gain on the change in fair value of derivative instruments increased by $63,000, or 117%, from a loss of $54,000 in the three months ended March 31, 2025 to a gain of $9,000 in the three months ended March 31, 2026. The change in fair value in both periods is primarily attributable to the change in our stock price and the resulting valuation at the respective reporting period.
Provision for Income Taxes
The Company recorded an income tax provision of $5,000 and $12,000 during the three months ended March 31, 2026 and 2025, respectively.
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Liquidity and Capital Resources
General
As of March 31, 2026, our principal sources of liquidity were our cash and cash equivalents of $9.8 million with an accumulated deficit of approximately $233.7 million. Our short-term uses of cash are for working capital and to pay the principal of our indebtedness. During the three months ended March 31, 2026, we incurred a net loss of approximately $5.0 million and had net cash used in operating activities of $1.6 million.
Under ASC Subtopic 205-40, Presentation of Financial Statements—Going Concern (“ASC 205-40”), we have the responsibility to evaluate whether conditions and/or events raise substantial doubt about our ability to meet our future financial obligations as they become due within one year of the unaudited condensed consolidated financial statements included elsewhere in this Report. The result of our ASC 205-40 analysis, due to uncertainties discussed below, is that there is substantial doubt about our ability to continue as a going concern through the next 12 months from the date of the unaudited condensed consolidated financial statements in this Report.
As an early-stage company, we have mainly incurred net losses and cash outflows since our inception. We may continue to incur net losses and cash outflows in accordance with our operating plan as we continue to scale our operations to meet anticipated demand and seek to establish our product and service offerings. As a result, our ability to access capital is critical and until we can generate sufficient revenue to cover our operating expenses, working capital and capital expenditures, we will need to raise additional capital in order to fund and scale our operations. These conditions and events raise substantial doubt about our ability to continue as a going concern. Our unaudited condensed consolidated financial information does not include any adjustment that may result from the outcome of this uncertainty.
In response to these conditions, we are currently evaluating different strategies to obtain the required funding for future operations. We have plans to secure and intend to employ various strategies to raise additional capital, which may include the ATM Offering (as defined below) as well as other capital raising strategies such as debt financing (which may include asset-based lending and/or receivable financing), other non-dilutive financing and/or equity financing. However, we are limited in how much money we can raise under the ATM Offering. Our ability to access other capital when needed is not assured and, if capital is not available to us when, and in the amounts needed, we could be required to delay, scale back or abandon some or all of our development programs and other operations, which could materially harm our business, prospects, financial condition and operating results.
Global general economic and political conditions, such as inflation, tariffs (or the threat of tariffs), uncertain credit and global financial markets, supply chain disruption, international currency fluctuations, and geopolitical events have had and could continue to have an adverse impact in our ability to raise additional funds. If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce or eliminate our commercialization, research and development programs and/or other efforts and our ability to continue our operations would be negatively impacted. If we seek additional financing to fund our business activities in the future and there remains substantial doubt about our ability to continue as a going concern, investors or other financing sources may be unwilling to provide funding to us on commercially reasonable terms, if at all. In addition, we may have to liquidate our assets and may receive less than the value at which those assets are carried on our unaudited condensed consolidated financial statements and/or seek protection under Chapters 7 or 11 of the United States Bankruptcy Code. This could potentially cause us to cease operations and result in a complete or partial loss of your investment in our Common Stock.
ATM Offering
On August 14, 2025, we entered into a Sales Agreement (the “Sales Agreement”) with Roth Capital Partners, LLC (the “Agent”). Pursuant to the terms of the Sales Agreement, we may offer and sell shares of our common stock having an aggregate offering amount of up to $20 million from time to time through the Agent (the “ATM Offering”). Pursuant to General Instruction I.B.6 of Form S-3, the prospectus setting forth the offer and sale of securities pursuant to the ATM Offering is limited to an aggregate of $5.4 million during any 12-month period pursuant to the Sales Agreement. Any sales of common stock pursuant to the Sales Agreement would be made in sales deemed to be an “at-the-market offering” as defined in Rule 415 under the Securities Act of 1933, as amended. The Agent is entitled to a commission of 3.0% of the gross proceeds from the sale of common stock sold under the Sales Agreement. During 2025, we sold an aggregate of 730,400 shares of common stock in the ATM Offering, resulting in net proceeds of approximately $2.4 million. As of March 31, 2026, we had $2.5 million of
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shares of Common Stock available for future issuance under the ATM Offering pursuant to our prospectus supplement with respect to the ATM Offering, and $17.2 million remaining under the terms of the Sales Agreement.
Cash Flow Data
The following table provides a summary of cash flow data for the three months ended March 31, 2026 and 2025 (in thousands):
Three Months Ended March 31, | ||||||||||||||
2026 | 2025 | |||||||||||||
Net cash used in operating activities | $ | (1,588) | $ | (4,756) | ||||||||||
Net cash provided by investing activities | 312 | — | ||||||||||||
Net cash used in financing activities | (2,915) | (1,482) | ||||||||||||
Net decrease in cash and cash equivalents | $ | (4,191) | $ | (6,238) | ||||||||||
Cash Flow from Operating Activities
Our cash flow from operating activities is significantly affected by the growth of our business. Our operating cash flow is also affected by our working capital needs to support growth in inventory and fluctuations in accounts receivable, accounts payable and other current assets and liabilities.
Net cash used in operating activities was $1.6 million for the three months ended March 31, 2026, primarily consisting of a cash-basis net loss of $1.7 million from normal operations of the Company (after non-cash adjustments of $3.3 million), partially offset by favorable net working capital changes of $0.1 million, primarily driven by lower inventories due to improved inventory turns and other assets, partially offset by higher accounts receivable and prepaid expenses and other current assets.
Net cash used in operating activities was $4.8 million for the three months ended March 31, 2025, primarily consisting of a cash-basis net loss of $7.1 million from normal operations of the Company (after non-cash adjustments of $3.1 million), partially offset by favorable net working capital changes of $2.3 million, primarily driven by lower accounts receivable and other liabilities, partially offset by lower accounts payable and purchases of inventory for production build-up.
Cash Flow from Investing Activities
Net cash provided by investing activities was $0.3 million for the three months ended March 31, 2026 due to proceeds from the disposal of assets held for sale, partially offset by $19,000 in purchases of property and equipment.
Net cash provided by investing activities was $0 million for the three months ended March 31, 2025.
Cash Flow from Financing Activities
Net cash used in financing activities was $2.9 million for the three months ended March 31, 2026, which primarily related to (i) $1.5 million for payments of principal on Convertible Notes, (ii) payments for short-term insurance financing notes of $0.7 million, (iii) taxes paid relating to net-settlement of stock-based awards of $0.6 million, and (iv) equipment lease principal payments of $0.1 million.
Net cash used in financing activities was $1.5 million for the three months ended March 31, 2025, primarily related to (i) net short-term insurance financing note activity of $0.8 million, (ii) equipment lease principal payments of $0.6 million and (iii) taxes paid relating to net-settlement of stock-based awards of $0.1 million.
Management plans to continue to seek opportunities to reduce costs and, in particular, cash expenditures, in a manner intended to minimize their adverse impact on our core operations. However, there can be no assurance that the measures described above, or any other cost-cutting measures we may implement in the future, will be sufficient to address our immediate or longer-term liquidity and working capital needs.
Contractual Obligations and Commitments
As a result of the termination of the lease on the Company’s manufacturing facility in Mesa, Arizona (“Mesa Lease”), future lease commitments have been reduced. We did not have any additional material contractual obligations or other commitments as of March 31, 2026, other than as disclosed in the 2025 Form 10-K, and in Note 13 — Commitments and Contingencies.
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Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements, as defined under the applicable rules and regulations of the SEC.
Critical Accounting Policies and Estimates
Our unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) which requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the balance sheet date, as well as reported amounts of revenues and expenses during the reporting periods. Our most significant estimates and judgments involve inventory valuation, incremental borrowing rates for assessing operating and financing lease liabilities, useful lives of property and equipment, earn-out shares liability, stock-based compensation, common stock warrant liability, product warranty liability and valuations utilized in connection with acquisitions. We base our estimates on historical experience and on various other assumptions believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from those estimates, and such differences could be material to our financial statements.
There were no material changes in our critical accounting policies from those disclosed in our 2025 Form 10-K.
Recent Accounting Pronouncements
See Note 2 — Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements to our unaudited condensed consolidated financial statements included in this filing for more information about recent accounting pronouncements, the timing of their adoption, and our assessment, to the extent we have made one, of their potential impact on our financial condition and our results of operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As a smaller reporting company (as defined in Item 10(f)(1) of Regulation S-K), we are not required to provide the information under this Item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in company reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Principal Executive Officer and Principal Financial Officer, to allow timely decisions regarding required disclosure.
As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Principal Executive Officer and Principal Financial Officer carried out evaluations of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2026. Based upon each of their evaluations, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were not effective at the reasonable assurance level for the three months ended March 31, 2026, due to the material weaknesses in our internal control over financial reporting discussed below.
Management’s Annual Report on Internal Controls over Financial Reporting
Management is responsible for designing, implementing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Exchange Act. Our management, including the Chief Executive Officer and Chief Financial Officer, recognizes that our disclosure controls or our internal control over financial reporting cannot prevent or detect all possible instances of errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of changes in conditions, the effectiveness of internal control over financial reporting may vary over time.
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Our management assessed the effectiveness of our internal control over financial reporting as of March 31, 2026 and, in making this assessment, used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013 framework). Because of the material weaknesses described below, our management believes that, as of March 31, 2026, our internal control over financial reporting was not effective based on those criteria.
Material Weaknesses in Internal Controls Over Financial Reporting
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim unaudited condensed consolidated financial statements will not be prevented or detected on a timely basis. Accordingly, a material weakness increases the risk that the financial information we report contains material errors. If we fail to remediate these material weaknesses, determine that our internal controls over financial reporting are not effective, discover areas that need improvement in the future or discover additional material weaknesses, these shortcomings could have an adverse effect on our business and financial results, and the price of our Common Stock could be negatively affected.
As disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025, as amended, during the financial reporting close process for the period ended December 31, 2025, management continued to identify material weaknesses in the design and operating effectiveness of internal control over financial reporting related to revenue recognition. Management also identified additional material weaknesses related to the timeliness of recording supplier and vendor accruals, including instances in which accruals were not properly recorded due to deficiencies in the identification and evaluation of vendor contract terminations.
Management believes these material weaknesses resulted from limited resources within our accounting and operations functions, which restricted its ability to timely identify, evaluate, and address technical accounting and disclosure matters affecting the consolidated financial statements. As part of management’s efforts to reduce costs and preserve liquidity, we were unable to develop and retain sufficient personnel to adequately fulfill internal control responsibilities, resulting in an insufficient complement of individuals with the appropriate level of accounting knowledge and experience. Accordingly, management has concluded that these deficiencies were attributable to insufficient internal resources in technical accounting and financial reporting, which adversely impacted our internal control over financial reporting for the year ended December 31, 2025 and the quarter ended March 31, 2026.
Based on the results of our evaluation and the material weaknesses described above, management concluded that the Company’s internal control over financial reporting was not effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of annual and interim unaudited condensed consolidated financial statements for external reporting purposes in accordance with GAAP as of December 31, 2025 and March 31, 2026.
Notwithstanding these material weaknesses, management has concluded that our unaudited condensed consolidated financial statements included in this Form 10-Q are fairly stated in all material respects in accordance with U.S. GAAP for each of the periods presented therein.
Remediation of Material Weakness in Internal Control Over Financial Reporting
To remediate the material weaknesses in internal control over financial reporting related to the ineffective design and operating effectiveness of controls over revenue recognition, the timeliness of recording supplier and vendor accruals, and the timely identification and assessment of vendor contract terminations, management is implementing enhancements to our financial reporting control framework. These remediation efforts are intended to strengthen both disclosure controls and procedures and internal control over financial reporting by further documenting and implementing control activities to address the identified risks of material misstatement, as well as enhancing monitoring activities over such controls. Management believes these remediation efforts are progressing as planned and expects to remediate the material weaknesses during the year ending December 31, 2026. Remediation efforts to date include the following:
•Adding qualified personnel and providing enhanced training to improve the assessment and documentation of contractual terms and conditions within the revenue recognition process;
•Strengthening communication protocols between our sales, accounting, and finance teams to ensure timely identification and evaluation of any non‑standard contract terms and conditions;
•Designing and implementing a precise control, using existing personnel, to ensure the timely identification and assessment of vendor contract terminations, and providing enhanced training to improve the timely identification, evaluation, and recording of supplier and vendor accruals; and
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•Engaging external consultants with expertise in public company internal control compliance to assist in assessing and implementing additional controls related to revenue recognition.
To further remediate the identified material weaknesses, management, including the Chief Executive Officer and Chief Financial Officer, has reaffirmed and reinforced the importance of effective internal control, control consciousness and maintaining a strong control environment throughout the organization. Management expects to continue its efforts to evaluate, refine, and enhance our financial reporting controls and procedures. These material weaknesses will not be considered remediated until the applicable controls have operated for a sufficient period of time and management has concluded, through testing, that the enhanced controls are designed appropriately and operating effectively.
Changes in Internal Control over Financial Reporting
Except as noted above, there were no changes in the Company’s internal control over financial reporting that occurred during the three months ended March 31, 2026, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
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Part II - Other Information
Item 1. Legal Proceedings
From time to time, we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business. We are not currently a party to any legal proceedings, the outcome of which, if determined adversely to us, would individually or in the aggregate have a material adverse effect on our business, financial condition or results of operations.
Item 1A. Risk Factors
Our risk factors are described in the “Risk Factors” section of our 2025 Form 10-K. There have been no material changes to our risk factors since the filing of the 2025 Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
No unregistered sales of equity securities occurred during the quarter.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
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Item 6. Exhibits
(a)Exhibits.
| Exhibit Number | Description | |||||||||||||
| 3.1 | Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed on August 26, 2021). | |||||||||||||
| 3.2 | Certificate of Amendment to Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed on December 6, 2023). | |||||||||||||
| 3.3 | Bylaws of the Company (incorporated by reference to Exhibit 3.2 of the Company’s Current Report on Form 8-K filed on August 26, 2021). | |||||||||||||
| 10.1 | Confidential Separation Agreement and General Release between Christen Romero and Xos, Inc., dated as of April 24, 2026 (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on April 29, 2026). | |||||||||||||
| 10.2 | Third Amended and Restated Convertible Promissory Note, dated as of May 8, 2026, by and among Xos, Inc., and Aljomaih Automotive Co. (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on May 13, 2026). | |||||||||||||
31.1* | Certification of the Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a). | |||||||||||||
31.2* | Certification of the Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a). | |||||||||||||
32.1** | Certification of the Chief Executive Officer and Chief Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350. | |||||||||||||
| 101.INS | XBRL Instance Document. | |||||||||||||
| 101.SCH | XBRL Taxonomy Extension Schema Document. | |||||||||||||
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | |||||||||||||
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. | |||||||||||||
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document. | |||||||||||||
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. | |||||||||||||
| 104.0 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). | |||||||||||||
* Filed herewith.
** Furnished herewith and not deemed to be “filed” for purposes of Section 18 of the Exchange Act, and shall not be deemed to be incorporated by reference into any filing under the Securities Act, or the Exchange Act (whether made before or after the date of this Report), irrespective of any general incorporation language contained in such filing.
Item 5. Other Information
(c) During our last fiscal quarter, none of our directors or officers, as defined in Rule 16a-(1)(f), adopted terminated
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| XOS, INC. | ||||||||
Date: May 14, 2026 | By: | /s/ Dakota Semler | ||||||
| Name: | Dakota Semler | |||||||
| Title: | Chief Executive Officer (Principal Executive Officer) | |||||||
Date: May 14, 2026 | By: | /s/ Liana Pogosyan | ||||||
| Name: | Liana Pogosyan | |||||||
| Title: | Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) | |||||||
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FAQ
How did Xos (XOS) perform financially in Q1 2026?
Xos generated revenue of $11,225 thousand and a net loss of $4,953 thousand in Q1 2026. This compares with revenue of $5,879 thousand and a net loss of $10,186 thousand a year earlier, showing stronger sales and a smaller loss.
What is the going concern status of Xos (XOS) as of March 31, 2026?
Xos explicitly states that conditions and events raise substantial doubt about its ability to continue as a going concern. Management notes that without sufficient new capital, receivable collections, or debt refinancing, Xos could be required to seek bankruptcy protection under Chapters 7 or 11.
What is Xos’s cash position and debt load in the Q1 2026 10-Q?
As of March 31, 2026, Xos reported cash and cash equivalents of $9,849 thousand. Total convertible debt under its Convertible Promissory Note was $17,000 thousand, with mandatory principal payments scheduled in 2026, 2027, and 2028, pressuring future liquidity.
How quickly is Xos (XOS) using cash in its operations?
Net cash used in operating activities was $1,588 thousand for the three months ended March 31, 2026. This represents an improvement from $4,756 thousand of operating cash outflow in the same period of 2025, reflecting reduced cash burn in the quarter.
What are Xos’s main revenue drivers in Q1 2026?
In Q1 2026, Xos’s revenue mainly came from powertrains and hubs at $9,116 thousand and stepvans and vehicle incentives at $1,620 thousand. Other product revenue was $292 thousand, and ancillary revenue contributed $197 thousand during the period.
How concentrated are Xos (XOS) customers and receivables?
Xos’s revenue and receivables are highly concentrated. In Q1 2026, three customers represented 49%, 20%, and 12% of revenue. At March 31, 2026, six customers accounted for 26%, 15%, 13%, 12%, 10%, and 10% of accounts receivable, increasing counterparty risk.