10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2026


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission file number 001-39598

XOS, INC.

(Exact name of registrant as specified in its charter)


Delaware	98-1550505
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

3550 Tyburn Street Los Angeles, CA	90065
(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
Common Stock, $0.0001 par value per share	XOS	The Nasdaq Capital Market
Warrants, every thirty warrants exercisable for one share of Common Stock at an exercise price of $345.00 per share	XOSWW	The Nasdaq Capital Market

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	☐
Non-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 14,217,852 shares of Common Stock, $0.0001 par value as of August 7, 2026.

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TABLE OF CONTENTS


	Page
Part I - Financial Information	6
Item 1. Financial Statements (Unaudited)	7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	35
Item 3. Quantitative and Qualitative Disclosures About Market Risk	48
Item 4. Controls and Procedures	48
Part II - Other Information	51
Item 1. Legal Proceedings	51
Item 1A. Risk Factors	51
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	51
Item 3. Defaults Upon Senior Securities	51
Item 4. Mine Safety Disclosures	51
Item 5. Other Information	51
Item 6. Exhibits	52
Signatures	53

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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 a Convertible Promissory Note (as amended the “Convertible Note”) outstanding as of June 30, 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.

•

The sale of a substantial number of shares of our common stock or other equity securities in the public markets, including pursuant to our at-the-market equity sales program, or the perception that such sales could occur, could depress the market price of our common stock and impair our ability to raise capital through the sale of additional equity securities.

•

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 on 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 conditions and global financial markets, 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 economic downturns as a result of the conflict with Iran and shortages of access to oil, energy and other key industrial inputs.

A discussion of these and other factors affecting our business and prospects is set forth in Part I, 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

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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.

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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;

•

“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.

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Item 1. Financial Statements

Index to Unaudited Condensed Consolidated Financial Statements


	Page
Condensed Consolidated Balance Sheets as of June 30, 2026 (Unaudited) and December 31, 2025	8
Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2026 (Unaudited) and 2025 (Unaudited)	9
Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2026 (Unaudited) and 2025 (Unaudited)	10
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2026 (Unaudited) and 2025 (Unaudited)	11
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)


	June 30, 2026			December 31, 2025
Assets
Cash and cash equivalents	$	13,235		$	14,040
Accounts receivable, net		4,485			6,035
Inventories		23,533			24,961
Prepaid expenses and other current assets		3,713			4,841
Total current assets		44,966			49,877
Property and equipment, net		3,579			4,320
Operating lease right-of-use assets, net		1,726			1,534
Other non-current assets		4,177			4,632
Total assets	$	54,448		$	60,363

Liabilities and Stockholders’ Equity
Accounts payable	$	1,378		$	2,473
Convertible debt, current		7,500			6,500
Other current liabilities		13,601			14,011
Total current liabilities		22,479			22,984
Common stock warrant liability		79			73
Other non-current liabilities		1,033			1,345
Convertible debt, non-current		8,000			12,000
Total liabilities		31,591			36,402
Commitments and contingencies (Note 13)
Stockholders’ Equity
Common stock $0.0001 par value per share, authorized 1,000,000 shares, 14,146 and 11,403 shares issued and outstanding at June 30, 2026 and December 31, 2025, respectively		2			1
Preferred stock $0.0001 par value per share, authorized 10,000 shares, 0 shares issued and outstanding at June 30, 2026 and December 31, 2025		—			—
Additional paid-in capital		262,730			252,026
Accumulated deficit		(239,875	)		(228,066	)
Total stockholders’ equity		22,857			23,961
Total liabilities and stockholders’ equity	$	54,448		$	60,363

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 June 30,						Six Months Ended June 30,
	2026			2025			2026			2025
Revenues	$	4,740		$	18,393		$	15,965		$	24,272
Cost of goods sold		4,167			16,756			11,021			21,399
Gross profit		573			1,637			4,944			2,873

Operating expenses
General and administrative		5,817			5,906			11,882			13,802
Research and development		1,899			2,087			3,929			4,017
Sales and marketing		804			707			1,720			1,361
Total operating expenses		8,520			8,700			17,531			19,180

Loss from operations		(7,947	)		(7,063	)		(12,587	)		(16,307	)

Other income (expense), net		1,096			(405	)		816			(1,256	)
Change in fair value of derivative instruments		(15	)		(6	)		(6	)		(60	)
Loss before provision for income taxes		(6,866	)		(7,474	)		(11,777	)		(17,623	)
Provision for income taxes		27			13			32			25
Net loss	$	(6,893	)	$	(7,487	)	$	(11,809	)	$	(17,648	)

Net loss per share
Basic	$	(0.55	)	$	(0.90	)	$	(0.98	)	$	(2.16	)
Diluted	$	(0.55	)	$	(0.90	)	$	(0.98	)	$	(2.16	)
Weighted average shares outstanding
Basic		12,591			8,287			12,084			8,182
Diluted		12,591			8,287			12,084			8,182

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			Accumulated			Total Stockholders’
	Shares			Par Value		Capital			Deficit			Equity
Balance at December 31, 2024		8,046		$	1	$	237,029		$	(202,910	)	$	34,120
Stock options exercised		—			—		—			—			—
Stock based compensation expense		—			—		1,523			—			1,523
Issuance of common stock for vesting of restricted stock units		98			—		—			—			—
Shares withheld related to net share settlement of stock-based awards		(42	)		—		(140	)		—			(140	)
Net loss		—			—		—			(10,161	)		(10,161	)
Balance at March 31, 2025		8,102		$	1	$	238,412		$	(213,071	)	$	25,342
Stock based compensation expense		—			—		1,574			—			1,574
Issuance of common stock for vesting of restricted stock units		449			—		—			—			—
Shares withheld related to net share settlement of stock-based awards		(158	)		—		(548	)		—			(548	)
Net loss		—			—		—			(7,487	)		(7,487	)
Balance at June 30, 2025		8,393		$	1	$	239,438		$	(220,558	)	$	18,881


	Common Stock					Additional Paid-in			Accumulated			Total Stockholders’
	Shares			Par Value		Capital			Deficit			Equity
Balance at December 31, 2025		11,403		$	1	$	252,026		$	(228,066	)	$	23,961
Stock based compensation expense		—			—		2,119			—			2,119
Issuance of common stock for vesting of restricted stock units		898			—		—			—			—
Shares withheld related to net share settlement of stock-based awards		(318	)		—		(663	)		—			(663	)
Net loss		—			—		—			(4,916	)		(4,916	)
Balance at March 31, 2026		11,983		$	1	$	253,482		$	(232,982	)	$	20,501
Stock options exercised		—			—		—			—			—
Stock based compensation expense		—			—		1,988			—			1,988
Issuance of common stock for vesting of restricted stock units		860			—		—			—			—
Shares withheld related to net share settlement of stock-based awards		(167	)		—		(375	)		—			(375	)
Issuance of common stock in at-the-market offering, net		379			—		2,248			—			2,248
Issuance of common stock in registered direct offering, net		1,091			1		5,387			—			5,388
Net loss		—			—		—			(6,893	)		(6,893	)
Balance at June 30, 2026		14,146		$	2	$	262,730		$	(239,875	)	$	22,857

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)


	Six Months Ended June 30,
	2026			2025
OPERATING ACTIVITIES:
Net loss	$	(11,809	)	$	(17,648	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		1,084			1,070
Amortization of right-of-use assets		868			818
Amortization of debt discounts and issuance costs		—			24
Amortization of insurance premiums		1,013			1,325
Inventory reserve		(877	)		(2,206	)
Impairment of property and equipment		61			401
Change in fair value of derivative instruments		6			60
Gain on lease termination		(54	)		—
Stock-based compensation expense		4,107			3,097
Allowance for credit losses		(110	)		(36	)
Other non-cash items		(46	)		75
Changes in operating assets and liabilities:
Accounts receivable		1,660			8,817
Inventories		1,935			7,471
Prepaid expenses and other current assets		(197	)		(2,262	)
Other assets		455			300
Accounts payable		(1,084	)		(3,999	)
Other liabilities		(1,287	)		2,582
Net cash used in operating activities		(4,275	)		(111	)

INVESTING ACTIVITIES:
Proceeds from the disposal of assets held for sale and other assets		350			—
Purchase of property and equipment		(38	)		—
Net cash provided by investing activities		312			—

FINANCING ACTIVITIES:
Payments on convertible notes		(3,000	)		—
Payment for short-term insurance financing note		(1,289	)		(1,887	)
Taxes paid related to net share settlement of stock-based awards		(1,038	)		(688	)
Principal payment of equipment leases		(152	)		(1,200	)
Proceeds from short-term insurance financing note		1,001			1,675
Proceeds from issuance of common stock in at-the-market offering, net		2,248			—
Proceeds from issuance of common stock in registered direct offering, net		5,388			—
Stock options exercised		—			—
Net cash provided by (used in) financing activities		3,158			(2,100	)

Net decrease in cash and cash equivalents		(805	)		(2,211	)
Cash and cash equivalents, beginning of period		14,040			10,996
Cash and cash equivalents, end of period	$	13,235		$	8,785


Supplemental disclosure of cash flow information
Cash paid for income taxes	$	18		$	24
Supplemental disclosure of non-cash activities
Operating lease termination	$	(54	)	$	—
Right-of-use assets obtained in exchange for operating lease liabilities	$	1,060		$	—

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 conditions 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, conflicts and tensions in the Middle East, including those involving Israel and Iran, and economic relations 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 geopolitical issues continue to evolve and the ultimate impact on the Company is uncertain, but any prolonged or escalating conflict or tension 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

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Xos, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Unaudited

Company will need to raise additional capital in order to fund and scale its operations. The 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 June 30, 2026, the Company’s principal sources of liquidity were its cash and cash equivalents aggregating to $13.2 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 $4.3 million and $0.1 million for the six months ended June 30, 2026 and 2025, respectively.

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. On May 8, 2026, the Company and Aljomaih entered into a Third Amended and Restated Convertible Promissory Note (the "Third A&R Note"). The Third A&R Note reduced the conversion price from $71.451 to $12.00 per share of Common Stock (subject to customary proportional adjustment). The Third A&R Note also adds a mandatory conversion feature to the Convertible Note 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.

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Xos, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Unaudited

Based on the Company’s strategies to raise funds as described above and Xos’s cash and cash equivalents as of June 30, 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 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 affecting power electronics, batteries and battery components, semiconductors, and structural materials, have increased variability in the Company's cost structure and procurement planning. Tariffs imposed under Section 232 of the Trade Expansion Act of 1962 and Section 301 of the Trade Act of 1974 remained in effect during the period and applied to certain imported components used by the Company. Effective January 1, 2026, previously announced Section 301 tariff increases on certain Chinese-origin products took effect, including a significant increase in the rate applicable to certain lithium-ion batteries and new tariffs on natural graphite and permanent magnets. A temporary global import surcharge under Section 122 of the Trade Act of 1974 was also in effect from February 24, 2026, through July 24, 2026, subject to specified exemptions and limitations. Subsequent to the period, new Section 301 tariffs took effect on July 24, 2026, covering products from a broad group of trading partners, including an additional tariff on most Chinese-origin products, subject to specified exemptions; these tariffs may apply in addition to other applicable duties. Ongoing and potential trade actions, including active Section 232 and 301 investigations, could result in additional tariffs on supply chain components, increasing costs and disrupting sourcing, procurement, or production planning.

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 and six months ended June 30, 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

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Xos, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Unaudited

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.

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.

Revision of Previously Issued Financial Statements

The Company has identified an immaterial prior period revision with respect to the improper recording of vendor accrued purchases within other current liabilities, in its previously reported financial statements for the periods ended December 31, 2024, March 31, 2025, June 30, 2025, December 31, 2025, and March 31, 2026.

In accordance with Staff Accounting Bulletin ("SAB") 99, Materiality, and SAB 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in the Current Year Financial Statements, the Company evaluated the materiality of the errors from qualitative and quantitative perspectives, and concluded that the errors were immaterial to any prior annual and interim financial statements. Notwithstanding this conclusion, management has revised the accompanying unaudited condensed consolidated financial statements for the affected periods, and related notes included herein to correct the errors. Refer to Note 19 — Revision of Previously Reported Information in the unaudited condensed consolidated financial statements for further details.

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 a 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 June 30, 2026 and December 31, 2025.

The reconciliation of the change in the Company’s product liability balances during the three and six months ended June 30, 2026 and 2025 consisted of the following (in thousands):

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Xos, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Unaudited


	Three Months Ended June 30,						Six Months Ended June 30,
	2026			2025			2026			2025
Warranty liability, beginning of period	$	1,418		$	863		$	1,477		$	740
Reduction in liability (payments)		(621	)		(381	)		(1,220	)		(689	)
Increase in liability		423			548			963			979
Warranty liability, end of period	$	1,220		$	1,030		$	1,220		$	1,030

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 June 30, 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 June 30, 2026, four customers accounted for 27%, 15%, 14%, and 13% of the Company’s revenues. During the three months ended June 30, 2025, one customer accounted for 70% of the Company’s revenues. During the six months ended June 30, 2026, two customers accounted for 38% and 22% of the Company’s revenues. During the six months ended June 30, 2025, one customer accounted for 53% of the Company’s revenues.

Accounts receivable totaled $4.5 million, net of allowance of $34,000, $6.0 million, net of allowance of $49,000, and $26.9 million, net of allowance of $0.2 million as of June 30, 2026, December 31, 2025 and December 31, 2024, respectively. As of June 30, 2026, five customers accounted for 19%, 16%, 15%, 14%, and 13% 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.

As of June 30, 2026, one vendor accounted for 14% 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 segment as it has developed, marketed, and sold primarily only one class of similar products of electric stepvans, stripped chassis vehicles, battery systems, hubs, and other products. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”), or decision-making group, in deciding how to allocate resources and in assessing performance. The Company’s CODM is its Chief Executive Officer.

The CODM assesses performance of the segment and decides how to allocate resources based on revenue, gross profit, employee-related costs and net loss presented on a consolidated basis, for purposes of allocating resources and evaluating financial performance. The Company has one business activity and there are no segment managers who are held accountable for operations, operating results and plans for products or components below the consolidated unit level. Accordingly, the Company reports under a single operating segment. The accounting policies of the segment are the same as those described in the summary of significant accounting policies.

Recent Accounting Pronouncements Issued and Adopted:

In July 2025, the FASB issued Accounting Standards Update ("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.

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Xos, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Unaudited

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 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, applied either prospectively, with early adoption permitted, or by a retrospective approach. The Company intends to adopt the amendments in this update prospectively 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-three 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 does 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.

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Xos, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Unaudited

Note 3 — Revenue Recognition

Disaggregated revenues by major source for the three and six months ended June 30, 2026 and 2025 consisted of the following (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Product and service revenue
Stepvans & vehicle incentives(1)	$	581	$	17,087	$	2,201	$	20,671
Powertrains & hubs(1)		3,468		930		12,584		2,522
Other product revenue(2)		525		152		817		619
Total product revenue		4,574		18,169		15,602		23,812
Ancillary revenue		166		224		363		460
Total revenues	$	4,740	$	18,393	$	15,965	$	24,272

(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 both the three and six months ended June 30, 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 $8,000 as of June 30, 2026 and are expected to be satisfied in 2026. The remaining performance obligations for software services total $0.5 million as of June 30, 2026 and $0.2 million are expected to be satisfied in 2026 with the remaining $0.3 million expected to be satisfied in 2027 and beyond.

The Company leases stepvans and hubs to customers under operating leases with terms ranging from 24 to 36 months. At the end of the lease term, customers are required to return the vehicles to Xos. During the three months ended June 30, 2026 and 2025, the Company recorded operating lease revenue of $0 and $4,000, respectively, on a straight-line basis over the contractual terms of the respective leases as part of stepvans & vehicle incentives, above. During the six months ended June 30, 2026 and 2025, the Company recorded operating lease revenue of $0 and $11,000, respectively, on a straight-line basis over the contractual terms of the respective leases as part of stepvans & vehicle incentives, above. During the three months ended June 30, 2026 and 2025, the Company recorded operating lease revenue of $80,000 and $11,000, respectively, on a straight-line basis over the contractual terms of the respective leases as part of powertrains & hubs, above. During the six months ended June 30, 2026 and 2025, the Company recorded operating lease revenue of $109,000 and $22,000, respectively, on a straight-line basis over the contractual terms of the respective leases as part of powertrains & hubs, above.

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 June 30, 2026 and 2025 was approximately $80,000 and $15,000, respectively. Lease revenue related to both operating and sales-type leases for the six months ended June 30, 2026 and 2025 was approximately $109,000 and $33,000, 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 both the three and six months ended June 30, 2026 and 2025.


(in thousands)	Balance Sheet Location	June 30, 2026			December 31, 2025
Lease receivable		$	268		$	572
Less: current portion of lease receivable	Prepaid expenses and other current assets		(212	)		(517	)
Lease receivable, non-current	Other non-current assets	$	56		$	55

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Xos, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Unaudited

As of June 30, 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	$	155	$	95
2027	$	68	$	—
2028 and thereafter	$	45	$	—
Total lease payments	$	268	$	95

Note 5 — Inventories

Inventory amounted to $23.5 million and $25.0 million, respectively, as of June 30, 2026 and December 31, 2025 and consisted of the following (in thousands):


	June 30, 2026		December 31, 2025
Raw materials	$	13,757	$	16,367
Work in process		3,642		3,647
Finished goods		6,134		4,947
Total inventories	$	23,533	$	24,961

Inventories as of June 30, 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 June 30, 2026 and December 31, 2025, respectively.

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 June 30, 2026 and 2025, the Company recorded a favorable change in our inventory reserves of $0.7 million and $1.7 million, respectively, to reflect inventories at their net realizable values and provide an allowance for any excess or obsolete inventories. During the six months ended June 30, 2026 and 2025, the Company recorded a favorable change in our inventory reserves of $0.9 million and $2.2 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 June 30, 2026 and December 31, 2025 consisted of the following (in thousands):


	June 30, 2026		December 31, 2025
Prepaid inventories	$	202	$	465
Prepaid expenses and other(1)		2,162		2,184
Lease receivable		212		517
Financed insurance premiums		814		1,076
Assets held for sale(2)		323		599
Total prepaid expenses and other current assets	$	3,713	$	4,841

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Notes to Condensed Consolidated Financial Statements

Unaudited

(1)

Primarily relates to prepayments for energy services projects, prepaid insurance, prepaid licenses and subscriptions, other receivables, and contract assets arising from contracts with customers. Contract assets arising from contracts with customers totaled $0, $0, and $1.1 million, as of June 30, 2026, December 31, 2025 and December 31, 2024, respectively.

(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 June 30, 2026 and December 31, 2025 consisted of the following (in thousands):


	June 30, 2026		December 31, 2025
Security deposits(1)	$	—	$	338
Duty drawback receivable(2)		2,709		2,709
Lease receivable, non-current		56		55
Other non-current assets		1,412		1,530
Total other non-current assets	$	4,177	$	4,632

(1)

Primarily relates to security deposits for operating leases.

(2)

Represents the estimated amount that can be recovered from previously paid tariffs relating to crushed SOLO vehicles that were acquired in connection with the ElectraMeccanica acquisition.

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Notes to Condensed Consolidated Financial Statements

Unaudited

Other Current Liabilities

Other current liabilities as of June 30, 2026 and December 31, 2025 consisted of the following (in thousands):


	June 30, 2026		December 31, 2025
Accrued expenses and other(1)	$	6,326	$	5,827
Contract liabilities, current(2)		235		243
Accrued interest(3)		1,597		758
Accrued payroll(4)		1,383		2,004
Customer deposits(5)		777		616
Warranty liability		1,220		1,477
Short-term insurance financing notes		670		958
Operating lease liabilities, current(6)		1,150		1,836
Finance lease liabilities, current		243		292
Total other current liabilities	$	13,601	$	14,011

(1)

Primarily relates to other accrued expenses, accrued inventory purchases, remaining lease termination payments related to the Mesa Lease, and accrued professional fees.

(2)

Contract liabilities, current, arising from contracts with customers is $0.3 million as of December 31, 2024.

(3)

Represents accrued interest on the Convertible Promissory Note, which interest is convertible into shares of our Common Stock at maturity.

(4)

Primarily relates to payroll liabilities such as accrued payroll, accrued vacation, accrued bonuses and other payroll liabilities.

(5)

Customer deposits balance is $1.3 million as of December 31, 2024.

Revenue recognized from the customer deposits and contract liabilities balance for both of the three months ended June 30, 2026 and 2025 was $0.1 million. Revenue recognized from the customer deposits and contract liabilities balance for the six months ended June 30, 2026 and 2025 was $0.6 million and $0.4 million, respectively.

Other Non-Current Liabilities

Other non-current liabilities as of June 30, 2026 and December 31, 2025 consisted of the following (in thousands):


	June 30, 2026		December 31, 2025
Accrued interest expense and other	$	35	$	616
Contract liabilities, non-current(1)		347		342
Operating lease liabilities, non-current(2)		629		262
Finance lease liabilities, non-current		22		125
Total other non-current liabilities	$	1,033	$	1,345

(1)

Contract liabilities, non-current, arising from contracts with customers is $0.4 million as of December 31, 2024.

(2)

Primarily relates to operating lease liabilities assumed in connection with the ElectraMeccanica acquisition.

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.

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Notes to Condensed Consolidated Financial Statements

Unaudited

The Earn-out Shares will be issued in tranches based on the following conditions:

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 June 30, 2026 and December 31, 2025, the fair value of the Earn-out Shares liability was estimated to be $0. The Company recognized a change in fair value in Earn-out Shares liability of $0 in its unaudited condensed consolidated statements of operations during both the three and six months ended June 30, 2026 and 2025.

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

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(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 (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.

On May 8, 2026, the Company and Aljomaih entered into the Third A&R Note. The Third A&R Note reduced the conversion price from $71.451 to $12.00 per share of Common Stock (subject to customary proportional adjustment). The Third A&R Note also adds a mandatory conversion feature to the Convertible Note 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.

The future scheduled mandatory prepayments of principal as of June 30, 2026 were as follows (in thousands):


	Mandatory Prepayments
2026	$	3,500
2027		9,000
2028		3,000
Total	$	15,500

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 Accounting Standards Codification ("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 and six months ended June 30, 2026 and 2025 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 and six months ended June 30, 2026 and 2025.

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As of June 30, 2026, the Company had a principal balance of $15.5 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 June 30, 2026 and 2025, respectively. The Company recorded interest expense of $0.8 million and $1.0 million in other expense, net, related to the Note during the six months ended June 30, 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).

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

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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 June 30, 2026 and 2025, the Company issued 0 shares of Common Stock under the SEPA. As of December 31, 2025, the remaining commitment available under the agreement was $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 (the "2023 Registration Statement"). The 2023 Registration Statement was declared effective on June 8, 2023. On August 14, 2025, the Company filed a prospectus supplement to the prospectus included in the 2023 Registration Statement for an at-the-market offering ("ATM Offering") by the Company of up to $5.4 million of its Common Stock. 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. On June 5, 2026, the Company filed a registration statement on Form S-3 (File No. 333-296569) 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 (the “2026 Registration Statement”). The 2026 Registration Statement was declared effective on June 22, 2026, replacing the 2023 Registration Statement. On June 23, 2026, the Company filed a prospectus supplement to the prospectus included in the 2026 Registration Statement for an ATM Offering by the Company of up to $8.8 million of its Common Stock.

During both of the three and six months ended June 30, 2026, 378,700 shares of Common Stock were sold under the ATM Offering program at an average price of $6.71 per share for aggregate net proceeds of $2.2 million after commissions of $0.1 million and legal, accounting, investor relations, and other offering costs of $0.2 million. During both of the three and six months ended June 30, 2025, no shares of Common stock were sold under the ATM Offering program. As of June 30, 2026, the Company had $8.8 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 $14.6 million remaining under the terms of the Sales Agreement.

Registered Direct Offering

On June 4, 2026, the Company entered into a Securities Purchase Agreement with institutional investors, pursuant to which the Company issued and sold 1,090,910 shares of its Common Stock at a purchase price of $5.50 per share for aggregate net proceeds of approximately $5.4 million after deducting placement agent fees of approximately $0.4 million and legal, investor relations, and other offering costs of $0.2 million.

Note 10 — Derivative Instruments

Public and Private Placement Warrants

As of June 30, 2026, the Company had 18,633,301 Public Warrants and 199,997 Private Placement Warrants outstanding, with fair values of $78,000 and $840, 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,

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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).

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

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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 June 30, 2026, there were 1,165 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.

Stock option activity during the three months ended June 30, 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		1,211		$	0.47	$	0.66		3.69	$	1,399
Granted		—			—		—				—
Exercised		—			—		—				—
Forfeited		(23	)		0.34		0.46				42
March 31, 2026 — Options outstanding		1,188		$	0.47	$	0.66		3.51	$	1,154
Granted		—			—		—				—
Exercised		(23	)		0.64		0.46				35
Forfeited		—			—		—				—
June 30, 2026 — Options outstanding		1,165		$	0.47	$	0.66		3.25	$	2,746
June 30, 2026 — Options vested and exercisable		1,165		$	0.47	$	0.66		3.25	$	2,746

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 June 30, 2026 and 2025 was approximately $35 and $0, respectively. The aggregate intrinsic value of options exercised during the six months ended June 30, 2026 and 2025 was approximately $35 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 option grants during the three and six months ended June 30, 2026 and 2025.

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

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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. On June 23, 2026, the Company’s stockholders approved the 2026 Amendment to the Xos, Inc. Amended and Restated 2021 Equity Incentive Plan (the “2026 Amendment”) to increase the aggregate number of shares of Common Stock reserved for issuance under the 2021 Equity Plan by 3,740,000 shares.

As of June 30, 2026, there were 5,972,396 shares of Common Stock available for issuance under the A&R 2021 Equity Plan, as amended.

RSU activity during the three months ended June 30, 2026 consisted of the following:


	RSUs			Weighted Average Grant Date Fair Value		Weighted Average Fair Value
December 31, 2025 — RSU outstanding		3,096,067		$	3.79	$	5,605,441
Granted		96,716			2.22		215,355
Vested		(898,345	)		3.59		1,873,916
Forfeited		—			—		—
March 31, 2026 — RSU outstanding		2,294,438		$	3.80	$	3,741,339
Granted		332,617			2.02		673,312
Vested		(740,401	)		4.12		2,167,773
Forfeited		(375	)		4.00		653
June 30, 2026 — RSU outstanding		1,886,279		$	3.54	$	5,699,166

The Company recognized stock-based compensation expense (including Earn-out RSUs) in the unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2026 totaling approximately $2.0 million and $4.1 million, respectively, and June 30, 2025, totaling approximately $1.6 million and $3.1 million, respectively, which consisted of the following (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Cost of goods sold	$	54	$	47	$	119	$	108
Research and development		315		336		670		691
Sales and marketing		246		206		658		437
General and administrative		1,373		985		2,660		1,861
Total	$	1,988	$	1,574	$	4,107	$	3,097

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 $6.3 million as of June 30, 2026, and weighted average remaining amortization period as of June 30, 2026 was 1.39 years.

The aggregate fair value of RSUs that vested was $2.2 million and $4.1 million during the three and six months ended June 30, 2026, respectively.

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Note 12 — Property and Equipment, net

Property and equipment, net consisted of the following at June 30, 2026 and December 31, 2025 (in thousands):


	June 30, 2026			December 31, 2025
Equipment	$	5,607		$	5,705
Finance lease assets		1,339			1,339
Furniture and fixtures		173			173
Company vehicles(1)		4,011			3,442
Leasehold improvements		1,401			1,401
Computers, software and related equipment		3,128			3,128
Property and equipment, gross		15,659			15,188
Accumulated depreciation		(12,080	)		(10,868	)
Property and equipment, net	$	3,579		$	4,320

(1)

Amounts include operating lease assets (stepvans and hubs) for which the Company is a lessor. As of June 30, 2026, gross operating lease assets and accumulated depreciation on operating lease assets were $0.9 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 June 30, 2026 and 2025 totaled $0.5 million and $0.6 million, respectively. Depreciation expense during both the six months ended June 30, 2026 and 2025 totaled $1.1 million.

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 June 30, 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.

Other Contingencies

The Company enters into non-cancellable long-term purchase orders and vendor agreements in the normal course of business. As of June 30, 2026, non-cancellable purchase commitments with three of the Company’s vendors totaled approximately $31,000.

Note 14 — Related Party Transactions

The Company has lease agreements with Fitzgerald Manufacturing Partners. The owner of Fitzgerald Manufacturing Partners is a stockholder of the Company. For each of the three months ended June 30, 2026 and 2025, the Company incurred rent expense of $0.1 million and $0.2 million, respectively, related to these agreements. For the six months ended June 30, 2026 and 2025, the Company incurred rent expense of $0.3 million and $0.4 million, respectively, related to these agreements.

Note 15 — Income Taxes

The Company’s effective tax rate during the three months ended June 30, 2026 and 2025 was (0.39%) and (0.17%), respectively. The Company’s effective tax rate during the six months ended June 30, 2026 and 2025 was (0.27%) and (0.14%), respectively. State taxes coupled with losses not benefited resulted in an effective tax rate below the statutory tax rate of 21% for the six months ended June 30, 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

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Notes to Condensed Consolidated Financial Statements

Unaudited

recognized in its financial statements. The Company does not have any uncertain tax positions that meet this threshold as of June 30, 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 June 30, 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 June 30, 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 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 June 30, 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 and six months ended June 30, 2026 and 2025 consisted of the following (in thousands, except per share amounts):


	Three Months Ended June 30,						Six Months Ended June 30,
	2026			2025			2026			2025
Numerator:
Net loss	$	(6,893	)	$	(7,487	)	$	(11,809	)	$	(17,648	)
Net loss attributable to common stockholders, basic		(6,893	)		(7,487	)		(11,809	)		(17,648	)
Net loss attributable to common stockholders, diluted(1)		(6,893	)		(7,487	)		(11,809	)		(17,648	)
Denominator:
Basic
Weighted average common shares outstanding, basic		12,591			8,287			12,084			8,182
Basic net loss per share	$	(0.55	)	$	(0.90	)	$	(0.98	)	$	(2.16	)
Diluted
Weighted average common shares outstanding, diluted(1)		12,591			8,287			12,084			8,182
Diluted net loss per share	$	(0.55	)	$	(0.90	)	$	(0.98	)	$	(2.16	)

(1)

Net loss attributable to common stockholders, diluted during both the three and six months ended June 30, 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).

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Xos, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Unaudited

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 June 30, 2026 and 2025 consisted of the following (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Contingent earn-out shares		547		547		547		547
Common stock underlying public and private warrants		628		628		628		628
Restricted stock units		1,886		1,049		1,886		1,049
Stock options		1		1		1		1
If-converted common stock from convertible debt		1,542		280		1,542		280

Note 17 — Segment Reporting

The following table presents segment revenue, gross profit, and net loss for the periods presented (in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
	2026			2025			2026			2025
Revenues	$	4,740		$	18,393		$	15,965		$	24,272
Cost of goods sold		4,167			16,756			11,021			21,399
Gross profit		573			1,637			4,944			2,873
less:
Employee related		3,086			2,959			6,015			5,944
Stock-based compensation(1)		1,934			1,528			3,988			2,989
Facility and rent		516			1,132			1,115			2,191
Insurance		618			800			1,385			1,678
Depreciation		465			504			964			951
Professional services		740			448			1,361			1,084
Computer and software as a service		448			502			1,078			852
Research and development materials		427			472			878			809
Other(2)		286			355			747			2,682
Other (income) expense, net(3)		(1,096	)		405			(816	)		1,256
Change in fair value of derivative instruments		15			6			6			60
Provision for income taxes		27			13			32			25
Segment net loss	$	(6,893	)	$	(7,487	)	$	(11,809	)	$	(17,648	)

____________

(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.

(3)

Other (income) expense, net includes $1.2 million in recoveries associated with previously paid import duties for both of the three and six months ended June 30, 2026.

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.

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Xos, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Unaudited

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.

The Company’s financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable, other current liabilities, convertible debt, 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 June 30, 2026 and December 31, 2025 consisted of the following (in thousands):


	June 30, 2026
	Fair Value		Level 1		Level 2		Level 3
Financial Liabilities:
Private Placement Warrants	$	1	$	—	$	1	$	—
Public Warrants		78		78		—		—
Total Financial Liabilities	$	79	$	78	$	1	$	—


	December 31, 2025
	Fair Value		Level 1		Level 2		Level 3
Financial Liabilities:
Private Placement Warrants	$	1	$	—	$	1	$	—
Public Warrants		72		72		—		—
Total Financial Liabilities	$	73	$	72	$	1	$	—

There was no change in the fair value of Level 3 financial liabilities during the three and six months ended June 30, 2026. The fair value of Earn-out Shares liability was immaterial to the consolidated financial statements for each of the periods ended June 30, 2026 and December 31, 2025.

Note 19 — Revision of Previously Reported Information

In connection with the preparation of the Report, the Company identified immaterial errors in its previously reported financial statements for the periods ended December 31, 2024, March 31, 2025, June 30, 2025, December 31, 2025, and March 31, 2026 relating to the improper recording of vendor accrued purchases.

In accordance with SAB 99, Materiality, and SAB 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in the Current Year Financial Statements, the Company evaluated the materiality of the errors from qualitative and quantitative perspectives, and concluded that the errors were immaterial to any prior interim financial statements. Notwithstanding this

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Xos, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Unaudited

conclusion, management has revised the accompanying unaudited condensed consolidated financial statements for the affected periods, and related notes included herein to correct the errors.

The following tables present the effect of correcting this error on the Company's previously issued financial statements (in thousands).


For the period ended December 31, 2024
	As previously reported			Adjustment		As revised

Consolidated Statement of Stockholders' Equity
Accumulated deficit	$	(203,420	)	$	510	$	(202,910	)
Total stockholders' equity		33,610			510		34,120


For the period ended March 31, 2025
	As previously reported			Adjustment		As revised

Condensed Consolidated Statement of Stockholders' Equity
Net and comprehensive loss	$	(10,186	)	$	25	$	(10,161	)
Accumulated deficit		(213,606	)		535		(213,071	)
Total stockholders' equity		24,807			535		25,342


For the three months ended June 30, 2025
	As previously reported			Adjustment			As revised

Condensed Consolidated Statement of Operations and Comprehensive Loss
Cost of goods sold	$	16,774		$	(18	)	$	16,756
Gross profit		1,619			18			1,637
Loss from operations		(7,081	)		18			(7,063	)
Loss before provision for income taxes		(7,492	)		18			(7,474	)
Net loss		(7,505	)		18			(7,487	)
Net and comprehensive loss		(7,505	)		18			(7,487	)


For the six months ended June 30, 2025
	As previously reported			Adjustment			As revised

Condensed Consolidated Statement of Operations and Comprehensive Loss
Cost of goods sold	$	21,442		$	(43	)	$	21,399
Gross profit		2,830			43			2,873
Loss from operations		(16,350	)		43			(16,307	)
Loss before provision for income taxes		(17,666	)		43			(17,623	)
Net loss		(17,691	)		43			(17,648	)
Net and comprehensive loss		(17,691	)		43			(17,648	)

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Xos, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Unaudited


For the period ended June 30, 2025
	As previously reported			Adjustment		As revised

Condensed Consolidated Statement of Stockholders' Equity
Net and comprehensive loss	$	(7,505	)	$	18	$	(7,487	)
Accumulated deficit		(221,111	)		553		(220,558	)
Total stockholders' equity		18,328			553		18,881


For the period ended June 30, 2025
	As previously reported			Adjustment			As revised

Condensed Consolidated Statement of Cash Flows
Net loss	$	(17,691	)	$	43		$	(17,648	)
Other liabilities		2,625			(43	)		2,582


For the period ended December 31, 2025
	As previously reported			Adjustment			As revised

Consolidated Balance Sheet
Other current liabilities	$	14,685		$	(674	)	$	14,011
Total current liabilities		23,658			(674	)		22,984
Total liabilities		37,076			(674	)		36,402
Accumulated deficit		(228,740	)		674			(228,066	)
Total stockholders' equity		23,287			674			23,961


For the period ended December 31, 2025
	As previously reported			Adjustment		As revised

Consolidated Statement of Stockholders' Equity
Accumulated deficit		(228,740	)		674		(228,066	)
Total stockholders' equity		23,287			674		23,961


For the period ended March 31, 2026
	As previously reported			Adjustment		As revised

Condensed Consolidated Statement of Stockholders' Equity
Net loss	$	(4,953	)	$	37	$	(4,916	)
Accumulated deficit		(233,693	)		711		(232,982	)
Total stockholders' equity		19,790			711		20,501

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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 May 8, 2026, the Company and Aljomaih Automotive Co. (“Aljomaih”) amended the Convertible Promissory Note (as amended from time to time, 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.

The Public Warrants, which have an exercise price of $345.00 per whole share, subject to adjustments, and are listed on the Nasdaq Capital Market with trading symbol “XOSWW,” will expire on August 20, 2026 or earlier upon their redemption or liquidation, and will cease trading on or prior to their expiration date.

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.

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The U.S. trade policy environment has shifted materially since our last filing. Tariff measures imposed under Sections 232 and 301 remain in effect, and the scope and rates of these measures continue to evolve. Effective January 1, 2026, Section 301 tariff rates on certain products imported from China increased significantly, including certain lithium-ion batteries, natural graphite, and permanent magnets. A temporary global import surcharge imposed under Section 122 of the Trade Act of 1974 was in effect from February 24, 2026, through July 24, 2026, subject to specified exclusions and limitations. Effective July 24, 2026, new Section 301 tariffs became applicable to products from a broad group of trading partners, including an additional tariff on most products imported from China, subject to specified exemptions. Existing tariffs and potential future actions under Sections 232 and 301 may affect batteries, power electronics, power and grid equipment, structural materials, and other components within our supply chain, creating additional risk to our cost structure and procurement planning.

These overlapping and evolving tariff regimes have introduced significant volatility into our cost structure and procurement planning, particularly for power electronics, batteries and battery components, and structural materials. Uncertainty regarding implementation timelines, product coverage, applicable exemptions, and potential future trade actions has required frequent adjustments to sourcing strategies, supplier selection, inventory planning, and contract terms. To mitigate these impacts, we have undertaken the following measures:

•

diversified our supply base by qualifying alternative suppliers in jurisdictions with lower tariff exposure;

•

renegotiated pricing, delivery, and commercial terms to address tariff exposure and potential cost passthroughs;

•

conducted tariff classification and compliance reviews to confirm applicable HTS codes and evaluate available exemptions, exclusions, preferential treatment, and duty reduction programs;

•

adjusted procurement timing and inventory levels for components considered to have elevated tariff or supply disruption risk;

•

monitored pending Section 232 and Section 301 investigations and evaluated alternative sources, advance purchases, and contract repricing provisions in anticipation of potential new tariff actions; and

•

evaluated the effect of the expiration of the Section 122 surcharge and the Section 301 tariffs effective July 24, 2026, on our sourcing strategies 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.

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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.

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 June 30, 2026, we delivered 6 vehicles (including leases) and 24 powertrains & hubs. During the three months ended June 30, 2025, we delivered 128 vehicles and 7 powertrains & hubs. During the three months ended June 30, 2026, we generated $0.6 million in revenue (or 12% of revenue) in vehicle sales, $3.5 million (or 73% of revenue) in powertrain & hub sales, $0.5 million (or 11% of revenue) in other product revenue, and $0.2 million (or 4% of revenue) in ancillary revenue. During the three months ended June 30, 2025, we generated $17.1 million in revenue (or 93% of revenue) from vehicle sales, $0.9 million (or 5% of revenue) in powertrain & hub sales, $0.2 million (or 1% of revenue) in other product revenue, and $0.2 million (or 1% of revenue) from ancillary revenue. Unless and until we develop a robust backlog of binding orders, we expect our unit volumes to fluctuate from quarter to quarter, particularly where customers place, and/or shift delivery dates, for larger orders.

During the six months ended June 30, 2026, we delivered 20 vehicles (including leases) and 105 powertrains & hubs. During the six months ended June 30, 2025, we delivered 150 vehicles and 14 powertrains & hubs. During the six months ended June 30, 2026, we generated $2.2 million in revenue (or 14% of revenue) in vehicle sales, $12.6 million (or 79% of revenue) in powertrain & hub sales, $0.8 million (or 5% of revenue) in other product revenue, and $0.4 million (or 2% of revenue) in ancillary revenue. During the six months ended June 30, 2025, we generated $20.7 million in revenue (or 85% of revenue) from vehicle sales, $2.5 million (or 10% of revenue) in powertrain & hub sales, $0.6 million (or 3% of revenue) in other product revenue, and $0.5 million (or 2% 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

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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.

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.

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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 materials 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 the 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.

Cost of goods sold includes the impact of identifiable tariff costs related to the production of our products. 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 continue to undertake efforts to identify more cost-effective vendors and sources of parts and raw materials to lower our overall cost of production.

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.

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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 Income (Expense), Net

Other income (expense), net primarily includes recoveries associated with previously paid import duties, 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.

Results of Operations

Comparison of the Three and Six Months Ended June 30, 2026 and 2025

The following table sets forth our historical operating results for the periods indicated:


	For the Three Months Ended June 30,
(dollars in thousands)	2026			2025			$ Change			% Change
Revenues	$	4,740		$	18,393		$	(13,653	)		(74	)%
Cost of goods sold		4,167			16,756			(12,589	)		(75	)%
Gross profit		573			1,637			(1,064	)		(65	)%
Operating expenses
General and administrative		5,817			5,906			(89	)		(2	)%
Research and development		1,899			2,087			(188	)		(9	)%
Sales and marketing		804			707			97			14	%
Total operating expenses		8,520			8,700			(180	)		(2	)%
Loss from operations		(7,947	)		(7,063	)		(884	)		13	%
Other income (expense), net		1,096			(405	)		1,501			(371	)%
Change in fair value of derivative instruments		(15	)		(6	)		(9	)		150	%
Loss before provision for income taxes		(6,866	)		(7,474	)		608			(8	)%
Provision for income taxes		27			13			14			108	%
Net loss	$	(6,893	)	$	(7,487	)	$	594			(8	)%

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	For the Six Months Ended June 30,
(dollars in thousands)	2026			2025			$ Change			% Change
Revenues	$	15,965		$	24,272		$	(8,307	)		(34	)%
Cost of goods sold		11,021			21,399			(10,378	)		(48	)%
Gross profit		4,944			2,873			2,071			72	%
Operating expenses
General and administrative		11,882			13,802			(1,920	)		(14	)%
Research and development		3,929			4,017			(88	)		(2	)%
Sales and marketing		1,720			1,361			359			26	%
Total operating expenses		17,531			19,180			(1,649	)		(9	)%
Loss from operations		(12,587	)		(16,307	)		3,720			(23	)%
Other income (expense), net		816			(1,256	)		2,072			(165	)%
Change in fair value of derivative instruments		(6	)		(60	)		54			(90	)%
Loss before provision for income taxes		(11,777	)		(17,623	)		5,846			(33	)%
Provision for income taxes		32			25			7			28	%
Net loss	$	(11,809	)	$	(17,648	)	$	5,839			(33	)%

Revenues

Our total revenues decreased by $13.7 million, or 74%, from $18.4 million in the three months ended June 30, 2025 to $4.7 million in the three months ended June 30, 2026, primarily driven by a decrease in unit sales. During the three months ended June 30, 2026, we sold 6 vehicles and 24 powertrains & hubs, compared to 128 vehicles and 7 powertrains & hubs during the three months ended June 30, 2025.

Our total revenues decreased by $8.3 million, or 34%, from $24.3 million in the six months ended June 30, 2025 to $16.0 million in the six months ended June 30, 2026, primarily driven by a decrease in unit sales. During the six months ended June 30, 2026, we sold 20 vehicles and 105 powertrains & hubs, compared to 150 vehicles and 14 powertrains & hubs during the six months ended June 30, 2025.

Revenue for the three months ended June 30, 2026 and 2025 consisted of the following (dollars in thousands):


	Three Months Ended June 30,
	2026		2025		$ Change			% Change
Product and service revenue
Stepvans & vehicle incentives(1)	$	581	$	17,087	$	(16,506	)		(97	)%
Powertrains & hubs(1)		3,468		930		2,538			273	%
Other product revenue(2)		525		152		373			245	%
Total product revenue		4,574		18,169		(13,595	)		(75	)%
Ancillary revenue		166		224		(58	)		(26	)%
Total revenues	$	4,740	$	18,393	$	(13,653	)		(74	)%

Revenue for the six months ended June 30, 2026 and 2025 consisted of the following (dollars in thousands):


	Six Months Ended June 30,
	2026		2025		$ Change			% Change
Product and service revenue
Stepvans & vehicle incentives(1)	$	2,201	$	20,671	$	(18,470	)		(89	)%
Powertrains & hubs(1)		12,584		2,522		10,062			399	%
Other product revenue(2)		817		619		198			32	%
Total product revenue		15,602		23,812		(8,210	)		(34	)%
Ancillary revenue		363		460		(97	)		(21	)%
Total revenues	$	15,965	$	24,272	$	(8,307	)		(34	)%

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(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 both of the three and six months ended June 30, 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 $8,000 as of June 30, 2026 and are expected to be satisfied in 2026. The remaining performance obligations for software services total $0.5 million as of June 30, 2026 and $0.2 million are expected to be satisfied in 2026 with the remaining $0.3 million expected to be satisfied in 2027 and beyond.

Cost of Goods Sold

Cost of goods sold decreased by $12.6 million, or 75%, from $16.8 million in the three months ended June 30, 2025 to $4.2 million in the three months ended June 30, 2026. The decrease in cost of goods sold is directly attributable to the decrease in our product revenue and associated decreases of (i) $11.0 million in direct materials, (ii) $2.0 million in manufacturing overhead, (iii) $0.1 million dealer return reserves with no such comparable expense in the three months ended June 30, 2026, (iv) $0.1 million for warranty reserve and (v) $0.1 million for freight costs. These decreases were offset by increases of (i) $0.2 million in physical inventory count and other adjustments, (ii) $0.3 million related to increases in inventory reserves and (iii) $0.2 million in direct labor largely related to the completion of energy service projects.

Cost of goods sold decreased by $10.4 million, or 48% from $21.4 million in the six months ended June 30, 2025 to $11.0 million in the six months ended June 30, 2026. The decrease in cost of goods sold is directly attributable to the decrease in our product revenue and associated decreases of (i) $9.7 million in direct materials, (ii) $1.9 million in manufacturing overhead, (iii) $0.2 million in freight costs, and (iv) $0.1 million in dealer return reserves with no such comparable expense in the six months ended June 30, 2026. These decreases were offset by increases of (i) $0.5 million related to increases in inventory reserves, (ii) $0.4 million related to identifiable tariff charges, (iii) $0.3 million for direct labor largely related to the completion of energy service projects, and (iii) $0.3 million in physical inventory count and other adjustments.

The decreases in direct material and manufacturing overhead costs are driven by a decrease 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 decrease correspondingly with a decrease in production volume and units sold.

General and Administrative

General and administrative expenses decreased by $0.1 million, or 2%, from $5.9 million in the three months ended June 30, 2025 to $5.8 million in the three months ended June 30, 2026, attributable to decreases of (i) $0.6 million in facility expenses connected to the termination of the Mesa Lease (as defined below) with no such comparable expense in the three months ended June 30, 2026, (ii) $0.2 million in insurance costs, and (iii) $0.3 million in other operating expenses including travel, recruiting, and computer software costs. These decreases were offset by increases of (i) $0.4 million in stock-based compensation expense, (ii) $0.3 million in personnel costs for legal, finance, accounting, information technology and general and administrative functions, and (iii) $0.3 million in professional fees.

General and administrative expenses decreased by $1.9 million, or 14%, from $13.8 million in the six months ended June 30, 2025 to $11.9 million in the six months ended June 30, 2026, attributable to decreases of (i) $1.9 million in financed equipment lease expense due to fees incurred during the six months ended June 30, 2025 with no comparable expense for the six months ended June 30, 2026, (ii) $1.1 million in facility expenses connected to the termination of the Mesa Lease (as defined below) with no such comparable expense in the six months ended June 30, 2026 and (iii) $0.3 million in insurance costs. These decreases were offset by increases of (i) $0.8 million in stock-based compensation expense, (ii) $0.3 million in personnel costs for legal, finance, accounting, information technology and general and administrative functions and (iii) $0.3 million in professional fees.

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Research and Development

Research and development expenses decreased by $0.2 million, or 9%, from $2.1 million in the three months ended June 30, 2025 to $1.9 million in the three months ended June 30, 2026. The change was primarily due to decreases of (i) $0.1 million personnel costs and (ii) $0.1 million in materials purchases related to Hub development.

Research and development expenses decreased by $0.1 million, or 2%, from $4.0 million in the six months ended June 30, 2025 to $3.9 million in the six months ended June 30, 2026. The change was primarily due to a decrease of $0.4 million in personnel costs, partially offset by increases of $0.3 million in materials purchases related to Hub development and other expenses.

Sales and Marketing

Sales and marketing expense increased by $0.1 million, or 14% from $0.7 million in the three months ended June 30, 2025 to $0.8 million in the three months ended June 30, 2026. The change was primarily due to an increase of $0.1 million in employee bonuses.

Sales and marketing expense increased by $0.3 million, or 26% from $1.4 million in the six months ended June 30, 2025 to $1.7 million in the six months ended June 30, 2026. The change was primarily due to an increase of $0.3 million in employee bonuses.

Other Income (Expense), net

Other income (expense), net increased by $1.5 million, from a loss of $0.4 million in the three months ended June 30, 2025 to a gain of $1.1 million in the three months ended June 30, 2026. The change was attributable to (i) $1.2 million in recoveries associated with previously paid import duties in the three months ended June 30, 2026, with no such comparable income in the prior year period (ii) $0.1 million less in interest expense, (iii) $0.1 million gain resulting from the early termination of an operating lease with no such comparable income for the three months ended June 30, 2025 and (iv) $0.1 million related to lower other expenses.

Other income (expense), net increased by $2.1 million, from a loss of $1.3 million in the six months ended June 30, 2025 to a gain of $0.8 million in the six months ended June 30, 2026. The change was attributable to (i) $1.2 million in recoveries associated with previously paid import duties in the six months ended June 30, 2026, with no such comparable income in the prior year period (ii) $0.4 million less in impairment losses on property and equipment, (iii) $0.2 million less in interest expense, (iv) $0.2 million related to lower other expenses and (v) $0.1 million gain resulting from the early termination of an operating lease with no such comparable income for the six months ended June 30, 2025.

Change in Fair Value of Derivatives

The loss on the change in fair value of derivative instruments increased by $9,000, or 150%, from a loss of $6,000 in the three months ended June 30, 2025 to $15,000 in the three months ended June 30, 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.

The loss on the change in fair value of derivative instruments decreased by $54,000, or 90%, from a loss of $60,000 in the six months ended June 30, 2025 to $6,000 in the six months ended June 30, 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 $27,000 and $13,000 during the three months ended June 30, 2026 and 2025, respectively.

The Company recorded an income tax provision of $32,000 and $25,000 during the six months ended June 30, 2026 and 2025, respectively.

Liquidity and Capital Resources

General

As of June 30, 2026, our principal sources of liquidity were our cash and cash equivalents of $13.2 million with an accumulated deficit of approximately $239.9 million. Our short-term uses of cash are for working capital and to pay the principal of our indebtedness. During the six months ended June 30, 2026, we incurred a net loss of approximately $11.8 million and had net cash used in operating activities of $4.3 million.

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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”), subject to the limitations of General Instruction I.B.6 of Form S-3, which limits the amount the Company may sell, together with any other primary offerings on Form S-3, 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. In the six months ended June 30, 2026, we sold 378,700 shares of common stock in the ATM Offering, resulting in net proceeds of approximately $2.2 million. During the 12 calendar month period ending August 12, 2026, we have sold an aggregate of $11,366,932 of securities pursuant to General Instruction I.B.6 of Form S-3. As of June 30, 2026, we had $8.8 million of shares of Common Stock available for future issuance under the ATM Offering pursuant to our prospectus supplement with respect to the ATM Offering, and $14.6 million remaining under the terms of the Sales Agreement.

Registered Direct Offering

On June 4, 2026, we entered into (i) a Securities Purchase Agreement (the “Securities Purchase Agreement”) with certain institutional investors and (ii) a Placement Agency Agreement (the “Placement Agency Agreement”) with the Agent, pursuant to which the Agent acted as our exclusive placement agent in connection with a registered direct offering of 1,090,910 shares of Common Stock at a purchase

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price of $5.50 per share (the "Registered Direct Offering"). On June 5, 2026, we completed the sale of the Shares pursuant to the Securities Purchase Agreement. The aggregate gross proceeds to us from the offering were approximately $6.0 million, before deducting placement agent fees and other offering expenses. Pursuant to the Placement Agency Agreement, we agreed to pay Agent a cash fee equal to 6.5% of the aggregate gross proceeds received by us in the offering and to reimburse certain expenses of Agent in an aggregate amount of up to $75,000.

Cash Flow Data

The following table provides a summary of cash flow data for the six months ended June 30, 2026 and 2025 (in thousands):


	Six Months Ended June 30,
	2026			2025
Net cash used in operating activities	$	(4,275	)	$	(111	)
Net cash provided by investing activities		312			—
Net cash provided by (used in) financing activities		3,158			(2,100	)
Net decrease in cash and cash equivalents	$	(805	)	$	(2,211	)

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 $4.3 million for the six months ended June 30, 2026, primarily consisting of a cash-basis net loss of $5.8 million from normal operations of the Company (after non-cash adjustments of $6.0 million), partially offset by favorable net working capital changes of $1.5 million, primarily driven by lower inventories due to improved inventory turns and lower accounts receivable due to collections, partially offset by lower other liabilities, accounts payable, and higher prepaid expenses and other current assets.

Net cash used in operating activities was $0.1 million for the six months ended June 30, 2025, primarily consisting of a cash-basis net loss of $13.1 million from normal operations of the Company (after non-cash adjustments of $4.6 million), partially offset by favorable net working capital changes of $13.0 million, primarily driven by lower accounts receivable due to collections, inventories due to improved inventory turns, partially offset by lower accounts payable and higher prepaid expenses and other current assets.

Cash Flow from Investing Activities

Net cash provided by investing activities was $0.3 million for the six months ended June 30, 2026 due to proceeds from the disposal of assets held for sale, partially offset by $38,000 in purchases of property and equipment.

Net cash provided by investing activities was $0 for the six months ended June 30, 2025.

Cash Flow from Financing Activities

Net cash provided by financing activities was $3.2 million for the six months ended June 30, 2026, which primarily related to (i) net proceeds of $5.4 million in the Registered Direct Offering, (ii) net proceeds of $2.2 million in sales under the ATM Offering program, and (iii) proceeds of $1.0 million from short-term insurance financing notes, partially offset by (i) $3.0 million for payments of principal on Convertible Notes, (ii) payments for short-term insurance financing notes of $1.3 million, (iii) taxes paid relating to net-settlement of stock-based awards of $1.0 million, and (iv) equipment lease principal payments of $0.1 million.

Net cash used in financing activities was $2.1 million for the six months ended June 30, 2025, primarily related to (i) net short-term insurance financing note activity of $0.2 million, (ii) equipment lease principal payments of $1.2 million and (iii) taxes paid relating to net-settlement of stock-based awards of $0.7 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

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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.

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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. Effective June 30, 2026, the Company entered a lease termination agreement for the lease on the Company's office in Huntington Beach, California, reducing outstanding and future lease commitments by $0.4 million. We did not have any additional material contractual obligations or other commitments as of June 30, 2026, other than as disclosed in the 2025 Form 10-K, and in Note 13 — Commitments and Contingencies.

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, and product warranty liability. 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.

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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 June 30, 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 as of June 30, 2026, due to the material weaknesses in our internal control over financial reporting discussed below.

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.

During the period ended June 30, 2026, management identified an additional material weakness related to the improper recording of vendor accrued inventory purchases, including instances in which accruals were overstated due to deficiencies in the purchase-to-pay process.

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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 June 30, 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 June 30, 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 and accuracy of recording supplier and vendor accruals, including vendor accrued inventory purchases, 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;

•

Designing and implementing a precise control, using existing personnel, to ensure the proper recording of vendor accrued purchases, and coordination with our supply chain team to monitor aged purchase orders; and

•

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.

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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 June 30, 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 202 5 Form 10-K. There have been no material changes to our risk factors since the filing of the 202 5 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.

Item 5. Other Information

(c)

During our last fiscal quarter, except as set forth below, none of our directors or officers, as defined in Rule 16a-1(f), adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” each as defined in Item 408 of Regulation S-K.

On May 26, 2026, Dakota Semler, our Chief Executive Officer and chairman of our board of directors, terminated the previously disclosed Rule 10b5-1 trading arrangement, adopted December 30, 2025, with respect to the potential sale of up to an aggregate of 245,000 shares of our Common Stock, that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act.

On June 30, 2026, Giordano Sordoni, our Chief Operating Officer and a member of our board of directors, entered into a Rule 10b5-1 trading arrangement (the “Sordoni Arrangement”) with respect to the potential sale of up to an aggregate of 883,125 shares of our Common Stock, that is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act. Orders under the Sordoni Arrangement will be effective no earlier than September 29, 2026, and will be executed or cancelled by July 1, 2027 at the latest.

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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 be tween 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).
10.3		Placement Agency Agreement, dated June 4, 2026, by and among Xos, Inc. and Roth Capital Partners, LLC (incorporated by reference to Exhibit 1.1 of the Company's Current Report on Form 8-K filed on June 5, 2026).
10.4		Securities Purchase Agreement, dated June 4, 2026, by and among Xos, Inc. and certain investors (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed on June 5, 2026).
10.5		2026 Amendment to the Xos, Inc. Amended and Restated 2021 Equity Incentive Plan (incorporated by reference to Appendix C to the Registrant’s Definitive Proxy Statement on Schedule 14A filed with the SEC on May 4, 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.

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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: August 13, 2026	By:	/s/ Dakota Semler
	Name:	Dakota Semler
	Title:	Chief Executive Officer (Principal Executive Officer)

Date: August 13, 2026	By:	/s/ Liana Pogosyan
	Name:	Liana Pogosyan
	Title:	Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)