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

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

Indicate by check mark whether the ~~registrant~~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,”~~company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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 ~~Exchange~~ Act). Yes ☒ No ☐

AsThe registrant had outstanding 163,637,247 shares of ~~August 17, 2021, 37,500,000 Class A ordinary shares,~~Common Stock, $0.0001 par value ~~$0.0001, and 9,375,000 Class B ordinary shares, par value $0.0001, were issued and outstanding.~~

The accompanying notes are an integral part of these unaudited condensed consolidated financial ~~statements.~~

COVID-19 and actions taken to mitigate its spread have had and may continue to have an ~~emerging growth company that has opted out~~adverse impact on the economies and financial markets of ~~using~~many countries, including the ~~extended transition period difficult or impossible because~~areas in which the Company operates. As the COVID-19 pandemic continues to evolve, the Company believes the extent of the ~~potential differences~~pandemic’s impact to its business, operating results, cash flows, liquidity and financial condition will be primarily driven by the severity and duration of the COVID-19 pandemic, the pandemic’s impact on the United States and global economies and the timing, scope and effectiveness of federal, state and local governmental responses to the pandemic. Those primary drivers are beyond the Company’s knowledge and control, and as a result, at this time the Company is unable to predict the cumulative impact, both in ~~accounting standards used.~~

terms of severity and duration, that the COVID-19 pandemic will have on its business, operating results, cash flows and financial condition. However, the impact of the COVID-19 pandemic could be material if the current circumstances continue to exist for a prolonged period of time or worsen.

~~Cash~~

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Xos, Inc. and ~~Cash Equivalents~~

Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

Additionally, recent geopolitical events, such as the recent military conflict between Russia and Ukraine, may increase the severity of supply chain disruptions and further hinder our ability to source inventory for our vehicles. The conflict continues to evolve and its ultimate impact on the Company ~~considers all short-term investments~~is uncertain, but a prolonged conflict may have a material negative impact on the Company’s business, operating results, cash flows, liquidity and financial condition.

Although the Company has used the best current information available to it in its estimates, actual results could materially differ from the estimates and assumptions developed by management.

Supply Chain Disruptions

Negative global economic conditions, which the COVID-19 pandemic has contributed to, has impacted the Company’s ability to source certain critical inventory items. The series of restrictions imposed and the speed and nature of the recovery in response to the pandemic have placed burdens on the Company’s supply chain management, such as the semiconductor chip and battery cell shortage and supply limitations on vehicle bodies and aluminum.

Despite supply chain disruptions, the Company has continued to source inventory for its vehicles and its purchasing team has been working with ~~an original maturity~~vendors to find alternative solutions to areas where there are supply chain constraints, and where appropriate and critical, has placed orders in advance of ~~three months or less when purchased~~projected need to ensure inventory is able to be ~~cash equivalents.~~

delivered in time for production plans.

10Note 2

— Basis of Presentation and Summary of Significant Accounting Policies

NEXTGEN ACQUISITION CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

~~Investments Held~~The following is a summary of the significant accounting policies consistently applied in the ~~Trust Account~~

~~The Company’s portfolio~~preparation of investments is comprised of U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, or investments in money market funds that invest in U.S. government securities and generally have a readily determinable fair value, or a combination thereof. When the Company’s investments held in the Trust Account are comprised of U.S. government securities, the investments are classified as trading securities. When the Company’s investments held in the Trust Account are comprised of money market funds, the investments are recognized at fair value. Trading securities and investments in money market funds are presented on the balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of these securities is included in Net gain from cash equivalents held in Trust Account in the accompanying unaudited condensed ~~statement~~consolidated financial statements:

Basis of ~~operations.~~ Presentation

The ~~estimated~~accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“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, Legacy Xos and Xos Services. All significant intercompany accounts and transactions have been eliminated in consolidation.

In the opinion of management, all adjustments (primarily consisting of normal accruals) considered for a fair presentation have been included. Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. 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, 2021 and 2020 presented in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on March 30, 2022.

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, earn-out shares liability, stock-based compensation, common stock warrant liability 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 ~~investments held~~assets and liabilities. Actual results could differ from those estimates, and such differences could be material to the Company’s condensed consolidated financial statements.

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Xos, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

Reclassifications

Certain prior period balances have been reclassified to conform to the current period presentation in the ~~Trust Account are determined using available market information.~~

~~Concentration~~unaudited condensed consolidated financial statements and the accompanying notes, including (i) classification of ~~Credit Risk~~

~~Financial instruments that potentially subject~~operating expenses in the unaudited condensed consolidated statements of operations and comprehensive loss and (ii) presenting equipment leases as part of other current and non-current liabilities. The Company reclassified a portion of its payroll related expenses in general and administrative to sales and marketing and research and development. Additionally, the Company reclassified depreciation expense 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,~~general and administrative expense. These reclassifications have no effect on previously reported net loss.

Warranty Liability

Since 2021, the Company provides customers with a product warranty that assures that the products meet standard specifications and are free for periods typically between 2 to 5 years. The Company accrues warranty reserve for the products sold, which includes its best estimate of the projected costs to repair or replace items under warranties and recalls if identified. These estimates are based on actual claims incurred to date and an estimate of the nature, frequency and costs of future claims. These estimates are inherently uncertain given the Company’s relatively short history of sales, and changes to its historical or projected warranty experience may cause material changes to the warranty reserve in the future. Claims incurred under the Company’s standard product warranty programs are recorded based on open claims. No claims were incurred for the year ended December 31, 2021 and the period ended March 31, 2022. The Company recorded warranty liability within other current liabilities in the consolidated balance sheets as of March 31, 2022 and December 31, 2021.

The reconciliation of the change in the Company’s product liability balances for the three months ended March 31, 2022 consisted of the following (in thousands):


	March 31, 2022
Warranty liability, beginning of period	$	177
Reduction in liability (payments)	—
Increase in liability (new warranties)	298
Warranty liability, end of period	$	475

Leases

Upon inception of a contract, the Company evaluates if the contract, or part of the contract, contains a lease. A lease conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

Right-of-use (“ROU”) assets represent the Company's right to use an underlying asset for the lease term, and lease liabilities represent the Company's obligation to make lease payments arising from the lease. The lease liability is measured as the present value of the unpaid lease payments, and the ROU asset value is derived from the calculation of the lease liability, including prepaid lease payments, if any. Lease payments include fixed and in-substance fixed payments, variable payments based on an index or rate, reasonably certain purchase options, termination penalties, fees paid by the lessee to the owners of a special-purpose entity for restructuring the transaction, and probable amounts the lessee will owe under a residual value guarantee. Lease payments do not include (i) variable lease payments other than those that depend on an index or rate, (ii) any guarantee by the lessee of the lessor’s debt, or (iii) any amount allocated to non-lease components, if such election is made upon adoption, per the provisions of ASU 2016-02, Leases.

When the Company cannot determine the actual implicit rates a lease, it uses its estimated incremental borrowing rate, which is derived from information available at the lease commencement date, in determining the present value of lease payments. The Company gives consideration to its recent debt issuances, if any, as well as publicly available data for instruments with similar characteristics when calculating its incremental borrowing rate. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term. The Company's lease term includes any option to extend the lease when it is reasonably certain to be exercised based on considering all relevant economic factors. Operating expense charges from the lessor are accounted for on an accrual basis. The Company has elected not ~~experienced~~to separate the lease and non-lease components.

The leases have remaining initial terms ranging from less than 1 year to6 years.

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Xos, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

The Company reviews the carrying value of its right-of-use assets for impairment whenever events or changes in circumstances indicate that the recorded value may not be recoverable. Recoverability of assets is measured by comparing the carrying amounts of the assets to the estimated future undiscounted cash flows, excluding financing costs. If the Company determines that an impairment exists, any related impairment loss is estimated based on fair values.

Recent Accounting Pronouncements Issued and Adopted:

ASC 842, Leases: In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), as subsequently amended, which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors), and replaces the existing guidance in ASC 840, Leases. The new standard also requires lessees to recognize operating and finance lease liabilities and corresponding ROU assets on the balance sheet and to provide enhanced disclosures surrounding the amount, timing and uncertainty of cash flows arising from leasing arrangements.

On January 1, 2022, the Company adopted ASC 842 using the modified retrospective method. The Company has presented financial results and applied its accounting policies for the period beginning January 1, 2022 under ASC 842, while prior period results and accounting policies have not been adjusted and are reflected under legacy GAAP pursuant to ASC 840. In connection with the adoption of ASC 842, the Company performed an analysis of contracts under ASC 840 to ensure proper assessment of leases (or embedded leases) in existence as of January 1, 2022. The Company elected the package of practical expedients permitted under ASC 842, which allows the Company not to reassess 1) whether any expired or existing contracts as of the adoption date are or contain a lease, 2) lease classification for any expired or existing leases as of the adoption date and 3) initial direct costs for any existing leases as of the adoption date. The most significant impact of applying ASC 842 was the recognition of ROU asset and lease liabilities for operating leases in its condensed consolidated balance sheets. On January 1, 2022, the Company recognized an initial operating ROU asset of $7.7 million and associated operating lease liabilities of $7.7 million.

Refer to Note 6 — Leases for further information regarding the impact of the adoption of ASU 2016-02 on the Company's financial statements, as well as its various accounting policies for each lease type.

Recent Accounting Pronouncements Issued and not yet Adopted:

ASU 2016-13, Financial Instruments — Credit Losses (“ASU 2016-13”): In June 2016, the FASB issued ASU 2016-13, the Company will be required to use an expected-loss model for its marketable debt securities, available-for sale, which requires that credit losses be presented as an allowance rather than as an impairment write-down. Reversals of credit losses (in situations in which the estimate of credit losses declines) is permitted in the reporting period that the change occurs. Current U.S. GAAP prohibits reflecting reversals of credit losses in current period earnings. At March 31, 2022, the Company had $117.9 million in marketable debt securities, available for sale which would be subject to this new standard. As of December 31, 2021, these marketable debt securities, available for sale have an average credit rating of A+ and no impairment write-downs have been recorded. The Company is currently evaluating the impact of this new standard on ~~this account~~its investment policy and ~~management believes~~investments and does not expect the standard to have a material impact on its financial statements at adoption or in subsequent periods. The Company expects to adopt the new standard effective January 1, 2023.

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Xos, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

Note 3— Revenue Recognition

Disaggregated revenues by major source for the three months ended March 31, 2022 and 2021 consisted of the following (in thousands):


	Three Months Ended
	March 31, 2022		March 31, 2021
Product and service revenue
Stepvans & vehicle incentives	$	6,863	$	674
Powertrains	14		119
Fleet-as-a-Service	95		—
Total product revenue	6,972		793
Ancillary revenue	59		—
Total revenue	$	7,031	$	793

Note 4 — Inventories

Inventory amounted to $40.3 million and $30.9 million, respectively, as of March 31, 2022 and December 31, 2021 and consisted of the following (in thousands):


	March 31, 2022		December 31, 2021
Raw materials	$	24,008	$	20,382
Work in process	18,602		10,659
Finished goods	—		901
Inventories, gross of reserves	42,610		31,942
Less: inventory reserve	(2,307)		(1,059)
Inventories, net	$	40,303	$	30,883

Note 5 — Selected Balance Sheet Data

Prepaid expenses and other current assets as of March 31, 2022 and December 31, 2021 consisted of the following (in thousands):


	March 31, 2022		December 31, 2021
Prepaid inventories	$	8,415	$	7,303
Prepaid insurance	3,040		4,996
Deposits (primarily relating to deposits on equipment purchases)	3,203		2,783
Assets held for sale	1,848		1,848
Prepaid licenses and subscriptions	706		801
Others	358		119
Total	$	17,570	$	17,850

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Xos, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

Other current liabilities as of March 31, 2022 and December 31, 2021 consisted of the following (in thousands):


	March 31, 2022		December 31, 2021
Accrued expenses(1)	$	8,120	$	3,997
Lease liabilities, current	1,958		482
Customer deposits	1,026		899
Warranty liability	475		177
Others	278		306
Total	$	11,857	$	5,861

____________

(1) Primarily relates to personnel costs — wages, health benefits, vacation and other accruals.

Note 6 — Leases

A summary of the balances relating to the Company’s lease assets and liabilities as of March 31, 2022 consisted of the following (in thousands):


	Balance Sheet Location	March 31, 2022
Assets
Operating leases	Operating lease right-of-use assets, net	$	7,765
Equipment finance leases	Property and equipment, net	2,156
Total Lease Assets		$	9,921

Liabilities
Current
Operating leases	Other current liabilities	$	1,465
Equipment finance leases	Other current liabilities	493
Sub-total		$	1,958
Non-current
Operating leases	Other non-current liabilities	$	6,353
Equipment finance leases	Other non-current liabilities	1,542
Sub-total		$	7,895
Total Lease Liabilities		$	9,853

Operating Leases

The Company has a 5-year office lease on its headquarter facility in Los Angeles, which commenced in January 2022, as well as certain other leases (both short-term and long-term) within the United States.

The Company records lease expense on a straight-line basis over the lease term in general and administrative expense. Total lease expense for the three months ended March 31, 2022 and 2021 was $0.4 million and $0.2 million, respectively.

Lease terms include renewal or termination options that the Company is reasonably certain to exercise. For leases with a term of 12 months or less, the Company has made an accounting policy election to not ~~exposed~~record a ROU asset and associated lease liability on its unaudited condensed consolidated balance sheet. Total lease expense recorded for these short-term leases is immaterial for the three months ended March 31, 2022.

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Xos, Inc. and Subsidiaries

Notes to ~~significant risks~~Unaudited Condensed Consolidated Financial Statements

Equipment Finance Leases

The Company leases certain equipment facilities under finance leases that expire on ~~such accounts.~~

various dates through 2027. The finance lease cost for the three months ended March 31, 2022 and 2021 consisted of the following (in thousands):


	Income Statement Location	March 31, 2022		March 31, 2021
Amortization	General and administrative expense	$	160	$	29
Interest accretion on finance lease liabilities	Other income (expense), net	27		6
Total		$	187	$	35

Supplemental Cash Flow Information, Weighted-Average Remaining Lease Term and Discount Rate

The weighted-average remaining lease term and discount rates, as well as supplemental cash flow information for the three months ended March 31, 2022 consisted of the following (in thousands for the supplemental cashflow information):


Supplemental cashflow information:
Cash paid for amounts included in the measurement of operating lease liabilities	$	408
ROU assets obtained in exchange for operating lease obligations	$	437
Weighted average remaining lease term:
Operating leases	5.3 years
Equipment finance leases	3.7 years
Weighted average discount rate:
Operating lease - IBR	5.5		%
Equipment finance leases - rate implicit in the lease	7.0		%

Maturity Analysis

A summary of the undiscounted cash flows and a reconciliation to the Company’s lease liabilities as of March 31, 2022 consisted of the following (in thousands):


	March 31, 2022
	Operating Leases		Equipment Finance Leases		Total
2022 (remaining nine months)	$	1,233	$	480	$	1,713
2023	1,894		529		2,423
2024	1,948		444		2,392
2025	2,004		439		2,443
2026	1,672		356		2,028
Thereafter	130		29		159
Total future minimum lease payments	$	8,881	$	2,277	$	11,158
Less: imputed interest	1,063		242		1,305
Present value of Lease Liabilities	$	7,818	$	2,035	$	9,853

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Xos, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

Schedule of future minimum lease payments for operating and finance leases as of December 31, 2021 consisted of the following (in thousands):


	December 31, 2021
	Operating Leases		Equipment Finance Leases		Total
2022	$	1,167	$	482	$	1,649
2023	1,158		442		1,600
2024	1,192		386		1,578
2025	1,228		401		1,629
2026	1,265		339		1,604
Thereafter	106		27		133
Total future minimum lease payments	$	6,116	$	2,077	$	8,193

~~Fair Value Measurement~~

Note 7 — Recapitalization and Earn-out Shares Liability

~~Fair value~~

Recapitalization

As discussed in Note 1, on August 20, 2021, Legacy Xos and NextGen consummated the Business Combination contemplated by the Merger Agreement. Xos has been determined to be the accounting acquirer based on evaluation of the following facts and circumstances:

•Xos stockholders have the largest voting interest in the post-combination company;

•The board of directors of Xos is ~~defined~~authorized to be up to 9 members and had 6 members designated at the time of closing, and Xos having the ability to nominate the majority of the members of the board of directors as of closing;

•Xos management holds executive management roles (including Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, and Chief Technology Officer, among others) for the ~~price that would~~post-combination company and is responsible for the day-to-day operations;

•The post-combination company assumed the Xos name: “Xos, Inc.”; and

•The intended strategy of the post-combination entity continued Legacy Xos’ strategy of being a leader in the electric vehicle industry.

Accordingly, all historical financial information presented in these combined and consolidated financial statements represents the accounts of Legacy Xos and its wholly owned subsidiaries “as if” Legacy Xos is the predecessor and legal successor. The historical operations of Legacy Xos are deemed to be ~~received for~~those of the Company. Thus, the financial statements included in this report reflect (i) the historical operating results of Legacy Xos prior to the business combination; (ii) the combined results of NextGen and Legacy Xos following the Business Combination; and (iii) the assets and liabilities of Legacy Xos at their historical cost. No step-up basis of intangible assets or goodwill was recorded in the business combination transaction consistent with the treatment of the transaction as a reverse capitalization.

In connection with the Business Combination, each share of Legacy Xos Common Stock and Legacy Xos Preferred Stock issued and outstanding immediately prior to the Business Combination (with each share of Legacy Xos Preferred Stock being treated as if it were converted into Legacy Xos Common Stock immediately prior to the Business Combination) converted into the right to receive 1.956440 shares (the “Exchange Ratio”) of Common Stock.

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Xos, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

Also, in connection with the Business Combination, the following occurred:

•the merger of Legacy Xos into a wholly owned subsidiary of NextGen, with Legacy Xos surviving the merger as a wholly owned subsidiary of NextGen, with the combined company is referred to as “Xos”;

•142,584,621 shares of Common Stock issued, including: (i) the Legacy Xos’ Common Stock, and (ii) Legacy Xos’ Preferred Stock, including the exercise and conversion of Legacy Xos’ Preferred Stock warrant (as if the Legacy Xos Preferred Stock had converted into the Legacy Xos’ Common Stock immediately prior to the reverse merger);

•the issuance and sale of 19,600,000 shares of Common Stock (PIPE investment) for a purchase price of $10.00 per share and an ~~asset~~aggregate purchase price of $196.0 million (which excludes the sale of 2,000,000 shares in the aggregate for a purchase price of $10.00 per share and an aggregate purchase price of $20.0 million pursuant to an offering of Common Stock by the founders of Legacy Xos). On the Closing Date, one of the PIPE Investors, Grantchester C Change, LLC., did not fund their $4.0 million committed amount under the binding Subscription Agreement.;

•the settlement of the outstanding underwriting fees incurred in connection with the initial public offering of NextGen on October 9, 2020, for which the final cash amount owed was $11.2 million;

•the settlement of the direct and incremental transaction costs incurred prior to, or ~~paid for transfer~~concurrent with, the closing of athe business combination in the amount of $44.2 million, which are recorded as reduction to additional paid-in capital;

•the recognition of contingent earn-out interests provision as liability ~~in an orderly transaction between market participants at the measurement date. U.S. GAAP establishes~~with a ~~three-tier~~ fair value ~~hierarchy, which prioritizes~~of $101.7 million on the ~~inputs used~~day of the merger consummation; and,

•the assumption of the Public Warrants (12,499,964 units) and Private Placement Warrants (6,333,334 units) at fair value of $17.9 million on the day of merger consummation.

Contingent Earn-out Shares Liability

The Company has a contingent obligation to issue 16.2 million shares (the “Earn-out Shares”) of Common Stock and grant 261,000 restricted stock units (“Earn-out RSUs”) to certain stockholders and employees upon the achievement of certain market share price milestones within specified periods following the Business Combination on August 20, 2021.

The Earn-out Shares will be issued in ~~measuring fair value. The hierarchy gives~~tranches based on the ~~highest priority to unadjusted quoted prices in active markets~~following conditions:

i.If the volume-weighted average closing share price (“VWAP”) of the Common Stock equals or exceeds $14.00 per share for ~~identical assets or liabilities (Level 1 measurements)~~any 10 trading days within any consecutive 20-trading day period between the merger closing date and the ~~lowest priority~~five year anniversary of such closing date (“Earn-out Period”), then the Company is required to ~~unobservable inputs (Level 3 measurements)~~issue an aggregate of 5.4 million 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). ~~These tiers consist of:~~

	●	~~Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;~~

	●	Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and

	●	Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

~~In some circumstances,~~If after Closing and during the ~~inputs used~~Earn-out Period, there is a Change in Control (as defined in the Merger Agreement), the Company is required to ~~measure fair~~issue Tranche 1 Earn-out Shares when the value ~~might be categorized within different levels~~per share of the ~~fair~~Company is equal to or greater than $14.00 per share, but less than $20.00. If there is a change in control where the value ~~hierarchy. In those instances,~~per share of commons stock is less than $14.00, 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 $20.00 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 5.4 million 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 $20.00 per share, but less than $25.00.

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Xos, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

iii.If the VWAP of the Common Stock equals or exceeds $25.00 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 5.4 million 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 valuer per share of the Company is equal to or greater than $25.00 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 ~~is categorized in its entirety~~liability, and the increase or decrease in the fair value ~~hierarchy based on~~during the ~~lowest level input that is significant to the fair value measurement.~~

NEXTGEN ACQUISITION CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

~~Fair Value of Financial Instruments~~

As of June 30, 2021 and December 31, 2020, the carrying values of cash, accrued expenses and accrued expenses – related party approximate their fair values due to the short-term nature of the instruments. As of June 30, 2021 and December 31, 2020, the Company’s portfolio of investments held in the Trust Account is comprised entirely of investments in money market funds that invest in U.S. government securities.

~~Derivative warrant liabilities~~

The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and FASB ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting ~~period.~~

The warrants issued in connection with the Initial Public Offering (the “Public Warrants”) and the Private Placement Warrants are recognized as derivative liabilities in accordance with ASC 815. Accordingly, the Company recognizes the warrant instruments as liabilities at fair value and adjusts the instruments to fair value at each reporting period. The liabilities are subject to re-measurement at each balance sheet date until exercised, and any change in fair valueperiod is recognized in the ~~Company’s~~condensed consolidated statement of ~~operations.~~operations accordingly. The fair value of the ~~Public Warrants issued in connection with~~Earn-out Shares liability was estimated using the ~~Public Offering and Private Placement Warrants were initially measured at fair value using a~~ Monte Carlo simulation ~~model~~of the stock prices based on historical and ~~subsequently,~~implied market volatility of a peer group of public companies.

The Company recognized a gain on the fair value change in Earn-out Shares liability of $2.6 million in its unaudited condensed consolidated statements of operations for the three months ended March 31, 2022.

Note 8 — Investments

Amortized cost, gross unrealized gains/losses in accumulated other comprehensive loss and fair value of marketable debt securities, available-for-sale, by type of security as of March 31, 2022 and December 31, 2021 consisted of the following (in thousands):


	March 31, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Short-term investments:
Corporate debt security	$	62,153	$	—	$	(338)	$	61,815
U.S. treasuries	4,966		—		(48)		4,918
Asset-backed security and other	4,868		—		(47)		4,821
Non-U.S. government and supranational bonds	16,375		—		(109)		16,266
Certificate of deposit	2,003		—		—		2,003
	$	90,365	$	—	$	(542)	$	89,823
Long-term investments:
Corporate debt security	$	24,997	$	—	$	(591)	$	24,406
U.S. treasuries	650		—		(9)		641
Asset-backed security and other	3,081		—		(65)		3,016


	$	28,728	$	—	$	(665)	$	28,063

Table of Contents

Xos, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements


	December 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Short-term investments:
Corporate debt security	$	71,406	$	—	$	(57)	$	71,349
U.S. treasuries	3,415		—		(7)		3,408
Asset-backed security and other	2,555		—		(4)		2,551
Non-U.S. government and supranational bonds	16,405		1		(19)		16,387
Certificate of deposit	1,001		—		—		1,001
	$	94,782	$	1	$	(87)	$	94,696
Long-term investments:
Corporate debt security	$	42,703	$	—	$	(246)	$	42,457
U.S. treasuries	2,201		—		(5)		2,196
Asset-backed security and other	5,438		—		(28)		5,410
Non-U.S. government and supranational bonds	3,769		—		(16)		3,753
Certificate of deposit	1,000		—		—		1,000
	$	55,111	$	—	$	(295)	$	54,816

The Company’s investments in marketable debt securities, available-for-sale that have been in a continuous unrealized loss position by type of security as of March 31, 2022 and December 31, 2021 consisted of the following (in thousands):


	March 31, 2022
	Less than 12 months				12 months or greater				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Corporate debt security	$	86,221	$	(929)	$	—	$	—	$	86,221	$	(929)
US treasuries	5,559		(57)		—		—		5,559		(57)
Asset-backed security and other	7,837		(112)		—		—		7,837		(112)
Non-U.S. government and supranational bonds	16,266		(109)		—		—		16,266		(109)
Certificates of deposit	2,003		—		—		—		2,003		—
	$	117,886	$	(1,207)	$	—	$	—	$	117,886	$	(1,207)

Table of Contents

Xos, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements


	December 31, 2021
	Less than 12 months				12 months or greater				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Corporate debt security	$	113,806	$	(303)	$	—	$	—	$	113,806	$	(303)
US treasuries	5,604		(12)		—		—		5,604		(12)
Asset-backed security and other	7,961		(32)		—		—		7,961		(32)
Non-U.S. government and supranational bonds	20,140		(34)		—		—		20,140		(34)
Certificates of deposit	2,001		—		—		—		2,001		—
	$	149,512	$	(381)	$	—	$	—	$	149,512	$	(381)

Gross realized gains and gross realized losses from the sales of the Company’s marketable debt securities, available-for-sale for the three months ended March 31, 2022 and 2021 consisted of the following (in thousands):


	Three Months Ended
	March 31, 2022		March 31, 2021
Gross realized gains	$	—	$	—
Gross realized losses	$	(6)	$	—

Amortized cost and fair value of marketable debt securities, available-for-sale by contractual maturity as of March 31, 2022 consisted of the following (in thousands, except weighted average data):


	Amortized Cost		Fair Value
Due in one year or less	$	90,364	$	89,822
Due after one year through five years	28,729		28,064
	$	119,093	$	117,886
Weighted average contractual maturity			0.7 years

Amortized cost and fair value of marketable debt securities, available-for-sale by contractual maturity as of December 31, 2021 consisted of the following (in thousands, except weighted average data):


	Amortized Cost		Fair Value
Due in one year or less	$	94,782	$	94,696
Due after one year through five years	55,111		54,816
	$	149,893	$	149,512
Weighted average contractual maturity			0.8 years

Actual maturities may differ from contractual maturities because certain issuers may have the right or obligation to prepay certain obligations with or without penalties.

Table of Contents

Xos, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

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 1 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 hereby 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 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.

Legacy Xos’ Preferred Stock

During the fourth quarter of 2020, Legacy Xos executed a financing round and issued shares of preferred stock (the “2020 Series A Financing’’). The 2020 Series A Financing included the authorization of 25,794,475 shares of Legacy Xos Preferred Stock in classes A through A-10. The shares of Class A Legacy Xos Preferred Stock was allocated to investors who contributed new money to Legacy Xos, while the shares of Class A-1 through A-10 Legacy Xos Preferred Stock were issued in exchange to convertible note holders. As part of this raise, 1,411,764 shares of Class A Legacy Xos Preferred Stock and 1 warrant exercisable for 319,411 shares of Class A Legacy Xos Preferred Stock were issued for aggregate cash proceeds of $9.6 million and a subscription receivable for $2.4 million. During the quarter ended March 31, 2021, the Legacy Xos issued an additional 3,739,846 shares of Class A Legacy Xos Preferred Stock raising $31.8 million in cash proceeds, and the conversion of the SAFE Note (refer to Note 8).

As part of this transaction, Legacy Xos converted $21.5 million of convertible notes and $2.5 million in accrued interest into 21,570,308 shares of Class A-1 through A-10 Legacy Xos Preferred Stock. These exchanges from convertible notes into shares of Legacy Xos Preferred Stock included transactions with both related and unrelated parties. The differences between the total carrying value of the converted notes held by third parties, and the fair value of the ~~Private Placement Warrants~~issued shares of Legacy Xos Preferred stock, was recorded as realized loss on debt extinguishment in the consolidated statement of operations.

We have been estimated using a Monte Carlo simulation model each measurement date. The fair value of Public Warrants issued in connection with the Initial Public Offering have subsequently been measured based on the listed market price of such warrants. The determination ofdetermined the fair value of the ~~warrant liability may be subject to change as more current information becomes available~~issued shares of Legacy Xos Preferred Stock in connection with the note conversion using market rates experienced in other non-related party transactions, through the issuance of shares of Legacy Xos Preferred Stock. As some of the converted third-party notes have voting rights and ~~accordingly~~others do not, the ~~actual results could differ significantly. Derivative warrant liabilities are classified as non-current liabilities as their liquidation is not reasonably expected to require~~fair value of non-voting shares were reduced by 3%.

Concurrent with the ~~use~~Business Combination, outstanding shares of ~~current assets or require the creation~~Legacy Xos Preferred Stock were converted into shares of ~~current liabilities.~~

~~Class A Ordinary Shares Subject to Possible Redemption~~

~~The Company accounts for its Class A ordinary shares subject to possible redemption~~Common Stock in accordance with the ~~guidance in FASB ASC Topic 480 “Distinguishing Liabilities from Equity.” Class A ordinary~~Exchange Ratio.

Table of Contents

Xos, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

Standby Equity Purchase Agreement

On March 23, 2022, the Company entered into a Standby Equity Purchase Agreement (the "SEPA") with YA II PN, Ltd. (“Yorkville”), whereby the Company has 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 during the 36 months following the execution of the SEPA, subject to ~~mandatory redemption (if any) are classified as liability instruments~~certain conditions. The Company expects to use any net proceeds for working capital and ~~are measured~~general corporate purposes.

As consideration for Yorkville’s commitment to purchase shares of common stock at ~~fair value. Conditionally redeemable Class A ordinary shares (including Class A ordinary shares that feature redemption rights that are either within~~ the ~~control of the holder or subject to redemption~~Company’s direction upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, Class A ordinary shares are classified as shareholders’ equity. The Company’s Class A ordinary shares feature certain redemption rights that are considered to be outside of the Company’s controlterms and subject to the occurrence of uncertain future events. Accordingly, at June 30, 2021, and December 31, 2020, 32,185,932 and 32,952,414 Class A ordinary shares subject to possible redemption are presented as temporary equity, outsideconditions set forth in the purchase agreement, upon execution of the ~~shareholders’ equity section~~purchase agreement, the Company issued 18,582 shares of ~~the Company’s balance sheets.~~

common stock to Yorkville.

Note 10 — Derivative Instruments

NEXTGEN ACQUISITION CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

~~Offering Costs Associated with the Initial~~ Public ~~Offering~~

Offering costs consisted of legal, accounting, underwriting fees and other costs incurred in connection with the preparation for the Initial Public Offering. Offering costs are allocated to the separable financial instruments issued in the Initial Public Offering based on a relative fair value basis, compared to total proceeds received. Offering costs associated with warrant liabilities are expensed as incurred, presented as non-operating expenses in the statement of operations. Offering costs associated with the Public Shares were charged to shareholders’ equity upon the completion of the Initial Public Offering.

~~Income Taxes~~

~~The Company follows the asset and liability method of accounting for income taxes under FASB ASC Topic 740, “~~~~Income Taxes~~.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

FASB ASC Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. There were no unrecognized tax benefits as of December 31, 2020. The Company’s management determined that the Cayman Islands is the Company’s only major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts were accrued for interest and penalties for the six months ended June 30, 2021. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.

The Company may be subject to potential examination by U.S. federal, U.S. state or foreign taxing authorities in the area of income taxes. These potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with U.S. federal, U.S. state and foreign tax laws. There is currently no taxation imposed on income by the Government of the Cayman Islands. In accordance with Cayman federal income tax regulations, income taxes are not levied on the Company. Consequently, deferred tax assets and income taxes are not reflected in the Company’s financial statements. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.

~~Net Loss Per Ordinary Share~~

The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” Net loss per share is computed by dividing net loss by the weighted average number of ordinary shares outstanding during the period excluding ordinary shares subject to forfeiture. An aggregate of 32,185,932 Class A ordinary shares subject to possible redemption on June 30, 2021 has been excluded from the calculation of basic loss per ordinary share, since such shares, if redeemed, only participate in their pro rata share of the trust earnings. The Company has not considered the effect of the warrants sold in the Initial Public Offering (including the consummation of the Over-Allotment Units) and Private Placement ~~to purchase an aggregate~~Warrants

As of ~~18,833,334 shares of the Company’s ordinary shares in the calculation of diluted loss per share, since the exercise of the warrants are contingent upon the occurrence of future events.~~

The Company applies the two-class method in calculating income (loss) per ordinary share. Net income (loss) per ordinary share, basic and diluted for Class A ordinary shares subject to possible redemption is calculated by dividing the proportionate share of income or loss on Investment held by the Trust Account, net of applicable franchise and income taxes, by the weighted average number of shares of Class A ordinary shares subject to possible redemption outstanding since original issuance.

The Company’s net loss is adjusted for the portion of income (loss) that is attributable to Class A ordinary shares subject to redemption, as these shares only participate in the earnings of the Trust Account and not the income or losses of the Company. Accordingly, basic and diluted loss per ordinary share is calculated as follows:

NEXTGEN ACQUISITION CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

For the
Three Months
Ended
June 30,
2021 For the
Six Months Ended
June 30,
2021
Class A ordinary shares subject to possible redemption
Numerator: Earnings allocable to ordinary shares subject to possible redemption
Income from investments held in Trust Account $ 10,839 $ 18,776
Less: Company’s portion available to be withdrawn to pay taxes - -
Net income attributable to Class A ordinary shares subject to possible redemption $ 10,839 $ 18,776
Denominator: Weighted average Class A ordinary shares subject to possible redemption
Basic and diluted weighted average shares outstanding, Class A ordinary shares subject to possible redemption 32,113,401 32,525,950
Basic and diluted net income per share, Class A ordinary shares subject to possible redemption $ 0.00 $ 0.00

Non-redeemable ordinary shares
Numerator: Net income (loss) minus Net Earnings
Net income (loss) $ 733,375 $ (7,664,815 )
Net income allocable to Class A ordinary shares subject to possible redemption 10,839 18,776
Non-redeemable net income (loss) $ 722,536 $ (7,683,591 )
Denominator: Weighted average non-redeemable ordinary shares
Basic and diluted weighted average shares outstanding, non-redeemable ordinary shares 14,761,599 14,349,050
Basic and diluted net income (loss) per share, non-redeemable ordinary shares $ 0.05 $ (0.54 )

~~Recent Accounting Standards~~

~~In August 2020, the FASB issued Accounting Standards Update (“ASU”) No. 2020-06,~~ Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies accounting for convertible instruments by removing major separation models required under current U.S. GAAP. The ASU also removes certain settlement conditions that are required for equity-linked contracts to qualify for the derivative scope exception, and it simplifies the diluted earnings per share calculation in certain areas. The Company adopted ASU 2020-06 on January 1, 2021. Adoption of the ASU did not impact the Company’s financial position, results of operations or cash flows.

The Company’s management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements.

~~Note 3—Initial Public Offering~~

~~On October 9, 2020,~~March 31, 2022, the Company ~~consummated its Initial~~had 18,563,297 Public ~~Offering~~Warrants and 270,001 Private Placement Warrants outstanding, with fair values of ~~35,000,000 Units, at $10.00 per Unit, generating gross proceeds of $350.0~~$7.8 million and ~~incurring offering costs of approximately $19.8~~$0.1 million, inclusive of approximately $12.3 million in deferred underwriting commissions. On November 13, 2020, the underwriters partially exercised the over-allotment option and on November 17, 2020, purchased an additional 2,500,000 Over-Allotment Units, generating gross proceeds of $25.0 million, and incurred additional offering costs of approximately $1.4 million in underwriting fees (inclusive of $875,000 in deferred underwriting fees).

respectively.

~~Each Unit consists of one Class A ordinary share and one-third of one redeemable warrant (“~~

The Public ~~Warrant”). Each whole Public Warrant will entitle the holder to purchase one Class A ordinary share at~~Warrants have an exercise price of $11.50 per share, subject to ~~adjustment (see Note 7).~~

NEXTGEN ACQUISITION CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

~~Note 4—Private Placement~~

Simultaneously with the closing of the Initial Public Offering, the Company consummated the Private Placement of 6,000,000 Private Placement Warrants, at a price of $1.50 per Private Placement Warrant with the Sponsor, generating gross proceeds of $9.0 million. Simultaneously with the closing of the Over-Allotment on November 17, 2020, the Company consummated the second closing of the Private Placement, resulting in the purchase of an aggregate of an additional 333,334 Private Placement Warrants by the Sponsor, generating gross proceeds to the Company of $500,000.

Each whole Private Placement Warrant is exercisable for one whole share of Class A ordinary shares at a price of $11.50 per share. A portion of the proceeds from the sale of the Private Placement Warrants to the Sponsor was added to the proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the Private Placement Warrantsadjustments, and will expire ~~worthless. The Private Placement Warrants will be non-redeemable for cash and exercisable~~ on ~~a cashless basis so long as they are held by the Sponsor or its permitted transferees.~~

The Sponsor and the Company’s officers and directors agreed, subject to limited exceptions, not to transfer, assign or sell any of their Private Placement Warrants until 30 days after the completion of the initial Business Combination.

~~Note 5—Related Party Transactions~~

~~Founder Shares~~

On July 31, 2020, the Sponsor paid an aggregate of $25,000 in exchange for issuance of 10,062,500 Class B ordinary shares (the “Founder Shares”). The holders of the Founder Shares agreed to forfeit up to an aggregate of 1,312,500 Founder Shares, on a pro rata basis, to the extent that the option to purchase additional units is not exercised in full by the underwriters, so that the Founder Shares will represent 20% of the Company’s issued and outstanding shares after the Initial Public Offering. On November 17, 2020, the underwriters partially exercised the over-allotment option to purchase as additional 2,500,000 Units and forfeited the remaining option; thus, an aggregate of 687,500 Class B ordinary shares were forfeited accordingly.

The Initial Shareholders agreed not to transfer, assign or sell any of their Founder Shares until the earlier to occur of (A) one year after the completion of the initial Business Combination; and (B) subsequent to the initial Business Combination (x) if the last reported sale price of Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share splits, share dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like) for anyAugust 20, trading days within any 30-trading day period commencing at least 150 days after the initial Business Combination or (y) the date on which the Company completes a liquidation, merger, share exchange, reorganization or other similar transaction that results in all of the Public Shareholders having the right to exchange their ordinary shares for cash, securities or other property.

~~Related Party Loans~~

On March 29, 2021, the Company issued a promissory note to Sponsor (the “Promissory Note”), pursuant to which the Company may borrow up to an aggregate principal amount of $1,000,000. The Promissory Note is non-interest bearing and payable on the earlier of (i) October 9, 2022 and (ii) the completion of the Business Combination. As of June 30, 2021, there was $440,000 outstanding under the Promissory Note.

In addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor, members of the Company’s founding team or any of their affiliates may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of such Working Capital Loans may be convertible into warrants of the post Business Combination entity at a price of $1.50 per warrant. The warrants would be identical to the Private Placement Warrants. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. As of June 30, 2021, the Company had no borrowings under the Working Capital Loans.

NEXTGEN ACQUISITION CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

~~Note 6—Commitments and Contingencies~~

~~Registration and Shareholder Rights~~

The holders of the Founder Shares, Private Placement Warrants and any warrants that may be issued upon conversion of Working Capital Loans (and any Class A ordinary shares issuable upon the exercise of the Private Placement Warrants or warrants issued upon conversion of the Working Capital Loans and upon conversion of the Founder Shares) are entitled to registration rights pursuant to a registration and shareholder rights agreement. The holders of these securities are entitled to make up to three demands, excluding short form demands, that the Company registers such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of the initial Business Combination. The Company will bear the expenses incurred in connection with the filing of any such registration statements.

~~Underwriting Agreement~~

The Company granted the underwriters a 45-day option from the date of this prospectus to purchase up to 5,250,000 additional Units at the Initial Public Offering price less the underwriting discounts and commissions. On November 13, 2020, the underwriters partially exercised the over-allotment option and on November 17, 2020, purchased an additional 2,500,000 Over-Allotment Units.

The underwriters were entitled to an underwriting discount of $0.20 per unit, or $7.00 million in the aggregate, paid upon the closing of the Initial Public Offering. In addition, $0.35 per unit, or $12.25 million in the aggregate will be payable to the underwriters for deferred underwriting commissions. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement.

In connection with the consummation of the Over-Allotment on November 17, 2020, the underwriters were entitled to an additional fee of $500,000 paid upon closing, and $875,000 in deferred underwriting commissions.

~~Deferred Legal Fees~~

The Company’s legal counsel agreed to defer their fees in excess of $250,000 until the consummation of the Company’s initial Business Combination. In the event, either (x) the initial Business Combination is not consummated within two years of the Initial Public Offering and the proceeds of the Initial Public Offering are returned to investors, or (y) the legal counsel declined to represent the Company in the initial Business Combination due to a conflict, the legal counsel will write off such deferred amounts.

The deferred amount is an unrecognized contingent liability, as closing of a potential business combination was not considered probable as of June 30, 2021. As of June 30, 2021, there was approximately 5.0 million in deferred legal fees.

NEXTGEN ACQUISITION CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

~~Note 7—Shareholders’ Equity~~

~~Preference Shares~~ ~~— The Company is authorized to issue 5,000,000 preference shares with a par value of $0.0001 per share. As of June 30, 2021, there were no preference shares issued or outstanding.~~

~~Class A Ordinary Shares~~ — The Company is authorized to issue 500,000,000 Class A ordinary shares with a par value of $0.0001 per share. Holders of the Company’s Class A ordinary shares are entitled to one vote for each share. On June 30, 2021 and December 31, 2020, there were 37,500,000 Class A ordinary shares issued or outstanding, including 32,185,932 and 32,592,414 Class A ordinary shares subject to possible redemption, respectively.

~~Class B Ordinary Shares~~ — The Company is authorized to issue 50,000,000 Class B ordinary shares with a par value of $0.0001 per share. As of June 30, 2021 and December 31, 2020, the Company had 9,375,000 Class B ordinary shares issued and outstanding.

Holders of the Class A ordinary shares and holders of the Class B ordinary shares will vote together as a single class on all matters submitted to a vote of the shareholders, except as required by law. Each ordinary share will have one vote on all such matters.

~~The Class B ordinary shares will automatically convert into Class A ordinary shares at the time of the initial Business Combination,~~2026 or earlier at the option of the holder, on a one-for-one basis, subject to adjustment for share splits, share dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like, and subject to further adjustment as provided herein. In the case that additional Class A ordinary shares,upon redemption or equity-linked securities, are issued or deemed issued in excess of the amounts issued in the Initial Public Offering and related to the closing of the initial Business Combination, the ratio at which the Class B ordinary shares will convert into Class A ordinary shares will be adjusted (unless the holders of a majority of the issued and outstanding Class B ordinary shares agree to waive such anti-dilution adjustment with respect to any such issuance or deemed issuance) so that the number of Class A ordinary shares issuable upon conversion of all Class B ordinary shares will equal, in the aggregate, on an as-converted basis, 20% of the sum of all ordinary shares issued and outstanding upon the completion of the Initial Public Offering plus all Class A ordinary shares and equity-linked securities issued or deemed issued in connection with the initial Business Combination, excluding any shares or equity-linked securities issued, or to be issued, to any seller in the initial Business Combination. In no event will the Class B ordinary shares convert into Class A ordinary shares at a rate of less than one to one.

~~Note 8—~~~~Warrants~~

~~As of June 30, 2021, the Company had 12,500,000 Public Warrants and 6,333,334 Private Placement Warrants outstanding.~~

liquidation. The Public Warrants may only be exercised for a whole number of shares. No fractional Public Warrants will be issued upon separation of the ~~Units~~units and only whole Public Warrants will trade. The Public Warrants ~~will become exercisable on the later of (a) 30 days after the completion of a Business Combination or (b) 12 months from the closing of the Initial Public Offering;~~became exercisable; provided ~~in each case~~ that the Company has an effective registration statement under the Securities Act covering the issuance of the ~~Class A ordinary shares~~Common Stock issuable upon exercise of the ~~warrants~~Warrants and a current prospectus relating to them is available and such shares are registered, qualified or exempt from registration under the securities, or blue sky, laws of the state of residence of the holder (or the Company permits holders to exercise their ~~warrants~~Warrants on a cashless basis under the circumstances specified in the warrant agreement). The Company has agreed that as soon as practicable, but in no event later than 15 business days after the closing of the initial Business Combination, the Company will use its commercially reasonable efforts to fileA registration statement was filed with the SEC ~~a registration statement~~ covering the issuance of the ~~Class A ordinary shares~~Common Stock issuable upon exercise of the ~~warrants,~~Warrants, and the Company will use its commercially reasonable efforts ~~to cause the same to become effective within 60 business days after the closing of the initial Business Combination and~~ to maintain the effectiveness of such registration statement and a current prospectus relating to those ~~Class A ordinary~~ shares of Common Stock until the ~~warrants~~Public Warrants expire or are ~~redeemed; provided that if~~redeemed. If the ~~Class A ordinary~~ shares of Common Stock are at the time of any exercise of a ~~warrant~~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, requires 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.

NEXTGEN ACQUISITION CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

The warrants have an exercise price of $11.50 per share, subject to adjustments, and will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation. In addition, if (x) the Company issues additional Class A ordinary shares or equity-linked securities for capital raising purposes in connection with the closing of the initial Business Combination at an issue price or effective issue price of less than $9.20 per ordinary share (with such issue price or effective issue price to be determined in good faith by the board of directors and, in the case of any such issuance to the Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor or such affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of the initial Business Combination on the date of the consummation of the initial Business Combination (net of redemptions), and (z) the volume weighted average trading price of Class A ordinary shares during the 20 trading day period starting on the trading day prior to the day on which the Company consummates its initial Business Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, the $18.00 per share redemption trigger price described under “Redemption of warrants for cash when the price per Class A ordinary share equals or exceeds $18.00” and “Redemption of warrants for Class A ordinary shares when the price per Class A ordinary share equals or exceeds $10.00” will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price, and the $10.00 per share redemption trigger price described under the caption “Redemption of warrants when the price per Class A ordinary share equals or exceeds $10.00” will be adjusted (to the nearest cent) to be equal to the higher of the Market Value and the Newly Issued Price.

The Private Placement Warrants are identical to the Public Warrants, ~~underlying the Units sold in the Initial Public Offering,~~ except that the Private Placement Warrants and the ~~Class A ordinary shares~~Common Stock issuable upon exercise of the Private Placement Warrants ~~will~~were not be transferable, assignable or salable until ~~30 days after the completion of a Business Combination,~~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 ~~such purchasers’~~their permitted transferees. If the Private Placement Warrants are held by someone other than the ~~Initial Shareholders~~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~~Warrants for cash when the price per ~~Class A ordinary share~~Common Stock equals or exceeds $18.00:

Once the ~~warrants~~Warrants become exercisable, the Company may redeem the outstanding ~~warrants~~Warrants (except as described ~~herein~~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 Class A ordinary shares 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 $18.00 per share (as adjusted for share sub-divisions, share dividends, rights issuances, consolidations, reorganizations, recapitalizations and the like).

•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 $18.00 per share (as adjusted for share sub-divisions, share dividends, rights issuances, consolidations, reorganizations, recapitalizations and the like).

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Xos, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

The Company will not redeem the ~~warrants~~Warrants as described above unless a registration statement under the Securities Act covering the issuance of the ~~Class A ordinary shares~~Common Stock issuable upon exercise of the ~~warrants~~Warrants is then effective and a current prospectus relating to those ~~Class A ordinary shares~~Common Stock is available throughout the 30-day redemption period. If and when the ~~warrants~~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.

NEXTGEN ACQUISITION CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Redemption of ~~warrants~~Warrants for ~~Class A ordinary shares~~Common Stock when the price per ~~Class A ordinary~~ share equals or exceeds $10.00:

Once the ~~warrants~~Warrants become exercisable, the Company may redeem the outstanding ~~warrants~~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 Class A ordinary shares;

	●	if, and only if, the Reference Value equals or exceeds $10.00 per share (as adjusted for share splits, share dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like); and

	●	if the Reference Value is less than $18.00 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.

•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 $10.00 per share (as adjusted for share splits, share dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like); and

•if the Reference Value is less than $18.00 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 ~~Class A ordinary shares~~Common Stock shall mean the average reported last sale price of ~~Class A ordinary shares~~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.~~

Warrants.

In no event will the Company be required to net cash settle any ~~warrant. If~~Warrant. The Warrants may also expire worthless.

Note 11 — Share-Based Compensation

2018 Stock Plan

On November 27, 2018, the Legacy Xos’ 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.

Options

As of March 31, 2022, there were 1,834,681 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 4 years, at the rate of 25% on the first anniversary of the date of grant and ratably on a monthly basis over the remaining 36-month period thereafter based on continued service.

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Xos, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

Stock option activity during the three months ended March 31, 2022 consisted of the following:


	Options	Weighted Average Fair Value		Weighted Average Exercise Price		Weighted Average Remaining Years	Intrinsic Value
December 31, 2021 — Options outstanding	1,838,759	$	0.02	$	0.02	8.22	$	5,756,797
Granted	—	—		—		0.00
Exercised	400	0.02		0.02		0.00
Forfeited	3,678	0.03		0.02		0.00
March 31, 2022 — Options outstanding	1,834,681	$	0.02	$	0.02	7.98	$	5,450,514
March 31, 2022 — Options vested and exercisable	643,002	$	0.02	$	0.02	7.83	$	1,909,819

Aggregate intrinsic value represents the difference between the exercise price of the options and the fair value of the Company’s common stock. The aggregate intrinsic value of options exercised during the three months ended March 31, 2022 and 2021 were approximately $1,000 and $6,000, respectively.

The Company estimates the 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 months ended March 31, 2022 and 2021.

2021 Equity Plan

On August 19, 2021 the Company’s stockholders approved 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 no statutory stock options (“NSOs”), stock appreciation rights, restricted stock awards, RSUs, performance awards and other forms of awards to employees, directors and consultants, including employees and consultants of Xos’ affiliates.

As of March 31, 2022, there were 20,947,440 shares of Common Stock available for issuance under the 2021 Equity Plan.

RSU activity during the three months ended March 31, 2022 consisted of the following:


	RSU’s	Weighted Average Grant Date Fair Value		Weighted Average Fair Value
December 31, 2021 — RSU outstanding	1,844,820	$	3.60	$	5,811,183
Granted	1,618,442	2.67		$	3,960,984
Vested	133,349	3.21		$	347,382
Forfeited	117,532	3.38		$	279,746
March 31, 2022 — RSU outstanding	3,212,381	$	3.27	$	9,605,019

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Xos, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

The Company recognized stock-based compensation expense (including earn-out RSU’s) in the condensed consolidated statements of operations and comprehensive loss during the three months ended March 31, 2022, and 2021 totaling approximately $1.4 million and $2,000, respectively, which consisted of the following (in thousands):


	March 31, 2022		March 31, 2021
Cost of goods sold	$	29	$	—
Research and development	261		—
Sales and marketing	58		—
General and administrative	1,043		2
Total	$	1,391	$	2

The unamortized stock-based compensation expense was $9.2 million as of March 31, 2022, and weighted average remaining amortization period as of March 31, 2022 was 3.08 years.

The aggregate fair value of RSU’s that vested was $0.3 millionduring the three months ended March 31, 2022.

Note 12 — Property and Equipment, net

Property and equipment, net consisted of the following at March 31, 2022 and December 31, 2021 (in thousands):


	March 31, 2022		December 31, 2021
Equipment	$	6,241	$	5,244
Furniture & fixtures	168		141
Company vehicles	497		153
Leasehold improvements	626		626
Computers, software and related equipment	1,431		1,289
Construction in progress	3,144		1,444
Property and Equipment, gross	12,107		8,897
Accumulated depreciation	(1,854)		(1,471)
Property and Equipment, net	$	10,253	$	7,426

Depreciation expense during the three months ended March 31, 2022 and 2021 totaled approximately $0.3 million and $0.1 million, respectively.

Note 13 — Commitments and Contingencies

Operating and Finance Leases

Refer to Note 6, Leases for future minimum lease commitments.

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 consolidated financial statements. As of March 31, 2022 and December 31, 2021, 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.

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Xos, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

Note 14 — Related Party Transactions

The Company leases property in North Hollywood, California from the Valley Industrial Properties which is ~~unable~~owned by the Sunseeker Trust. The Sunseeker Trust is an irrevocable trust with the beneficiary being the mother of the CEO, Dakota Semler. Rent expense during each of the three months ended March 31, 2022 and 2021 amounted to ~~complete~~$35,000, respectively.

The Company has contract manufacturing agreements with Metalsa S.A. de C.V. and Fitzgerald Manufacturing Partners. We utilize Metalsa, a ~~Business Combination within~~Mexico-based automotive supplier, to provide parts and manufacturing services. Metalsa had an investment in the ~~Combination Period~~Company in the form of a convertible note payable which was converted as part of the Series A Financing (see Note 9 above). Similarly, we utilize Fitzgerald Manufacturing Partners to provide parts and manufacturing services; the owner is a stockholder of the Company. We also have lease agreements with Fitzgerald Manufacturing Partners, for which we recorded rent expense of $172,000 and $0 during the three months ended March 31, 2022 and 2021.

The Company had a partial recourse promissory note in the amount of $364,000 due from the COO, Giordano Sordoni. The note was utilized to exercise options provided to him by the Company. Interest is compounded annually at a rate of 2.38%. The note was issued in the amount of $364,000 on June 24, 2019. The full balance and interest of $15,000 was forgiven by the Company during the first quarter of 2021.

The Company converted 34 notes payable with outstanding carrying value of $18.9 million from related parties into 19,664,000 preferred shares as described above in Note 9 - Equity. These related parties consisted of the CEO, COO, board members, board advisors, and various trusts whose beneficiaries are relatives of the CEO.

The Company utilized employees from an entity owned by the CEO in conducting repairs and maintenance at their new headquarters. Amounts charged for these services were at the employees’ current salary rates including benefits and totaled $0 and $37,000 during the three months ended March 31, 2022 and 2021.

Note 15 — Income Taxes

The effective tax rate for the three months ended March 31, 2022 and 2021 was (0.01)% and 0%, respectively. State taxes coupled with losses not benefited resulted in an effective tax rate, below the statutory tax rate of 21% for the three months ended March 31, 2022.

The Company recognizes tax benefits related to positions taken, or expected to be taken, on its tax returns, only if the positions are "more-likely-than-not" sustainable. Once this threshold has been met, the Company's measurement of its expected tax benefits is recognized in its financial statements. The Company does not have any uncertain tax positions that meet this threshold as of March 31, 2022 and December 31, 2021.

The Company files income tax returns with the Internal Revenue Service and the taxing authorities of various states. The tax periods 2018 through 2021 remain open in most jurisdictions. The Company ~~liquidates~~is not currently under examination by income tax authorities in any federal or state jurisdiction.

At March 31, 2022, the ~~funds held~~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, length of carryback and carryforward periods, as well as 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; and accordingly, for the periods ended March 31, 2022 and 2021, the Company has provided a valuation allowance against net US deferred tax assets.

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Xos, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

Note 16 — Net Loss per Share

Basic and diluted net loss per share for the three months ended March 31, 2022 and 2021 consisted of the following (in thousands, except for per share amounts):


	March 31, 2022		March 31, 2021
Numerator:
Net income (loss)	$	(21,186)	$	(13,850)
Denominator:
Basic
Weighted average common shares outstanding — basic	163,165		72,354
Basic net loss per share	$	(0.13)	$	(0.19)
Diluted
Weighted average common shares outstanding from above	163,165		72,354
Add: dilutive effect of options	—		—
Add: dilutive effect of RSUs	—		—
Weighted average common shares outstanding	163,165		72,354
Diluted net loss per share	$	(0.13)	$	(0.19)

Potential weighted average shares that were excluded from the computation of diluted net income (loss) per share because their effect was anti-dilutive as of March 31, 2022 and 2021 consisted of the following (in thousands):


	March 31, 2022	March 31, 2021
Contingent earn-out shares	16,422	—
Common stock public and private warrants	18,833	—
Restricted stock units	731	—
Stock options	1,813	2,341

Note 17 — Fair Value Measurements

ASC 820, Fair Value Measurements and Disclosures, clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based upon assumptions that market participants would use in pricing an asset or liability.

U.S. GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. As presented in the ~~Trust Account, holders~~tables below, this hierarchy consists of ~~warrants will~~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 ~~receive any~~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 ~~such funds with respect~~the assets or liabilities. Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.

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Xos, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

The Company’s financial instruments consist primarily of cash and cash equivalents, accounts receivable, investments in marketable debt securities, available-for-sale, accounts payable, other current liabilities, Warrants, the Legacy Xos Preferred Stock Warrant (defined above), convertible notes and the associated derivative liability. The fair value of cash and accounts receivable approximates carrying value due to their ~~warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.~~

~~Note 9—Fair Value Measurements~~

short-term maturity.

~~The following table presents information about the Company’s financial~~

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. Derivative financial instruments which are required to be measured at fair value on a recurring basis are measured at fair value using Level 3 inputs for all periods presented. Level 3 inputs are unobservable inputs that are ~~measured~~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, 2021~~March 31, 2022 and December 31, ~~2020 by level within the fair value hierarchy:~~

Fair Value Measured as of June 30, 2021
Level 1 Level 2 Level 3
Assets:
Investments held in Trust Account $ 375,029,850 $
-
$
-

Liabilities:
Derivative warrant liabilities Public Warrants $ 23,125,000 $ - $ -
Derivative warrant liabilities Private Warrants $ - $ - $ 11,716,670

December 31, 2020
Fair Value Measured as of December 31, 2020
Level 1 Level 2 Level 3
Assets:
Investments held in Trust Account $ 375,007,974 $ - $ -
Liabilities:
Derivative warrant liabilities Public Warrants $ 18,683,920 $ - $ -
Derivative warrant liabilities Private Warrants $ - $ - $ 9,816,670

NEXTGEN ACQUISITION CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

~~Transfers to/from Levels 1, 2 and 3 are recognized at the beginning~~2021 consisted of the ~~reporting period. There were no transfers between levels for~~following (in thousands):


	March 31, 2022
	Fair Value		Level 1		Level 2		Level 3





Assets
Cash and Cash Equivalents(1):
Money market funds	$	9,215	$	9,215	$	—	$	—
	$	9,215	$	9,215	$	—	$	—
Short-Term Investments:
U.S. treasuries	$	4,918	$	4,918	$	—	$	—
Corporate debt security	61,815		—		61,815		—
Asset-backed security and other	4,821		—		4,821		—
Non-U.S. government and supranational bonds	16,266		—		16,266		—
Certificate of Deposit	2,003		—		2,003		—
	$	89,823	$	4,918	$	84,905	$	—
Long-Term Investments:
U.S. treasuries	$	641	$	641	$	—	$	—
Corporate debt security	24,406		—		24,406		—
Asset-backed security and other	3,016		—		3,016		—
	$	28,063	$	641	$	27,422	$	—

Financial Liabilities:
Private Placement Warrants	$	114	$	—	$	114	$	—
Public Warrants	7,816		7,816		—		—
Contingent Earn-out Shares liability	26,938		—		—		26,938
Total Financial Liabilities	$	34,868	$	7,816	$	114	$	26,938

____________

(1) Included in total cash and cash equivalents in the ~~six months ended June 30, 2021.~~

condensed consolidated balance sheets.

~~Level 1 instruments include investments~~

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Xos, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements


	December 31, 2021
	Fair Value		Level 1		Level 2		Level 3





Financial Assets
Cash and Cash Equivalents(1):
Money market funds	$	5,868	$	5,868	$	—	$	—
Non-U.S. government and supranational bonds	647		—		647		—
Corporate debt security	1,805		—		1,805		—
	$	8,320	$	5,868	$	2,452	$	—
Short-Term Investments:
U.S. treasuries	$	3,408	$	3,408	$	—	$	—
Corporate debt security	71,349		—		71,349		—
Asset-backed security and other	2,551		—		2,551		—
Non-U.S. government and supranational bonds	16,387		—		16,387		—
Certificate of Deposit	1,001		—		1,001		—
	$	94,696	$	3,408	$	91,288	$	—
Long-Term Investments:
U.S. treasuries	$	2,196	$	2,196	$	—	$	—
Corporate debt security	42,457		—		42,457		—
Asset-backed security and other	5,410		—		5,410		—
Non-U.S. government and supranational bonds	3,753		—		3,753		—
Certificate of Deposit	1,000		—		1,000		—
	$	54,816	$	2,196	$	52,620	$	—

Financial Liabilities:
Private Placement Warrants	$	140	$	—	$	140	$	—
Public Warrants	7,356		7,356		—		—
Contingent Earn-out Shares liability	29,240		—		—		29,240
Total Financial Liabilities	$	36,736	$	7,356	$	140	$	29,240

____________

(1) Included in ~~mutual funds invested~~total cash and cash equivalents in ~~government securities.~~ the condensed consolidated balance sheets.

The ~~Company uses inputs such as actual trade data, quoted market prices from dealers or brokers, and other similar sources to determine the fair value of its investments.~~

The fair value of the Private Placement Warrants was measured using a Monte Carlo simulation model. The fair value of Public Warrants issued in connection with the Initial Public Offering are measured based on the listed market price of such warrants, a Level 1 measurement. For the six months ended June 30, 2021, the Company recognized a charge to the statement of operations resulting from an increasechanges in the fair value of Level 3 financial liabilities ~~of $6.3 million presented as change in fair value of derivative warrant liabilities on~~during the ~~accompanying unaudited condensed statement of operations.~~

~~The estimated fair value~~three months ended March 31, 2022 consisted of the ~~Private Placement Warrants,~~following (in thousands):


	Earn-out Shares Liability
Fair value at December 31, 2021	$	29,240
Recognition of earn-out RSU’s	322
Change in fair value during the period	(2,624)
Fair value at March 31, 2022	$	26,938

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Xos, Inc. and ~~the Public Warrants prior~~Subsidiaries

Notes to ~~being separately listed and traded, is determined using~~Unaudited Condensed Consolidated Financial Statements

Significant unobservable inputs related to Level 3 inputs. Inherent in a Monte Carlo simulation are assumptions related to expected stock-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its ordinaryearn-out shares ~~based on implied volatility from the Company’s traded warrants and from historical volatility of select peer company’s ordinary shares that matches the expected remaining life~~liability consisted of the ~~warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life~~following as of ~~the warrants. The expected life~~March 31, 2022:


						March 31, 2022
Stock price						$2.99
Stock price volatility						80.0%
Expected term						4.39 years
Risk-free interest rate						2.4%

Table of ~~the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates remaining at zero.~~

Contents

~~The following table provides quantitative information regarding Level 3 fair value measurements inputs at their measurement dates:~~

As of June 30,
2021 As of March 31,
2021
Exercise price $ 11.50 $ 11.50
Stock Price $ 9.94 $ 9.92
Option term (in years) 5.09 5.34
Volatility 26.00 % 29.10 %
Risk-free interest rate 0.88 % 1.00 %

~~The change in the fair value of the derivative warrant liabilities, measured using Level 3 inputs, for the three and six months ended June 30, 2021 is summarized as follows:~~

Warrant liabilities at January 1, 2021 $ 9,816,668
Change in fair value of derivative warrant liabilities 2,913,334
Derivative warrant liabilities at March 31, 2021 $ 12,730,001
Change in fair value of derivative warrant liabilities (1,013,331 )
Derivative warrant liabilities at June 30, 2021 $ 11,716,670

~~Note 10—Subsequent Events~~

Management has evaluated subsequent events to determine if events or transactions occurring through the date that the financial statements were issued, require potential adjustment to or disclosure in the financial statement and has concluded that all such events that would require recognition or disclosure have been recognized or disclosed.

Item 2. ~~Management’s~~Management's Discussion and Analysis of Financial Condition and Results of ~~Operations.~~

Operations

XOS’ MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

~~References to the “Company,” “our,” “us” or “we” refer to NextGen Acquisition Corporation.~~

The following discussion and analysis provides information which Xos’ management believes is relevant to an assessment and understanding of ~~the Company’s financial condition and~~our consolidated results of operations and financial condition. The discussion should be read ~~in conjunction~~together with the ~~unaudited~~ condensed consolidated financial statements and ~~the~~related notes ~~thereto contained elsewhere in this report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements~~ that ~~involve risks and uncertainties.~~

~~Cautionary Note Regarding Forward-Looking Statements~~

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, 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. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us 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. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. Such statements include, but are not limited to, possible business combinations, including our proposed Xos Business Combination, and the financing thereof, and related matters, as well as all other statements other than statements of historical fact included in this ~~Form 10-Q. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in~~Report. You should read the “Risk Factors” section of our Form 10-K/A, in our Xos Disclosure Statement, and in our other filings with the SEC. Our filings with the SEC can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, we disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

~~Overview~~

We are a blank check company incorporated as a Cayman Islands exempted company on July 29, 2020 for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses that the Company has not yet identified. Our Sponsor is NextGen Sponsor LLC, a Cayman Island exempted company.

The registration statement for our Initial Public Offering was declared effective on October 6, 2020. On October 9, 2020, we consummated the Initial Public Offering of 35,000,000 Units, at $10.00 per Unit, generating gross proceeds of $350.0 million, and incurring offering costs of approximately $19.8 million, inclusive of approximately $12.3 million in deferred underwriting commissions. On November 13, 2020, the underwriters partially exercised the over-allotment option and on November 17, 2020, purchased an additional 2,500,000 Over-Allotment Units, generating gross proceeds of $25.0 million, and incurred additional offering costs of approximately $1.4 million in underwriting fees (inclusive of approximately $875,000 in deferred underwriting fees).

Simultaneously with the closing of the Initial Public Offering, we consummated the private placement of 6,000,000 Private Placement Warrants, at a price of $1.50 per Private Placement Warrant with our Sponsor, generating gross proceeds of $9.0 million. Simultaneously with the closing of the Over-allotment on November 17, 2020, we consummated the second closing of the Private Placement, resulting in the purchase of an aggregate of an additional 333,334 Private Placement Warrants by the Sponsor, generating gross proceeds to the Company of $500,000.

Upon the closing of the Initial Public Offering, the Over-Allotment and the Private Placement, $375.0 million ($10.00 per Unit) of the net proceeds of the sale of the Units in the Initial Public Offering and the Private Placement were placed in a Trust Account with Continental Stock Transfer & Trust Company acting as trustee and invested in United States government treasury bills with a maturity of 185 days or less or in money market funds investing solely in U.S. Treasuries and meeting certain conditions under Rule 2a-7 under the Investment Company Act, as determined by us, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account as described below.

If we are unable to complete a Business Combination within 24 months from the closing of the Initial Public Offering, or October 9, 2022, we will (i) cease all operations except for the purpose of winding up; (2) as promptly as reasonably possible but not more than 10 business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (less up to $100,000 of interest to pay dissolution expenses and which interest shall be net of taxes payable), divided by the number of then issued and outstanding Public Shares, which redemption will completely extinguish Public Shareholders’ rights as shareholders (including the right to receive further liquidating distributions, if any); and (3) as promptly as reasonably possible following such redemption, subject to the approval of the remaining shareholders and our board of directors, liquidate and dissolve, subject in each case to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.

~~Proposed Xos Business Combination~~

~~On February 21, 2021, the Company entered into the Merger Agreement with Merger Sub and Xos.~~

~~The Merger Agreement provides that, among other things and upon the terms and subject to the conditions thereof, the following transactions will occur:~~

(i) at the Closing, upon the terms and subject to the conditions of the Merger Agreement, in accordance with the DGCL, Merger Sub will merge with and into Xos, the separate corporate existence of Merger Sub will cease and Xos will be the surviving corporation and the Company’s wholly-owned subsidiary;

(ii) as a result of the Merger, among other things and after giving effect to the Company Recapitalization (as defined in the Merger Agreement), all outstanding shares of Xos common stock or resulting from the conversion of preferred stock of Xos into common stock of Xos, together with shares of Xos common stock reserved in respect of (a) Xos Options, (b) Xos RSUs and (c) Xos Restricted Stock Awards outstanding as of immediately prior to the Merger that will be converted into awards based on new Xos common stock, will be cancelled in exchange for the right to receive an aggregate of 127,626,116 shares of new Xos common stock (at a deemed value of $10.00 per share), which, in the case of Xos Awards, will be shares underlying awards based on new Xos common stock representing a pre-transaction equity value of Xos of $1,276,261,160. The portion of the Aggregate Merger Consideration reflecting the conversion of the Xos Awards is calculated assuming that all new Xos Options are net-settled (although new Xos Options may by their terms be cash exercised, resulting in additional dilution); and

~~(iii) upon the effective time of the Domestication, the Company will immediately be renamed “Xos, Inc.” or such other name as agreed to by the Company and Xos prior to Closing.~~

Prior to the Closing, subject to the approval of the Company’s shareholders, and in accordance with the DGCL, CICA and the Company’s amended and restated memorandum and articles of association, the Company will effect a deregistration under the CICA and a domestication under Section 388 of the DGCL (by means of filing a certificate of domestication with the Secretary of State of Delaware), pursuant to which its jurisdiction of incorporation will be changed from the Cayman Islands to the State of Delaware.

In connection with the Domestication, (i) each of the Company’s then issued and outstanding Class A ordinary shares, par value $0.0001 per share, will convert automatically, on a one-for-one basis, into a share of NextGen Common Stock, (ii) each of the Company’s then issued and outstanding Class B ordinary shares, par value $0.0001 per share, will convert automatically, on a one-for-one basis, into a share of NextGen Common Stock, (iii) each of the Company’s then issued and outstanding warrant will convert automatically into a Domesticated NextGen Warrant, pursuant to the Warrant Agreement, dated October 6, 2020, between the Company and Continental Stock Transfer & Trust Company, as warrant agent, and (iv) each of the Company’s then issued and outstanding Cayman NextGen Units, if any, will be cancelled and will entitle the holder thereof to one share of NextGen Common Stock and one-third of one Domesticated NextGen Warrant.

On February 21, 2021, concurrently with the execution of the Merger Agreement, NextGen entered into Subscription Agreements with the PIPE Investors, pursuant to, and on the terms and subject to the conditions of which, the PIPE Investors have collectively subscribed for 22,000,000 shares of the NextGen Common Stock for an aggregate purchase price equal to $220,000,000, a portion of which is expected to be funded by one or more affiliates of the Sponsor and certain additional investors (which may include mutual funds and existing shareholders). 2,000,000 of the shares of the NextGen Common Stock to be sold in the PIPE Investment are shares owned by certain Xos officers. The PIPE Investment will be consummated substantially concurrently with the Closing.

~~The consummation of the proposed Xos Business Combination is subject to certain conditions as further described in the Merger Agreement.~~

For more information about the Merger Agreement and the proposed Xos Business Combination, see the Company’s Current Reports on Form 8-K filed with the SEC on February 22, 2021 and on May 14, 2021, and the Xos Disclosure Statement that the Company has filed with the SEC. Unless specifically stated, this Quarterly Report does not give effect to the proposed Xos Business Combination and does not contain the risks associated with the proposed Xos Business Combination. Such risks and effects relating to the proposed Xos Business Combination are included in the Xos Disclosure Statement.

~~Results of Operations~~

Our entire activity from July 29, 2020 (inception) through June 30, 2021 was in preparation for an Initial Public Offering, and since our Initial Public Offering, our activity has been limited to the search for a prospective initial Business Combination. We will not generate any operating revenues until the closing and completion of our initial Business Combination.

For the three months ended June 30, 2021, we had net income of approximately $733,000 which consisted mainly of an approximately $1,283,000 gain in change in fair value of derivative warrant liabilities and approximately $13,000 in net gain on investments held in Trust Account, partially offset by approximately $532,000 in general and administrative expenses, and $30,000 in general and administrative expenses – related party.

For the six months ended June 30, 2021, we had a loss of approximately $7.7 million, which consisted mainly of an approximately $6.3 million loss in change in fair value of derivative warrant liabilities, approximately $1.3 million in general and administrative expenses, and $60,000 in general and administrative expenses – related party, partially offset by approximately $22,000 in net gain on cash equivalents held in Trust Account.

~~Liquidity and Capital Resources~~

Our entire activity since inception through June 30, 2021 related to our formation, the preparation for the Initial Public Offering, and since the closing of the Initial Public Offering, the search for a prospective initial Business Combination. We have neither engaged in any operations nor generated any revenues to date. We will not generate any operating revenues until after completion of our initial Business Combination. We will generate non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering. We expect to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.

On March 29, 2021, we issued a promissory note, pursuant to which we may borrow up to an aggregate principal amount of $1,000,000. The promissory note is non-interest bearing and payable on the earlier of (i) October 9, 2022 and (ii) the completion of our initial Business Combination. As of June 30, 2021, there was $440,000 outstanding under the promissory note.

In connection with our assessment of going concern considerations in accordance with ASU 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” as of June 30, 2021, management believes that the Company will have sufficient working capital and borrowing capacity to meet its needs through the earlier of the consummation of a Business Combination or one year from this filing.

We continue to evaluate the impact of the COVID-19 pandemic and has concluded that the specific impact is not readily determinable as of the date of the balance sheet. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

~~Contractual Obligations~~

~~We do not have any long-term debt obligations, capital lease obligations, operating lease obligations, purchase obligations or long-term liabilities.~~

~~Critical Accounting Policies~~

~~This management’s~~ discussion and analysis of our financial condition and results of operations together with our unaudited interim condensed consolidated financial statements and the related notes included elsewhere in this Report and our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on March 30, 2022. 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 under the section entitled “Risk Factors”. Unless the context otherwise requires, references in this “Xos 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.

Overview

We are a mobility solutions company manufacturing Class 5 to 8 battery-electric commercial vehicles. We facilitate the transition of fleets from internal combustion engine vehicles to zero-emission vehicles with proprietary technology suited to the commercial use case. We also provide a range of services to facilitate the transition of fleets to electric vehicles, including charging infrastructure, vehicle maintenance, financing and service.

Our X-Platform (our proprietary, purpose-built vehicle chassis platform) and X-Pack (our proprietary battery system) provide modular features that allow us to accommodate a wide range of last-mile applications and enable us to offer clients at a lower total cost of ownership compared to traditional diesel fleets. The X-Platform and X-Pack are available for purchase as part of the Xos vehicle. The X-Platform and X-Pack were both 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). In addition to a competitive vehicle purchase price, our technology can also drive savings throughout ownership through increased vehicle uptime, greater payload capacity and reduced service and maintenance expense. Ninety percent of vehicles in our targeted segments operate on routes under 200 miles per shift (referred to as “last-mile” routes). Vehicles that fulfill these predictable last-mile routes generally return to base hubs on a daily basis. Such vehicles are ideal candidates for electrification as operators are able to connect the vehicles to dedicated charging infrastructure at return-to-base hubs. Our modular and cost-effective vehicles have been on the road and in customers’ hands since 2018, further validating the durability of satisfaction with our vehicles. During the three months ended March 31, 2022, we sold 56 vehicles. During the three months ended March 31, 2021, we sold 3 vehicles and 1 powertrain.

We have taken a conservative approach to capital investment with our Flex manufacturing strategy, which leverages our strategic partners’ existing facilities and labor to assemble up to 5,000 vehicles annually per facility once fully ramped up. This strategy will enable us to scale our operations in a capital efficient manner and in lockstep with market demand. We have partnered with two third-party contract manufacturer partners to operate two Flex facilities. Our Flex facilities are currently tooled to produce up to approximately 2,000 vehicles per annum in total, assuming we are able to mitigate current supply chain constraints.

Our Fleet-as-a-Service product facilitates the transition from traditional internal combustion engine vehicles to battery electric vehicles and provides fleet operators with a comprehensive set of solutions and products (including, but not limited to, Energy Services, service and maintenance, vehicle telematics, OTA updates and financing) to transition to and to operate an electric fleet. This product offering will combine traditionally disaggregated services into a bundled service package, thus reducing the cost and friction associated with electrifying commercial fleets. Services to be offered in our Fleet-as-a-Service offerings include our proprietary technologies and in-house services and offerings from our industry partners. Our Fleet-as-a-Service offering includes (i) Energy Services (on-site vehicle charging infrastructure as well as our proprietary mobile charging unit Xos HubTM); (ii) service and maintenance (provided by our internal maintenance team and industry partners); (iii) replacement parts; (iv) financing via our external partners; (v) risk mitigation products (e.g., GAP insurance and warranties); and (vi) our telematics unit, the Xosphere Intelligence Platform. Fleet-as-a-Service is expected to increase the lifetime revenue of each vehicle sold by us. For the three months ended March 31, 2022, we have generated $7.0 million in revenue (or 99% of revenue) from vehicle sales and Fleet-as-a-Service and $0.1 million from ancillary revenue (or 1% of revenue).

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We believe our growth in the coming years is supported by the strong secular tailwinds of an increased focus on the impact of climate change and the growth of e-commerce and last-mile delivery. Commercial trucks are the largest emitters of greenhouse gases per capita in the transportation industry. 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. Simultaneously, e-commerce continues to grow rapidly and has been accelerated by changes in consumer purchasing behavior during the COVID-19 pandemic. We believe the increased regulation relating to commercial vehicles, the launch of sustainability initiatives from leading financial and corporate institutions and the rapid growth of last-mile logistics will fuel accelerated adoption of our products worldwide.

We expect both our capital and operating expenditures will increase significantly in connection with our ongoing activities, as we:

•continue to invest in research and development and further develop and commercialize our core proprietary technologies, including our X-Platform chassis platform, X-Pack battery system and Fleet-as-a-Service platform;

•increase our investment in marketing and advertising, sales and distribution infrastructure to accelerate the growth in sales of our products and services;

•continue to invest in servicing our growing portfolio of vehicles on the road including account management, maintenance and service technicians and the Xosphere Intelligence Platform;

•continue to build out supply chain team as well as additional battery and vehicle Flex assembly lines to bolster manufacturing capacity and meet demand targets, and to adjust to macroeconomic changes, including supply chain shortages;

•continue to build out finance operations to maintain and improve financial controls, financial planning and risk management;

•invest in operations functions including IT, administration and human resources to maintain and improve our operational systems, processes and procedures;

•obtain, maintain, expand, and protect our intellectual property portfolio including patents, trade secrets, trademarks and copyrights; and

•further invest in infrastructure to operate in accordance with public company standards and guidelines.

Recent Development

Standby Equity Purchase Agreement

On March 23, 2022, we entered into a Standby Equity Purchase Agreement (the "SEPA") with YA II PN, Ltd. (“Yorkville”), whereby we shall have the right, but not the obligation, to sell to Yorkville up to $125.0 million of shares of our Common Stock at our request during the 36 months following the execution of the SEPA, subject to certain conditions. We expect to use any net proceeds for working capital and general corporate purposes.

Business Combination and Public Company Costs

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 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 (the “Domestication”), the “Business Combination”). As a result of the Merger, NextGen completed the Domestication, Merger Sub merged with and into Xos Fleet, Inc. (which was formerly known as Xos, Inc.), the separate corporate existence of Merger Sub ceased and Xos Fleet, Inc. was to be the surviving corporation and a wholly owned subsidiary of NextGen, and NextGen changed its name to “Xos, Inc.” Xos Fleet, Inc. is the accounting predecessor and the combined entity will be the successor SEC registrant, and Xos’ financial statements for previous periods will be disclosed in the registrant’s future periodic reports filed with the SEC.

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The Business Combination is accounted for as a reverse recapitalization. Under this method of accounting, NextGen has been treated as the acquired company for financial statement reporting purposes. The most significant change in the successor’s future reported financial position and results is an increase in cash by $216.7 million, net of transaction costs and redemptions. Total non-recurring transaction costs was approximately $55.4 million.

As a consequence of the completion of the Business Combination, we became the successor to an SEC-registered and Nasdaq-listed company with ticker “XOS”, which has required us and will continue to require us to hire additional personnel and implement procedures and processes to address public company regulatory requirements and customary practices. We have incurred and expect to incur additional annual expenses as a public company for, among other things, directors’ and officers’ liability insurance, director fees and additional internal and external accounting and legal and administrative resources, including increased audit and legal fees.

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 of this Report.

Successful Commercialization of our Products and Services

We expect to derive future revenue from sales of our vehicles, battery systems and Fleet-as-a-Service offering. 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 our operations through commercialization and production with proceeds from the Business Combination. 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. We expect that the sales of our vehicles and services to our existing and future customers will be an important indicator of our performance.

Production of Lyra Series, Improved Battery Pack System

We started the production of the Lyra Series of battery packs during the fourth quarter of 2021. The Lyra series of battery packs features a 52% improvement in gravimetric energy density and a 45% improvement in volumetric energy density, and is compatible with all Xos on-highway vehicles. The battery packs come in two configurations: Lyra 30 (29.4kWh) and Lyra 60 (61.8kWh) offering 25 and 50 miles of range, respectively. Each pack features individual, recirculated air cooling and an independent battery management system, offering improved reliability and the ability to mix-and-match packs to cater to each customer’s unique range requirements.

Supply Chain Management

As described more fully below, there are certain areas in our supply chain management that have been disrupted due to global economic conditions and the prolonged effect of the COVID-19 pandemic. Our ability to find alternative solutions to meet customer demands will affect our financial performance.

Global economic conditions, which the COVID-19 pandemic has contributed to, has impacted our ability to source certain of our critical inventory items. The series of restrictions imposed and the speed and nature of the recovery in response to the pandemic has placed a burden on our supply chain management, including but not limited to the following areas:

•Semiconductor chip shortage: The global silicon semiconductor industry has experienced a shortage in supply and difficulties in ability to meet customer demand. This shortage has led to an increase in lead-times of production of semiconductor chips and components since the beginning of 2020.

•Battery cells:The battery cell industry is facing a shortage in supply which is causing suppliers to limit customer allocations.

•Supply limitation on vehicle bodies and aluminum: Vehicle body suppliers are currently experiencing elevated pricing or a shortage of key materials such as aluminum.

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Additionally, recent geopolitical events, such as the recent military conflict between Russia and Ukraine, may increase the severity of supply chain disruptions and further hinder our ability to source inventory for our vehicles. The conflict continues to evolve and its ultimate impact on the Company is uncertain, but a prolonged conflict may have a material negative impact to our business, operating results, cash flows, liquidity and financial condition.

Despite supply chain disruptions, we have continued to source inventory for our vehicles and our purchasing team has been working with vendors to find alternative solutions to areas where there are supply chain constraints. Where appropriate and critical, we have placed orders in advance of projected need to try and offset disruptions. While we are working to minimize the impact of these supply limitations, we cannot be certain that all inventory will be able to be delivered in time for production plans.

Tightness in supply availability could lead to previously unforeseen cost and delivery pressures on certain material and logistical costs in 2022. As the Company accelerates execution of its strategic plans, we will endeavor to be strategic in our cost action plans, including working with various vendors and service providers to provide us cost-effective arrangements.

Impact of COVID-19

As the COVID-19 pandemic continues to evolve, the ultimate extent of the impact on our businesses, operating results, cash flows, liquidity and financial condition will be primarily driven by the severity and duration of the pandemic as well as the pandemic’s impact on the U.S. and global economies. During the three months ended March 31, 2022, despite the continued COVID-19 pandemic, we continued to operate our business at full capacity, including all of our manufacturing and research and development operations, with the adoption of enhanced health and safety practices. Although we have made our best estimates based upon current information, actual results could materially differ from the estimates and assumptions developed by management. Accordingly, it is reasonably possible that the estimates made in the financial statements have been, or will be, impacted in the near term as a result of these conditions.

Basis of Presentation

The accompanying condensed consolidated financial statements include the accounts of Xos and its wholly owned subsidiaries, Legacy Xos and Xos Services. 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 growth company with minimal commercial operations and our activities to date have been conducted exclusively within North America. For more information about our basis of operations, refer to Note 1 - Description of Business in the accompanying unaudited condensed consolidated financial statements for more information.

Components of Results of Operations

Revenues

To date, we have primarily generated revenues from the sale of electric step van and stripped chassis vehicles and battery systems and the licensing of our software systems. Our stripped chassis is our vehicle offering that comprises our X-Platform electric vehicle base and X-Pack 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. In addition, we will offer a full suite of service offerings including energy services, service and maintenance, telematics and financing.

Revenue consists of product sales, inclusive of shipping and handling charges, net of estimates for customer allowances. 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. 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.

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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. Materials include inventory purchased from suppliers, as well as assembly components that are assembled by company personnel, including allocation of stock-based compensation expense. Direct labor costs relate to the wages of those individuals responsible for the assembly of vehicles 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 consolidated statements of operations and comprehensive income (loss), allocated to cost of goods sold.

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 obsolete and on-hand inventory in excess of forecasted demand.

We are continuing to undertake efforts to find more cost-effective vendors and sources of parts to lower our overall cost of production. Direct labor and overhead costs relate primarily to expenses incurred through our third-party manufacturing partners. We expect these expenses to increase in future periods as production volume increases to meet expected growth in customer demand.

General and Administrative Expenses

General and administrative (“G&A”) expenses consist 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 as G&A expenses. G&A expenses also include 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 consolidated statements of operations and comprehensive income (loss), allocated to G&A.

We expect our G&A to increase for the foreseeable future as we scale headcount with the growth of our business, and as a result of operating as a public company, including compliance with the rules and regulations of the SEC, legal, audit, additional insurance expenses, investor relations activities, and other administrative and professional services.

Research and Development Expenses

Research and development (“R&D”) expenses consist primarily of costs incurred for the design and development of our vehicles and battery systems, which include:

•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;

•Fees paid to third parties such as consultants and contractors for engineering and computer-aided design (“CAD”) work on vehicle designs and other third-party services; and,

•Payroll expense for employees primarily engaged in R&D activities, including allocation of stock-based compensation expense.

We expect our research and development costs to increase materially for the foreseeable future as we continue to invest in research and development of our battery systems, chassis design and certain other technologies. As such, we expect salaries, benefits, and expenses related to those employees whose primary function is in the design and development of new and redesigned vehicle and battery design (primarily in our engineering department) to increase and be allocated.

Sales and Marketing Expenses

Sales and marketing expenses consist primarily of expenses related to our marketing of vehicles and brand initiatives, which includes:

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•Travel expenses of our sales force who are primarily responsible for introducing our platform and offerings to potential customers.

•Web design, marketing and promotional items, and consultants who assist in the marketing of the Company.

•Payroll expense for employees primarily engaged in sales and marketing activities, including allocation of stock-based compensation expense.

•Depreciation expense on property and equipment related to sales and marketing 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 consolidated statements of operations and comprehensive income (loss), allocated to sales and marketing.

We expect these expenses to increase for the foreseeable future as travel expands due to the planned expansion of our sales team and increasing deployment of both direct and indirect marketing efforts. We expect an increase in our cost of sales and marketing expenses as we expand our ongoing hybrid distribution strategy that utilizes both direct distribution and indirect distribution through partnerships with our dealer network.

Other Income (Expense), Net

Other income (expense), net includes interest income from our investments in marketable debt securities, available-for-sale and interest paid on our equipment leases.

Results of Operations

Comparison of the Three Months Ended March 31, 2022 and 2021

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


	For the Three Months Ended March 31,
(in thousands)	2022		2021		$ Change		% Change
Revenues	$	7,031	$	793	$	6,238	787	%
Cost of goods sold	10,186		672		9,514		nm(1)
Gross margin	(3,155)		121		(3,276)		nm
Operating expenses
General and administrative	11,322		2,354		8,968		381	%
Research and development	6,949		2,999		3,950		132	%
Sales and marketing	2,028		312		1,716		nm
Total operating expenses	20,299		5,665		14,634		258	%
Loss from operations	(23,454)		(5,544)		(17,910)		323	%
Other income (expense), net	81		(217)		298		(137)	%
Change in fair value of derivative instruments	(435)		6,394		(6,829)		(107)	%
Change in fair value of earn-out interests liability	2,624		—		2,624		100	%
Write-off of subscription receivable	—		(379)		379		(100)	%
Realized loss on debt extinguishment	—		(14,104)		14,104		(100)	%
Loss before provision for income taxes	(21,184)		(13,850)		(7,334)		53	%
Provision for income taxes	2		—		2		100	%
Net Loss	$	(21,186)	$	(13,850)	$	(7,336)	53	%

___________

(1)Percentage changes greater than or equal to 400% are not meaningful and noted as nm in the table above.

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Revenues

Our total revenue increased by $6.2 million or 787% from $0.8 million in the three months ended March 31, 2021 to $7.0 million in the three months ended March 31, 2022 primarily driven by increase in unit sales. During the three months ended March 31, 2022, we sold 56 stepvans, compared to 3 stepvans and 1 powertrain during the three months ended March 31, 2021.

Cost of Goods Sold

Cost of goods sold increased by $9.5 million, from $0.7 million in the three months ended March 31, 2021 to $10.2 million in the three months ended March 31, 2022. The increase in cost of goods sold is directly attributable to the increase in our product revenues and increases of (i) $1.2 million in the inventory reserve with no such comparable reserve during the three months ended March 31, 2021 and (ii) $8.3 million in direct materials, direct labor, and manufacturing overhead.

The increase in direct labor encompasses both employee and subcontractor labor costs. The direct labor costs are primarily attributable to an increased headcount and the temporary labor used to manufacture and fulfill current and future orders. Additionally, the use of our contract manufacturing partners to assist in our chassis production line has increased direct labor costs. The increase in direct material costs, is due to not having supply contract agreements necessary to get competitive pricing for raw materials. As production increases and we order materials in larger quantities, we expect to have supply contract agreements that decrease the costs of raw materials. A significant portion of the overhead costs incurred include 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 are still incurred when we experience a reduction in production volume. In the near term, we plan to increase production activities, expecting fixed and semi-fixed overhead costs to be absorbed through the production of our batteries and chassis.

General and Administrative

General and administrative expenses increased by $9.0 million, or 381%, from $2.4 million in the three months ended March 31, 2021 to $11.3 million in the three months ended March 31, 2022, attributable to increases of (i) $5.2 million in headcount and personnel cost for supply chain, sales, legal, accounting, information technology and general and administrative functions necessary to support our business growth (ii) $1.9 million in insurance costs driven by overall coverage increase and the amortization expense of D&O insurance, (iii) $1.1 million in consultant and professional expenses related to the implementation of our new ERP system, financial processes, and the Business Combination, (iv) $0.3 million in investment for equipment and technology driven by an increase in our headcount and (v) $0.5 million in other operating expenses, including depreciation, travel, recruiting, freight and sales tax.

Research and Development

Research and development expenses increased by $4.0 million, or 132%, from $3.0 million in the three months ended March 31, 2021 to $6.9 million in the three months ended March 31, 2022. The growth was primarily due to increases of (i) $2.6 million in allocation of personnel costs driven by higher headcount in engineering, including the allocation of stock-based compensation expense, and (iii) $1.4 million in net other costs, driven by equipment and material purchases used solely for R&D purposes.

Sales and Marketing

Sales and marketing expense increased by $1.7 million, from $0.3 million in the three months ended March 31, 2021 to $2.0 million in the three months ended March 31, 2022. The growth was primarily due to increases of (i) $1.5 million in allocation of personnel costs driven by higher headcount, including the allocation of stock-based compensation expense and (ii) $0.2 million related to consulting fees, public relations costs, participation in tradeshows and general marketing efforts to enhance brand recognition.

Other Income (Expense), net

Other income (expense), net increased by $0.3 million, or 137%, from $0.2 million in the three months ended March 31, 2021 to $0.1 million in the three months ended March 31, 2022. The three months ended March 31, 2022, includes interest income on available-for-sale debt securities, whereas previous quarter period related to interest expense on the convertible notes, which was extinguished during the three months ended March 31, 2021.

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Change in Fair Value of Derivatives

This represents changes in the fair value of the derivatives, including the common stock warrant liability assumed as part of the SPAC merger and the conversion feature on the convertible notes issued in prior years. This convertible note was extinguished during the first quarter of 2021, resulting in the release of the derivative liability and hence, a significant fair value gain adjustment in 2021.

Change in Fair Value of Contingent Earn-out Interests Liability

This represents changes in the fair value of the contingent earn-out interests liabilities.

Write-off of Subscription Receivable

In 2020, the Company had a promissory note receivable in the amount of $364,000 due from the Company’s COO, Giordano Sordoni. The note was utilized to exercise options provided to him by the Company. The principal balance of the note and the associated accrued interest was subsequently forgiven during the three months ended March 31, 2021. No similar transaction occurred during the three months ended March 31, 2022.

Realized Loss on Debt Extinguishment

This represents the loss on the conversion of convertible debt into preferred shares during the three months ended March 31, 2021. No similar transaction occurred during the three months ended March 31, 2022.

Provision for income taxes

The Company recorded income tax provision of $2,000 and $0 during the during the three months ended March 31, 2022 and 2021, respectively.

Non-GAAP Financial Measures

EBITDA and Adjusted EBITDA

“EBITDA” is defined as net loss before other non-operating expense or income, income tax expense or benefit, and depreciation and amortization. “Adjusted EBITDA” is defined as EBITDA adjusted for stock-based compensation and other non-recurring items determined by management. Adjusted EBITDA is intended as a supplemental measure of our performance that is neither required by, nor presented in accordance with, GAAP. We believe that the use of EBITDA and Adjusted EBITDA provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the Company’s financial measures with those of comparable companies, which may present similar non-GAAP financial measures to investors. However, you should be aware that when evaluating EBITDA and Adjusted EBITDA we may incur future expenses similar to those excluded when calculating these measures. In addition, our presentation of these measures should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. Our computation of Adjusted EBITDA may not be comparable to other similarly titled measures computed by other companies, because all companies may not calculate Adjusted EBITDA in the same fashion.

Because of these limitations, EBITDA and Adjusted EBITDA should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using EBITDA and Adjusted EBITDA on a supplemental basis. You should review the reconciliation of net loss to EBITDA and Adjusted EBITDA below and not rely on any single financial measure to evaluate our business.

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The following table reconciles net loss to EBITDA and Adjusted EBITDA for the three months ended March 31, 2022 and 2021, respectively:


(in thousands)	Three Months Ended March 31,
	2022		2021
Net loss	$	(21,186)	$	(13,850)
Other (income) expense, net	(81)		217
Depreciation	268		89
Provision for income taxes	2		—
EBITDA	$	(20,997)	$	(13,544)
Change in fair value of derivative instruments	435		(6,394)
Change in fair value of earn-out shares liability	(2,624)		—
Stock based compensation	1,391		2
Adjusted EBITDA	$	(21,795)	$	(19,936)

Liquidity and Capital Resources

We consummated the Business Combination, which resulted in net cash proceeds of approximately $216.7 million. As of March 31, 2022, our principal sources of liquidity were our cash and cash equivalents (excluding restricted cash) and investments in marketable debt securities, available-for-sale aggregating $129.7 million. In December 2020, we had the initial closing of our Series A Financing, and in the first quarter of 2021, we completed the Series A Financing, including the conversion of all our convertible notes into shares of Legacy Xos preferred stock. Prior to our Series A Financing in December 2020 and the Business Combination, we had financed our operations primarily from the sales of convertible notes.

As an early stage growth company, the net losses and cash outflows we have incurred since inception are consistent with our strategy and budget. We will continue to incur net losses and cash outflows in accordance with our operating plan as we continue to expand our research and development activities with respect to our vehicles and battery systems, scale our operations to meet anticipated demand and establish our Fleet-as-a-Service product offering. Our ability to access 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.

We believe that our existing cash resources, including capital raised in the Series A Financing and Business Combination, are sufficient to support planned operations for the next 12 months. Additionally, on March 23, 2022, the Company entered into a Standby Equity Purchase Agreement (the "SEPA") with YA II PN, Ltd. ("Yorkville"), whereby the Company shall have the right, but not the obligation, to sell to Yorkville up to $125.0 million of its shares of common stock at the Company's request during the 36 months following the execution of the SEPA, subject to certain conditions. The Company expects to use the net proceeds received from sales of common stock pursuant to the SEPA for working capital and general corporate purposes. As a result, our management believes that our current financial resources are sufficient to continue operating activities for at least 12 months past the issuance date of the financial statements.

Cash Flows Summary

Summary of cash flow data consisted of the following (in thousands):


	Three Months Ended March 31,
(in thousands)		2022		2021
Net cash used in operating activities		$	(31,304)	$	(8,782)
Net cash provided by (used in) investing activities		27,153		(202)
Net cash provided by (used in) financing activities		(181)		34,153
Net increase (decrease) in cash and cash equivalents		$	(4,332)	$	25,169

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Cash Flows from Operating Activities

Our cash flows from operating activities are significantly affected by the growth of our business primarily related to research and development and selling, general, and administrative activities. Our operating cash flows are also affected by our working capital needs to support growth in inventory reserves and fluctuations in accounts payable and other current assets and liabilities.

Net cash used in operating activities was $31.3 million for the three months ended March 31, 2022, primarily consisting of a net loss excluding non-cash expenses and gains of $19.4 million, and net changes in operating assets and liabilities of $11.9 million, including $10.7 million in inventory cost build-up as production ramps up.

Net cash used in operating activities was $8.8 million for the three months ended March 31, 2021, primarily consisting of a net loss excluding non-cash expenses and gains of $5.7 million, and net changes in operating assets and liabilities of $3.1 million, including $1.4 million in inventory cost build-up in anticipation of production ramp-up.

Cash Flows from Investing Activities

We continue to experience negative cash flows from investing activities as we expand our business. Cash flows from investing activities primarily relate to capital expenditures to support our growth, as well as investing available cash from the Business Combination to earn interest income. Net cash used in capital expenditures is expected to continue to expand.

Net cash provided by investing activities was $27.2 million for the three months ended March 31, 2022, primarily consisting of property and equipment additions of $3.0 million and net proceeds from sale of investments in marketable debt securities of $30.2 million.

Net cash used in investing activities was $0.2 million for the three months ended March 31, 2021, primarily relating to property and equipment additions.

Cash Flows from Financing Activities

Net cash used in financing activities was $0.2 million for the three months ended March 31, 2022, primarily relating to taxes paid relating to net-settlement of stock-based awards of $0.1 million and equipment lease principal payments of $0.1 million.

Net cash provided by financing activities was $34.2 million for the three months ended March 31, 2021, which primarily relating to the Series A Financing in December 2020, resulting in the receipt of $34.2 million in cash and subscription receivables. As part of this financing, we also converted all of our convertible debt and accrued interest to additional shares of Legacy Xos Preferred Stock in January 2021.

Contractual Obligations and Commitments

We did not have any material contractual obligations or other commitments as of March 31, 2022, other than what’s disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021.

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 ~~which~~ have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. ~~GAAP. The preparation of our financial statements~~GAAP”) which requires usmanagement to make certain estimates and ~~judgments~~assumptions that affect the reported amounts of assets and liabilities ~~revenues~~ and ~~expenses and the~~ disclosure of contingent assets and liabilities ~~in our financial statements. On an ongoing basis, we evaluate our~~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 valuation of stock-based compensation, including ~~those related to~~the fair value of ~~financial instruments~~our Common Stock, and ~~accrued expenses.~~the valuation of the convertible notes payable, the SAFE, and derivative liability. We base our estimates on historical experience ~~known trends~~ and ~~events and~~on various other ~~factors that we believe~~assumptions believed to be reasonable, ~~under the circumstances,~~ the results of which form the basis for making judgments about the carrying values of assets and ~~liabilities that are not readily apparent from other sources.~~liabilities. Actual results ~~may~~could differ from ~~these~~those estimates, ~~under different assumptions or conditions. We have identified the following as~~and such differences could be material to our financial statements.

There were no material changes in our critical accounting ~~policies:~~

~~Derivative warrant liabilities~~

We do not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. We evaluate all of its financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualifypolicies, as embedded derivatives, pursuant to ASC 480 and ASC 815-15. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period.

The 12,500,000 Public Warrants and the 6,333,334 Private Placement Warrants are recognized as derivative liabilities in accordance with ASC 815-40. Accordingly, the we recognize the warrant instruments as liabilities at fair value and adjusts the instruments to fair value at each reporting period. The liabilities are subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognizeddisclosed in our ~~statement~~Annual Report on Form 10-K for the year ended December 31, 2021.

Table of ~~operations. The fair value~~Contents

Recent Accounting Pronouncements

See Note 2 — Basis of Presentation and Summary of Significant Accounting Policies to our unaudited condensed consolidated financial statements included in this filing for more information about recent accounting pronouncements, the ~~Public Warrants issued in connection with the Public Offering~~timing of their adoption, and Private Placement Warrants were initially measured at fair value using a Monte Carlo simulation model and subsequently, the fair value of the Private Placement Warrants have been estimated using a Monte Carlo simulation model each measurement date. The fair value of Public Warrants issued in connection with the Initial Public Offering have subsequently been measured based on the listed market price of such warrants.

~~Class A Ordinary Shares Subject to Possible Redemption~~

We account for Class A ordinary shares subject to possible redemption in accordance with the guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 480 “~~Distinguishing Liabilities from Equity~~.” Class A ordinary shares subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. Conditionally redeemable Class A ordinary shares (including Class A ordinary shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) are classified as temporary equity. At all other times, Class A ordinary shares are classified as shareholders’ equity. Our Class A ordinary shares feature certain redemption rights that are considered to be outside of our control and subjectassessment, to the ~~occurrence~~extent we have made one, of ~~uncertain future events. Accordingly,~~their potential impact on ~~June 30, 2021~~our financial condition and ~~December 31, 2020, 32,185,932 and 32,952,414 Class A ordinary shares subject to possible redemption are presented as temporary equity, outside~~our results of ~~the shareholders’ equity section of the Company’s condensed balance sheets.~~

~~Net Income (Loss) Per Ordinary Share~~

~~We comply with accounting and disclosure requirements of FASB ASC Topic 260, “~~~~Earnings Per Share~~.” Net loss per share is computed by dividing net loss by the weighted average number of shares of ordinary shares outstanding during the period excluding ordinary shares subject to forfeiture. An aggregate of 32,185,932 Class A ordinary shares subject to possible redemption on June 30, 2021 have been excluded from the calculation of basic loss per ordinary share, since such shares, if redeemed, only participate in their pro rata share of the trust earnings. We have not considered the effect of the warrants sold in the Initial Public Offering (including the consummation of the Over-Allotment Units) and Private Placement to purchase an aggregate of 18,833,334 ordinary shares in the calculation of diluted loss per share, since the exercise of the warrants are contingent upon the occurrence of future events. As a result, diluted net loss per ordinary share is the same as basic net loss per ordinary share for the period presented.

We apply the two-class method in calculating income (loss) per ordinary share. Net income (loss) per ordinary share, basic and diluted for Class A ordinary shares subject to possible redemption is calculated by dividing the proportionate share of income or loss on Investment held by the Trust Account, net of applicable franchise and income taxes, by the weighted average number of shares of Class A ordinary shares subject to possible redemption outstanding since original issuance.

Net income (loss) per ordinary share, basic and diluted for non-redeemable ordinary share is calculated by dividing net income (loss) less income attributable to Class A ordinary shares subject to possible redemption by the weighted average number of shares of non-redeemable ordinary shares outstanding for the period presented.

operations.

Internal Control Over Financial Reporting

~~Recent Accounting Pronouncements~~

~~In August 2020, the FASB issued Accounting Standards Update (“ASU”) No. 2020-06,~~ ~~Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts~~As disclosed in ~~Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity~~ ~~(“ASU 2020-06”)~~our 2021 Form 10-K, ~~which simplifies accounting for convertible instruments by removing major separation models~~we were not required under current U.S. GAAP. The ASU also removes certain settlement conditions that are required for equity-linked contracts to qualify for the derivative scope exception, and it simplifies the diluted earnings per share calculation in certain areas. We adopted ASU 2020-06 on January 1, 2021. Adoption of the ASU did not impact our financial position, results of operations or cash flows.

~~Our management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements.~~

~~Off-Balance Sheet Arrangements~~

~~As of June 30, 2021, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.~~

~~JOBS Act~~

The Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We qualify as an “emerging growth company” and under the JOBS Act are allowed to comply with ~~new or revised accounting pronouncements~~the rules of the SEC implementing Section 404 of the Sarbanes-Oxley Act, based on ~~the effective~~our business combination date ~~for private (not publicly traded) companies. We~~and are ~~electing to delay the adoption of new or revised accounting standards, and as a result, we may~~therefore not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result, the financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

Additionally, we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an “emerging growth company,” we choose to rely on such exemptions we may not be required to ~~among other things, (i) provide an auditor’s attestation~~make a formal assessment of the effectiveness of our internal control over financial reporting for that purpose. We excluded management’s report on ~~our system of~~ internal controls over financial reporting pursuant to Section ~~404, (ii) provide all~~215.02 of the ~~compensation disclosure~~SEC’s Compliance and Disclosure Interpretations. We are required to disclose changes made in our internal controls and procedures on a quarterly basis, we are not required to make our first annual assessment of our internal control over financial reporting pursuant to Section 404 until the year following our first annual report required to be filed with the SEC post-merger, which is December 31, 2022. We have begun the process of establishing a system of internal control to support management’s evaluation of internal control subsequent to the completed Business Combination on August 20, 2021.

Effective internal controls are necessary to provide reliable financial reports and to assist in the effective prevention of fraud. Any inability to provide reliable financial reports or prevent fraud could harm our business. Any system of internal controls, however well designed and operated, is based in part on certain assumptions and can provide only reasonable, not absolute, assurances that ~~may be required~~the objectives of ~~non-emerging growth public companies under~~ the ~~Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii)~~system are met. As part of our process to establish an effective system of internal controls, management has identified areas of improvement in our preliminary system of internal control over financial reporting that we are working diligently to address.

If we cannot conclude that we have effective internal control over our financial reporting, investors could lose confidence in the reliability of our financial statements, which could lead to a decline in our stock price. Failure to comply with ~~any requirement that may be adopted~~reporting requirements could also subject us to sanctions and/or investigations by the ~~PCAOB regarding mandatory audit firm rotation~~SEC, the NASDAQ or ~~a supplement~~other regulatory authorities. If we fail to remedy any deficiencies or maintain the ~~auditor’s report providing additional information about the audit and the~~adequacy of our internal controls, we could be subject to regulatory scrutiny, civil or criminal penalties or stockholder litigation. In addition, failure to maintain adequate internal controls could result in financial statements (auditor discussion and analysis) and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median employee compensation. These exemptions will apply for a period of five years following the completion ofthat do not accurately reflect our ~~Initial Public Offering~~operating results or ~~until we are no longer an “emerging growth company,” whichever is earlier.~~

financial condition..

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to a ~~smaller reporting company~~variety of market and other risks, including the effects of changes in interest rates, inflation, and foreign currency exchange rates, as ~~defined by Rule 12b-2~~well as risks to the availability of funding sources, hazard events, and specific asset risks.

Interest Rate Risk

The market risk inherent in our financial instruments and our financial position represents the potential loss arising from adverse changes in interest rates. We maintain a portfolio of investments in a variety of fixed and variable debt rate securities, including, U.S. treasuries, corporate debt, asset-backed securities, non-U.S. government and supranational bonds and certificate of deposit. As of March 31, 2022, the fair value of investments in marketable debt securities, available-for-sale was $117.9 million. The primary objective of our investment activity is to maintain the safety of principal, and to provide for future liquidity requirements while maximizing yields without significantly increasing risk. While some investments may be securities of companies in foreign countries, all investments are denominated and payable in U.S. Dollars. We do not enter into investments for trading or speculative purposes. While our intent is not to sell these investment securities prior to their stated maturities, we may choose to sell any of the ~~Exchange Act~~securities for strategic reasons including, but not limited to, anticipated capital requirements, anticipation of credit deterioration, duration management and because a security no longer meets the criteria of our investment policy. We do not use derivatives or similar instruments to manage our interest rate risk. We seek to invest in high quality investments. The weighted average rating (exclusive of cash and cash equivalents) was AA- as of December 31, 2021. Maturities are maintained consistent with our short-, medium- and long-term liquidity objectives.

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The following table sets forth the impact on the fair value of our investments as of March 31, 2022 from changes in interest rates based on the weighted average duration of the debt securities in our portfolio (dollars in thousands):


	Approximate Change in Fair Value of Investments
Change in Interest Rate	Increase (Decrease)
2% Decrease	$	1,501
1% Decrease	$	750
1% Increase	$	(708)
2% Increase	$	(1,289)

Foreign Currency Risk

There was no material foreign currency risk for the three months ended March 31, 2022 and 2021.

Inflation Risk

We monitor inflation and the effects of changing prices. Inflation increases the cost of goods and services used. If our costs were to become subject to significant inflationary pressures, we may not ~~required~~be able to ~~provide~~fully offset these higher costs through price increases or mitigate the ~~information otherwise required under this item.~~

impact through alternative solutions. Our inability to do so could harm our business, financial condition and results of operations.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

~~Under~~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 ~~supervision~~Exchange Act, is recorded, processed, summarized and ~~with~~reported within the ~~participation of our~~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~~Chief Executive Officer and ~~principal financial~~Chief Financial Officer, to allow timely decisions regarding required disclosure.

As required by Rules 13(a)-15(e) and ~~accounting officer, we conducted an evaluation~~15(d)-15(e) under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out evaluations of the effectiveness of the design and operation of our disclosure controls and procedures as of ~~the end of the fiscal quarter ended June 30, 2021, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act.~~March 31, 2022. Based upon ~~this evaluation~~each of their evaluations, our Chief Executive Officer and ~~in light of the material weakness in internal controls described below, our certifying officer~~Chief Financial Officer concluded that ~~during the period covered by this report~~ our disclosure controls and procedures (as defined in Rules 13(a)-15(e) and 15(d)-15(e) under the Exchange Act) were ~~not effective.~~

effective as of the end of the quarter ended March 31, 2022.

Changes in Internal Control over Financial Reporting

~~There was no change~~During the quarter ended March 31, 2022, we continue to be engaged in the process of design and implementation of our internal control over financial reporting ~~that occurred during~~in a manner commensurate with the ~~fiscal quarter ended June 30, 2021 covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely~~scale of our operations subsequent to ~~materially affect,~~the business combination, including the enhancement of our internal and external technical accounting resources.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control ~~over financial reporting as~~objectives. Because of the ~~circumstances~~inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that ~~led~~all control issues and instances of fraud, if any, within the company have been detected. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to ~~the restatement of our financial statements described in our Form 10-K/A had~~error or fraud may occur and not yet been identified. Due solely to the events that led to our restatement of our financial statements, management identified a material weakness in internal controls related to the accounting for warrants issued in connection with our Initial Public Offering, as described in Note 2 to the Notes to Consolidated Financial Statements entitled “Restatement of Previously Issued Financial Statements” in our Form 10-K/A.

be detected.

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Part II - Other Information

~~PART II – OTHER INFORMATION~~

~~Item 1.~~

Item1. Legal Proceedings

NextGen has received six demand letters from putative stockholders of NextGen dated June 2, 2021, June 11, 2021, June 25, 2021, June 29, 2021, June 30, 2021 and July 6, 2021 (the “Demands”) generally alleging that the proxy statement/prospectus forming part of the registration statement on Form S-4 that NextGen filed with the SEC on May 14, 2021 omits material information with respectFrom time to ~~NextGen’s proposed business combination with Xos. The Demands seek the issuance of corrective disclosures~~time, we may become involved in ~~an amendment~~legal proceedings or ~~supplement~~be subject to the proxy statement/prospectus. One of the Demands further alleges that the merger consideration with respect to the business combination with Xos is inadequate, and asserts that an increase in consideration should be negotiated.

~~On June 14, 2021, a complaint was filed against NextGen and the members of its board of directors~~claims arising in the ~~Supreme Court~~ordinary course of ~~New York under~~our business. We are not currently a party to any legal proceedings, the ~~caption Green v. NextGen Acquisition Corp., et al., Index No. 653766/2021 (N.Y. Sup. Ct.). The complaint alleges that~~outcome of which, if determined adversely to us, would individually or in the ~~proxy statement/prospectus forming part~~aggregate have a material adverse effect on our business, financial condition or results of the registration statement on Form S-4 that NextGen filed with the SEC on May 14, 2021 omits material information, rendering the proxy statement/prospectus false and misleading. The complaint seeks an order enjoining the proposed Business Combination unless and until additional disclosures are issued; rescinding the proposed Business Combination, to the extent it closes; directing the defendants to disseminate a proxy statement that does not contain any untrue statements of material fact; declaring that the board of directors of NextGen violated their fiduciary duties; awarding costs, including attorneys’ fees and expert fees; and awarding such other relief as the court deems proper. Defendants have not yet responded to such complaint.

operations.

Item 1A. Risk ~~Factors.~~

Factors

Our risk factors are described in the “Risk Factors” section of our 20 21 Form 10-K. There have been no material changes ~~from the~~to our risk factors ~~previously disclosed in~~since the ~~Company’s~~filing of the 2021 Form ~~10-K/A. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.~~

10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds ~~from Registered Securities~~

~~Unregistered Sales~~

~~On February 21, 2021, concurrently with~~In consideration for Yorkville’s commitments under the ~~execution of the Merger Agreement,~~SEPA, we ~~entered into the Subscription Agreements, pursuant to, and on the terms and subject to the conditions of which, the PIPE Investors have collectively subscribed for 22,000,000~~issued 18,582 shares of ~~the Company’s Common Stock for an aggregate purchase price equal to $220,000,000, a portion of which is expected to be funded by one or more affiliates of~~ our ~~Sponsor and certain additional investors (which may include mutual funds and existing shareholders of NextGen). 2,000,000 of the shares of the NextGen~~ Common Stock to ~~be sold~~Yorkville on March 23, 2022. We did not receive any cash proceeds in connection with this issuance.

The issuance of the ~~PIPE Investment are shares owned by certain Xos officers. The PIPE Investment will be consummated substantially concurrently with the Closing. These issuances were~~securities in this transaction was made ~~pursuant to~~in reliance on the exemption from registration ~~contained~~ in Section 4(a)(2) ofunder the Securities Act.

~~No underwriting discounts or commissions were paid with respect to such sales.~~

~~Use of Proceeds~~

On October 9, 2020, the Company consummated its Initial Public Offering of 35,000,000 Units, at $10.00 per Unit, generating gross proceeds of $350.0 million. Goldman Sachs & Co. LLC and Credit Suisse Securities (USA) LLC acted as the book-running managers for the Initial Public Offering. The securities sold in the Initial Public Offering were registered under the Securities Act on a registration statement on Form S-1 (No. 333-248921). The SEC declared the registration statements effective on October 6, 2020. On November 13, 2020, the underwriters partially exercised the over-allotment option and on November 17, 2020, purchased an additional 2,500,000 Over-Allotment Units, generating gross proceeds of $25.0 million.

There has been no material change in the planned use of the proceeds from the Initial Public Offering and Private Placement as is described in the Company’s final prospectus related to the Initial Public Offering.

Item 3. Defaults Upon Senior Securities

None.

~~None.~~

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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).
31.1*3.2			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			Equity Purchase Agreement, dated March 23, 2022 between Xos, Inc. and YA II PN, LTD (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on March 28, 2022).
31.1			Certification of ~~Principal~~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 ~~Principal~~Chief Financial Officer ~~Pursuant to Rules 13a-14(a)~~required by Rule 13a-14(b) or Rule 15d-14(b) and ~~15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002~~18 U.S.C. 1350..

32.1**101.INS			~~Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~

101.INS*	~~Inline~~ XBRL Instance Document.

101.SCH*		~~Inline~~ XBRL Taxonomy Extension Schema Document.

101.CAL*		~~Inline~~ XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF*		~~Inline~~ XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB*		~~Inline~~ XBRL Taxonomy Extension Label Linkbase Document.

101.PRE*		~~Inline~~ XBRL Taxonomy Extension Presentation Linkbase Document.

~~104~~*	~~Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).~~

*	~~Filed herewith.~~

**	~~Furnished herewith.~~

Table of Contents

SIGNATURES

~~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 on this 17th day of August, 2021.~~

authorized.


		~~NEXTGEN ACQUISITION CORPORATION~~XOS, INC.

Date: May 9, 2022	By:		/s/ ~~Patrick T. Ford~~Dakota Semler
		Name:		~~Patrick T. Ford~~Dakota Semler
		Title:		Chief Executive Officer (Principal Executive Officer)

Date: May 9, 2022		By:		/s/ Kingsley E. Afemikhe
		Name:		Kingsley E. Afemikhe
		Title:		Chief Financial Officer (Principal Financial Officer and ~~Secretary~~Principal Accounting Officer)

~~iso4217:USD xbrli:shares~~

~~Cayman Islands~~	~~001-39598~~	~~98-1550505~~
Delaware			98-1550505
(State or other jurisdiction of incorporation or organization)			~~(Commission File Number)~~	(I.R.S. Employer Identification ~~Number)~~

2255 Glades Road, Suite 324A Boca Raton, FL	~~33431~~No.)

3550 Tyburn Street Los Angeles, CA		90065
(Address of ~~principal executive offices)~~Principal Executive Offices)		(Zip Code)


Title of each class		Trading Symbol		~~Trading Symbol(s)~~		Name of ~~each~~ exchange on which registered
~~Units, each consisting of one Class A ordinary~~Common Stock, $0.0001 par value per share ~~and one-third of one redeemable warrant~~		XOS		~~NGACU~~		~~The~~ Nasdaq ~~Stock~~Global Market ~~LLC~~
~~Class A ordinary shares, par value $0.0001 per share~~			~~NGAC~~	~~The Nasdaq Stock Market LLC~~
~~Redeemable warrants,~~Warrants, each whole warrant exercisable for one ~~Class A ordinary~~ share of Common Stock at an exercise price of $11.50 per share	XOSWW		~~NGACW~~		~~The~~ Nasdaq ~~Stock~~Global Market ~~LLC~~


	26Page
~~Item 4.~~Condensed Consolidated Balance Sheets	~~Mine Safety Disclosures~~7	26
~~Item 5.~~Condensed Consolidated Statement s of Operations and Comprehensive Loss	~~Other Information~~8	26
~~Item 6.~~Condensed Consolidated Statements of Legacy Xos Preferred Stock and Stockholders' Equity (Deficit)	~~Exhibits~~9	27
Condensed Consolidated Statements of Cash Flows		10
~~SIGNATURES~~Notes to Unaudited Condensed Consolidated Financial Statements	2812


	March 31, 2022 (Unaudited)		December 31, 2021
Assets
Cash and cash equivalents	$	11,810	$	16,142
Restricted cash	3,034		3,034
Accounts receivable	6,848		3,353
Marketable debt securities, available-for-sale — short-term	89,823		94,696
Inventories, net	40,303		30,883
Prepaid expenses and other current assets	17,570		17,850
Total current assets	169,388		165,958
Marketable debt securities, available-for-sale — long-term	28,063		54,816
Property and equipment, net	10,253		7,426
Operating lease right-of-use assets, net	7,765		—
Other assets	506		506
Total assets	$	215,975	$	228,706

Liabilities and Stockholders’ Equity
Accounts payable	$	7,941	$	10,122





Other current liabilities	11,857		5,861
Total current liabilities	19,798		15,983
Earn-out shares liability	26,938		29,240
Common stock warrant liability	7,930		7,496
Other non-current liabilities	7,895		1,594
Total liabilities	62,561		54,313
Commitment and Contingencies	0		0
Stockholders’ Equity
Common Stock $0.0001 par value, authorized 1,000,000 shares, 163,253 and 163,137 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively	16		16
Preferred Stock $0.0001 par value, authorized 10,000 shares, 0 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively	—		—
Additional paid-in capital	179,884		178,851
Accumulated deficit	(25,279)		(4,093)
Accumulated other comprehensive loss	(1,207)		(381)
Total stockholders’ equity	153,414		174,393
Total liabilities and stockholders’ equity	$	215,975	$	228,706


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


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


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒


			Page ~~No.~~
~~PART I. FINANCIAL INFORMATION~~Part I - Financial Information			3
Item 1.			~~Condensed~~ Financial Statements	16
			~~Condensed Balance Sheets as of June 30, 2021 (Unaudited) and December 31, 2020~~	1
	~~Unaudited Condensed Statements of Operations for the Three and Six Months Ended June 30, 2021~~	2
	~~Unaudited Condensed Statements of Changes in Shareholders’ Equity for the Three and Six Months Ended June 30, 2021~~	3
	~~Unaudited Condensed Statement of Cash Flows for the Six Months Ended June 30, 2021~~	4
	~~Notes to Unaudited Condensed Financial Statements~~	5
Item 2.	~~Management’s~~ Management's Discussion and Analysis of Financial Condition and Results of Operations	2134
Item 3.			Quantitative and Qualitative Disclosures About Market Risk	2544
Item 4.			Controls and Procedures	2545
Part II - Other Information					46
~~PART II. OTHER INFORMATION~~Item 1. Legal Proceedings			46
Item 1.1A. Risk Factors			~~Legal Proceedings~~46		26
~~Item 1A.~~			~~Risk Factors~~	26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds ~~from Registered Securities~~	2646
Item 3.			Defaults Upon Senior Securities	46
Item 4. Mine Safety Disclosures			46
Item 5. Other Information			46
Item 6. Exhibits			46
Signatures			47

	June 30, 2021			December 31, 2020
	(Unaudited)
Assets:
Current assets:
Cash	$	25,413		$	821,331
Prepaid expenses		362,076			443,165
Total current assets		387,489			1,264,496
Investments held in Trust Account		375,029,850			375,007,974
Total Assets	$	375,417,339		$	376,272,470

Liabilities and Shareholders’ Equity:
Current liabilities:
Accounts payable	$	69,752		$	5,497
Due to related party		1,135			-
Accrued expenses		80,452			117,238
Note payable		440,000			-
Total current liabilities		591,339			122,735
Derivative warrant liabilities		34,841,670			28,500,590
Deferred underwriting commissions in connection with the initial public offering		13,125,000			13,125,000
Total liabilities		48,558,009			41,748,325

Commitments and Contingencies

Class A ordinary share, $0.0001 par value; 32,185,932 and 32,952,414 shares subject to possible redemption at $10.00 per share as of June 30, 2021 and December 31, 2020, respectively		321,859,320			329,524,140

Shareholders’ Equity:
Preference shares, $0.0001 par value; 5,000,000 shares authorized; none issued and outstanding		-			-
Class A ordinary shares, $0.0001 par value; 500,000,000 shares authorized; 5,314,068 and 4,547,586 shares issued and outstanding (excluding 32,185,932 and 32,952,414 shares subject to possible redemption) as of June 30, 2021 and December 31, 2020, respectively		532			455
Class B ordinary shares, $0.0001 par value; 50,000,000 shares authorized; 9,375,000 shares issued and outstanding as of June 30, 2021 and December 31, 2020		937			937
Additional paid-in capital		19,337,507			11,672,764
Accumulated deficit		(14,338,966	)		(6,674,151	)
Total shareholders’ equity		5,000,010			5,000,005
Total Liabilities and Shareholders’ Equity	$	375,417,339		$	376,272,470


	Three Months Ended March 31
	2022		2021
Revenues	$	7,031	$	793
Cost of goods sold	10,186		672
Gross margin	(3,155)		121

Operating expenses
General and administrative	11,322		2,354
Research and development	6,949		2,999
Sales and marketing	2,028		312
Total operating expenses	20,299		5,665

Loss from operations	(23,454)		(5,544)

Other income (expense), net	81		(217)
Change in fair value of derivative instruments	(435)		6,394
Change in fair value of earn-out shares liability	2,624		—
Write off of subscription receivable	—		(379)
Realized loss on debt extinguishment	—		(14,104)
Loss before provision for income taxes	(21,184)		(13,850)
Provision for income taxes	2		—
Net loss	(21,186)		(13,850)

Other comprehensive loss
Marketable debt securities, available-for-sale
Change in net unrealized loss, net of tax of $—, for the three months ended March 31, 2022 and 2021	(826)		—
Total comprehensive loss	$	(22,012)	$	(13,850)

Net loss per share
Basic	$	(0.13)	$	(0.19)
Diluted	$	(0.13)	$	(0.19)
Weighted average shares outstanding
Basic	163,165		72,354
Diluted	163,165		72,354

	For the Three Months Ended June 30, 2021			For the Six Months Ended June 30, 2021
	(unaudited)			(unaudited)
Operating expenses
General and administrative expenses	$	531,773		$	1,285,611
General and administrative expenses - related party		30,000			60,000
Total operating expenses		(561,773	)		(1,345,611	)
Other income (expense):
Change in fair value of derivative warrant liabilities		1,282,520			(6,341,080	)
Net gain from cash equivalents held in Trust Account		12,628			21,876
Net income (loss)	$	733,375		$	(7,664,815	)

Weighted average shares outstanding of Class A ordinary shares subject to possible redemption, basic and diluted		32,113,401			32,525,950
Basic and diluted net income per share, Class A ordinary shares subject to possible redemption	$	0.00		$	0.00
Weighted average shares outstanding of non-redeemable ordinary shares, basic and diluted		14,761,599			14,349,050
Basic and diluted net income (loss) per share, non-redeemable ordinary shares	$	0.05		$	(0.54	)


	Legacy Xos Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity (Deficit)
	Shares	Amount		Shares	Par Value


Balance at December 31, 2020	2,762	$	7,862	72,277	$	7	$	290	$	(27,494)	$	—	$	(27,197)
Payment of subscription receivable	—	2,430		—	—		380		—		—		380
Issuance of Legacy Xos Preferred Stock, including note conversion	49,518	66,701		—	—		—		—		—		—
Options exercised	—	—		206	—		3		—		—		3
Stock repurchased and retired	—	—		(94)	—		(1)		—		—		(1)
Stock based compensation expense	—	—		—	—		2		—		—		2
Net loss	—	—		—	—		—		(13,850)		—		(13,850)
Balance at March 31, 2021 (unaudited)	52,280	$	76,993	72,389	$	7	$	674	$	(41,344)	$	—	$	(40,663)




Balance at December 31, 2021	—	$	—	163,137	$	16	$	178,851	$	(4,093)	$	(381)	$	174,393
Stock options exercised	—	—		—	—		—		—		—		—
Stock based compensation expense	—	—		—	—		1,068		—		—		1,068
Issuance of common stock for vesting of restricted stock units	—	—		133	—		—		—		—		—
Shares withheld related to net share settlement of stock-based awards	—	—		(36)	—		(97)		—		—		(97)
Issuance of common stock for commitment shares under Standby Equity Purchase Agreement	—	—		19	—		62		—		—		62
Net and comprehensive loss	—	—		—	—		—		(21,186)		(826)		(22,012)
Balance at March 31, 2022 (unaudited)	—	$	—	163,253	$	16	$	179,884	$	(25,279)	$	(1,207)	$	153,414

	Ordinary Shares										Additional						Total
	Class A						Class B				Paid-in			Accumulated			Shareholders’
	Shares			Amount			Shares		Amount		Capital			Deficit			Equity
Balance - December 31, 2020		4,547,586		$	455			9,375,000	$	937	$	11,672,764		$	(6,674,151	)	$	5,000,005
Shares subject to possible redemption		839,819			84			-				8,398,105			-			8,398,189
Net loss		-			-			-		-		-			(8,398,190	)		(8,398,190	)
Balance - March 31, 2021 (unaudited)		5,387,405			539			9,375,000		937		20,070,869			(15,072,341	)		5,000,004
Shares subject to possible redemption		(73,337	)		(7	)		-		-		(733,362	)		-			(733,369	)
Net loss		-			-			-		-		-			733,375			733,375
Balance - June 30, 2021 (unaudited)		5,314,068		$	532			9,375,000	$	937	$	19,337,507		$	(14,338,966	)	$	5,000,010


Supplemental disclosure of non-cash investing and financing activities
Purchase of property and equipment in accounts payable	$	97	$	—
Recognition of right-of-use asset and lease liabilities upon ASC 842 adoption on 1/1/2022	$	7,682	$	—
Right-of-use asset obtained in exchange for operating lease obligations	$	437	$	—
Conversion of notes payable to Legacy Xos Preferred Stock:
Issuance of redeemable convertible preferred stock	$	—	$	34,918
Conversion of interest payable on convertible notes	$	—	$	2,453
Conversion of notes payable into preferred stock	$	—	$	21,540

Cash Flows from Operating Activities:
Net loss	$	(7,664,815	)
Adjustments to reconcile net loss to net cash used in operating activities:
Net gain from investments held in Trust Account		(21,876	)
Change in fair value of derivative warrant liabilities		6,341,080
Changes in operating assets and liabilities:
Prepaid expenses		81,089
Accounts payable		64,255
Due to related party		1,135
Accrued expenses		(36,786	)
Net cash used in operating activities		(1,235,918	)

Cash Flows from Financing Activities:
Proceeds from note payable to related party		440,000
Net cash provided by financing activities		440,000

Net decrease in cash		(795,918	)

Cash - beginning of the period		821,331
Cash - end of the period	$	25,413

Supplemental disclosure of noncash investing and financing activities:
Change in value of Class A ordinary share subject to possible redemption	$	(7,664,820	)

	For the Three Months Ended June 30, 2021		For the Six Months Ended June 30, 2021
Class A ordinary shares subject to possible redemption
Numerator: Earnings allocable to ordinary shares subject to possible redemption
Income from investments held in Trust Account	$	10,839	$	18,776
Less: Company’s portion available to be withdrawn to pay taxes		-		-
Net income attributable to Class A ordinary shares subject to possible redemption	$	10,839	$	18,776
Denominator: Weighted average Class A ordinary shares subject to possible redemption
Basic and diluted weighted average shares outstanding, Class A ordinary shares subject to possible redemption		32,113,401		32,525,950
Basic and diluted net income per share, Class A ordinary shares subject to possible redemption	$	0.00	$	0.00

Non-redeemable ordinary shares
Numerator: Net income (loss) minus Net Earnings
Net income (loss)	$	733,375	$	(7,664,815	)
Net income allocable to Class A ordinary shares subject to possible redemption		10,839		18,776
Non-redeemable net income (loss)	$	722,536	$	(7,683,591	)
Denominator: Weighted average non-redeemable ordinary shares
Basic and diluted weighted average shares outstanding, non-redeemable ordinary shares		14,761,599		14,349,050
Basic and diluted net income (loss) per share, non-redeemable ordinary shares	$	0.05	$	(0.54	)

	Fair Value Measured as of June 30, 2021
	Level 1		Level 2		Level 3
Assets:
Investments held in Trust Account	$	375,029,850	$	-	$	-
Liabilities:
Derivative warrant liabilities Public Warrants	$	23,125,000	$	-	$	-
Derivative warrant liabilities Private Warrants	$	-	$	-	$	11,716,670

December 31, 2020
	Fair Value Measured as of December 31, 2020
	Level 1		Level 2		Level 3
Assets:
Investments held in Trust Account	$	375,007,974	$	-	$	-
Liabilities:
Derivative warrant liabilities Public Warrants	$	18,683,920	$	-	$	-
Derivative warrant liabilities Private Warrants	$	-	$	-	$	9,816,670

	As of June 30, 2021			As of March 31, 2021
Exercise price	$	11.50		$	11.50
Stock Price	$	9.94		$	9.92
Option term (in years)		5.09			5.34
Volatility		26.00	%		29.10	%
Risk-free interest rate		0.88	%		1.00	%

Warrant liabilities at January 1, 2021	$	9,816,668
Change in fair value of derivative warrant liabilities		2,913,334
Derivative warrant liabilities at March 31, 2021	$	12,730,001
Change in fair value of derivative warrant liabilities		(1,013,331	)
Derivative warrant liabilities at June 30, 2021	$	11,716,670