Xos, Inc.

On August 21, 2025, the Company entered into an agreement with the lessor of the Company’s manufacturing facility in Mesa, Arizona, leased by the Company’s indirect wholly owned subsidiary, EMV Automotive USA Inc., to terminate the lease on the facility. As a result of the termination, the Company is no longer obligated to pay rent on the Mesa Lease and the Company will make 18 monthly payments of approximately $2.8 million in the aggregate to complete the termination. See Note 2 — Summary of Significant Accounting Policies of this Report.

We believe our existing facilities are generally well maintained and adequate for our current requirements and that we will be able to obtain additional or alternative space at other locations to support our continuing expansion. We currently do not own any real property.

• We are or may be subject to risks associated with strategic alliances or acquisitions and may not be able to identify adequate strategic relationship opportunities, or form strategic relationships, in the future.
• Risks Relating to the Design, Supply and Manufacturing of our Products
• We have experienced and may in the future experience significant delays in the design, manufacturing and wide-spread deployment of our products, which could harm our business, prospects, financial condition and operating results.
• We may not be able to accurately plan our production, which may result in us carrying excess and/or obsolete raw material inventory.
• Our ability to develop and manufacture our products of sufficient quality and appeal to customers on schedule and on a large scale will require significant capital expenditures and is unproven and still evolving.
• We have no experience to date in high volume manufacturing of our products.
• If we fail to successfully tool our manufacturing facilities or if our manufacturing facilities become inoperable, we will be unable to produce our vehicles and our business will be harmed.
• We are dependent on our suppliers, some of which are limited source or single-source suppliers, and the inability or unwillingness of these suppliers, due to increased demand or other factors, to deliver necessary components and materials used in our products at prices, timelines, volumes, performance and specifications acceptable to us, could have a material adverse effect on our business, prospects, financial condition and operating results.
• Our battery packs use lithium-ion battery cells, a class of batteries which have been observed to catch fire or vent smoke and flame.
• We have, and may again experience increases in costs, disruption of supply or shortage of materials, in particular for lithium-ion battery cells, semiconductors and other key components, which have harmed and could continue to harm our business.
• We rely on complex machinery for the manufacture of our products, which involves a significant degree of risk and uncertainty in terms of operational performance and costs.
• Delays in deployment of sufficient charging solutions for our vehicles has resulted in the delay of the delivery of vehicles to customers.
• Our business and prospects depend significantly on our ability to build our brands. We may not successfully establish, maintain and strengthen the Xos brand or any other brands, and our brand and reputation could be harmed by negative publicity regarding Xos or our products.
• If we fail to manage our growth effectively, we may not be able to further design, develop, manufacture and market our products successfully.
• The performance characteristics of our products may vary due to factors outside of our control, which could harm our ability to develop, market and deploy our products.
• Insufficient reserves to cover future warranty or part replacement needs or other vehicle, powertrain and battery pack repair requirements, including any potential software upgrades, could materially and adversely affect our business, prospects, financial condition and operating results.
• We have experienced product recalls and may experience future product recalls that could materially and adversely affect our business, prospects, financial condition and operating results.
• We may become subject to product liability claims, including possible class action and derivative lawsuits, which could harm our financial condition and liquidity if we are not able to successfully defend or insure against such claims.
• If we are unable to establish and maintain confidence in our long-term business prospects among customers and analysts and within our industry, then our financial condition, operating results, business prospects and access to capital may be materially and adversely affected.
• We have limited experience servicing our products and our integrated software. If we or our partners are unable to adequately service our products and integrated software, our business, prospects, financial condition and operating results may be materially and adversely affected.
• Our products rely on software and hardware that is highly technical, and if these systems contain errors, bugs or vulnerabilities, or if we are unsuccessful in addressing or mitigating technical limitations in our systems, our business could be adversely affected.
• Risks Related to our Financial Condition
• Our recent cost-cutting measures may not adequately reduce our operating costs or improve our operating margins, may lead to additional workforce attrition and may cause operational disruptions.
• We are an early-stage company with a history of losses and may incur significant expenses and continuing losses for the foreseeable future.
• We will require significant capital to develop and grow our business, and we may be unable to adequately control the costs associated with our operations.
• Our ability to generate or maintain positive cash flow is uncertain.
• Our financial results may vary significantly from period to period due to fluctuations in our product development cycle and operating costs, product demand and other factors.
• Our business plans require a significant amount of capital. In addition, our future capital needs may require us to sell additional equity or debt securities that may dilute our stockholders or introduce covenants that may restrict our operations or our ability to pay dividends.
• The unavailability, reduction or elimination of government and economic incentives could have a material adverse effect on our business, prospects, financial condition and operating results.
• Our ability to use net operating loss carryforwards and other tax attributes may be limited in connection with the Business Combination or other ownership changes.
• We may not be able to obtain or agree on acceptable terms and conditions for all or a significant portion of the government grants, loans and other incentives for which we may apply. As a result, our business, prospects, financial condition and operating results may be adversely affected.
• We previously restated our financial statements for several prior periods, which resulted in unanticipated costs and may adversely affect investor confidence, our stock price, our ability to raise capital in the future and our reputation.
• Risks Related to Our Indebtedness
• We have incurred substantial debt, which could impair our flexibility and access to capital and adversely affect our financial position, and our business would be adversely affected if we are unable to service our debt obligations and are subject to default.
• Servicing our debt requires a significant amount of cash, and we may not have sufficient cash flow from our business to pay our substantial debt.
• Conversion of the Convertible Note may dilute the ownership interest of our stockholders or may otherwise depress the price of our Common Stock.
• Risks Related to our Acquisition of ElectraMeccanica
• We may be unable to realize the opportunities expected from the acquisition of ElectraMeccanica, which could adversely affect our business, financial condition and results of operations.
• Significant costs have been incurred and are expected to be incurred in connection with the consummation of the acquisition of ElectraMeccanica and integrating it with the rest of our business.
• Legal and Regulatory Risks
• Changes in U.S. trade policy, including the threat and/or imposition of tariffs and the resulting consequences or perceptions thereof, could adversely affect our business, prospects, financial condition and operating results.
• A shift in the regulatory landscape toward more lenient emissions standards, or the perception that such a shift may occur, may impair demand for zero-emission vehicles.
• We may face regulatory limitations on our ability to sell vehicles directly to consumers, which could materially and adversely affect our ability to sell our vehicles.
• We, our outsourcing partners and our suppliers are subject to substantial regulation and any failure by us, our outsourcing partners or our suppliers to comply with, these regulations could substantially harm our business and operating results.
• If our IT systems, those of third-parties upon which we rely, or our data are or were compromised, we could experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; and loss of customers or sales.
• Changes in tax laws or regulations that are applied adversely to us or our customers may have a material adverse effect on our business, cash flow, financial condition and results of operations.
• We are subject to stringent and evolving U.S. and foreign laws, regulations and rules, contractual obligations, industry standards, policies and other obligations related to data privacy and security. Our actual or perceived failure to comply with such obligations could lead to regulatory investigations and actions; litigation (including class claims) and mass arbitration demands; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue and profits; loss of customers and sales; and other adverse business consequences.
• We are subject to various environmental laws and regulations that could impose substantial costs.
• We may in the future expand internationally and may face risks associated with our international operations, including unfavorable regulatory, political, tax and labor conditions, which could harm our business.
• We are subject to export and import controls and economic sanctions laws that could subject us to liability if we are not in compliance with such laws.
• We are subject to U.S. and foreign anti-corruption and anti-money laundering laws and regulations. We can face criminal liability and other serious consequences for violations, which can harm our business.
• We may need to defend ourselves against intellectual property infringement claims or misappropriation claims, which may be time-consuming and expensive and, if adversely determined, could limit our ability to commercialize our products.
• Our business may be adversely affected if we fail to obtain, maintain, enforce and protect our intellectual property and are unable to prevent unauthorized use by third-parties of our intellectual property and proprietary technology.
• Our patent applications for our proprietary technology may not issue, which may have a material adverse effect on our ability to prevent others from commercially exploiting products similar to ours.
• Our business may be adversely affected by labor and union activities.
• Risks Related to Operating as a Public Company and Ownership of Our Securities
• If we fail to establish and maintain proper and effective internal control over financial reporting, as a public company our ability to produce accurate and timely financial statements could be impaired, investors or analysts may lose confidence in our financial reporting, the trading price of our Common Stock may decline and we could face regulatory investigations or actions.
• The market prices of our Common Stock and Warrants may be volatile.
• We do not expect to declare any dividends in the foreseeable future.
• There is no guarantee that the Warrants will be in the money at the time they become exercisable, and they may expire worthless.
• The terms of the Warrants may be amended in a manner adverse to a holder if holders of at least 65% of the then outstanding Public Warrants approve of such amendment.
• We may redeem unexpired Warrants prior to their exercise at a time that is disadvantageous to warrant holders, thereby making such Warrants worthless.
• The Warrants are accounted for as derivative liabilities with changes in fair value each period included in earnings, which may have an adverse effect on the market price of our securities.
• We may issue a substantial number of additional shares of our Common Stock or Preferred Stock, including under our equity incentive plan. Any such issuances would dilute the interest of our stockholders and likely present other risks.
• Concentration of ownership among our existing executive officers and directors and their respective affiliates may prevent other investors from influencing significant corporate decisions.
• Investments in us may be subject to U.S. foreign investment regulations which may impose conditions or limitations on certain investors (including, but not limited to, limits on purchasing our Common Stock, limits on information sharing with such investors, requiring a voting trust, governance modifications, forced divestiture, or other measures).
• Risks Factors Related to the ATM Offering
• Issuances or sales of our common stock in the ATM Offering may be dilutive or cause the market price of our shares to fall.