Item 2.01.
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Completion of Acquisition or Disposition of Assets.
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The disclosure set forth in the “Introductory
Note” above is incorporated by reference into this Item 2.01.
FORM 10 INFORMATION
Prior to the Closing, the Company was a shell company
(as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) with no operations, formed
as a vehicle to effect a business combination with one or more operating businesses. After the Closing, the Company became a holding company
whose only assets consist of equity interests in Xos Fleet, Inc. Item 2.01(f) of Form 8-K
states that if the registrant was a shell company, as NextGen was immediately before the Merger, then the registrant must disclose the
information that would be required if the registrant were filing a general form for registration of securities on Form 10. Accordingly,
the Company is providing below the information that would be included in a Form 10 if it were to file a Form 10. Please note that the
information provided below relates to the combined company after the consummation of the Business Combination, unless otherwise specifically
indicated or the context otherwise requires.
Cautionary Note Regarding Forward-Looking Statements
The Company makes forward-looking statements in
this Current Report on Form 8-K and in documents incorporated herein by reference. All statements, other than statements of present or
historical fact included in or incorporated by reference in this Current Report on Form 8-K, regarding the Company’s future financial
performance, as well as the Company’s strategy, future operations, financial position, estimated revenues, and losses, projected
costs, prospects, plans and objectives of management are forward-looking statements. When used in this Current Report on Form 8-K, the
words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,”
“intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,”
“project,” “should,” “will,” “would” the negative of such terms and other similar expressions
are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These
forward-looking statements are based on management’s current expectations, assumptions, hopes, beliefs, intentions and strategies
regarding future events and are based on currently available information as to the outcome and timing of future events. The Company cautions
you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and
many of which are beyond the control of the Company, incident to its business.
These forward-looking statements are based on information
available as of the date of this Current Report on Form 8-K, and current expectations, forecasts and assumptions, and involve a number
of risks and uncertainties. Accordingly, forward-looking statements in this Current Report on Form 8-K and in any document incorporated
herein by reference should not be relied upon as representing the Company’s views as of any subsequent date, and the Company does
not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether
as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
As a result of a number of known and unknown risks
and uncertainties, the Company’s actual results or performance may be materially different from those expressed or implied by these
forward-looking statements. Some factors that could cause actual results to differ include:
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the Company’s ability to recognize the costs and anticipated
benefits of the Business Combination, which may be affected by, among other things, competition and the ability of the Company to grow
and manage growth profitably following the Closing;
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changes in domestic and foreign business, market, financial, political,
legal conditions and applicable laws and regulations;
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the outcome of any legal proceedings against the Company;
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the financial and business performance of the Company, including risk
of uncertainty in our financial projections and business metrics and any underlying assumptions thereunder and our ability to convert
backlog orders into deliveries;
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changes in the Company’s strategy, future operations, financial position,
estimated revenues and losses, projected costs, prospects and plans;
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the Company’s ability to maintain an effective system of internal controls
over financial reporting;
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the Company’s ability to grow market share in its existing markets
or any new markets it may enter;
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the Company’s ability to respond to general economic conditions;
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the Company’s ability to manage its growth effectively;
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the Company’s ability to achieve and maintain profitability in the
future;
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the
Company’s ability to access sources of capital to finance operations, growth and future capital requirements;
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the Company’s ability to maintain and enhance its products and brand,
and to attract customers;
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the Company’s ability to execute its business model, including market
acceptance of its planned products and services and achieving sufficient production volumes at acceptable quality levels and prices;
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the success of strategic relationships with third parties;
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the Company’s ability to scale in a cost-effective manner;
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developments and projections relating to the Company’s competitors
and industry;
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the impact of health epidemics, including the COVID-19 pandemic, on the Company’s
business and the actions the Company may take in response thereto;
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the impact of global economic conditions, such as supply chain disruptions
which the COVID-19 pandemic has contributed to;
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the
Company’s expectations regarding its ability to obtain and maintain intellectual property
protection and not infringe on the rights of others;
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expectations
regarding the time during which we will be an emerging growth company under the Jumpstart
Our Business Startups Act of 2012, as amended;
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market
acceptance of our Fleet-as-a-Service offering and potential changes to the regulatory requirements
and restrictions on the use of customer data;
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our
ability to find new partners for our Fleet-as-a-Service offering;
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our
ability to find and retain critical employee talent needed to continue our product innovation;
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our
ability to decarbonize our supply chain;
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the outcome of any known and unknown litigation and regulatory proceedings;
and
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other risks and uncertainties set forth in the Proxy Statement/Prospectus
in the section entitled “Risk Factors” beginning on page 28 of the Proxy Statement/Prospectus, which is incorporated herein
by reference.
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Business and Properties
The business and properties of NextGen and Legacy
Xos prior to the Business Combination are described in the Proxy Statement/Prospectus in the sections entitled “Information About
NextGen” beginning on page 179 and “Information About Xos” beginning on page 194 of the Proxy Statement/Prospectus,
which are incorporated herein by reference.
Risk Factors
The risks associated with the Company’s
business are described above and in the Proxy Statement/Prospectus in the section entitled “Risk Factors” beginning
on page 25 of the Proxy Statement/Prospectus, which is incorporated herein by reference.
Selected Historical Financial Information
The selected
historical consolidated financial information and other data for the years ended December 31, 2020, 2019 and 2018 for Legacy Xos
are set forth in the Proxy Statement/Prospectus beginning on page 21and incorporated herein by reference.
Unaudited Condensed Consolidated Financial Statements
The unaudited condensed consolidated financial
statements of Legacy Xos as of June 30, 2021 and for the six months ended June 30, 2021 and 2020 have been prepared in accordance with
U.S. generally accepted accounting principles for interim financial information and pursuant to the regulations of the SEC and are set
forth herein as Exhibit 99.1 and incorporated herein by reference.
These unaudited condensed consolidated financial
statements should be read in conjunction with the historical audited financial statements of Legacy
Xos as of and for the years ended December 31, 2020, 2019 and 2018 and the related notes
included in the Proxy Statement/Prospectus beginning on page F-46 of the Proxy Statement/Prospectus, which are incorporated herein
by reference.
Unaudited Pro Forma Condensed Combined Financial Information
The unaudited pro forma condensed combined financial
information of the Company as of June 30, 2021 and for the six months ended June 30, 2021 is set forth in Exhibit 99.2 hereto and incorporated
herein by reference.
The unaudited pro forma condensed combined financial
information of the Company as of and for the year ended December 31, 2020 is set forth in the Proxy Statement/Prospectus beginning on
page 170 and incorporated herein by reference.
Management’s Discussion and Analysis of Financial Condition
and Results of Operations
The following discussion
and analysis provides information which the Company’s management believes is relevant to an assessment and understanding of the
Company’s consolidated results of operations and financial condition. The discussion should be read together with the section entitled
“Selected Historical Financial Information”. The discussion and analysis should also be read together with our pro forma financial
information as of June 30, 2021 and for the six months ended June 30, 2021 (see the section entitled “Unaudited Pro Forma Condensed
Combined Financial Information”). This discussion may contain forward-looking statements based upon current expectations that involve
risks and uncertainties. The Company’s 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” or in other parts in the
definitive proxy statement / final prospectus dated July 30, 2021. Unless the context otherwise requires, references in this “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” to “we”, “us” and “our”
refer to the Company.
Overview
We are a mobility solutions
company manufacturing Class 5 to 8 battery-electric commercial vehicles and facilitating fleet operations. Our mission is to decarbonize
commercial transportation by developing innovative technologies and intelligent mobility solutions at the intersection of energy and software.
We developed the X-Platform (our proprietary, purpose-built vehicle chassis platform) and the X-Pack (our proprietary battery system)
specifically for the medium and heavy-duty commercial vehicle segment with a focus on last-mile commercial fleet operations. Our “Fleet-as-a-Service”
package offers our customers a comprehensive suite of commercial products and services to facilitate electric fleet operations and seamlessly
transition their traditional combustion-engine fleets to battery-electric vehicles.
Our innovative X-Platform and X-Pack provide modular features that
allow us to accommodate a wide range of last-mile applications and enable us to offer clients 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. Both the X-Platform and
X-Pack were engineered to be modular in nature to allow fleet operators to customize their vehicles to fit their specific commercial applications
(e.g., upfitting with a specific vehicle body and/or tailoring battery range). In addition to a competitive 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 and are ideal candidates
for electrification as operators are able to connect them to dedicated charging infrastructure. Our modular and cost-effective vehicles
have been on the road and in customers’ hands since 2018, validating the durability and low-cost design of our vehicles. As of June
30, 2021, we have entered into binding agreements and non-binding letters of intent, memorandums of understanding and other similar agreements
with over a dozen customers. Pursuant to binding agreements with both our end-user and dealer customers, our customers have agreed
to purchase, subject to certain modification and cancellation provisions, a total of over 2,000 vehicle units with the option to purchase
an additional 4,000 units which expires at the end of 2022, for a total backlog of over 6,000 vehicles units. During the six months ended
June 30, 2021, we sold three vehicles and six powertrains. Since inception and up to June 30, 2021, we have delivered 32 vehicles and
powertrains combined. We expect to deliver a total of 116 units in 2021. We expect to deliver over 90% of the aforementioned contracted
non-option orders, which is over 1,800 vehicles, by the end of 2022. We anticipate that a portion of the aforementioned 4,000 optional
orders, if exercised, may not be produced and delivered until 2023.
We have taken a conservative
approach to capital deployment with our Flex manufacturing strategy. This strategy leverages our strategic partners’ existing facilities
and labor to assemble up to 5,000 vehicles annually per facility once they are fully ramped up at an estimated average future cost of
approximately $45 million dollars per facility build out. This strategy will enable us to scale our operations in a capital efficient
manner and in lockstep with market demand. As of June 30, 2021, we have partnered with two third-party contract manufacturer partners
to operate two Flex facilities with the combined capacity to manufacture approximately up to 10,000 vehicles per year once fully ramped
up. We anticipate the production of each Flex facility to be up to 5,000 vehicles at peak capacity.
We expect our current facilities to satisfy our currently projected vehicle production volumes through 2023.
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 (X-Platform, X-Pack, energy
services, digital fleet management products, over-the-air software update technology, and a wide-range of service products) and offerings
from our industry partners, such as Dickinson Fleet Services for service and maintenance and DLL for financing. Our Fleet-as-a-Service
is expected to increase the lifetime revenue of each vehicle sold by us. As of June 30, 2021, five customers have utilized our Fleet-as-a-Service
offering. As of June 30, 2021, we have generated $2.6 million in revenue (or 47% of our revenue) from vehicle sales and $2.9 million in
revenue (or 53% of our revenue) from our Fleet-as-a-Service offering.
We believe our growth in the
coming years is supported by the strong secular tailwinds of climate change and e-commerce. 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 financial and corporate institutions and the rapid growth
of last-mile logistics will fuel accelerated adoption of our products worldwide. We also believe that our distribution strategies will
be a key factor to enhancing brand awareness and fueling business growth. We employ a hybrid distribution
strategy, that utilizes both direct distribution and indirect distribution, through partnerships with dealer networks. Our
dealer distribution network broadens our reach to fleet customers, creates efficiencies within our go-to-market strategy and facilitates
other aspects of our Fleet-as-a-Service platform including service and maintenance.
We expect both our capital and operating expenditures and working capital
requirements will increase significantly in connection with our ongoing activities, as we:
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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;
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increase our investment in marketing and advertising, sales
and distribution infrastructure, both direct sales and sales through dealer networks, to accelerate the growth in sales of our products
and services;
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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;
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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;
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continue to build out finance operations to maintain and
improve financial controls, financial planning and risk management;
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invest in operations functions including IT, administration
and human resources to maintain and improve our operational systems, processes and procedures;
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obtain, maintain, expand, and protect our intellectual property
portfolio including patents, trade secrets, trademarks and copyrights; and
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further invest in infrastructure to operate in accordance
with public company standards and guidelines.
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Recent Developments
Consummation of the Business Combination with NextGen
On August 20, 2021, the
Company completed the Closing of the Business Combination with NextGen, which was announced on February 21, 2021. As a result of the
Business Combination, Xos Fleet, Inc. will be the accounting predecessor and the combined entity will be the successor SEC
registrant, and Xos Fleet, Inc.’s financial statements for previous periods will be disclosed in the registrant’s future
periodic reports filed with the SEC.
The completion of the business combination resulted in net proceeds
of $216.7 million in cash (including proceeds from NextGen trust account and PIPE investment less transaction costs and redemptions).
For further details, see the sections entitled “Introductory Note” and “Unaudited Pro Forma Condensed Combined Financial
Information.”
Series A Equity Financing
During the fourth quarter
of 2020, Legacy Xos executed the initial closing of a financing round and issued Series A preferred shares (the “Series A Financing’’).
The Series A Financing included the authorization of 25,794,475 shares of preferred stock in classes A through A-10. Class A was
allocated to investors who contributed new money to Legacy Xos, while Class A-1 through A-10 were issued in exchange to convertible
note holders. As part of this raise, 1,411,764 preferred Class A shares and one warrant exercisable for 319,411 of preferred Class A
shares were issued for aggregate cash proceeds of $9.5 million and a subscription receivable of $2.4 million. As a result of this transaction
and other transactions with Legacy Xos’ common stock, Legacy Xos had outstanding subscription receivable balances of $2.8 million
as of December 31, 2020. Such subscription receivable balances were presented net of additional paid in capital in these financial statements.
Subsequent to December 31, 2020, the Legacy Xos issued an additional 3,739,846 preferred Class A shares raising $31.8 million in
cash proceeds, and the conversion of the $30,000 simple agreement for future equity (“SAFE”) Note. This transaction triggered
a contractual conversion of all of the convertible debt and accrued interest into preferred stock issuing shares in Class A-1 through
A-10.
Supply Chain Disruptions
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:
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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.
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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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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, and where appropriate and critical, has placed orders in advance of projected need to ensure inventory is able to be delivered
in time for production plans.
However, continued tightness in supply availability could lead to previously
unforeseen cost and delivery pressures on certain material and logistical costs in the second half of the year. As the Company accelerates
execution of its strategic plans post-merger, 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, including the continued spread of the Delta variant in the U.S. and other countries and the potential emergence of
other SARS-CoV-2 variants that may prove especially contagious or virulent, 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, the pandemic’s
impact on the U.S. and global economies. During the six-month period ended June 30, 2021, 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 including an indoor mask policy and vaccination policy for our employees who work onsite.
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, materially and negatively impacted in the near term as a result of these conditions, and if so, we may be subject to future
impairment losses related to long-lived assets as well as changes to valuations.
Comparability of Financial Information
Our future results of operations
and financial position may not be comparable to historical results as a result of the Business Combination.
Business Combination and Public Company Costs
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 will approximately be $55.4 million. For further details,
see the section entitled “Unaudited Pro Forma Condensed Combined Financial Information.”
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 below and in the “Risk Factors” section of the definitive proxy statement / final prospectus dated
July 30, 2021.
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 and the Series A Financing. 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.
Supply Chain Management
As noted in the “Recent
Developments” section, 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.
Components of Results of Operations
Basis of Presentation
The accompanying consolidated
financial statements include the accounts of Xos and its wholly owned subsidiaries, Xos Fleet, Inc. and Rivordak, Inc. 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. See Note 1 in the accompanying audited consolidated financial statements for more information.
Currently, we conduct business
through one operating segment. We are currently an early stage growth company with minimal commercial operations, and our manufacturing
activities to-date have been conducted exclusively within the United States and Mexico. For more information about our basis of operations,
refer to Note 1 in the accompanying financial statements.
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 proprietarily 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.
We recognize revenue consisting
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.
Cost of Goods Sold
To date, our cost of goods
sold has included materials and other direct costs related to production of our vehicles, including components and parts, batteries, and
direct labor costs, among others. Materials include inventory purchased from suppliers, as well as assembly components that are assembled
by company personnel. Direct labor costs relate to the wages of those individuals responsible for the assembly of vehicles delivered to
customers. 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.
Research and Development Expense
Research and development expenses
consist primarily of costs incurred for the design and development of our vehicles and battery systems, which include:
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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; and
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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.
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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. These marketing efforts include travel expenses
of our sales force who are primarily responsible for introducing our platform and offerings to potential customers. Expenses related to
web design, marketing and promotional items, and consultants who assist in the marketing of the Company are also included in these expenses.
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.
General and Administrative Expenses
General and administrative
expenses (“G&A”) 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, stock-based compensation, and associated payroll taxes. Overhead items including rent, insurance, utilities,
and other items are included as general and administrative expenses.
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. We also expect to begin to allocate personnel-related expenses to the departments in which
employees provide their primary service, including sales and marketing, and research and development. Corporate executives, finance legal
and other administrative functions’ personnel-related expenses will remain as general and administrative expense.
Depreciation Expense
Depreciation is provided on
property and equipment over the estimated useful lives on a straight-line basis. Upon retirement or disposal, the cost of the asset disposed,
and the related accumulated depreciation are removed from the accounts and any gain or loss is reflected in the statement of loss. No
depreciation is allocated to cost of goods sold, research and development, or general and administrative expenses.
Interest Income (Expense)
Interest income (expense) consists
primarily of interest received or earned on our cash and cash equivalents and note receivable balances. Interest expense includes interest
paid on our equipment loans and convertible notes, as well as the amortization of the associated discount on the convertible notes.
Results of Operations
Comparison of the Six Months Ended June 30, 2021 to the Six Months
Ended June 30, 2020
The following table sets forth
our historical operating results for the periods indicated:
For the Six Months Ended
June 30,
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(in thousands)
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2021
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2020
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$ Change
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% Change
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Revenues
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$
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1,389
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$
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573
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$
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816
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142
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%
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Cost of goods sold
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1,257
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478
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779
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163
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%
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Gross profit
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132
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95
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37
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39
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%
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Operating Expenses
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|
|
|
|
|
|
|
|
|
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Research and development
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3,630
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|
1,713
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1,917
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112
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%
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Sales and marketing
|
|
|
151
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|
|
|
77
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|
|
|
74
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|
|
|
96
|
%
|
General and administrative
|
|
|
9,369
|
|
|
|
1,924
|
|
|
|
7,445
|
|
|
|
387
|
%
|
Depreciation
|
|
|
380
|
|
|
|
148
|
|
|
|
232
|
|
|
|
157
|
%
|
Total Operating Expenses
|
|
|
13,530
|
|
|
|
3,862
|
|
|
|
9,668
|
|
|
|
250
|
%
|
Loss from Operations
|
|
|
(13,398
|
)
|
|
|
(3,767
|
)
|
|
|
(9,631
|
)
|
|
|
256
|
%
|
Other Income (Expenses)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(13
|
)
|
|
|
(1,319
|
)
|
|
|
1,306
|
|
|
|
99
|
%
|
Change in fair value of derivatives
|
|
|
4,964
|
|
|
|
—
|
|
|
|
4,964
|
|
|
|
100
|
%
|
Write-off of subscription receivable
|
|
|
(379
|
)
|
|
|
—
|
|
|
|
(379
|
)
|
|
|
100
|
%
|
Realized loss on debt extinguishment
|
|
|
(14,104
|
)
|
|
|
—
|
|
|
|
(14,104
|
)
|
|
|
100
|
%
|
Miscellaneous
|
|
|
(78
|
)
|
|
|
4
|
|
|
|
(82
|
)
|
|
|
205
|
%
|
Total Other Income (Expenses)
|
|
|
(9,610
|
)
|
|
|
(1,315
|
)
|
|
|
(8,295
|
)
|
|
|
631
|
%
|
Net Loss
|
|
$
|
(23,008
|
)
|
|
$
|
(5,082
|
)
|
|
$
|
(17,926
|
)
|
|
|
353
|
%
|
Revenues
Our total revenue increased
by $0.8 million or 142% from $0.6 million in the six months ended June 30, 2020 to $1.4 million in the six months ended June 30, 2021.
This increase was the result of an increase in the number of vehicles and powertrains delivered to two different customers. We increased
sales by selling three vehicles and six powertrains in the six months ended June 30, 2021 compared to five powertrains in the six months
ended June 30, 2020.
Cost of Goods Sold
Cost of goods sold increased
by $0.8 million or 163% from $0.5 million in the six months ended June 30, 2020 to $1.3 million in the six months ended June 30, 2021.
The increase in the cost of goods sold was directly related to the increased sales of our vehicles. We are continuously working to source
materials from more cost-effective sources.
Research and Development
Research and development expenses
increased by $1.9 million or 112% from $1.7 million in the six months ended June 30, 2020 to $3.6 million in the six months ended June
30, 2021. The increase was primarily due to the ongoing development of new battery designs and product offerings as well as further refinement
of our chassis design. These increased costs were incurred through the utilization of consultants and software licenses who were tasked
to assist company personnel in the design, development and testing of our next generation battery design and redesigning existing vehicle
designs to accommodate the dimensions and requirements of the new battery packs. We also began classifying the salaries of those individuals
responsible for research and development activities from general and administrative to research and development.
General and Administrative
General, and administrative
expenses increased by $7.4 million or 387% from $1.9 million in the six months ended June 30, 2020 to $9.4 million in the six months ended
June 30, 2021, primarily due to an increase in personnel including sales, legal and accounting personnel relating to the Business Combination.
We also increased our spend relating to consultants who assisted in the implementation of our new ERP system, financial processes, and
legal consultants who consulted on the Business Combination. We also increased our spend on the previously mentioned new ERP system and
our new headquarters.
Interest Expense
Interest expense decreased
$1.3 million or 99% from $1.3 million in the six months ended June 30, 2020 to $0.0 in the six months ended June 30, 2021. The interest
expense in prior year represents interest on the convertible notes which were converted in January 2021.
Change in Fair Value of Derivatives
The account represents the
revaluation of derivative instruments to the fair market at the end of each reporting period.
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 six months ended June 30, 2021. No similar transaction occurred during the six months ended June 30, 2021.
Realized Loss on Debt Extinguishment
This represents the loss on
the conversion of convertible debt into preferred shares during the six months ended June 30, 2021. No similar transaction occurred during
the six months ended June 30, 2020.
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.
The following table reconciles
net loss to EBITDA and Adjusted EBITDA for the six months ended June 30, 2021 and 2020, respectively:
|
|
Six Months Ended June 30,
|
|
(in thousands)
|
|
2021
|
|
|
2020
|
|
Net loss
|
|
$
|
(23,008
|
)
|
|
$
|
(5,082
|
)
|
Interest expense, net
|
|
|
13
|
|
|
|
1,319
|
|
Depreciation
|
|
|
380
|
|
|
|
148
|
|
EBITDA
|
|
$
|
(22,615
|
)
|
|
$
|
(3,615
|
)
|
Change in fair value of derivative instruments
|
|
|
(4,964
|
)
|
|
|
—
|
|
Realized loss on debt extinguishment
|
|
|
14,104
|
|
|
|
—
|
|
Stock based compensation
|
|
|
3
|
|
|
|
8
|
|
Adjusted EBITDA
|
|
$
|
(13,472
|
)
|
|
$
|
(3,607
|
)
|
Liquidity and Capital Resources
Prior to our Series A Financing
in December 2020, we had financed our operations primarily from the sales of convertible notes. 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 redeemable preferred stock. As of June 30, 2021, our principal sources of liquidity were our
cash and cash equivalents in the amount of $23.6 million.
As an early stage growth company,
the net losses we have incurred since inception are consistent with our strategy and budget. We will continue to incur net losses 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 offering. We have realized recurring losses from
operations and have cash outflows from operating activities that raise substantial doubt about our ability to continue as a going concern.
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.
As of the date of this Form
8-K filing, our existing cash resources, including capital raised in the Series A Financing and Business Combination, are sufficient to
support planned operations for at least the next 12 months. As a result, the Xos’ management believes that its current financial
resources are sufficient to continue operating activities for at least one year past the issuance date of the financial statements as
of and for the six months ended June 30, 2021.
Cash Flows Summary
The following table provides
a summary of cash flow data:
|
|
Six Months Ended June 30,
|
|
(in thousands)
|
|
2021
|
|
|
2020
|
|
Net cash used in operating activities
|
|
$
|
(20,153
|
)
|
|
$
|
(4,040
|
)
|
Net cash used in investing activities
|
|
|
(702
|
)
|
|
|
(143
|
)
|
Net cash provided by financing activities
|
|
|
34,113
|
|
|
|
13,036
|
|
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 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 $20.2
million for the six months ended June 30, 2021, primarily consisting of a net loss of $23.0 million, non-cash charges of $9.9 million,
$4.9 million additional inventory as our production ramps, $0.4 million increase in accounts receivable related to sales, and a $1.7 million
increase in current assets primarily an increase in prepaid inventory.
Net cash used in operating
activities was $4.0 million for the six months ended June 30, 2020, primarily consisting of a net loss of $3.6 million from normal operations
of the Company, $0.3 million increase in accounts receivable, $0.3 million decrease in inventory, $0.3 million increase in other assets
primarily related to prepaid inventory, $0.9 million increase in interest payable on convertible debt, and a $0.7 million decrease in
accounts payable.
Cash Flows from Financing 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. Net cash used in investing activities is expected to continue to expand.
Net cash used in investing
activities was $0.7 million for the six months ended June 30, 2021, primarily consisting of property and equipment additions.
Net cash used in investing
activities was $0.1 million for the six months ended June 30, 2020, primarily consisting of property and equipment additions.
Cash Flows from Financing Activities
Net cash provided by financing
activities was $34.2 million for the six months ended June 30, 2021, primarily consisting of the issuance of convertible preferred shares
in the amount of $31.8 million for cash in January and February 2021, and the collection of the outstanding subscription receivable in
the amount of $2.4 million.
Net cash provided by financing
activities was $13.0 million for the six months ended June 30, 2020, primarily consisting of the issuance of convertible notes payable.
Contractual Obligations and Commitments
We do not have any material
contractual obligations or other commitments as of June 30, 2021, other than those disclosed in the Company’s consolidated financial
statements included in this filing.
Off-Balance Sheet Arrangements
We do not have any off-balance
sheet arrangements, as defined in the rules and regulations of the SEC.
Critical Accounting Policies and Estimates
Our financial statements have
been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”)
which requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities as of the balance sheet date, as well as reported amounts of revenues and expenses during the reporting
periods. The areas with significant estimates and judgments include, among others, share-based compensation, the fair value of the Company’s
common and preferred stock, valuation of the convertible notes and the related embedded derivative, SAFE note and warrant liability on
Series A preferred stock. We base our estimates on historical experience and on various other assumptions believed to be reasonable, the
results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ
from those estimates, and such differences could be material to our financial statements.
There have been no material
changes to our critical accounting policies and estimates as described in the accompanying financial statements as of and for the six-months
ended June 30, 2021.
We believe that the accounting
policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant
areas involving management’s judgments and estimates.
While our significant accounting
policies are described in the notes to our financial statements (see Note 2 in the accompanying audited financial statements), we believe
that the following accounting policies require a greater degree of judgment and complexity. Accordingly, these are the policies we believe
are the most critical to aid in fully understanding and evaluating our financial condition and results of operations.
Share-Based Compensation
We account for share-based payments that involve
the issuance of shares of common stock to employees and nonemployees and meet the criteria for equity-classified awards as share-based
compensation expense based on the grant-date fair value of the award. Prior to the Business Combination we issued stock option awards
to employees and nonemployees. Post-Business Combination, we may issue both stock options and restricted stock units (“RSUs”)
to employees and nonemployees, including non-employee directors. Certain employees hired prior to the Business Combination were promised
options that will be granted as RSUs post-Business Combination when we have our Form S-8 on file with the SEC. As a result, we expect
the compensation expense relating to stock-based awards to increase in the succeeding quarters.
The fair value of the stock
options issued to employees and nonemployees was estimated at each grant date using the Black-Scholes model which requires the input of
the following subjective assumptions:
|
(a)
|
the length of time grantees will retain their vested awards
before exercising them for employees and the contractual term of the options for nonemployees (“expected term”);
|
|
(b)
|
The volatility of our common stock price over the expected
term;
|
|
(c)
|
the expected dividends rate; and
|
|
(d)
|
the risk-free interest rate over the award’s expected
term.
|
Warrant Liability on Convertible Preferred
Stock
Due to proximity of the expected
consummation of the Business Combination, the valuation of the warrant as of June 30, 2021 was determined using the probability weighted
expected return method (“PWERM”) framework, incorporating the weighting of the likely two scenarios, as described more fully
below:
|
●
|
Merger/public scenario: 75% probability of occurrence with per share value determined on a discounted
basis using post-merger equity value of existing Xos stockholders less expected proceeds from the exercise of the warrant.
|
|
●
|
Private scenario: 25% probability of occurrence with per share value determined based on equal
50-50 weighting of the (i) market approach (ie. average revenue multiples derived from our peer group under the guideline public company
method) and (ii) income approach (ie. utilizing the Company’s projections under the discounted cash flow method).
|
Recent Accounting Pronouncements
See Note 2 to our consolidated
financial statements included in this filing for more information about recent accounting pronouncements, the timing of their adoption,
and our assessment, to the extent we have made one, of their potential impact on our financial condition and our results of operations.
Internal Control Over Financial Reporting
In connection with our internal
controls over the financial reporting process we have implemented the below, to appropriately prevent or detect a material misstatement
of our annual or interim financial statements, on a timely basis.
|
●
|
The entire finance department was replaced and a new team was hired beginning in mid-2020. The department has been expanded since this time to continue to address and implement additional internal controls, and ensure the ability to have timely financial reporting.
|
|
●
|
We have recruited additional personnel, in addition to utilizing
third-party consultants and specialists, to supplement our internal resources.
|
|
●
|
We have expanded cross-functional involvement and input into
period end expense accruals, as well as implemented process improvements in both our IT and business cycle processes.
|
|
●
|
We have been and continue to design and implement additional
automation and integration in our financially significant systems, most recently with the implementation of our new enterprise resource
planning (ERP) system.
|
We plan to continue to assess
our internal controls and procedures and intend to take further action as necessary or appropriate to address matters we identify.
No material weaknesses were
identified in connection with the audit of our financial statements for the years ended December 31, 2020, and 2019.
Quantitative and Qualitative Disclosures About Market Risk
We are exposed to a variety
of market and other risks, including the effects of changes in interest rates, inflation, and foreign currency exchange rates, as 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. As
of June 30, 2021, we had cash and cash equivalents of $23.6 million which are not invested in interest-bearing money market accounts for
which the fair market value would be affected by changes in the general level of U.S. interest rates. Therefore, interest rates would
not have a material effect on the fair market value of our cash and cash equivalents.
Foreign Currency Risk
There was no material foreign
currency risk for the six months ended June 30, 2021 and 2020.
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 be able to fully offset these higher costs through price increases or mitigate
the impact through alternative solutions. Our inability to do so could harm our business, financial condition and results of operations.
Directors and Executive Officers
Information with respect to the Company’s
directors and executive officers after the Closing is set forth in the Proxy Statement/Prospectus in the sections entitled “Management
of New Xos Following the Business Combination” and “Executive Compensation” beginning on pages 212 and page
233, respectively, of the Proxy Statement/Prospectus, which are incorporated herein by reference.
Directors
Effective as of the Closing, in connection with
the Business Combination, the size of the board of directors of the Company (the “Board”) was set at six members. Each of
Gregory L. Summe, S. Sara Mathew, Jeffrey M. Moslow and Josef H. von Rickenbach resigned as directors of the Company effective as of the
Closing. Effective as of the Closing, Dakota Semler, Giordano Sordoni, Burt Jordan, S. Sara Mathew,
George Mattson and Ed Rapp were elected to serve as directors on the Board. Mr. Semler will serve as the Chairman of the Board,
and Mr. Mattson as the lead independent director.
Burt Jordan
and Ed Rapp were appointed to serve as Class I directors, with terms expiring at the Company’s 2022 annual meeting of stockholders;
George Mattson and Giordano Sordoni were appointed to serve as Class II directors, with terms
expiring at the Company’s 2023 annual meeting of stockholders; and S. Sara Mathew and Dakota
Semler were appointed to serve as Class III directors, with terms expiring at the Company’s 2024 annual meeting of stockholders.
Biographical information for these individuals is set forth in the Proxy Statement/Prospectus in the section entitled “Management
of New Xos Following the Business Combination—Executive Officers and Directors After the Business Combination” beginning
on page 212 of the Proxy Statement/Prospectus, which is incorporated herein by reference.
Independence of Directors
The Board has determined that each of the directors
of the Company other than Messrs. Semler and Sordoni qualify as independent directors, as defined under the listing rules of The Nasdaq
Stock Market LLC (the “Nasdaq listing rules”), and that the Board consists of a majority of “independent directors,”
as defined under the rules of the SEC and Nasdaq listing rules relating to director independence requirements.
Committees of the Board of Directors
Effective as of as of the Closing, the standing
committees of the Board consist of an audit committee (the “Audit Committee”), a compensation committee (the “Compensation
Committee”) and a nominating and corporate governance committee (the “Nominating and Corporate Governance Committee”).
Each of the committees reports to the Board.
On August 20, 2021, effective as of the Closing,
the Board appointed Ed Rapp, S. Sara Mathew, Mr. Mattson and Burt Jordan to serve on the
Audit Committee, with Mr. Rapp serving as chair of the Audit Committee. The Board also, effective
as of the Closing, appointed S. Sara Mathew, George Mattson, Burt Jordan and Mr. Rapp to
serve on the Compensation Committee, with Ms. Mathew serving as chair of the Compensation
Committee. The Board appointed George Mattson, S. Sara Mathew and Ed Rapp to serve on the
Nominating and Corporate Governance Committee, with Mr. Mattson serving as chair of the Nominating
and Corporate Governance Committee.
Executive Officers
Effective as of the Closing, in connection with
the Business Combination, the Board appointed the following individuals as the Company’s executive officers: Dakota Semler to serve
as Chief Executive Officer, Giordano Sordoni to serve as Chief Operating Officer, Robert Ferber to serve as Chief Technology Officer
and Kingsley Afemikhe to serve as Chief Financial Officer. Effective as of the Closing, George N.
Mattson and Gregory L. Summe resigned as Co-Chairmen, and Patrick T. Ford resigned as Chief Financial Officer and Secretary. The
biographical information for the new executive officers set forth in the Proxy Statement/Prospectus in the section entitled “Management
of New Xos Following the Business Combination” beginning on page 212 of the Proxy Statement/Prospectus, is incorporated herein
by reference.
Director Compensation
On August 26, 2021, the Board adopted an amended and restated non-director
employee compensation policy. Pursuant to this policy, each member of the Board who is not an employee of the Company receives the following
compensation for his or her service as a member of the Board:
|
●
|
For directors that join the Board before December 31, 2021, an initial equity
grant equal to $270,000, which vests ratably over a three-year period, with one-third vesting on each anniversary of the grant date, subject
to the Board member’s continued service on the Board; and
|
|
●
|
An annual equity grant equal to $200,000, which fully vests one year following the date of grant, subject to the Board member’s continued service on the Board.
|
The lead independent director will receive a cash
retainer of $25,000 for his or her service in that role. The chairs of the audit committee, compensation committee and nominating and
corporate governance committee will receive cash retainers of $20,000, $15,000 and $10,000, respectively, for his or her respective committee
service.
Executive Compensation
The Company intends to enter into individual amended
and restated employment agreements with Dakota Semler, Giordano Sordoni, Robert Ferber and Kingsley Afemikhe, which will supersede their
existing employment agreements. Details of the employment agreements will be filed and descriptions thereof shall be included when filed.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information known
to the Company regarding the beneficial ownership of the Common Stock as of the Closing Date, after giving effect to the Closing, by:
|
●
|
each person who is known by the Company to be the beneficial owner of more
than 5% of the outstanding shares of the Common Stock;
|
|
●
|
each current named executive officer and director of the Company; and
|
|
●
|
all current executive officers and directors of the Company, as a group.
|
Beneficial ownership is determined according to
the rules of the SEC, which generally provide that a person has beneficial ownership of a security if he, she or it possesses sole or
shared voting or investment power over that security, including options and warrants that are currently exercisable or exercisable within
60 days.
The beneficial ownership percentages set forth
in the table below are based on 162,184,621 shares of Common Stock issued and outstanding as of the Closing Date and do not take into
account the issuance of any shares of Common Stock upon the exercise of warrants, each exercisable for one share of Common Stock at a
price of $11.50 per share (the “Warrants”) to purchase 18,833,334 shares of Common Stock, or the exercise of options to purchase
1,039,947 shares of Common Stock, in each case subject to any applicable vesting conditions. Unless otherwise noted in the footnotes to
the following table, and subject to applicable community property laws, the persons and entities named in the table have sole voting and
investment power with respect to their beneficially owned Common Stock.
Name and Address of Beneficial Owner(1)
|
|
Number of Shares of
Common Stock
Beneficially Owned
|
|
|
Percentage of
Outstanding
Common Stock
|
|
Directors and Named Executive Officers:
|
|
|
|
|
|
|
Dakota Semler(2)
|
|
|
57,132,178
|
|
|
|
35.2
|
%
|
Giordano Sordoni
|
|
|
23,253,816
|
|
|
|
14.3
|
%
|
Robert Ferber(3)
|
|
|
611,386
|
|
|
|
*
|
|
Kingsley Afemikhe(4)
|
|
|
301,717
|
|
|
|
*
|
|
Burt Jordan
|
|
|
—
|
|
|
|
*
|
|
S. Sara Mathew
|
|
|
—
|
|
|
|
*
|
|
George N. Mattson(5)
|
|
|
9,375,000
|
|
|
|
5.8
|
%
|
Ed Rapp(6)
|
|
|
230,169
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
All Directors and Executive Officers of the Company as a Group (eight individuals)
|
|
|
90,904,267
|
|
|
|
56.0
|
%
|
|
|
|
|
|
|
|
|
|
Five Percent Holders:
|
|
|
|
|
|
|
|
|
Aljomaih Automotive Co.(7)
|
|
|
19,301,251
|
|
|
|
11.9
|
%
|
Emerald Green Trust(8)
|
|
|
53,745,903
|
|
|
|
33.1
|
%
|
NextGen Sponsor LLC(5)
|
|
|
9,375,000
|
|
|
|
5.8
|
%
|
(1)
|
Unless otherwise noted, the business address of those listed in the table above is 3550 Tyburn Street, Suite 100, Los Angeles, California
90065.
|
(1)
|
Unless otherwise noted, the business address of those listed in the table above is 3550 Tyburn Street, Suite 100, Los Angeles, California
90065.
|
(2)
|
Consists of (i) 2,884,155 shares of Common Stock held directly by Mr.
Semler, (ii) 53,745,903 shares of Common Stock held by Emerald Green Trust and (iii) 502,120 shares of Common Stock held by GenFleet,
LLC. Mr. Semler is deemed to beneficially own securities held by Emerald Green Trust and GenFleet, LLC by virtue of his shared control
over such entities.
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(3)
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Consists of (i) 427,971shares of Common Stock held by Mr. Ferber and (ii) 183,415 shares of Common Stock issuable upon the exercise
of options within 60 days of August 20, 2021.
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(4)
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Consists of 258,615 shares of Common Stock and 43,103 shares of Common Stock issuable upon the exercise of options within 60 days
of August 20, 2021.
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(5)
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Mr. Mattson is deemed to beneficially own securities held by NextGen
Sponsor by virtue of his shared control over NextGen Sponsor. The business address of Mr. Mattson and NextGen Sponsor is c/o NextGen Acquisition
Corporation, 2255 Glades Road, suite 324A, Baca Raton, FL 33431 and post-Business Combination is 3550 Tyburn Street, Suite 100, Los Angeles,
CA 90065.
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(6)
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Consists of 117,647 shares of Common Stock held by Edward Joseph Rapp TTEE U/A DTD 02/07/2005.
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(7)
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The shares of Common Stock reported herein are directly owned by Aljomaih
Automotive Co. (“Aljomaih Automotive”). Aljomaih Automotive is wholly owned by Aljomaih Holding Co. (“Aljomaih”).
The board of directors of Aljomaih has the power to dispose of and the power to vote the shares of Common Stock beneficially owned by
Aljomaih Automotive. Mohammed Al-Abdullah Aljomaih, Mohammed Abdulaziz Aljomaih, Abdulrahman Abdulaziz Aljomaih, Hamad Abdulaziz Aljomaih
are each a shareholder and a director of Aljomaih and may be deemed to beneficially own securities held by Aljomaih Automotive. The business
address of the reporting person is P.O Box 224, Dammam Postal Code 31411, Saudi Arabia.
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(8)
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Mr. Semler is deemed to beneficially own securities held by Emerald
Green Trust by virtue of his shared control over Emerald Green Trust and thus such securities are included above for Mr. Semler’s
ownership. The business address of the reporting person is 32111 Mulholland Hwy, Malibu, CA 90265.
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Certain Relationships and Related Transactions
The certain relationships and related party transactions
of the Company are described in the Proxy Statement/Prospectus in the section entitled “Certain Relationships and Related Party
Transactions” beginning on page 241 of the Proxy Statement/Prospectus, which is incorporated herein by reference.
Legal Proceedings
Information about legal proceedings is set forth
in the Proxy Statement/Prospectus in the section “Information About Xos—Legal Proceedings” on page 211 of the
Proxy Statement/Prospectus, which is incorporated herein by reference.
Market Price of and Dividends on the Registrant’s Common Equity
and Related Stockholder Matters
Market Information and Holders
NextGen Class A Ordinary Shares and the Warrants
were historically quoted on The Nasdaq Capital Market under the symbols “NGAC” and “NGACW,” respectively. On August
20, 2021, the Common Stock and Warrants began trading on The Nasdaq Capital Market under the new trading symbols “XOS” and
“XOSWW,” respectively.
As of the Closing Date and following the completion
of the Business Combination, the Company had 162,184,621 shares of the Common Stock issued and outstanding held of record by 132 holders,
and 18,833,298 Warrants outstanding held of record by 2 holders.
On August 20, 2021, in connection with the Closing,
all of the units previously issued by NextGen separated into their component parts of one share of Common Stock and one-third of one Warrant
to purchase one share of Common Stock, and the units ceased trading on The Nasdaq Capital Market.
Dividends
The Company has not paid any cash dividends on
the Common Stock to date. The Company may retain future earnings, if any, for future operations, expansion and debt repayment and has
no current plans to pay cash dividends for the foreseeable future. Any decision to declare and pay dividends in the future will be made
at the discretion of the Board and will depend on, among other things, the Company’s results of operations, financial condition,
cash requirements, contractual restrictions and other factors that the Board may deem relevant. In addition, the Company’s ability
to pay dividends may be limited by covenants of any existing and future outstanding indebtedness the Company or its subsidiaries incur.
The Company does not anticipate declaring any cash dividends to holders of the Common Stock in the foreseeable future.
Recent Sales of Unregistered Securities
Reference is made to the disclosure set forth below
under Item 3.02 of this Current Report on Form 8-K concerning the issuance and sale by the Company of certain unregistered securities,
which is incorporated herein by reference.
Description of Registrant’s Securities to be Registered
Common Stock
A description of the Common Stock is included in
the Proxy Statement/Prospectus in the section entitled “Description of New Xos’ Securities—New Xos Common Stock”
beginning on page 248 of the Proxy Statement/Prospectus, which is incorporated herein by reference.
Warrants
A description of the Company’s Warrants is
included in the Proxy Statement/Prospectus in the section entitled “Description of New Xos’ Securities—Redeemable
Warrants” beginning on page 249 of the Proxy Statement/Prospectus, which is incorporated herein by reference.
Indemnification of Directors and Officers
Information about indemnification of the Company’s
directors and officers is set forth in the Proxy Statement/Prospectus in the section entitled “Management After the Business
Combination—Limitation on Liability and Indemnification of Directors and Officers” beginning on page 218 of the Proxy
Statement/Prospectus, which is incorporated herein by reference. The disclosure set forth in Item 1.01 of this Current Report on Form
8-K under the section entitled “Indemnification Agreements” is incorporated by reference into this Item 2.01.
Financial Statements and Supplementary Data
The information set forth in Item 9.01 of this
Current Report on Form 8-K is incorporated herein by reference.
Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Reference is made to the disclosure set forth under
Item 4.01 of this Report relating to the changes in certifying accountant.