10-K/A: Xos Inc. Files Amendment to 10-K, Addressing Omitted Information and Executive Certifications

Sentiment:

10-K/A Amendment 18 April 2025 4:28 PM

Xos Inc. files an amendment to its annual report on Form 10-K to include previously omitted information regarding directors, executive officers, compensation, and related matters.

Capital raiseOn August 9, 2022, we entered into a Note Purchase Agreement with Aljomaih Automotive Co. (Aljomaih) under which we agreed to sell and issue to Aljomaih a convertible promissory note in the principal amount of $20.0 million.The Aljomaih Note bears interest at a rate of 10.0% per annum, payable at maturity in shares of our Common Stock (Interest Shares), unless earlier converted or paid.The conversion price for the Aljomaih Note was initially equal to $71.451 per share, as adjusted for our Reverse Stock Split that occurred on December 6, 2023, subject to adjustment in some events pursuant to the terms of the Aljomaih Note.We will have the right, in our sole discretion and exercisable at our election by sending notice of such exercise to Aljomaih, to irrevocably fix the method of settlement that will apply to all conversions of Aljomaih Notes.The Aljomaih Note may not be converted into shares of our Common Stock and Interest Shares may not be issued to the extent (i) such conversion or issuance would result in the investor having beneficial ownership of more than 19.99% of the then outstanding shares of our Common Stock or (ii) the aggregate number of shares issued would exceed 1,106,644 shares of our Common Stock.The Aljomaih Note also includes an optional prepayment feature that provides us, on or after August 11, 2024, or as otherwise agreed to between us and Aljomaih in writing, the right to prepay the outstanding principal and accrued and unpaid interest, upon written notice not less than five trading days prior to exercise of the option, in full or in part and without penalty.We have also agreed to grant Aljomaih a right to designate one individual for nomination (the Designated Director) to our Board, subject to the approval of us and our Board and satisfaction of certain conditions.In addition, we have agreed to give Aljomaih a right of first offer (Right of First Offer) with respect to any future distribution of products or services offered by us in Cooperation Council for the Arab States of the Gulf (Saudi Arabia, Bahrain, Kuwait, United Arab Emirates, Qatar and Oman), Jordan, Iraq, Syria, Lebanon, Egypt and Yemen.

Worse than expectedThe company's 2024 results fell just short of the minimum thresholds for payment under the Operating Cash Flow and Gross Margin performance criteria of the 2024 Bonus Plan.

Summary

Xos, Inc. filed Amendment No. 1 to its Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
The amendment includes information omitted from Part III, Items 10, 11, 12, 13, and 14 of the original Form 10-K.
It also removes a reference to the incorporation by reference of portions of the proxy statement into Part III of the original Form 10-K.
The filing includes new certifications from the principal executive officer and principal financial officer under Section 302 of the Sarbanes-Oxley Act of 2002.
The amendment does not include financial statements or amend disclosures related to Items 307 and 308 of Regulation S-K.
As of March 26, 2025, there were 8,102,993 shares of the registrant's common stock outstanding.
The aggregate market value of the common stock held by non-affiliates of the registrant on June 30, 2024 was approximately $28.8 million.
The Board of Directors met 13 times during fiscal year 2024 and acted by unanimous written consent in lieu of a meeting on four occasions.
The company has three standing committees: an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee.
The Audit Committee met five times and acted by unanimous written consent on six occasions during fiscal year 2024.
The Compensation Committee met three times and acted by unanimous written consent on six occasions during fiscal year 2024.
The Nominating and Corporate Governance Committee met one time and acted by unanimous written consent on three occasions during fiscal year 2024.
The company's named executive officers for the year ended December 31, 2024, were Dakota Semler, Giordano Sordoni, and Christen Romero.
The company's independent registered public accounting firm for the fiscal years ended December 31, 2024 and 2023 was Grant Thornton LLP.
Audit fees billed by Grant Thornton LLP were $687,000 for the fiscal year ended December 31, 2024, and $487,000 for the fiscal year ended December 31, 2023.

Sentiment

Score: 5

Explanation: The document is primarily factual, providing required disclosures. The salary reductions and missed bonus targets are negative signals, but the overall tone is neutral.

Positives

The company has a majority independent board, ensuring strong corporate governance.
The compensation program is designed to align executive incentives with stockholder value.
The company has established an annual cash bonus program with performance goals to tie executive bonuses to company performance.
The company has a clawback policy in place to recoup incentive compensation in certain circumstances.
The company has a Related Person Transactions Policy to ensure fair dealings.

Negatives

The company's Chief Executive Officer and Chief Operating Officer accepted temporary reductions in their annual base salaries of approximately 50%, and the then General Counsel and Secretary accepted a temporary reduction in his annual base salary of approximately 20%, in each case effective as of October 28, 2024.
The company's 2024 results fell just short of the minimum thresholds for payment under the Operating Cash Flow and Gross Margin performance criteria of the 2024 Bonus Plan.
Several Section 16(a) reports were filed late by executive officers and directors.
The company's independent directors attended 69% and 68% of such meetings, respectively, which is below the 75% threshold.

Risks

The classification of the Board may delay or prevent changes in control or management.
The company's success depends on attracting, retaining, incentivizing, and rewarding qualified executives.
The company's performance is subject to unforeseen challenges.
The company's ability to meet its financial obligations depends on evolving business and economic conditions.
The company's future success depends on its ability to comply with insider trading laws, rules, and regulations.

Future Outlook

The timing of any restoration of such base salaries for those who remain employed will be based on evolving business and economic conditions and will be made in consultation with, and pursuant to the consent of, the Board of Directors.

Industry Context

The document provides insight into the corporate governance, executive compensation, and related party transactions of a publicly traded company in the electric vehicle industry. This information is relevant for investors and stakeholders to assess the company's management practices and financial health.

Comparison to Industry Standards

The board composition, with a majority of independent directors, aligns with best practices in corporate governance, similar to companies like Tesla (TSLA) and Rivian (RIVN).
Executive compensation structures, including base salary, stock awards, and bonus plans, are common in the automotive and technology industries, comparable to companies like Ford (F) and General Motors (GM).
The presence of an audit committee, compensation committee, and nominating and corporate governance committee is standard practice for publicly traded companies, as seen in companies like Workhorse Group (WKHS) and Nikola Corporation (NKLA).
Related party transaction policies are also common among public companies to ensure transparency and prevent conflicts of interest, similar to policies at Oshkosh Corporation (OSK).

Related Party Transactions

During the year ended December 31, 2024, we sold two Hubs to Xcel Energy in the ordinary course of business for an aggregate of approximately $0.5 million.
On August 9, 2022, we entered into a Note Purchase Agreement with Aljomaih Automotive Co. (Aljomaih) under which we agreed to sell and issue to Aljomaih a convertible promissory note in the principal amount of $20.0 million.

Stakeholder Impact

Shareholders are impacted by the company's corporate governance practices, executive compensation, and related party transactions.
Employees are impacted by the company's compensation policies and potential changes in executive leadership.
Customers and suppliers may be impacted by the company's related party transactions and overall financial health.
Creditors are impacted by the company's debt obligations and potential capital raises.

Next Steps

Election of directors at the next annual meeting of stockholders.
Continued monitoring of executive compensation and corporate governance practices.
Potential restoration of executive salaries based on business and economic conditions.
Potential conversion or prepayment of the Aljomaih Note.

Key Dates

Date	Description
September 6, 2016	Dakota Semler entered into an offer letter agreement with Legacy Xos to serve as its Chief Executive Officer.
September 7, 2016	Giordano Sordoni entered into an offer letter agreement with Legacy Xos to serve as Director of Business Development.
October 6, 2020	Letter Agreement among NextGen, NextGen Sponsor and the Registrants officers and directors.
December 6, 2020	Christen Romero entered into an offer letter agreement with Legacy Xos to serve as Senior Commercial Counsel.
August 20, 2021	The Business Combination between NextGen and Legacy Xos was consummated.
October 1, 2021	Commencement of annual cash retainer for lead independent director.
December 2021	Alice K. Jackson joined the Board.
January 5, 2022	Liana Pogosyan Offer Letter with Xos, Inc.
January 2022	Compensation Committee approved a program pursuant to which non-employee directors may elect to receive their annual cash retainers and any other cash compensation they become entitled to receive for serving on our Board in the form of fully vested restricted stock unit awards rather than in cash by executing a form of election and timely delivering the same to the Company.
March 23, 2022	Standby Equity Purchase Agreement, dated March 23, 2022 between Xos, Inc. and YA II PN, LTD
August 9, 2022	Note Purchase Agreement, dated as of August 9, 2022, by and between Xos, Inc. and Aljomaih Automotive Co.
August 9, 2022	Securities Purchase Agreement, dated as of August 9, 2022, by and between Xos, Inc. and YA II PN, Ltd.
August 9, 2022	Registration Rights Agreement, dated as of August 9, 2022, by and between Xos, Inc. and YA II PN, Ltd.
August 11, 2022	Our Board adopted the Xos, Inc. Third Amended and Restated Non-Employee Director Compensation Policy (the Director Compensation Policy).
October 2022	Stuart Bernstein joined the Board.
September 28, 2022	We and Aljomaih agreed to amend and restate the Original Note to the Aljomaih Note to, among other things, adjust the calculation of the shares of our Common Stock issuable as interest, as described further below.
May 2023	Ms. Pogosyan has served as our Vice President of Finance and Acting Chief Financial Officer since May 2023, and previously served as our Controller from January 2022 to May 2023.
June 22, 2023	First Amendment to Standby Equity Purchase Agreement, dated June 22, 2023, between Xos, Inc. and YA II PN, Ltd.
June 22, 2023	Side Letter to the Securities Purchase Agreement, dated June 22, 2023, between Xos, Inc. and YA II PN, Ltd.
September 2023	Mr. Mattson has served as the Chief Executive Officer and director of Wheels Up Experience Inc. (NYSE: UP), a leading provider of on-demand private aviation in the U.S., since September 2023.
November 21, 2023	Amendment to Offer Letter between Liana Pogosyan and Xos, Inc., dated November 21, 2023
November 21, 2023	Amendment to Offer Letter between Christen Romero and Xos, Inc., dated November 21, 2023
November 2023	Our Board adopted our Incentive Compensation Recoupment Policy, which is intended to comply with the final clawback rules adopted by the SEC pursuant to Section 10D and Rule 10D-1 of the Exchange Act and the related Nasdaq listing requirements.
December 6, 2023	Certificate of Amendment to Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 of the Companys Current Report on Form 8-K filed on December 6, 2023).
January 11, 2024	Arrangement Agreement by and between Xos, Inc. and ElectraMeccanica Vehicles Corp., dated as of January 11, 2024
January 11, 2024	Form of Voting Support and Lock-Up Agreement, dated as of January 11, 2024, by and between Electrameccanica Vehicles Corp. and certain holders of shares of common stock of Xos, Inc.
January 11, 2024	Form of Voting Support and Lock-Up Agreement, dated as of January 11, 2024, by and between Xos, Inc. and certain holders of shares of common stock of ElectraMeccanica Vehicles Corp.
January 31, 2024	Amendment Agreement by and between Xos, Inc. and ElectraMeccanica Vehicles Corp., dated as of January 31, 2024
March 2024	Luisa Ingargiola, Dietmar Ostermann and Michael Richardson joined the Board.
March 25, 2024	Burt Jordan resigned from our Board.
May 13, 2024	Ms. Ingargiola was appointed to the Audit Committee on May 13, 2024.
May 13, 2024	Mr. Ostermann was appointed to the Compensation Committee on May 13, 2024.
May 13, 2024	Mr. Richardson was appointed to the Nominating and Corporate Governance Committee on May 13, 2024.
July 10, 2024	Pursuant to the Director Compensation Policy, Mr. Mattson, Mr. Bernstein, Ms. Ingargiola, Ms. Jackson, Mr. Ostermann, Mr. Rapp and Mr. Richardson were each granted 28,694 RSUs as an Annual Grant.
October 28, 2024	Effective October 28, 2024, each of Messrs. Semler and Sordonis base salary rate was reduced by 50% and Mr. Romeros base salary rate was reduced by 20%.
December 31, 2024	End of fiscal year.
January 10, 2025	Mr. Romero resigned as General Counsel and Secretary of Xos, Inc. effective January 10, 2025.
January 1, 2025	On January 1, 2025, the number of shares available for issuance under the ESPP automatically increased by 120,694 shares.
January 1, 2025	Subsequent to December 31, 2024, an additional 402,314 shares of Common Stock became available for issuance under the 2021 Plan as of January 1, 2025 pursuant to an automatic increase.
April 2025	In April 2025, Ms. Jackson began serving as VP Grid Modeling Initiative of Breakthrough Energy.
April 3, 2025	Effective April 3, 2025, Mr. Mattson stepped down as chair of the Compensation Committee and the Board appointed Mr. Ostermann as the new chair.
March 13, 2025	On March 13, 2025, the Compensation Committee of our Board determined to award discretionary bonuses to participants in the 2024 Bonus Plan who remain employed by the Company at the time of payment.
March 26, 2025	As of March 26, 2025, there were 8,102,993 shares of the registrant's common stock outstanding.
March 31, 2025	The following table sets forth the name, age and position of each of our executive officers and directors as of March 31, 2025
April 18, 2025	Date of signatures on the report.

Keywords

executive compensation, corporate governance, board of directors, financial reporting, audit committee, proxy statement, Form 10-K, Xos Inc.

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