UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM ~~10-Q~~10-Q/A

Amendment No. 1


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the quarterly period ended ~~March 31, 2023~~September 30, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the transition period from ________________ to ________________

Commission File Number: 001-39395

Faraday Future Intelligent Electric Inc.

(Exact name of registrant as specified in its charter)


Delaware						84-4720320
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

18455 S. Figueroa Street, Gardena, CA						90248
(Address of Principal Executive Offices)						(Zip Code)

(424) 276-7616

Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock, par value $0.0001 per share	FFIE	The Nasdaq Stock Market LLC
Redeemable warrants, exercisable for shares of Class A common stock at an exercise price of $11.50 per share	FFIEW	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The registrant had outstanding ~~1,076,721,342~~386,256,244 shares of Class A common stock and 64,000,588 shares of Class B common stock as of ~~May 5, 2023.~~November 17, 2022.

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EXPLANATORY NOTE

Faraday Future Intelligent Electric Inc. (the “Company” or “FF”) is filing this Amendment No. 1 to its Quarterly Report on Form 10-Q (this “Form 10-Q/A”) for the period ended September 30, 2022, originally filed with the Securities and Exchange Commission (the “SEC”) on November 21, 2022 (the “Original Filing”), to restate certain information in the Company's previously issued consolidated financial statements and related disclosures for the period ended September 30, 2022. Concurrent with the filing of this Form 10-Q/A, the Company will be filing an amended Form 10-K for the year ended December 31, 2022 (originally filed with the SEC on March 9, 2023) and an amended Form 10-Q for the period ended March 31, 2023 (originally filed with the SEC on May 12, 2023).

Restatement

On July 11, 2023, the Company announced thatthe Audit Committee of the Company’s Board of Directors determined, based on the recommendation of management that the Company’s previously issued financial statements included in the 2022 Form 10-K for the period ended December 31, 2022 and Quarterly Reports on Form 10-Q for the periods ended March 31, 2023 and September 30, 2022 (the “Affected Periods”) should no longer be relied upon due to errors identified in the Affected Periods primarily due to an error stemming from a non-cash and non-operating item related to the change in the fair value upon conversion of the notes payable issued under the Company’s debt arrangements. The Company has determined that it is appropriate to correct the misstatements in the Company’s previously issued financial statements and related disclosures by amending the Original Filing, its Annual Report on Form 10-K for the year ended December 31, 2022, and its Quarterly Report on Form 10-Q for the period ended March 31, 2023.

Internal Control Considerations

In the Original Filing in Controls and Procedures within Part I, Item 4, the Company previously identified and reported eight material weaknesses. In connection with this restatement, management has concluded that the errors identified in the Affected Periods were not prevented or detected as a result of certain of the eight material weaknesses that were previously identified and reported, including specifically that the Company did not design and maintain effective controls to address the identification of and accounting for certain non-routine, unusual or complex transactions, including the proper application of U.S. GAAP to such transactions.

For a more detailed discussion of the correction of these accounting errors, refer to Note 2, Restatement, included in Part I, Item 1, Notes to Condensed Consolidated Financial Statements, of this Form 10-Q/A. For more information about the related material weaknesses in internal control over financial reporting and the Company’s remedial actions, refer to Controls and Procedures in Part I, Item 4 of this Form 10-Q/A.

Amendment to Form 10-Q

In accordance with Rule 12b-15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the following Items of the Original Filing have been amended and restated and the complete text of those is set out in this Form 10-Q/A:

•Part I, Item 1, Financial Statements (unaudited)

•Part I, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations

•Part I, Item 4, Controls and Procedures

•Part II, Item 1A, Risk Factors

Note that the only changes to the Original Filing are those related to the matters described herein and only in the Items listed above. Item 1A “Risk Factors” has been updated to reflect risks as of the date of this amended filing. Except as described above, no changes have been made to the Original Filing, and this Form 10-Q/A does not modify, amend or update any of the other financial information or other information contained in the Original Filing. In addition, in accordance with SEC rules, this Form 10-Q/A includes updated certifications from our Chief Executive Officer and Chief Financial Officer as Exhibits 31.1, 31.2 and 32. Otherwise, the information contained in this Form 10-Q/A is as of the date of the Original Filing and does not reflect any information or events occurring after the date of the Original Filing. Such subsequent information or events include, among others, the information and events described in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, which is being filed concurrently with this Form 10-Q/A, and the information and events described in our Current Reports on Form 8-K filed subsequent to the date of the Original Filing. For a description of such subsequent information and events, please read our reports filed pursuant to the Exchange Act subsequent to the date of the Original Filing, which update and supersede certain information contained in the Original Filing and this Form 10-Q/A.

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INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


		Pages
FARADAY FUTURE INTELLIGENT ELECTRIC INC.

Part I Financial Information
Item 1.	Condensed Consolidated Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets as of ~~March 31, 2023~~September 30, 2022 and December 31, ~~2022~~2021	3
	Condensed Consolidated Statements of Operations and Comprehensive ~~Income (~~Loss ) for the Three and Nine Months Ended ~~March 31, 2023~~September 30, 2022 and ~~2022~~2021	4
	Condensed Consolidated Statements of Commitment to Issue Class A Common Stock and Stockholders’ Equity (Deficit) for the Three and Nine Months Ended ~~March 31, 2023~~September 30, 2022 and ~~2022~~2021	5
	Condensed Consolidated Statements of Cash Flows for the ~~Three~~Nine Months Ended ~~March 31, 2023~~September 30, 2022 and ~~2022~~2021	79
	Notes to the Condensed Consolidated Financial Statements	911
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1941
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4263
Item 4.	Controls and Procedures	4263

Part II Other Information
Item 1.	Legal Proceedings	4767
Item 1A.	Risk Factors	~~Risk Factors~~	4767
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5667
Item 3.	Defaults Upon Senior Securities	5667
Item 4.	Mine Safety Disclosures	5667
Item 5.	Other Information	5667
Item 6.	Exhibits	5768
Signatures		5870

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Part I - Financial Information

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Faraday Future Intelligent Electric Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

(Unaudited)
March 31, 2023 December 31, 2022
Assets
Current assets
Cash $ 31,769 $ 16,968
Restricted cash 1,505 1,546
Deposits 55,405 26,804
Other current assets 14,717 21,087
Total current assets 103,396 66,405
Property and equipment, net 446,524 417,803
Operating lease right-of-use assets 18,911 19,588
Other non-current assets 6,458 6,492
Total assets $ 575,289 $ 510,288
Liabilities and stockholders’ equity
Current liabilities
Accounts payable $ 76,926 $ 87,376
Accrued expenses and other current liabilities 66,980 65,709
Bridge Warrants 28,521 95,130
Accrued interest 2,505 1,864
Related party accrued interest 140 —
Operating lease liabilities, current portion 2,609 2,538
Finance lease liabilities, current portion 1,390 1,364
Related party notes payable 8,643 8,406
Notes payable, current portion 5,159 5,097
Total current liabilities 192,873 267,484
Finance lease liabilities, less current portion 6,209 6,570
Operating lease liabilities, less current portion 17,398 18,044
Other liabilities 9,758 9,429
Notes payable, less current portion 92,665 26,008
Total liabilities 318,903 327,535
Commitments and contingencies (Note 11)
Stockholders’ equity
Class A Common Stock, $0.0001 par value; 1,690,000,000 and 815,000,000 shares authorized; 838,872,039 and 563,346,216 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively 82 56
Class B Common Stock, $0.0001 par value; 75,000,000 shares authorized; 64,000,588 shares issued and outstanding as of March 31, 2023 and December 31, 2022 6 6
Additional paid-in capital 3,723,446 3,655,771
Accumulated other comprehensive gain 2,950 3,505
Accumulated deficit (3,470,098) (3,476,585)
Total stockholders’ equity 256,386 182,753
Total liabilities and stockholders’ equity $ 575,289 $ 510,288


	September 30, 2022		December 31, 2021
	As Restated

Assets
Current assets
Cash	$	31,766	$	505,091
Restricted cash	2,162		25,386
Deposits	44,530		63,370
Other current assets	23,759		13,410
Total current assets	102,217		607,257
Property and equipment, net	411,657		293,135
Right of use assets	20,202		—
Other non-current assets	6,608		7,040
Total assets	$	540,684	$	907,432
Liabilities and stockholders’ equity
Current liabilities
Accounts payable	65,239		37,773
Accrued payroll and benefits	31,124		21,752
Accrued expenses and other current liabilities	46,104		68,760
Related party accrued interest	12,760		11,231
Accrued interest	123		8,263
Operating lease liabilities, current portion	2,487		—
Finance lease liabilities, current portion	1,807		—
Related party notes payable	12,253		13,655
Notes payable, current portion	5,008		132,372
Total current liabilities	176,905		293,806
Operating lease liabilities, less current portion	18,640		—
Finance lease liabilities, less current portion	6,917		7,570
Other liabilities, less current portion	3,531		3,720
Notes payable, less current portion	46,950		34,682
Total liabilities	252,943		339,778
Commitments and contingencies (Note 12)
Stockholders’ equity
Class A Common Stock, $0.0001 par value; 750,000,000 shares authorized; 345,794,368 and 168,693,323 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively	31		17
Class B Common Stock, $0.0001 par value; 75,000,000 shares authorized; 64,000,588 and no shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively	6		—
Additional paid-in capital	3,620,281		3,482,226
Accumulated other comprehensive gain (loss)	6,603		(6,945)
Accumulated deficit	(3,339,180)		(2,907,644)
Total stockholders’ equity	287,741		567,654
Total liabilities and stockholders’ equity	$	540,684	$	907,432

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

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Faraday Future Intelligent Electric Inc.

Condensed Consolidated Statements of Operations and Comprehensive ~~Income (Loss)~~Loss

(in thousands, except share and per share )data)

(Unaudited)


									Three Months Ended September 30,				Nine Months Ended September 30,
									2022		2021		2022		2021
		Three Months Ended March 31,			As Restated						As Restated
			2023			2022
Operating expenses	Operating expenses							Operating expenses
Research and development	Research and development		$	46,160		$	114,935	Research and development	$	47,582	$	79,757	$	259,741	$	94,506
Sales and marketing	Sales and marketing		5,585			6,186		Sales and marketing	3,823		6,832		16,207		11,099
General and administrative	General and administrative		27,584			27,880		General and administrative	28,551		36,725		89,069		64,148
Loss on disposal of property and equipment	Loss on disposal of property and equipment		3,698			—		Loss on disposal of property and equipment	—		62,342		1,407		62,987
Total operating expenses	Total operating expenses		83,027			149,001		Total operating expenses	79,956		185,656		366,424		232,740

Loss from operations	Loss from operations		(83,027)			(149,001)		Loss from operations	(79,956)		(185,656)		(366,424)		(232,740)
Change in fair value measurements	Change in fair value measurements		94,917			1,186		Change in fair value measurements	(1,764)		(22,747)		4,580		(60,394)
Loss on settlement of notes payable			(3,021)			—
Interest expense	Interest expense		(4,651)			(3,746)		Interest expense	(245)		(296)		(5,119)		(26,550)
Related party interest expense	Related party interest expense		(140)			(622)		Related party interest expense	(996)		(1,597)		(2,931)		(15,765)
Other income (expense), net			2,409			(915)
Income (loss) before income taxes			6,487			(153,098)
Other (expense) income, net								Other (expense) income, net	(6,457)		1,117		(14,307)		(718)
Loss on extinguishment or settlement of related party notes payable, notes payable and vendor payables in trust, net								Loss on extinguishment or settlement of related party notes payable, notes payable and vendor payables in trust, net	(30,454)		(94,727)		(30,454)		(96,036)
Loss before income taxes								Loss before income taxes	(119,872)		(303,906)		(414,655)		(432,203)
Income tax provision	Income tax provision		—			—		Income tax provision	—		—		(9)		(3)
Net income (loss)			$	6,487		$	(153,098)
Net loss								Net loss	$	(119,872)	$	(303,906)	$	(414,664)	$	(432,206)

Per share information:	Per share information:							Per share information:
Net income (loss) per share of Common Stock attributable to common stockholders:
Basic			$	0.01		$	(0.48)
Diluted			(0.07)			(0.48)
Weighted average shares used in computing net income (loss) per share of Common Stock:
Basic			657,565,442			322,211,392
Diluted			988,638,662			322,211,392
Net loss per Common Stock – Class A and Class B – basic and diluted								Net loss per Common Stock – Class A and Class B – basic and diluted	$	(0.35)	$	(1.06)	$	(1.25)	$	(2.12)
Weighted average Common shares outstanding – Class A and Class B – basic and diluted								Weighted average Common shares outstanding – Class A and Class B – basic and diluted	346,575,508		287,951,929		330,878,677		203,686,758

Total comprehensive income (loss):
Net income (loss)			$	6,487		$	(153,098)
Total comprehensive loss:								Total comprehensive loss:
Net loss								Net loss	$	(119,872)	$	(303,906)	$	(414,664)	$	(432,206)
Change in foreign currency translation adjustment	Change in foreign currency translation adjustment		(555)			(564)		Change in foreign currency translation adjustment	9,864		189		13,548		(487)
Total comprehensive income (loss)			$	5,932		$	(153,662)
Total comprehensive loss								Total comprehensive loss	$	(110,008)	$	(303,717)	$	(401,116)	$	(432,693)

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

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Faraday Future Intelligent Electric Inc.

Condensed Consolidated Statements of Commitment to Issue Class A Common Stock and Stockholders’ Equity (Deficit)

(in thousands, except share and per share data)

(Unaudited)

Common Stock Additional
Paid-in
Capital Accumulated
Other
Comprehensive Gain
(Loss) Accumulated Deficit Total Stockholders’ Equity
Class A Class B
Shares Amount Shares Amount
Balance as of December 31, 2022 563,346,216 $ 56 64,000,588 $ 6 $ 3,655,771 $ 3,505 $ (3,476,585) $ 182,753
Conversion of notes payable and accrued interest into Class A Common Stock (Note 9) 223,539,619 20 — — 46,276 — — 46,296
Change in classification of warrants from Additional paid-in capital to liability pursuant to the Warrant Exchange (Note 9) — — — — (6,811) — — (6,811)
Reclassification of earnout shares liability to equity as part of authorized share increase — — — — 5,014 — — 5,014
Reclassification of liability for insufficient authorized shares related to stock options and RSUs — — — — 3,976 — — 3,976
Stock-based compensation — — — — 15,102 — — 15,102
Exercise of warrants 51,128,708 5 — — 4,074 — — 4,079
Exercise of stock options 49,456 — — — 44 — — 44
Issuance of shares for RSU vesting 808,040 1 — — — — — 1
Foreign Currency translation adjustment — — — — — (555) — (555)
Net income — — — — — — 6,487 6,487
Balance as of March 31, 2023 838,872,039 $ 82 64,000,588 $ 6 $ 3,723,446 $ 2,950 $ (3,470,098) $ 256,386


	Commitment to Issue Class A Common Stock	Common Stock					Additional Paid-in Capital (As Restated)		Accumulated Other Comprehensive Gain (Loss)		Accumulated Deficit (As Restated)				Total Stockholders’ Equity (Deficit) (As Restated)
			Class A					Class B
				Shares	Amount								Shares				Amount				Shares				Amount
Balance as of June 30, 2022				—	$	32,900				238,543,475			$	24		64,000,588			$	6			$	3,491,041			$	(3,261)			$	(3,219,308)			$	268,502
Issuance of shares pursuant to the commitment to issue Class A and Class B Common Stock				—	—				20,264,715		—				—		—				—				—				—				—
Transfer of private warrants to unaffiliated parties				—	—				—		—				—		—				186				—				—				186
Amendment of ATW NPA Warrants (Note 13)				—	—				—		—				—		—				1,238				—				—				1,238
Issuance pursuant to commitment to issue registered shares				—	(32,900)				2,387,500		—				—		—				32,900				—				—				32,900
Conversion of notes payable into class A common stock (as restated)				—	—				64,843,850		6				—		—				84,774				—				—				84,780
Stock-based compensation (as restated)				—	—				—		—				—		—				2,670				—				—				2,670
Exercise of stock options				—	—				3,137,272		—				—		—				7,181				—				—				7,181
Repurchase of common stock				—	—				(96,759)		—				—		—				(767)				—				—				(767)
Receipt of class A common stock in consideration of exercises of options				—	—				(311,878)		—				—		—				(669)				—				—				(669)
Exercise of warrants				—	—				17,026,193		1				—		—				1,727				—				—				1,728
Foreign currency translation adjustment				—	—				—		—				—		—				—				9,864				—				9,864
Net loss (as restated)				—	—				—		—				—		—				—				—				(119,872)				(119,872)
Balance as of September 30, 2022 (as restated)				—	$	—			345,794,368		$	31			64,000,588		$	6			$	3,620,281			$	6,603			$	(3,339,180)			$	287,741

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

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Faraday Future Intelligent Electric Inc.

Condensed Consolidated Statements of Commitment to Issue Class A Common Stock and Stockholders’ Equity (Deficit)

(in thousands, except share and per share data)

(Unaudited)

Commitment to Issue Class A Common Stock Common Stock Additional
Paid-in
Capital Accumulated
Other
Comprehensive
Loss Accumulated Deficit Total Stockholders’ Equity (Deficit)
Class A Class B
Shares Amount Shares Amount Shares Amount
Balance as of December 31, 2021 — $ — 168,693,323 $ 17 — $ — $ 3,482,226 $ (6,945) $ (2,907,644) $ 567,654
Reclassification of obligation to issue registered shares of Class A Common Stock upon adoption of ASU 2020-06 (Note 7) — 32,900 — — — — — — (20,265) (20,265)
Reclassification of deferred gain upon adoption of ASC 842 — — — — — — — — 3,393 3,393
Issuance of shares pursuant to the commitment to issue Class A and Class B Common Stock (Note 3) — — 68,742,020 7 64,000,588 6 (13) — — —
Stock-based compensation — — — — — — 3,347 — — 3,347
Exercise of stock options — — 761,675 — — — 1,855 — — 1,855
Foreign currency translation adjustment — — — — — — — (564) — (564)
Net loss — — — — — — — — (153,098) (153,098)
Balance as of March 31, 2022 — $ 32,900 238,197,018 $ 24 64,000,588 $ 6 $ 3,487,415 $ (7,509) $ (3,077,614) $ 402,322


	Commitment to Issue Class A Common Stock	Common Stock					Additional Paid-in Capital (As Restated)		Accumulated Other Comprehensive Gain (Loss)		Accumulated Deficit (As Restated)				Total Stockholders’ Equity (Deficit) (As Restated)
			Class A					Class B
				Shares	Amount								Shares				Amount				Shares				Amount
Balance as of December 31, 2021				—	$	—				168,693,323			$	17		—			$	—			$	3,482,226			$	(6,945)			$	(2,907,644)			$	567,654
Reclassification of obligation to issue registered shares of Class A Common Stock upon adoption of ASU 2020-06				—	32,900				—		—				—		—				—				—				(20,265)				(20,265)
Transfer of private warrants to unaffiliated parties				—	—				—		—				—		—				186				—				—				186
Amended Exercise price of ATW NPA warrants (Note 13)				—	—				—		—				—		—				1,238				—				—				1,238
Reclassification of deferred gain upon adoption of ASC 842				—	—				—		—				—		—				—				—				3,393				3,393
Issuance of shares pursuant to the commitment to issue Class A and Class B Common Stock				—	—				89,152,131		7				64,000,588		6				(13)				—				—				—
Issuance pursuant to commitment to issue registered shares				—	(32,900)				2,387,500		—				—		—				32,900				—				—				32,900
Conversion of notes payable into class A common stock (as restated)				—	—				64,843,850		6				—		—				84,774				—				—				84,780
Stock-based compensation (as restated)				—	—				—		—				—		—				9,144				—				—				9,144
Exercise of stock options				—	—				4,100,008		—				—		—				9,535				—				—				9,535
Repurchase of common stock				—	—				(96,759)		—				—		—				(767)				—				—				(767)
Receipt of class A common stock in consideration of exercises of options				—	—				(311,878)		—				—		—				(669)				—				—				(669)
Exercise of warrants				—	—				17,026,193		1				—		—				1,727				—				—				1,728
Foreign currency translation adjustment				—	—				—		—				—		—				—				13,548				—				13,548
Net loss (as restated)				—	—				—		—				—		—				—				—				(414,664)				(414,664)
Balance as of September 30, 2022 (as restated)				—	$	—			345,794,368		$	31			64,000,588		$	6			$	3,620,281			$	6,603			$	(3,339,180)			$	287,741

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

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Faraday Future Intelligent Electric Inc.

Condensed Consolidated Statements of Commitment to Issue Class A Common Stock and Stockholders’ Equity (Deficit)

(in thousands, except share and per share data)

(Unaudited)


	Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Gain (Loss)		Accumulated Deficit				Total Stockholders’ Equity (Deficit)
		Class A		Class B
									Shares(1)				Amount				Shares(1)				Amount
Balance as of June 30, 2021, as recast						107,659,654			$	10		64,000,588			$	6			$	1,973,314			$	(6,650)			$	(2,519,439)			$	(552,759)
Conversion of related party notes payable into Class A Common Stock (see Note 9)					11,566,196		1				—		—				160,436				—				—				160,437
Conversion of notes payable into Class A Common Stock (see Note 10)					7,688,153		1				—		—				98,374				—				—				98,375
Issuance of Class A Common Stock in the Business Combination, net of transaction costs (see Note 4)					27,798,411		3				—		—				170,111				—				—				170,114
Conversion of assumed PSAC convertible and promissory notes payable into Class A Common Stock (see Note 10)					80,000		—				—		—				790				—				—				790
Conversion of liabilities into Class A Common Stock in the Business Combination (see Note 4)					20,666,825		2				—		—				285,335				—				—				285,337
Conversion of liabilities into the commitment to issue Class A Common Stock in the Business Combination (see Note 4)					—		—				—		—				52,338				—				—				52,338
Legacy FF Ordinary Stock exchanged in the Business Combination for a commitment to issue Class A and Class B Common Stock					(117,839,510)		(12)				(64,000,588)		(6)				18				—				—				—
Issuance of Class A Common Stock in the PIPE Financing, net of transaction costs (see Note 4)					76,140,000		8				—		—				692,397				—				—				692,405
Settlement of lawsuit with issuance of vested stock options (see Note 13)					—		—				—		—				8,459				—				—				8,459
Settlement of accrued rent with issuance of vested stock options					—		—				—		—				951				—				—				951
Vesting of restricted stock award for employee bonus					—		—				—		—				14,620				—				—				14,620
Stock-based compensation					—		—				—		—				5,053				—				—				5,053
Exercise of stock options					1,078,495		—				—		—				2,740				—				—				2,740
Settlement of receivables through receipt of Class A Common Stock					(43,096)		—				—		—				(105)				—				—				(105)
Issuance of warrants					—		—				—		—				10,483				—				—				10,483
Foreign currency translation adjustment					—		—				—		—				—				189				—				189
Net loss					—		—				—		—				—				—				(303,906)				(303,906)
Balance as of September 30, 2021					134,795,128		$	13			—		$	—			$	3,475,314			$	(6,461)			$	(2,823,345)			$	645,521

(1) The shares of the Company’s common stock prior to the Business Combination (as defined in Note 1) have been retrospectively recast to reflect the change in the capital structure as a result of the Business Combination as described in Note 4.

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

Table of Contents

Faraday Future Intelligent Electric Inc.

Condensed Consolidated Statements of Commitment to Issue Class A Common Stock and Stockholders’ Equity (Deficit)

(in thousands, except share and per share data)

(Unaudited)


	Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Gain (Loss)		Accumulated Deficit				Total Stockholders’ Equity (Deficit)
		Class A		Class B
									Shares(1)				Amount				Shares(1)				Amount
Balance as of December 31, 2020, as recast						93,099,596			$	9		64,000,588			$	6			$	1,817,760			$	(5,974)			$	(2,391,139)			$	(579,338)
Conversion of The9 Conditional Obligation					423,053		—				—		—				2,863				—				—				2,863
Conversion of related party notes payable into Class A Common Stock (see Note 9)					22,454,776		2				—		—				294,794				—				—				294,796


Conversion of notes payable into Class A Common Stock (see Note 10)					7,688,153		1				—		—				98,374				—				—				98,375

Issuance of Class A Common Stock in the Business Combination, net of transaction costs (see Note 4)					27,798,411		3				—		—				170,111				—				—				170,114
Conversion of assumed PSAC convertible and promissory notes payable into Class A Common Stock (see Note 10)					80,000		—				—		—				790				—				—				790
Conversion of liabilities into Class A Common Stock in the Business Combination (see Note 4)					20,666,825		2				—		—				285,335				—				—				285,337
Conversion of liabilities into the commitment to issue Class A Common Stock in the Business Combination (see Note 4)					—		—				—		—				52,338				—				—				52,338
Legacy FF Ordinary Stock exchanged in the Business Combination for a commitment to issue Class A and Class B Common Stock					(117,839,510)		(12)				(64,000,588)		(6)				18				—				—				—
Issuance of Class A Common Stock in the PIPE Financing, net of transaction costs (see Note 4)					76,140,000		8				—		—				692,397				—				—				692,405
Settlement of lawsuit with issuance of vested stock options (see Note 13)					—		—				—		—				8,459				—				—				8,459
Settlement of accrued rent with issuance of vested stock options					—		—				—		—				951				—				—				951
Vesting of restricted stock award for employee bonus					—		—				—		—				14,620				—				—				14,620
Stock-based compensation					—		—				—		—				8,521				—				—				8,521
Exercise of stock options					4,326,920		—				—		—				10,492				—				—				10,492
Settlement of receivables through receipt of Class A Common Stock					(43,096)		—				—		—				(105)				—				—				(105)
Issuance of warrants					—		—				—		—				17,596				—				—				17,596
Foreign currency translation adjustment					—		—				—		—				—				(487)				—				(487)
Net loss					—		—				—		—				—				—				(432,206)				(432,206)
Balance as of September 30, 2021					134,795,128		$	13			—		$	—			$	3,475,314			$	(6,461)			$	(2,823,345)			$	645,521

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

Table of Contents

Faraday Future Intelligent Electric Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)


							Nine Months Ended September 30,
		Three Months Ended March 31,					2022			2021
		2023		2022			As Restated
Cash flows from operating activities	Cash flows from operating activities					Cash flows from operating activities
Net income (loss)		$	6,487	$	(153,098)
Net loss						Net loss	$	(414,664)		$	(432,206)
Adjustments to reconcile net loss to net cash used in operating activities	Adjustments to reconcile net loss to net cash used in operating activities					Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization expense	Depreciation and amortization expense	1,103		4,853		Depreciation and amortization expense	15,323			4,268
Stock-based compensation	Stock-based compensation	15,102		3,347		Stock-based compensation	9,144			8,521
Vesting of restricted stock awards for employee bonus						Vesting of restricted stock awards for employee bonus	—			14,620
Loss on disposal of property and equipment	Loss on disposal of property and equipment	3,698		—		Loss on disposal of property and equipment	1,407			62,987
Change in fair value measurement of related party notes payable and notes payable	Change in fair value measurement of related party notes payable and notes payable	(79,462)		(1,186)		Change in fair value measurement of related party notes payable and notes payable	(4,580)			60,394
Change in fair value measurement of warrant liability		(18,219)		—
Change in fair value measurement of earnout liability		2,764		—
Amortization of operating lease right-of-use assets and intangible assets		736		—
Loss on foreign exchange		653		894
Loss (gain) on foreign exchange						Loss (gain) on foreign exchange	2,484			(1,823)
Loss on write-off of vendor deposits, net and (gain) on write-off of accounts payable						Loss on write-off of vendor deposits, net and (gain) on write-off of accounts payable	2,992			(4,191)
Non-cash interest expense	Non-cash interest expense	4,533		2,319		Non-cash interest expense	8,050			36,478
Loss on settlement of notes payable		3,021		—
Loss on extinguishment or settlement of related party notes payable, notes payable and vendor payables in trust, net						Loss on extinguishment or settlement of related party notes payable, notes payable and vendor payables in trust, net	30,454			96,036
Gain on forgiveness of vendor payables in trust						Gain on forgiveness of vendor payables in trust	—			(1,731)
Reserve for unrecoverable value added taxes						Reserve for unrecoverable value added taxes	—			6,404
Other	Other	338		108		Other	324			—
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Deposits	Deposits	(29,370)		6,840		Deposits	13,364			(35,796)
Other current and non-current assets	Other current and non-current assets	6,368		2,095		Other current and non-current assets	(16,011)			(18,446)
Accounts payable	Accounts payable	(10,367)		5,747		Accounts payable	27,467			(40,434)
Accrued payroll and benefits						Accrued payroll and benefits	9,372			(6,889)
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	(9,626)		14,527		Accrued expenses and other current liabilities	(24,628)			12,763
Operating lease liabilities	Operating lease liabilities	(542)		(882)		Operating lease liabilities	(2,886)			—
Accrued interest expense	Accrued interest expense	(197)		(7,928)		Accrued interest expense	(12,721)			—
Transfers between vendor payables in trust and accounts payable						Transfers between vendor payables in trust and accounts payable	—			1,167
Net cash used in operating activities	Net cash used in operating activities	$	(102,980)	$	(122,364)	Net cash used in operating activities	$	(355,109)	$(355,109)	$	(237,878)
Cash flows from investing activities	Cash flows from investing activities					Cash flows from investing activities
Payments for property and equipment	Payments for property and equipment	(16,873)		(44,398)		Payments for property and equipment	$	(112,099)		$	(37,264)
Net cash used in investing activities	Net cash used in investing activities	$	(16,873)	$	(44,398)	Net cash used in investing activities	$	(112,099)		$	(37,264)
Cash flows from financing activities	Cash flows from financing activities					Cash flows from financing activities
Proceeds from issuance of Class A Common Stock in the Business Combination						Proceeds from issuance of Class A Common Stock in the Business Combination	$	—		$	229,583
Proceeds from issuance of Class A Common Stock pursuant to the PIPE Financing						Proceeds from issuance of Class A Common Stock pursuant to the PIPE Financing	—			761,400
Transaction costs paid in connection with the Business Combination						Transaction costs paid in connection with the Business Combination	—			(23,148)
Transaction costs paid in connection with the PIPE Financing						Transaction costs paid in connection with the PIPE Financing	—			(61,130)
Proceeds from related party notes payable						Proceeds from related party notes payable	—			200
Proceeds from notes payable, net of original issuance discount	Proceeds from notes payable, net of original issuance discount	131,800		—		Proceeds from notes payable, net of original issuance discount	40,050			172,031
Proceeds from exercise of warrants	Proceeds from exercise of warrants	4,079		—		Proceeds from exercise of warrants	1,728			—
Payments of notes payable	Payments of notes payable	(6)		(87,065)		Payments of notes payable	(87,258)			—
Settlement of notes payable transaction costs		(1,139)		—
Payments of related party notes payable						Payments of related party notes payable	—			(38,217)
Payments of notes payable, including liquidation premium						Payments of notes payable, including liquidation premium	—			(48,210)
Payments of notes payable issuance costs						Payments of notes payable issuance costs	(2,813)			(3,355)
Payments of vendor payables in trust						Payments of vendor payables in trust	—			(27,722)
Payments of finance lease obligations	Payments of finance lease obligations	(335)		(466)		Payments of finance lease obligations	(1,410)			(2,691)
Repurchase of common stock						Repurchase of common stock	(767)			—
Transfers between vendor payables in trust and accounts payable						Transfers between vendor payables in trust and accounts payable	—			(1,167)
Proceeds from exercise of stock options	Proceeds from exercise of stock options	44		1,855		Proceeds from exercise of stock options	9,535			10,492
Payments of stock issuance costs						Payments of stock issuance costs	—			(1,071)
Net cash (used in) provided by financing activities	Net cash (used in) provided by financing activities	$	134,443	$	(85,676)	Net cash (used in) provided by financing activities	(40,935)			966,995
Effect of exchange rate changes on cash and restricted cash	Effect of exchange rate changes on cash and restricted cash	170		(653)		Effect of exchange rate changes on cash and restricted cash	11,594			(2,536)
Net (decrease) increase in cash and restricted cash	Net (decrease) increase in cash and restricted cash	$	14,760	$	(253,091)	Net (decrease) increase in cash and restricted cash	(496,549)			689,317
Cash and restricted cash, beginning of period		18,514		530,477
Cash and restricted cash, end of period		33,274		277,386

Table of Contents

Faraday Future Intelligent Electric Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)


Cash and restricted cash, beginning of period	530,477	1,827
Cash and restricted cash, end of period	33,928	691,144

The following table provides a reconciliation of cash and restricted cash reported within the unaudited Condensed Consolidated Balance Sheets that aggregate to the total of the same such amounts shown in the unaudited Condensed Consolidated Statements of Cash Flows:

~~Table of Contents~~

~~Faraday Future Intelligent Electric Inc.~~

~~Condensed Consolidated Statements of Cash Flows~~

(i~~n thousands~~)

~~(Unaudited)~~


		Three Months Ended March 31,					Nine Months Ended September 30, 2022		Nine Months Ended September 30, 2021
Cash						Cash	$	505,091	$	1,124
Restricted cash						Restricted cash	25,386		703
Total cash and restricted cash, beginning of period						Total cash and restricted cash, beginning of period	$	530,477	$	1,827
		2023		2022
Cash	Cash	$	31,769	$	276,374	Cash	$	31,766	$	666,061
Restricted cash	Restricted cash	1,505		1,012		Restricted cash	2,162		25,083
Total cash and restricted cash, end of period	Total cash and restricted cash, end of period	$	33,274	$	277,386	Total cash and restricted cash, end of period	$	33,928	$	691,144

Supplemental disclosure of noncash investing and financing activities						Supplemental disclosure of noncash investing and financing activities
Conversion of related party notes payable and related party accrued interest into Class A Common Stock						Conversion of related party notes payable and related party accrued interest into Class A Common Stock	—		294,796
Conversion of notes payable and accrued interest into Class A Common Stock						Conversion of notes payable and accrued interest into Class A Common Stock	—		98,375
Conversion of assumed convertible and promissory notes payable into Class A Common Stock and Private Warrants						Conversion of assumed convertible and promissory notes payable into Class A Common Stock and Private Warrants	—		1,080
Recognition of operating right of use assets and lease liabilities upon adoption of ASC 842 and for new leases entered into in 2022						Recognition of operating right of use assets and lease liabilities upon adoption of ASC 842 and for new leases entered into in 2022	11,906		—
Additions of property and equipment included in accounts payable and accrued expenses						Additions of property and equipment included in accounts payable and accrued expenses	12,056		—
Issuance of Warrants						Issuance of Warrants	—		17,596
Issuance pursuant to commitment to issue registered shares						Issuance pursuant to commitment to issue registered shares	32,900		—
Receipt of class A common stock in consideration of exercises of options						Receipt of class A common stock in consideration of exercises of options	669		—
Transfer of private warrants to unaffiliated parties						Transfer of private warrants to unaffiliated parties	186		—
Conversion of convertible note to equity						Conversion of convertible note to equity	84,780		—
Acquisitions of property and equipment included in accounts payable						Acquisitions of property and equipment included in accounts payable	—		270
Conversion of The9 Conditional Obligation to equity						Conversion of The9 Conditional Obligation to equity	—		2,863
Settlement of vendor payables in trust for a commitment to issue Class A Common Stock						Settlement of vendor payables in trust for a commitment to issue Class A Common Stock	—		96,186
Settlement of accounts payable for a commitment to issue Class A Common Stock						Settlement of accounts payable for a commitment to issue Class A Common Stock	—		2,879

Supplemental disclosure of noncash investing and financing activities related to the Business Combination						Supplemental disclosure of noncash investing and financing activities related to the Business Combination
Exchange of Legacy FF redeemable preference stock for a commitment to issue Class A Common Stock						Exchange of Legacy FF redeemable preference stock for a commitment to issue Class A Common Stock	$	—	$	859,182
Exchange of Legacy FF convertible preferred stock for a commitment to issue Class B Common Stock						Exchange of Legacy FF convertible preferred stock for a commitment to issue Class B Common Stock	—		697,611
Settlement of notes payable and accrued interest for a commitment to issue Class A Common Stock						Settlement of notes payable and accrued interest for a commitment to issue Class A Common Stock	—		68,541
Settlement of related party notes payable and related party accrued interest for a commitment to issue Class A Common Stock						Settlement of related party notes payable and related party accrued interest for a commitment to issue Class A Common Stock	—		69,218
Settlement of vendor payables in trust for a commitment to issue Class A Common Stock						Settlement of vendor payables in trust for a commitment to issue Class A Common Stock	—		96,186
Settlement of accounts payable for a commitment to issue Class A Common Stock						Settlement of accounts payable for a commitment to issue Class A Common Stock	—		2,879
Reclassification of deferred transaction costs paid in prior periods against the proceeds received in the Business Combination						Reclassification of deferred transaction costs paid in prior periods against the proceeds received in the Business Combination	—		7,865

Supplemental disclosure of cash flow information	Supplemental disclosure of cash flow information					Supplemental disclosure of cash flow information
Cash paid for interest	Cash paid for interest	$	324	$	10,040	Cash paid for interest	$	12,721	$	5,837

Supplemental disclosure of noncash investing and financing activities

Additions of property and equipment included in accounts payable and accrued expenses		$	17,249	$	1,881
Reclassification of liability for insufficient authorized shares related to stock options and RSUs		8,979		—
Reclassification of earnout shares liability to equity as part of authorized share increase		5,014		—
Conversion of notes payable and accrued interest into Class A Common Stock		46,296		—
Issuance of SPA Notes pursuant to the Exchange Agreement (Note 9)		41,000		—
Issuance of SPA Warrants pursuant to the Exchange Agreement (Note 9)		26,455		—
Disposal of SPA Warrants and ATW NPA Warrants pursuant to the Exchange Agreement (Note 9)		77,577		—
Change in classification of warrants from Additional paid-in capital to liability pursuant to the Warrant Exchange (Note 9)		6,811		—
Recognition of operating right of use assets and lease liabilities upon adoption of ASC 842 and for new leases entered into in 2022		—		8,206

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

810

Faraday Future Intelligent Electric Inc.

Notes to Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

(Unaudited)

1. Nature of Business and Organization and Basis of Presentation

Nature of Business and Organization

Faraday Future Intelligent Electric Inc. (“Company” or “FF”), a holding company incorporated in the State of Delaware on February 11, 2020, conducts its operations through the subsidiaries of FF Intelligent Mobility Global Holdings Ltd. (“Legacy FF”), founded in 2014 and headquartered in Los Angeles, California. ~~FF is a global shared intelligent electric mobility ecosystem company with a vision to reformat the automotive industry.~~

On July 21, 2021 ~~(the “Closing Date”~~(“Closing”), the Company consummated a business combination pursuant to an Agreement and Plan of Merger dated January 27, 2021, ~~(as amended, the “Merger Agreement”),~~ by and among ~~the Company, PSAC Merger Sub Ltd. (“Merger Sub”), an exempted company with limited liability incorporated under the laws of the Cayman Islands and wholly-owned subsidiary of~~ Property Solutions Acquisition ~~Corp.~~Corp (“PSAC”)~~, a Delaware corporation our predecessor company,~~. and Legacy ~~FF. Pursuant to the terms of the Merger Agreement, Merger Sub merged with and into Legacy~~ FF ~~with Legacy FF surviving the merger as a wholly-owned subsidiary of the Company~~ (the “Business Combination”)., pursuant to which the Company received gross proceeds of $229,583 from the PSAC trust account. Upon the consummation of the Business Combination, ~~(the “Closing”),~~ PSAC changed its name from “Property Solutions Acquisition Corp.” to “Faraday Future Intelligent Electric Inc.”

Concurrently with the ~~execution~~Closing of the ~~Merger Agreement,~~Business Combination, the Company entered into separate ~~Subscription Agreements~~agreements with a number of investors (“PIPE Investors”) pursuant to which, on the Closing, ~~Date,~~ the PIPE Investors purchased, and the Company issued, an aggregate of 76,140,000 shares of Class A Common Stock, for a purchase price of ~~$10.00~~$10 per share with an aggregate purchase price of ~~$761.4 million~~$761,400 (“PIPE Financing”). Shares sold and issued in the PIPE Financing included registration rights. ~~The closing of the Private Placement occurred immediately prior to the Closing Date.~~

The Company operates in a single operating segment and designs and engineers next-generation, intelligent, electric vehicles. The Company ~~manufactures~~expects to manufacture vehicles at its ieFactory California production facility in Hanford, California and has additional engineering, sales, and operations capabilities in China. The Company has created innovations in technology, products, and a user-centered business model that are being incorporated into its planned electric vehicle platform.

Principles of Consolidation and Basis of Presentation

The ~~unaudited Condensed Consolidated Financial Statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) and include~~Company consolidates the ~~accounts~~financial statements of ~~the Company, its wholly-owned subsidiaries and~~ all ~~other~~ entities in which ~~the Company~~it has a controlling financial interest, including the accounts of any Variable Interest Entity (“VIE”) in which the Company has a controlling financial interest and for which it is the primary beneficiary. All intercompany transactions and balances have been eliminated upon consolidation.

The unaudited Condensed Consolidated Financial Statements have been prepared in conformity with generally accepted accounting principles in the United States (“GAAP”) for interim financial information and are unaudited.

These unaudited Condensed Consolidated Financial Statements do not include all disclosures that are normally included in annual audited financial statements prepared in accordance with GAAP and should be read in conjunction with the Company’s audited Consolidated Financial Statements for the year ended December 31, ~~2022,~~2021, included in the Company’s Form 10-K filed with Securities and Exchange Commission (“SEC”) on ~~March 9, 2023~~May 13, 2022 (“Form 10-K”). Accordingly, the Condensed Consolidated Balance Sheet as of December 31, ~~2022,~~2021, has been derived from the Company’s annual audited Consolidated Financial Statements but does not contain all of the footnote disclosures from the annual financial statements.

In the opinion of the Company, the unaudited Condensed Consolidated Financial Statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of its financial position, its results of operations, and cash flows for the periods presented. The accounting policies used in the preparation of these unaudited Condensed Consolidated Financial Statements are the same as those disclosed in the audited Consolidated Financial Statements for the year ended December 31, ~~2022,~~2021, included in the Form 10-K, except as described below.

~~Certain reclassifications have been made to prior periods~~Reclassification

The Company reclassified certain amounts in the unaudited Condensed Consolidated Financial Statements ~~and accompanying notes~~ to conform ~~with~~to the current period's presentation. Buildings and Leasehold improvements within Property and Equipment, Net were previously presented separately for the year ended December 31, 2022. Beginning 2023, the two lines were conformed to report these two balances together.

~~Faraday Future Intelligent Electric Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

Use of Estimates

The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions, which affect the reported amounts in the financial statements.

Estimates are based on historical experience, where applicable, and other assumptions which management believes are reasonable under the circumstances. On an ongoing basis,

Faraday Future Intelligent Electric Inc.

Notes to Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

(Unaudited)

management evaluates its estimates, including those related to the: (i) realization of tax assets and estimates of tax liabilities; (ii) valuation of equity securities; (iii) recognition and disclosure of contingent liabilities, including litigation reserves; (iv) fair value of related party notes payable, notes payable and ~~notes payable;~~warrants liabilities; (v) estimated useful lives and impairment of long-lived assets; (vi) fair value of options granted to employees and non-employees; ~~(vi)~~(vii) fair value of warrants, and ~~(vii)~~(viii) incremental borrowing rate used to measure operating lease liabilities. Such estimates often require the selection of appropriate valuation methodologies and financial models and may involve significant judgment in evaluating ranges of assumptions and financial inputs. Actual results may differ from those ~~estimates under different assumptions, financial inputs, or circumstances.~~estimates.

~~Given the global economic climate, unpredictable nature and unknown duration of the COVID-19 pandemic, estimates are subject to additional volatility.~~ As of the date the Company’s unaudited Condensed Consolidated Financial Statements were issued, the Company is not aware of any specific event or circumstance that would require it to update its estimates or judgments or to revise the carrying value of its assets or liabilities. However, these estimates and judgments may change as new events occur and additional information is ~~obtained.~~obtained, which may result in changes being recognized in the Company’s unaudited Condensed Consolidated Financial Statements in future periods. While the Company considered the effects of COVID-19 on its estimates and assumptions, due to the level of uncertainty regarding the economic and operational impacts of COVID-19 on the Company’s business, there may be other judgments and assumptions that the Company has not considered. Such judgments and assumptions could result in a material impact on the Company’s financial statements in future periods. Actual results could differ from these estimates and any such differences may have a material impact on the Company’s unaudited Condensed Consolidated Financial Statements.

~~Inventory and Inventory Valuation~~Income Tax

~~Inventory is stated at the lower of cost or net realizable value (“LCNRV”) and consists of raw materials, work-in-progress, and finished goods.~~ The Company ~~primarily computes cost using standard cost, which approximates cost on the first-in, first-out (“FIFO”) basis. Net realizable value (“NRV”) is the estimated selling price~~recorded an income tax provision of ~~inventory in the ordinary course of business, less reasonably predictable costs of completion, disposal,~~$0 and transportation. The Company assesses the valuation of inventory and periodically adjusts its value for estimated excess and obsolete inventory based upon expectations of future demand and market conditions, as well as damaged or otherwise impaired goods. As of March 31, 2023, substantially all of the Company’s inventory balance is classified as raw materials. Inventory is included in Other current assets on the unaudited Condensed Consolidated Balance Sheet.

~~Stock-Based Compensation~~

Forfeiture rate - Effective January 1, 2023, stock-based compensation expense is reduced for forfeitures only when they occur. This change of accounting policy resulted in the recognition of a cumulative increase of prior stock-based compensation expenses totaling $1.8 million, which was recorded in the unaudited Condensed Consolidated Statement of Operations and Comprehensive Income$9 for the three and nine months ended ~~March 31, 2023.~~

~~Income Tax~~

~~There was no income tax provision impact~~September 30, 2022, and $0 and $3 for the three and nine months ended September 30, 2021, respectively, on the unaudited Condensed Consolidated Statements of Operations and Comprehensive ~~Income (Loss) for the three months ended March 31, 2023 and 2022.~~Loss. The difference in the Company’s effective tax rate from the federal statutory rate of 21% is due to the ratio of domestic and international loss before taxes. The Company records a full valuation allowance to reflect limited benefits for income taxes in jurisdictions that historically reported losses and a provision for income taxes in jurisdictions that are profitable. The income tax provision for each period was the combined calculated tax expenses/benefits for various jurisdictions.

The Company is subject to taxation and files income tax returns with the U.S. federal government, ~~the state of~~ California and China. The Company’s income tax returns are open to examination by the relevant tax authorities until the expiration of the applicable statute of limitations, which is generally three years after the filing of the tax return. As of ~~March 31, 2023,~~September 30, 2022, the Company is not under any tax audits on its income tax returns. All of the Company’s prior year tax returns, from 2016 through 2021, are open under Chinese tax law.

The Company did not accrue any interest or penalties related to the Company's unrecognized tax benefits as of ~~March 31, 2023 and~~September 30, 2022, as the uncertain tax benefits only reduced the net operating losses. The Company does not expect the uncertain

~~Faraday Future Intelligent Electric Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

tax benefits to have material impact on its unaudited Condensed Consolidated Financial Statements within the next twelve months.

~~Recent~~Recently Adopted Accounting Pronouncements

~~Recently~~In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) (“ASC 842”), which outlines a comprehensive lease accounting ~~pronouncements not yet adopted~~

model that supersedes the previous lease guidance. The guidance requires lessees to recognize lease liabilities and corresponding right-of-use (“ROU”) assets for all leases with lease terms greater than 12 months. It also changes the definition of a lease and expands the disclosure requirements of lease arrangements. In ~~December 2022,~~July 2018, the FASB issued ASU ~~No. 2022-06,~~2018-11, ~~Deferral~~Leases (Topic 842) - Targeted Improvements, which provides the option of an additional transition method that allows entities to initially apply the new lease guidance at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company adopted the standard on January 1, 2022 using the modified retrospective basis and recorded operating lease ROU assets of $11,191 and operating lease liabilities of $11,191 on that date. As part of this adoption, the Company reclassified the deferred gain related to a previous sale and leaseback of $3,393 to accumulated deficit. The Company elected to apply the package of practical expedients permitted under the transition guidance within ASC 842 which does not require reassessment of initial direct costs, reassessment of the ~~Sunset Date~~classification of ~~Reference Rate Reform (Topic 848)~~leases as operating or financing, or reassessment of the definition of a lease (see Note 11, ~~(ASU 2022-06)~~Leases). ~~ASU 2022-06 provides optional expedients~~Finance lease liabilities and exceptions for applying GAAP to transactions affected by reference rate (e.g., LIBOR) reform if certain criteria are met, for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. ASU 2022-06 deferred the sunset date of Topic 848 from December 31, 2022 to December 31, 2024. ASU 2022-06 is effective as of December 21, 2022 through December 31, 2024. We continue to evaluate transactions or contract modifications occurringrelated property and equipment assets did not change as a result of ~~reference rate reform~~the adoption of this standard.

Faraday Future Intelligent Electric Inc.

Notes to Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

(Unaudited)

In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”). ASU 2020-06 simplifies the accounting for convertible instruments by removing certain separation models in ASC 470- 20, Debt — Debt with Conversion and Other Options, for convertible instruments. ASU 2020-06 updates the guidance on certain embedded conversion features that are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in capital, such that those features are no longer required to be separated from the host contract. The convertible debt instruments will be accounted for as a single liability measured at amortized cost. Further, ASU 2020-06 made amendments to the earnings per share guidance in Topic 260 for convertible instruments, the most significant impact of which is requiring the use of the if-converted method for the diluted EPS calculation, and no longer allowing the net share settlement method. ASU 2020-06 also made revisions to Topic 815-40, which provides guidance on how an entity must determine whether a contract qualifies for a scope exception from derivative accounting. The amendments to ~~apply~~Topic 815-40 change the ~~optional~~scope of contracts that are recognized as assets or liabilities. ASU 2020-06 is effective for interim and annual periods beginning after December 15, 2023, with early adoption permitted. Adoption of ASU 2020-06 can either be on a modified retrospective or full retrospective basis. The Company adopted the standard on January 1, 2022 on a modified retrospective basis and reclassified the Obligation to issue registered shares of Class A Common Stock of $12,635 from Accrued expenses and other current liabilities and reclassified $20,265 from Accumulated deficit to Commitment to issue Class A Common Stock on the unaudited Condensed Consolidated Balance Sheets.

In May 2021, the FASB issued ASU 2021-04, Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (“ASU 2021-04”). ASU 2021-04 clarifies and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. ASU 2021-04 made amendments to the earnings per share guidance in Topic 260 for an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options. Further, ASU 2021-04 made amendments to the Debt — Modifications and Extinguishments guidance in Topic 470-50. ASU 2021-04 also added references to revised guidance within Topic 505 and 718. Additionally, ASU 2021-04 made additions to Topic 815-40 related to the issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options. ASU 2021-04 is effective for interim and annual periods beginning after December 15, 2021, with early adoption permitted. Adoption of the amendments should be applied prospectively to modifications or exchanges occurring on or after the effective date of the amendments. The Company adopted ASU 2021-04 as of January 1, 2022, which had an ~~ongoing basis.~~immaterial effect on the unaudited Condensed Consolidated Financial Statements.

2. Restatement

In connection with remediating certain material weaknesses in the Company’s internal control over financial reporting previously disclosed in the Original Filing, the Company identified the error in its accounting for the conversion of the notes payable issued under its debt arrangements. The Company previously elected to measure such notes payable at fair value, as they contain embedded liquidation premiums with conversion rights that represent embedded derivatives (see Note 10, Notes Payable). Between the third quarter of 2022 and the first quarter of 2023 the purchasers converted certain of the notes into the Company’s Class A Common Stock. The Company historically erroneously applied debt conversion accounting guidance to the notes payable conversion transactions that is not applicable to debt accounted for under the Company’s fair value accounting policy election, which resulted in such conversions being incorrectly accounted for with a credit to Class A Common Stock and Additional paid-in capital equity equal to the fair value of the notes payable on each conversion date and no conversion gain or loss being recognized in the Consolidated Statements of Operations and Comprehensive Income (Loss). The Company should have accounted for such conversions by applying debt extinguishment accounting with a credit to Class A Common Stock and Additional paid-in capital equal to the fair value of the Class A Common Stock issued on each conversion date. Under debt extinguishment accounting the difference between the fair value of the Class A Common Stock issued and the fair value of the debt at each conversion date represents a gain or loss on extinguishment. Accordingly, the Company should have recognized an

Faraday Future Intelligent Electric Inc.

Notes to Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

(Unaudited)

additional $22,764 Loss on settlement of notes payable in the Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and nine months ended September 30, 2022 (and a corresponding $22,764 increase in Additional paid-in capital as of September 30, 2022) because the fair value of the Class A Common Stock issued significantly exceeded the fair value of the notes payable converted on each of the various conversion dates during the third quarter of 2022.

The restated financial information also includes adjustments to correct other immaterial errors, including errors that had previously been adjusted for as out of period corrections in the Affected Periods. The other immaterial errors impacting the Company’s financial statements as of September 30, 2022 and for the three and nine months then ended relate to Change in fair value measurement of notes payable, Interest expense, Stock-based compensation expense, Accrued interest, Additional paid-in capital, and Accumulated deficit. The restatement adjustments were tax effected and any tax adjustments reflected in the Affected Periods relate entirely to the tax effect on the restatement adjustments.

In addition to the restatement of the financial statements, certain information within the following notes to the financial statements has been restated to reflect the corrections of misstatements discussed above as well as to add disclosure language as appropriate: Note 8, Fair Value of Financial Instruments, Note 10, Notes Payable, and Note 14, Stock-Based Compensation.

Presented below is a reconciliation from the previously reported to the restated amounts as of and for the three and nine months ended September 30, 2022. The amounts labeled “As Previously Reported” were derived from the Original Filing. The impacts to the Condensed Consolidated Statements of Commitment to Issue Class A Common Stock and Stockholders’ Equity (Deficit) for the three and nine months ended September 30, 2022 as a result of the restatement were due to the changes in the Conversion of notes payable into Class A Common Stock, Stock-based compensation expense, and Net loss. In addition, there was no impact to net cash used in operating, investing or financing activities for the nine months ended September 30, 2022 as a result of the restatement.

The following tables present the effect of correcting these accounting errors on the Company’s previously issued financial statements (in thousands, except share and per share data):

Summary of Restatement - Condensed Consolidated Balance Sheet


	September 30, 2022
	As Previously Reported		Restatement Impacts		As Restated

Liabilities and stockholders’ equity
Current liabilities
Accrued interest	$	541	$	(418)	$	123
Total current liabilities	177,323		(418)		176,905
Total liabilities	253,361		(418)		252,943
Additional paid-in capital	3,603,368		16,913		3,620,281
Accumulated deficit	(3,322,685)		(16,495)		(3,339,180)
Total stockholders’ equity	287,323		418		287,741
Total liabilities and stockholders’ equity	$	540,684	$	—	$	540,684

Faraday Future Intelligent Electric Inc.

Notes to Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

(Unaudited)

Condensed Consolidated Statements of Operations and Comprehensive Loss


	Three Months Ended September 30, 2022
	As Previously Reported		Restatement Impacts		As Restated
Operating expenses
Research and development	$	48,062	$	(480)	$	47,582
Sales and marketing	3,888		(65)		3,823
General and administrative	28,655		(104)		28,551
Loss on disposal of property and equipment	—		—		—
Total operating expenses	80,605		(649)		79,956

Loss from operations	(80,605)		649		(79,956)
Change in fair value measurements	(6,966)		5,202		(1,764)
Interest expense	(663)		418		(245)
Related party interest expense	(996)		—		(996)
Other (expense) income, net	(6,457)		—		(6,457)
Loss on extinguishment or settlement of related party notes payable, notes payable and vendor payables in trust, net	(7,690)		(22,764)		(30,454)
Loss before income taxes	(103,377)		(16,495)		(119,872)
Income tax provision	—		—		—
Net loss	$	(103,377)	$	(16,495)	$	(119,872)

Per share information:
Net loss per Common Stock – Class A and Class B – basic and diluted	$	(0.30)	$	(0.05)	$	(0.35)
Weighted average Common shares outstanding – Class A and Class B – basic and diluted	346,575,508		—		346,575,508

Total comprehensive loss:
Net loss	$	(103,377)	$	(16,495)	$	(119,872)
Change in foreign currency translation adjustment	9,864		—		9,864
Total comprehensive loss	$	(93,513)	$	(16,495)	$	(110,008)

Faraday Future Intelligent Electric Inc.

Notes to Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

(Unaudited)


	Nine Months Ended September 30, 2022
	As Previously Reported		Restatement Impacts		As Restated
Operating expenses
Research and development	$	260,221	$	(480)	$	259,741
Sales and marketing	16,272		(65)		16,207
General and administrative	89,173		(104)		89,069
Loss on disposal of property and equipment	1,407		—		1,407
Total operating expenses	367,073		(649)		366,424

Loss from operations	(367,073)		649		(366,424)
Change in fair value measurements	(622)		5,202		4,580
Interest expense	(5,537)		418		(5,119)
Related party interest expense	(2,931)		—		(2,931)
Other (expense) income, net	(14,307)		—		(14,307)
Loss on extinguishment or settlement of related party notes payable, notes payable and vendor payables in trust, net	(7,690)		(22,764)		(30,454)
Loss before income taxes	(398,160)		(16,495)		(414,655)
Income tax provision	(9)		—		(9)
Net loss	$	(398,169)	$	(16,495)	$	(414,664)

Per share information:
Net loss per Common Stock – Class A and Class B – basic and diluted	$	(1.20)	$	(0.05)	$	(1.25)
Weighted average Common shares outstanding – Class A and Class B – basic and diluted	330,878,677		—		330,878,677

Total comprehensive loss:
Net loss	$	(398,169)	$	(16,495)	$	(414,664)
Change in foreign currency translation adjustment	13,548		—		13,548
Total comprehensive loss	$	(384,621)	$	(16,495)	$	(401,116)

Faraday Future Intelligent Electric Inc.

Notes to Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

(Unaudited)

Summary of Restatement - Condensed Consolidated Statement of Cash Flows


	Nine Months Ended September 30, 2022
	As Previously Reported		Restatement Impacts		As Restated
Cash flows from operating activities
Net loss	$	(398,169)	$	(16,495)	$	(414,664)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization expense	15,323		—		15,323
Stock-based compensation	9,793		(649)		9,144
Vesting of restricted stock awards for employee bonus	—		—		—
Loss on disposal of property and equipment	1,407		—		1,407
Change in fair value measurement of related party notes payable and notes payable	622		(5,202)		(4,580)
Loss (gain) on foreign exchange	2,484		—		2,484
Loss on write-off of vendor deposits, net and (gain) on write-off of accounts payable	2,992		—		2,992
Non-cash interest expense	8,468		(418)		8,050
Loss on extinguishment or settlement of related party notes payable, notes payable and vendor payables in trust, net	7,690		22,764		30,454
Gain on forgiveness of vendor payables in trust	—		—		—
Reserve for unrecoverable value added taxes	—		—		—
Other	324		—		324
Changes in operating assets and liabilities:
Deposits	13,364		—		13,364
Other current and non-current assets	(16,011)		—		(16,011)
Accounts payable	27,467		—		27,467
Accrued payroll and benefits	9,372		—		9,372
Accrued expenses and other current liabilities	(24,628)		—		(24,628)
Operating lease liabilities	(2,886)		—		(2,886)
Accrued interest expense	(12,721)		—		(12,721)
Transfers between vendor payables in trust and accounts payable	—		—		—
Net cash used in operating activities	$	(355,109)	$	—	$	(355,109)


Supplemental disclosure of noncash investing and financing activities
Conversion of convertible note to equity	$	67,218	$	17,562	$	84,780

3. Liquidity and Capital Resources

The Company has evaluated whether there are certain conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the unaudited Condensed Consolidated Financial Statements are issued. Based on its recurring losses from operations since inception and continued cash outflows from operating activities (all as described below), the Company has concluded that there is substantial doubt about its ability to continue as a going concern for a period of one year from the date that these unaudited Condensed Consolidated Financial Statements were issued.

The timing of first deliveries of FF 91 vehicles is uncertain and is not expected to occur in 2022 and remains subject to various conditions, many of which are outside of FF’s control, including the timing, size, and availability of additional financing as well as the implementation and effectiveness of FF’s headcount reductions and other expense reduction and payment delay measures. It is also subject to suppliers meeting their commitments on program deliverables including parts, and timely and successful certification testing. FF is seeking to raise additional capital from various fundraising efforts currently underway to supplement its cash on hand of $31,766 as of September 30, 2022. The Company has taken steps to preserve its cash position, including reducing spending, extending payment cycles and other similar measures.

Faraday Future Intelligent Electric Inc.

Notes to Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

(Unaudited)

As part of its funding efforts, on November 11, 2022, the Company entered into a Standby Equity Purchase Agreement (“SEPA”) with YA II PN, Ltd. (“Yorkville”), an affiliate of Yorkville Advisors Global, LP, which provides the Company the sole right, but not the obligation, to direct Yorkville from time to time to purchase up to $200,000 (“Commitment Amount”) of the Company’s shares of Class A Common Stock during the commitment period ending November 11, 2025, at a 3% discount of the VWAP (as defined below) of the shares during the three preceding days of each issuance. The Company has the option to increase the Commitment Amount to up to $350,000 during the commitment period. The Company agreed to issue 789,016 shares of Class A Common Stock in satisfaction of the commitment fee agreed upon in the SEPA. As of the date the unaudited Condensed Consolidated Financial Statement were issued, the Company did not direct Yorkville to buy any shares of Class A Common Stock. The Company shall use commercially reasonable efforts to prepare and file with the SEC a registration statement for the resale by Yorkville of the shares of Class A Common Stock to be issued under the SEPA (including the 789,016 commitment shares). The Company shall not have the ability to draw funds until the effectiveness of such registration statement and the satisfaction of certain other conditions.

Any purchase would be subject to certain limitations, including that Yorkville shall not purchase any shares that would result in it and its affiliates beneficially owning more than 9.99% of the then outstanding voting power or number of shares of Class A Common Stock or any shares that would exceed 19.99% of all shares of Class A Common Stock and Class B common stock of the Company outstanding on the date of the SEPA, unless Company shareholder approval was obtained allowing for issuances in excess of such amount (the “Exchange Cap”). The Exchange Cap will not apply under certain circumstances, including where the average price of all shares of Class A Common Stock equals or exceeds $0.62 per share.

Further, and as more fully described in Note 10, Notes Payable, the Company has unfunded commitments from Purchasers, in the amount of $40,000 in connection with the SPA, as such terms are defined in Note 10, Notes Payable, $20,000 of which is expected to be funded by the end of 2022, subject to the satisfaction of certain conditions, and the remaining $20,000 of which is expected to be received following the launch of the FF 91 and completion of certain other conditions. The Company also has the right to force the conversion of the warrants underlying the Warrant Reserve, as such term is defined in Note 13, Stockholders' Equity, for a total exercise price of $20,000 in cash, upon the completion of certain milestones and conditions.

Despite the access to liquidity resulting from the SEPA when, and if, it shall become effective, the Warrant Reserve and the unfunded commitments from the SPA, the Company projects that it may require additional funds during the remainder of 2022 and will require additional funds beyond 2022 in order to continue operations and support the ramp-up of production of the FF 91 to generate revenues to put the Company on a path to cash flow break-even. Incremental capital needs beyond 2022 to fund development of the Company’s remaining product portfolio will be highly dependent on the market success and profitability of the FF 91 and the Company’s ability to accurately estimate and control costs.

Since its formation, the Company has devoted substantial effort and capital resources to strategic planning, engineering, design, and development of its electric vehicle platform, development of initial electric vehicle models, and capital raising. Since inception, the Company has incurred cumulative losses from operations, negative cash flows from operating activities, and has an accumulated deficit of ~~$3,470.1 million~~$3,339,180 as of ~~March 31, 2023.~~ September 30, 2022. After the closing of the Business Combination and the PIPE Financing on July 21, 2021, the Company received gross proceeds aggregating $990,983 which it used to settle certain liabilities and the remainder of which management has used to finance the ongoing operations of the business.

The Company has funded its operations and capital needs primarily through the net proceeds received from capital contributions, the issuance of related party notes payable and notes payable (see Note 89, , Related Party Notes Payable and Note 910, , Notes Payable), the sale of Preferred and Common Stock (see Note ~~12,~~13, ~~Stockholders’~~Stockholders' Equity), and the net proceeds received from the Business Combination and the PIPE Financing (see Note 1,4, ~~Nature of~~ Business ~~and Organization and Basis of Presentation~~Combination).

FF announced the start of production of its first electric vehicle, the FF 91 Futurist, on March 29, 2023. However, FF has not recognized any revenue as of the date hereof. FF’s future business depends in large part on its ability to execute its plans to develop, manufacture, market, and deliver electric vehicles, including the FF 91, FF 81, FF 71 series, and SLMD electric vehicle models that appeal to customers. Based on certain management assumptions, including timely completion of certain testing and the suppliers meeting our supply chain requirement, FF originally expected deliveries of the FF 91 to users to begin before the end of April 2023. However, certain of FF’s suppliers informed FF that they will be unable to meet FF’s timing requirements and, therefore, FF has updated the timing for the start of deliveries for its FF 91 vehicle. Based on the revised delivery plan, FF expects the first phase of the three-phase delivery plan to begin at the end of May 2023, and the second phase of the three-phase delivery plan to begin at the end of the second quarter of 2023, followed by the third phase. The first phase is the “Industry Expert Futurist Product Officer (FPO) Co-Creation Delivery.” In this first phase, the Industry Expert FPO(s) will pay in full for an FF 91 vehicle in order to reserve the vehicle and be trained in the use of the vehicle. The reserved FF 91 vehicle will be delivered to the FPO at the beginning of the second phase. The second phase is the “FPO Co-Creation Delivery.” In this second phase, FPO(s) will take possession of the FF 91 vehicle. The third phase is the “Full Co-Creation Delivery.” In this third phase, FF will deliver FF 91 vehicles to all spire users that pay in full for an FF 91 vehicle.

The successful beginning of the second phase is contingent on receiving parts on our required timeframes and completion of requisite tests. Further, FF expects to need substantial additional financing to start the third phase of the delivery plan and is in discussions with additional potential investors to obtain such financing. As FF executes the three-phase delivery plan, it plans to continue to move vehicles into production and off-the-line with high quality and high product power. There is no assurance FF will be able to timely receive sufficient funding under existing or new financing commitments to produce and deliver the FF 91 Futurist on that timeline or at all. If unable to receive sufficient funding, FF will be required to obtain new financing commitments, which may not be available to it under reasonable commercial terms. Further, there cannot be any assurance that FF will be able to secure additional funding, under reasonable commercial terms if at all, develop the

~~Faraday Future Intelligent Electric Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

manufacturing capabilities and processes, secure reliable sources of component supply to meet quality, engineering, design or production standards, or to meet the required production volumes to successfully grow into a viable, cash flow positive, business.

The Company has continued financing discussions with multiple parties, but has experienced delays in securing additional funding commitments, which have exacerbated the supply chain pressures on FF’s business. Additionally, certain investors under the SPA may not fund their commitments until the Company increases the number of authorized shares of its Class A Common Stock and registers the securities underlying the SPA Warrants and SPA Notes in an effective registration statement. These factors, in addition to the continued rise in inflation and other challenging macroeconomic conditions, have led FF to take steps to preserve its current cash position, including reducing spending, extending payment cycles and implementing other similar measures. If FF’s ongoing capital raising efforts are unsuccessful or significantly delayed, or if FF experience prolonged material adverse trends in its business, FF’s production will be delayed or decreased, and actual use of cash, production volume and revenue for 2023 will vary from the Company’s previously disclosed forecasts, and such variances may be material. While FF is actively engaged in negotiations with potential financing sources, there is no guarantee that it will be able to raise additional capital on terms acceptable to it or at all. In addition to the risk that FF’s assumptions and analyses may prove incorrect, the projections may underestimate the professional fees and other costs to be incurred related to the pursuit of various financing options currently being considered and the ongoing legal risks. Incremental capital needs beyond 2023 to fund operations and the development of the Company’s remaining product portfolio and to ramp up production will be highly dependent on the market success and profitability of the FF 91 and the Company’s ability to accurately estimate and control costs. Apart from the FF 91 series, substantial additional capital will be required to fund operations, research, development, and design efforts for future vehicles.

~~As part of the SPA, as amended (as defined in Note 9,~~ ~~Notes Payable~~), the Company has obtained commitments from several investors totaling $267.0 million in new convertible note financing and in committed forced warrant exercise proceeds, subject to certain conditions. A total of ~~$220.3~~ ~~million under these commitments has been funded to date, through which the Company has received~~ ~~$193.3~~ ~~million (net of original discount and transaction costs). The right to force exercise of the Warrant Reserve (defined in Note 9,~~ ~~Notes Payable~~) expired upon the holders exercising their warrants during 2023. In February 2023, Senyun and a purchaser affiliated with ATW Partners LLC exercised 20% of their respective options to purchase additional senior secured notes and SPA Warrants (defined in Note 9, ~~Notes Payable) of the Company under the same terms as the Incremental Notes (defined in Note 9,~~ ~~Notes Payable). The Company received aggregated gross proceeds of~~ ~~$38.0~~ ~~million ($32.9~~ ~~million net of original issuance discount and transaction costs) in exchange for such issuances.~~

On November 11, 2022, FF entered into a Standby Equity Purchase Agreement (the “SEPA”) with YA II PN, Ltd. (“Yorkville”), which is an affiliate of Yorkville Advisors. Under terms of the SEPA, FF has the right, but not the obligation, to sell up to $200.0 million (which can be increased up to $350.0 million under FF’s option) of Class A common stock (“Class A Common Stock”) to an affiliate of Yorkville Advisors, subject to certain limitations, at the time of the Company’s choosing during the three year term of the SEPA.

On May 8, 2023, the Company entered into a Securities Purchase Agreement (the “Unsecured SPA”) with Metaverse Horizon Limited and V W Investment Holding Limited (the ”Unsecured SPA Purchasers”) to issue and sell, subject to the satisfaction of certain closing conditions, $100.0 million aggregate principal amount of the Company’s senior unsecured convertible promissory notes. On May 10, 2023, the Company received gross proceeds pursuant to the Unsecured SPA totaling $3.3 million ($3.0 million net of original issuance cost). The Unsecured SPA Purchasers committed to fund in eight subsequent closings fifteen days apart, subject to the satisfaction of certain closing conditions. In addition, any Unsecured SPA Purchaser may postpone or cancel any closing pursuant to the Unsecured SPA in its reasonable discretion if it reasonably determines, based on public information, that the first phase of the Company’s three-phase delivery plan as disclosed in public filings has not begun or will not begin prior to May 31, 2023 and/or the second phase of such delivery plan has not begun or will not begin prior to June 30, 2023, in each case within 15 calendar days of such deadline.

Despite the access to liquidity resulting from the SEPA and the unfunded commitments from the SPA, and the Unsecured SPA, the Company projects that it will require additional funds in order to continue operations and support the ramp-up of production of the FF 91 to generate revenues to put the Company on a path to cash flow break-even. Incremental capital needs beyond March 2023 to fund operations and the development of the Company’s remaining product portfolio and to ramp up production will be highly dependent on the market success and profitability of the FF 91 and the Company’s ability to accurately estimate and control costs.

~~Faraday Future Intelligent Electric Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

The Company’s ongoing liquidity needs will depend on the extent to which the Company’s actual costs vary from the Company’s estimates and the Company’s ability to control these costs, as well as the Company’s ability to raise additional funds. The Company is exploring various funding and financing alternatives to fund its ongoing operations and to ramp up production after start of production, including equipment leasing, construction financing of the Hanford, California manufacturing facility, secured syndicated debt financing, convertible notes, working capital loans, and equity offerings, among other options. The particular funding mechanisms, terms, timing, and amounts are dependent on the Company’s assessment of opportunities available in the marketplace and the circumstances of the business at the relevant time.

The timely achievement of the Company’s operating plan as well as its ability to maintain an adequate level of liquidity are subject to various risks associated with the Company’s ability to continue to successfully close additional sources of funding, control and effectively manage its costs, as well as factors outside of the Company’s control, including those related to global supply chain disruptions, the rising prices of materials, ~~and other~~ potential impact of the COVID-19 ~~pandemic. Refer to the section titled,~~ ~~“Risk Factors”~~ ~~in the Company’s Form 10-K for a full discussion of the risks associated with the COVID-19 pandemic.~~pandemic, and general macroeconomic conditions. The Company’s forecasts and projections of working capital reflect significant judgment and estimates for which there are inherent risks and uncertainties.

The Company expects to continue to generate significant

Faraday Future Intelligent Electric Inc.

Notes to Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

(Unaudited)

operating losses for the foreseeable future. The plans are dependent on the Company being able to continue to raise significant amounts of capital through the issuance of additional notes payable and equity securities.

There can be no assurance that the Company will be successful in achieving its strategic plans, that the Company’s future funding raises will be sufficient to support its ongoing operations, or that any additional financing will be available in a timely manner or on acceptable terms, if at all. If events or circumstances occur such that the Company does not meet its strategic plans, the Company will be required to reduce discretionary spending, alter or scale back vehicle development programs, be unable to develop new or enhanced production methods, or be unable to fund capital expenditures. Any such events would have a material adverse effect on the Company’s financial position, results of operations, cash flows, and ability to achieve its intended business objectives.

As of September 30, 2022, the Company was in default on a related party note payable with a principal amount of $8,451. In January 2022, the Company defaulted on the Optional Notes (see Note 10, Notes Payable). The holders of the Optional Notes have waived the default.

The unaudited Condensed Consolidated Financial Statements do not include any adjustments that might result from the outcome of this uncertainty. Accordingly, the unaudited Condensed Consolidated Financial Statements have been prepared on a basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business.

~~As of March 31, 2023,~~

4. Business Combination

On July 21, 2021, the Company ~~was operating in compliance with all covenants related~~consummated the Business Combination. Pursuant to ~~debt agreements, however as~~the terms of the ~~date of issuance~~Merger Agreement, Merger Sub merged with and into Legacy FF, with Legacy FF surviving the merger as a wholly-owned subsidiary of the ~~unaudited Condensed Consolidated Financial Statements~~Company. Upon the consummation of the Business Combination, the registrant changed its name from Property Solutions Acquisition Corp. to Faraday Future Intelligent Electric Inc.

Commitment to Issue Class A and Class B Common Stock

As part of the closing of the Business Combination, former stockholders and noteholders of Legacy FF are required to submit a signed Company share letter of transmittal or converting debt letter of transmittal along with a lockup agreement to the Company’s transfer agent in order for shares of the Company to be issued in their name in exchange for their shares in, notes from, vendor trust or other supplier agreements with, Legacy FF. Until the holder of the right to receive shares of the Company’s Class A Common Stock is ~~in breach~~issued shares, that holder does not have any of ~~its agreement with Chongqing Leshi Small Loan Co., Ltd.,~~the rights of a ~~related party, with a principal balance of $4.7 million. As of December 31,~~stockholder. During the three and nine month ended September 30, 2022, the Company ~~was in default on the Bridge Notes. Subsequent to the date of the Consolidated Financial Statements, the holders of the Bridge Notes waived the default.~~

~~3. Variable Interest Entities~~issued 20,264,715 and ~~Joint Ventures~~

~~The The9 Arrangement~~

On March 24, 2019, the Company entered into a Joint Venture Agreement (“JVA”) with The9 Limited (“The9”). Pursuant to the JVA, the Company and The9 agreed to establish an equity joint venture in Hong Kong, which would in turn establish a wholly-owned subsidiary in China, intended to engage in the business of manufacturing, marketing, selling and distributing the planned Faraday Future Icon V9 model electric vehicle in China. The Company and The9 would each be 50% owners of the joint venture. The9 made a $5.0 million non-refundable initial deposit (“The9 Conditional Obligation”) to the Company to participate in the joint venture. The9 had the right to convert the initial deposit into various classes of stock in the Company. For accounting purposes, the deposit is a financial instrument that embodies a conditional obligation that the issuer may settle by issuing a variable number of shares. The9 Conditional Obligation was measured at fair value, was remeasured at each reporting period, and represented a Level 3 financial instrument under the fair value hierarchy (see Note 7, ~~Fair Value of Financial Instruments). On November 22, 2020, the parties entered into an agreement to convert the initial deposit into 423,053~~89,152,131 shares of Class A Common Stock, respectively, and 64,000,588 shares of Class B Common Stock in full satisfaction of its commitment to issue Class A and Class B Common Stock.

The Company determined that the commitment to issue shares of Class A and Class B Common Stock is indexed to the Company’s own equity, within the meaning in ASC 815-10-15-74 and met the scope exception to not be subject to derivative accounting under ASC 815-40-25. As such, the Company classified the commitment to issue shares of Class A and Class B Common Stock in equity.

For purposes of presentation of shares outstanding in the Company’s financial statements, the unaudited Condensed Consolidated Balance Sheets and unaudited Condensed Consolidated Statements of Commitment to Issue Class A Common Stock and Stockholders’ Equity (Deficit) present legally issued and outstanding shares.

For purposes of presentation of basic and diluted net loss per share in the unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss, the Company includes shares to be issued in the denominator in accordance with ASC 710-10-54-4 and ASC 260-10-45-48 as if they had been issued on the date of the ~~Company, which were issued on February 23, 2021. Neither the Company nor The9 have made contributions to the joint venture~~merger, as ~~of March 31, 2023~~such shares are non-contingent and ~~December 31, 2022, and it has yet to commence business activities.~~are issuable for no consideration.

1319

Faraday Future Intelligent Electric Inc.

Notes to Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

(Unaudited)

~~The Geely Arrangement~~

In December 2020, the Company entered into a non-binding memorandum of understanding with Zhejiang Geely Holding Group Co., Ltd. (“Geely Holding”), which was also a subscriber in the PIPE Financing, pursuant to which the parties contemplate strategic cooperation in various areas including engineering, technology, supply chain, and contract manufacturing (“Geely JV”).

In January 2021, the Company and Geely Holding entered into a cooperation framework agreement and a license agreement (“Geely License”) that set forth the major commercial understanding of the proposed cooperation among the parties in the areas of potential investment into the Geely JV, engineering, technology, and contract manufacturing support. The foregoing framework agreement and the Geely License may be terminated if the parties fail to enter into the joint venture definitive agreement.

4.5. Deposits and Other Current Assets

Deposits and other current assets consist of the ~~following (dollars in thousands):~~following:


Deposits:	Deposits:	March 31, 2023		December 31, 2022		Deposits:	September 30, 2022		December 31, 2021
Deposits for research and development, prototype and production parts, and other	Deposits for research and development, prototype and production parts, and other	$	52,436	$	23,617	Deposits for research and development, prototype and production parts, and other	$	39,142	$	54,990
Deposits for goods and services yet to be received (“Future Work”)		2,969		3,187
Deposits for “Future Work”						Deposits for “Future Work”	5,388		8,380
Total deposits	Total deposits	$	55,405	$	26,804	Total deposits	$	44,530	$	63,370

Other current assets:	Other current assets:					Other current assets:
Prepaid expenses	Prepaid expenses	$	9,121	$	14,437	Prepaid expenses	$	19,300	$	11,119
Inventory		4,049		3,598
Other current assets	Other current assets	1,547		3,052		Other current assets	4,459		2,291
Total other current assets	Total other current assets	$	14,717	$	21,087	Total other current assets	$	23,759	$	13,410

During the three and nine months ended ~~March 31, 2023,~~September 30, 2022, the Company made deposits for research and ~~developments~~development (“R&D”) ~~services,~~, prototype ~~parts,~~ and ~~other~~production parts with its vendors, which support the Company’s ongoing R&D efforts and operations. The Company expenses deposits as the services are provided and prototype parts are received. ~~In addition, during~~

Amortization expense related to the Palantir hosting arrangement and other prepaid software subscriptions totaled $3,204 and $1,466 for the three months ended ~~March 31, 2023,~~September 30, 2022 and 2021, and $8,866 and $1,739 for the ~~Company made deposits for inventory~~nine months ended September 30, 2022 and ~~property and equipment items which are classified out of Deposits upon receipt of title.~~2021, respectively.

~~In July~~During the three months ended September 30, 2022, the Company entered into an ~~annual~~ insurance policy for its directors and officers (“D&O Policy”), which required it to make a prepayment in the amount of $21,732, of which ~~$5,433~~$4,265 was amortized to General and administrative expenses in the unaudited Condensed Consolidated Statement of Operations and Comprehensive ~~Income (Loss)~~Loss for three and nine months ended September 30, 2022.

6. Property and Equipment, Net

Property and equipment, net, consists of the following:


	September 30, 2022		December 31, 2021
Buildings	$	14,180	$	14,180
Computer hardware	3,112		3,051
Tooling, machinery, and equipment	8,916		8,868
Vehicles	337		337
Computer software	4,027		1,032
Leasehold improvements	383		297
Construction in process	391,880		275,048
Less: Accumulated depreciation	(11,178)		(9,678)
Total property and equipment, net	$	411,657	$	293,135

Depreciation expense related to property and equipment totaled $799 and $659 for the three months ended ~~March 31, 2023.~~September 30, 2022 and 2021, respectively, and $2,271 and $2,529 for the nine months ended September 30, 2022 and 2021, respectively.

1420

Faraday Future Intelligent Electric Inc.

Notes to Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

(Unaudited)

~~5. Property and Equipment, Net~~

~~Property and equipment, net, consists of the following (dollars in thousands):~~

March 31, 2023 December 31, 2022
Buildings and leasehold improvements $ 95,519 $ 19,778
Computer hardware 2,094 3,112
Tooling, machinery, and equipment 235,290 9,542
Vehicles 337 337
Computer software 4,125 4,212
Construction in process 120,971 392,935
Less: Accumulated depreciation (11,812) (12,113)
Total property and equipment, net $ 446,524 $ 417,803

~~Depreciation expense related to property and equipment totaled $1.1 million and $0.8 million for the three months ended March 31, 2023 and 2022, respectively.~~

FF announced the start of production of its first electric vehicle, the FF 91 Futurist, on March 29, 2023, at which point the Company classified a portion of its construction in process assets that are available for their intended use in the amount of $225.7 million and $75.7 million to Tooling, machinery and equipment and Buildings, respectively.

6.7. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the ~~following (dollars~~following:


	September 30, 2022		December 31, 2021
Accrued legal contingencies	$	14,606	$	16,881
Engineering, design and testing services received not invoiced	7,637		6,620
Deposits from customers	3,708		4,354
Accrued legal contingencies due to affiliates	6,551		6,673
Obligation to issue registered shares of Class A Common Stock (1)	—		12,635
Bridge Warrants (2)	4,686		—
Other current liabilities	8,916		21,597
Total accrued expenses and other current liabilities	$	46,104	$	68,760

(1) The obligation to issue registered shares of Class A Common Stock was reclassified to Commitment to issue Class A Common Stock upon the adoption of ASU 2020-06 on January 1, 2022, and subsequently to Additional paid-in capital (“APIC”) upon the issuance of Class A Common Stock on July 21, 2022 (see Note 8, Fair Value of Financial Instruments).

(2) Issuance of Liability-classified Warrants

On various funding dates and as part of the SPA (as defined and further discussed in ~~thousands):~~

March 31, 2023 December 31, 2022
Accrued payroll and benefits $ 25,481 $ 20,502
Accrued legal contingencies 16,000 18,940
Engineering, design and testing services received not invoiced 10,591 9,443
Deposits from customers 3,610 3,573
Other current liabilities 11,298 13,251
Total accrued expenses and other current liabilities $ 66,980 $ 65,709

Note 10,
Notes Payable

~~In connection with the Palantir platform hosting arrangement entered into during 2021,~~), the Company ~~has accrued $3.0 million~~issued 6,043,623 warrants (“Bridge Warrants”) to purchase the Company’s Class A Common Stock at a rate of 1:1, with an exercise price of $5 per share, subject to customary anti-dilution protection and ~~$2.5 million~~other adjustments, and are exercisable for seven years on a cash or cashless basis. The Company may repurchase the Warrants for $0.01 per Warrant share if and to the extent the volume weighted average prices of the Company’s Class A Common Stock during 20 of out 30 trading days prior to the repurchase is greater than $15 per share, subject to certain additional conditions.

The Company determined that the Bridge Warrants represent a liability that should be measured at fair value at each issuance date and reporting period, with changes recorded in Changes in fair value measurements in the unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss, as the Bridge Warrants contained provisions that allow the holders to redeem them in cash at any time upon the occurrence of ~~March 31, 2023~~a Fundamental Transaction, as defined in the warrants agreements, among other events, as a sale or transfer of the majority of its assets, merger with or acquisition by a third party. Accordingly, the Company recorded the Bridge Warrants in Accrued expense and ~~December 31, 2022, respectively, in~~ other current liabilities in the Company’s unaudited Condensed Consolidated Balance Sheet upon their issuance based on the relative fair values of the Bridge Notes and Bridge Warrants with portions of the proceeds, net of original issue discount and allocated transaction costs, so allocated to the warrants in the amount of $6,971.

On September 30, 2022, the Company determined the value of the warrants to be $4,686 and recorded ~~$4.9 million~~the difference as gain in the amount of $2,285 in the Changes in fair value measurements in the unaudited Condensed Consolidated Statements of Operations and ~~$2.5 million as of March 31, 2023 and December 31, 2022, respectively, in accounts payable. During~~Comprehensive Loss for the three and nine months ended ~~March 31, 2023 and 2022, the company recognized expense of $2.0 million related to the Palantir hosting arrangement.~~September 30, 2022.

7.8. Fair Value of Financial Instruments (As Restated)

Fair Value Measurements

The Company applies the provisions of ASC 820, Fair Value Measurement, which defines a single authoritative definition of fair value, sets out a framework for measuring fair value and expands on required disclosures about fair value measurements. The provisions of ASC 820 relate to financial assets and liabilities as well as other assets and liabilities carried at fair value on a recurring and nonrecurring basis. The standard clarifies that fair value is an exit price representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would

1521

Faraday Future Intelligent Electric Inc.

Notes to Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

(Unaudited)

use in pricing an asset or liability. As a basis for considering such assumptions, the standard establishes a three-tier value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1Valuations for assets and liabilities traded in active exchange markets, or interest in open-end mutual funds that allow a company to sell its ownership interest back at net asset value on a daily basis. Valuations are obtained from readily available pricing sources for market transactions involving identical assets, liabilities, or funds.

Level 2Valuations for assets and liabilities traded in less active dealer, or broker markets, such as quoted prices for similar assets or liabilities or quoted prices in markets that are not active. Level 2 instruments typically include U.S. Government and agency debt securities and corporate obligations. Valuations are usually obtained through market data of the investment itself as well as market transactions involving comparable assets, liabilities or funds.

Level 3Valuations for assets and liabilities that are derived from other valuation methodologies, such as option pricing models, discounted cash flow models or similar techniques, and not based on market exchange, dealer, or broker-traded transactions. Level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities.

Fair value estimates are made at a specific point in time based on relevant market information and information about the financial or nonfinancial asset or liability.

The Company has elected to apply the fair value option to certain notes payable with conversion features as discussed in Note 9,10, Notes Payable. Fair value measurements associated with the warrant liabilities, and notes payable represent Level 3 valuations under the fair value hierarchy.

Notes Payable

The Company has elected to measure certain notes payable at fair value. Specifically, the Optional Notes and the June 2021 Notes (as defined below), issued pursuant to the Note Purchase Agreement (“NPA”), and the Bridge Notes (as defined below), issued pursuant to the SPA (as defined below), as amended as they contain embedded liquidation premiums with conversion rights that represent embedded derivatives (see Note 9,10, Notes Payable). The Company used a binomial lattice model ~~and Black Scholes methodology~~ to value ~~various~~the notes payable which is widely used for valuing convertible ~~notes payable.~~notes. The significant assumptions used in the ~~models~~binomial lattice model include the risk-free rate, annual dividend yield, expected life, and volatility of the Company's stock.

The fair value adjustments related to notes payables were recorded in Change in Fair Value Measurements on the unaudited Condensed Consolidated Statements of Operations and Comprehensive ~~Income (Loss).~~

~~Bridge Warrants~~

The Company has elected to measure the Bridge Warrants at fair value. The Company used a Monte Carlo simulation model to measure the fair value of the warrants, where the significant assumptions used the volatility rate, the forecasted term of the Bridge Warrants and the projected stock price of the Company’s Class A Common Stock over such term. Fair value measurements associated with the liability-classified warrants represent Level 3 valuations under the fair value hierarchy.

~~SEPA~~

On November 23, 2022, the Company issued 789,016 Commitment Shares in satisfaction of the commitment fee agreed upon in the SEPA. During the period ended March 31, 2023 and as of the date of issuing the Condensed Consolidated Financial Statements, the Company did not direct Yorkville to buy any shares of Class A Common Stock. The Company determined that SEPA represents a derivative financial instrument under ASC 815, Derivatives and Hedging, which should be recorded at fair value at inception and each reporting date thereafter. The financial instrument was classified as a derivative asset with a fair value of $0.0 million as of March 31, 2023 and December 31, 2022.Loss.

Commitment to Issue Class A Common Stock

Upon the closing of the Business Combination, the Company assumed an obligation of PSAC to deliver 2,387,500 registered shares of Class A Common Stock to an entity that provided consulting and advisory services in connection with the Business Combination to PSAC for no consideration.

~~Faraday Future Intelligent Electric Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

Prior to the adoption of ASU 2020-06, ~~on January 1, 2022,~~ the agreement with the service provider specified that the shares to be delivered are required to be registered, which is considered to be outside of the control of the Company, and therefore this obligation failed to qualify for equity treatment under ASC 815-40-25-10, and net cash settlement was assumed.

As a result, in conjunction with recording the assets and liabilities of PSAC on the closing of the Business Combination, the Company recorded a liability of $32,900 for the Obligation to issue registered shares of Class A Common Stock in the Consolidated Balance Sheets during the year ended December 31, 2021. As of December 31, 2021, the fair value of the liability was $12,635 resulting in a gain of $20,265 recorded in the Change in Fair value measurements in the Consolidated Statements of Operations and Comprehensive Loss for the year ended December 31, 2021.

On January 1, 2022, upon the adoption of ASU 2020-06, the requirement to consider whether settlement is required to be in registered shares is no longer required to be considered in an entity’s evaluation of net cash settlement, however ASC 480-10-S99-3a was not amended in a similar fashion and therefore the Company, as part of the adjustments due to the adoption of ASU 2020-06, reclassified the Obligation to issue registered shares of Class A Common Stock from liabilities to the Commitment to issue Class A Common Stock within temporary equity.

Faraday Future Intelligent Electric Inc.

Notes to Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

(Unaudited)

On July 21, 2022, the Company amended its agreement with the service provider and delivered 2,387,500 unregistered shares of Class A Common Stock in satisfaction of its obligation. Upon its settlement, the carrying amount of the commitment equaled its initial carrying amount, therefore the Company classified the entire commitment to issue Class A Common Stock to APIC in the amount of ~~$32.9 million.~~

The Company used the probability-weighted expected return method (“PWERM”) to determine the fair value of the obligation to issue registered shares. The PWERM framework is a scenario-based methodology that estimates the fair value of the obligation based upon an analysis of future values of the settlement of the obligation to issue shares, assuming various outcomes. The probability weightings assigned to certain potential scenarios were based on management’s assessment of the probability of settlement of the liability in cash or shares and an assessment of the timing of settlement. In the equity settlement scenario, the obligation valuation was based on the Company’s share price as of each valuation date. In the cash settlement scenario, the obligation valuation was based the cash payment that equates to the share price times total shares to be issued, discounted to each valuation date.

~~Fair value measurements associated with the obligation to issue shares represent Level 3 valuations under the fair value hierarchy.~~

~~Private Warrants~~

The Private Warrants are classified as liabilities and the fair value is included in Other Liabilities, Less Current Portion on the Consolidated Balance Sheets. The Company valued the Private Warrants using a binomial lattice model. Inherent in a binomial lattice model are assumptions related to risk-free rate, annual dividend yield, expected warrant life, and volatility of the Company's stock. Changes in the fair value of the Private Warrants are recorded in Change in Fair Value Measurements in the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss). Fair value measurements associated with the Private Warrants liabilities represent Level 3 valuations under the fair value hierarchy.$32,900.

Transfer of Private Warrants to Unaffiliated Third Parties

~~Upon transfer of~~On August 9, 2022, PSAC Sponsor transferred 398,420 Private Warrants to unaffiliated third-party purchasers on the open ~~market,~~market. Upon such transfer, the transferred warrants ~~become~~became subject to identical terms to the Public Warrants ~~(see Note 12,~~ ~~Stockholders' Equity~~).underlying the units offered in the initial public offering of PSAC. Therefore, upon their transfer the Company classified the warrants to APIC at their fair value of ~~$0.0 million~~$186.

Issuance of Liability-classified Warrants

The Company used a Monte Carlo simulation model to measure the fair value of the warrants, where the significant assumptions used the volatility rate, the forecasted term of the Bridge Warrants and ~~$0.6 million, as of March 31, 2023 and December 31, 2022.~~

~~Liability Classified Instruments~~

~~From time to time, certain~~the projected stock price of the Company’s ~~equity-linked financial instruments may be classified as derivative liabilities under ASC 815,~~ ~~Derivatives and Hedging, due to the Company having insufficient authorized shares to fully settle the equity-linked financial instruments in shares. See Note 12,~~ ~~Stockholders’ Equity~~.Class A Common Stock over such term.

~~Faraday Future Intelligent Electric Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

Recurring Fair Value Measurements

Financial assets and financial liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The following tables present financial assets and liabilities remeasured on a recurring basis by level within the fair value ~~hierarchy (dollars in thousands):~~hierarchy:


	~~March 31, 2023~~September 30, 2022
	Level 1		Level 2		Level 3
Liabilities:
Notes payable	$	—	$	—	$	~~92,665~~46,950
Private ~~warrants~~Warrants	—		—		52130
Bridge ~~warrants~~Warrants	—		—		~~28,521~~4,686


	December 31, ~~2022~~2021
	Level 1		Level 2		Level 3
Liabilities:
Notes payable	$	—	$	—	$	~~26,008~~161,282
~~Accrued expenses and other current liabilities~~ Private Warrants	—		—		~~6,227~~642
~~Private warrants~~ Obligation to issue registered shares of Class A Common Stock	—		—		52
~~Bridge warrants~~	—		—		~~95,130~~12,635

The carrying amounts of the Company’s financial assets and liabilities, including cash, restricted cash, deposits, and accounts payable approximate fair value because of their short-term nature or contractually defined value.

Faraday Future Intelligent Electric Inc.

Notes to Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

(Unaudited)

The following table summarizes the activity of Level 3 fair value ~~measurements (dollars in thousands):~~measurements:

Bridge Warrants Notes
Payable, Bridge Private Warrants Earnout Shares Liability Liability for Insufficient Authorized Shares Related to Stock Options and RSUs
Balance as of December 31, 2022 $ 95,130 $ 26,008 $ 52 $ 2,250 $ 3,977
Additions 33,266 190,000 — — —
Disposals pursuant to warrant exchange (77,577) — — — —
Exercises (4,079) — — — —
Settlement of transaction costs — (1,139) — — —
Change in fair value measurements (18,219) (79,462) — 2,764 —
Stock-based compensation expense — — — — 5,002
Conversions of liability to Common Stock — — — (5,014) (8,979)
Conversions of notes to Common Stock — (42,742) — — —
Balance as of March 31, 2023 $ 28,521 $ 92,665 $ 52 $ — $ —


	Bridge Warrants		Notes Payable at Fair Value		Private Warrants		Obligation to Issue Registered Shares
Balance as of December 31, 2021	$	—	$	161,282	$	642	$	12,635
Additions	6,971		44,500		—		—
Changes in fair value measurements (as restated)	(2,285)		653		(326)		—
Payments of notes payable, including Payment Premium	—		(87,065)		—		—
Conversions of notes to common stock (as restated)	—		(72,420)		—		—
Reclassification of Private Warrants to Public Warrants	—		—		(186)		—
Reclassification of obligation to issue registered shares upon adoption of ASC 2020-06			—		—		(12,635)
Balance as of September 30, 2022	$	4,686	$	46,950	$	130	$	—

8.9. Related Party Notes Payable

The Company has been significantly funded by notes payable from related parties. These related parties include employees as well as affiliates of employees, affiliates, and other companies controlled or previously controlled by the Company’s founder and Chief Product and User Ecosystem Officer.

Related party notes payable consists of the following as of September 30, 2022:


Note Name	Contractual Maturity Date	Contractual Interest Rates	Balance as of September 30, 2022		Interest Expense for the Three Months Ended September 30, 2022		Interest Expense for the Nine Months Ended September 30, 2022
Related party notes – China(1)	Due on Demand	18%	$	8,451	$	996	$	2,931
Related party notes – China various other	Due on Demand	—%	3,802		—		—
			$	12,253	$	996	$	2,931

(1)As of September 30, 2022, the Company was in default on a related party note with a principal value of $8,451.

The estimated fair value of the related party notes payable, which are not carried at fair value, using inputs from Level 3 under the fair value hierarchy, was $12,726 and $13,337 as of September 30, 2022 and December 31, 2021, respectively.

Related party notes payable consists of the following as of December 31, 2021:


	December 31, 2021
Note Name	Contractual Maturity Date	Contractual Interest Rates	Unpaid Balance		Net Carrying Value at 12/31/21
Related party notes - China	Due on Demand	18%	$	9,411	$	9,411
Related party notes - China various other	Due on Demand	0%	4,244		4,244
Total related party notes payable			$	13,655	$	13,655

Faraday Future Intelligent Electric Inc.

Notes to Condensed Consolidated Financial Statements

~~(Unaudited)~~

~~Related party notes payable consists of the following as of March 31, 2023 (dollars~~ (in ~~thousands):~~

Note Name Contractual
Maturity
Date Contractual
Interest
Rates Net
Carrying
Value Interest Expense for the Three Months Ended March 31, 2023 Accrued Interest
Related party notes - China December 31, 2023 12.0% $ 4,715 $ 140 $ 140
Related party notes – China various other Due on Demand —% 3,928 — —
$ 8,643 $ 140 $ 140

thousands

~~Related party notes payable consists of the following as of December 31, 2022 (dollars in thousands):~~

Note Name Contractual
Maturity
Date Contractual
Interest
Rates Balance
as of December 31, 2022
Related party notes - China December 31, 2023 12.0% $ 4,651
Related party notes – China various other Due on Demand —% 3,755
$ 8,406

~~Fair Value of Related Party Notes Payable Not Carried at Fair Value~~

~~The estimated fair value of the Company’s related party notes payable not carried at fair value using inputs from Level 3 under the fair value hierarchy is $9.1 million~~, except share and ~~$8.7 million as of March 31, 2023 and December 31, 2022, respectively.~~

per share data)

~~Schedule of Principal Maturities of Related Party Notes Payable~~

~~The future scheduled principal maturities of related party notes payable as of March 31, 2023 were as follows (dollars in thousands):~~

Due on demand $ 3,928
2023 4,715
$ 8,643

~~The future scheduled principal maturities of related party notes payable as of December 31, 2022 were as follows (dollars in thousands):~~

Due on demand $ 3,755
2023 4,651
$ 8,406

~~Faraday Future Intelligent Electric Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

(Unaudited)

~~FF Top Expense Reimbursements and Consulting Fees~~

On January 31, 2023, the Company entered into a supplemental agreement to the Preliminary Term Sheet (the “Term Sheet” and such supplemental agreement, the “Supplemental Agreement”) with FF Top Holding LLC (“FF Top”), pursuant to which the parties agreed, due to the high amount of FF Top’s out-of-pocket legal fees and expenses incurred in connection with its financing efforts, to amend the Term Sheet to increase the cap for legal fees and expenses from $0.3 million to $0.7 million. The Company agreed to pay the remaining $0.4 million of the fees owed to FF Top as follows: (i) $0.2 million within one business day of execution of the Supplemental Agreement, and (ii) $0.2 million within one business day of consummation of new financing by the Company in an amount not less than $5.0 million or an earlier date approved by the Board. Pursuant to the Term Sheet, as amended by the Supplemental Agreement, the Company paid FF Top $0.2 million on each of February 1, 2023, and on February 6, 2023. In addition, on April 8, 2023, the Company reimbursed FF Top for $0.1 million related to legal expenses incurred by FF Top in connection with Amendment No. 6 (as defined in Note 9, 10. Notes Payable).

In early February 2023, FF Top requested from the Company legal expense reimbursement of $6.5 million for costs incurred related to the governance changes at the Company, which was not approved by the Board as of the date the unaudited Condensed Consolidated Financial Statements were issued. FF Top may in the future continue to request additional expense reimbursements and indemnification from the Company.

On March 6, 2023, the Company entered into a Consulting Service Agreement with FF Global Partners LLC (“FF Global”), according to which the Company agreed to pay a monthly consulting fee of $0.2 million to FF Global for the following services:

•~~Assistance in developing its funding strategy.~~

•~~Assistance in developing its value return and management strategy.~~

•~~Consultation on and integration of stockholder relations and stockholder resources.~~

•~~Supporting communications regarding stockholders meetings.~~

•~~Developing existing stockholder financing strategy, including with respect to retail investors and others.~~

•~~Assistance in risk management strategy.~~

•~~Assistance in capability build up and operation strategy.~~

Either party may terminate this Agreement upon one month prior written notice to the other party. Upon any termination of this Agreement, the Company shall promptly pay Consultant any accrued but unpaid fees hereunder, and shall reimburse Consultant for any unreimbursed expenses that are reimbursable hereunder. In addition, FF Global is entitled for reimbursement for all reasonable and documented out-of-pocket travel, legal, and other out-of-pocket expenses incurred in connection with their services, which out-of-pocket expenses shall not exceed $0.1 million without the prior written consent of the Company. The Company paid $0.6 million to FF Global during the 2023 to date, pursuant to the Consulting Service Agreement.

~~Advertising Services Payable to Leshi Information Technology Co., Ltd. (“LeTV”)~~

The Company accrued a payable to LeTV within Accrued expenses and other current liabilities in the amount of $7.1 million and $7.0 million as of March 31, 2023 and December 31, 2022, respectively, in connection with advertising services provided to the Company in prior years. LeTV is a Shanghai Stock Exchange-listed public company founded and controlled by Mr. Yueting Jia, the Company’s founder and Chief Product and User Ecosystem Officer.

~~Warm Time Inc. (“Warm Time”) and Ocean View Drive Inc. (“Ocean View”) Transactions~~

The Company leased two real properties, located in Rancho Palos Verdes, California (the “Rancho Palos Verdes Properties”), from Warm Time from January 1, 2018 through March 31, 2022. Warm Time in turn leased the Rancho Palos Verdes Properties from Mr. Jia. The Rancho Palos Verdes Properties were used by the Company to provide long-term or temporary housing to employees of the Company (including Dr. Carsten Breitfeld, former Global CEO of the Company). According to the agreement between the parties, the Company paid Warm Time a monthly amount of $0.1 million for rent and certain services, including catering, room services and organization of meetings, external gatherings and events, for the Rancho

~~Faraday Future Intelligent Electric Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

Palos Verdes Properties. In each of the three months ended March 31, 2023 and 2022, the Company paid to Warm Time $0.1 million for rent and business development services rendered to the Company and its executives.

As part of its relationship with the Company, Warm Time also served as the conduit for certain loans from Ocean View Drive Inc., an entity formerly controlled by Mr. Yueting Jia and now wholly owned by the spouse of Ruokun Jia, who is the former Assistant Treasurer of the Company and Mr. Yueting Jia’s nephew. The loans principal was repaid to the Company in prior years and accrued interest on such loans is outstanding as of March 31, 2023 and December 31, 2022 in the amount of $0.2 million.

In prior years, the Company advanced funding to Ocean View for various real estate purchases, including the Rancho Palos Verdes Properties and related expenses. As of March 31, 2023 and December 31, 2022, the Company has a receivable in the amount of $0.9 million from Ocean View which is recorded Deposits in the unaudited Condensed Consolidated Balance Sheet and Consolidated Balance sheet, respectively.

On February 9, 2023, the Company made a payment of approximately $0.2 million on behalf of Ocean View, an indemnified co-defendant, in connection with a seizure of funds related to the outstanding judgment in ongoing litigation, also involving Han’s San Jose Hospitality, LLC. Ocean View fulfilled its payment obligation under the settlement arrangement of such litigation, but the Company did not make its payment on the outstanding judgment which caused such seizure of funds of Ocean View. See ~~Note 11, Commitments and Contingencies~~ for more information. Following such seizure, the Company paid the outstanding judgment and all accrued interest. The payment remitted on behalf of Ocean View was recorded in Deposits in the unaudited Condensed Consolidated Balance Sheet as of March 31, 2023, the Company received the return of such indemnification payment in April 2023.

~~9. Notes Payable~~ (As Restated)

The Company has entered into notes payable agreements with third parties, which consists of the following as of September 30, 2022:


	September 30, 2022
Note Name	Contractual Maturity Date	Contractual Interest Rates	Unpaid Principal Balance		Fair Value Measurement Adjustments		Original issue discount and proceeds allocated to warrants		Net Carrying Value		Interest Expense for the Three Months Ended September 30, 2022 (As Restated)		Interest Expense for the Nine Months Ended September 30, 2022 (As Restated)
June 2021 Notes (3)	October 31, 2026	0%	$	4,012	$	612	$	(955)	$	3,669	$	—	$	—
Optional Notes (3)	October 31, 2026	15%	2,687		737		(912)		2,512		28		2,572
Bridge Notes (as restated) (4)	August 14, 2026	10%	44,500		7,690		(11,421)		40,769		—		—
Notes payable – China various other	Due on Demand	0%	4,902		—		—		4,902		—		—
Auto loans	October 26, 2026	7%	106		—		—		106		—		—
			$	56,207	$	9,039	$	(13,288)	$	51,958	$	28	$	2,572

The Company settled certain notes payable during the nine months ended September 30, 2022 as follows:


	Nine months ended September 30, 2022
Note Name	Contractual Maturity Date	Contractual Interest Rates	Net carrying value at 12/31/2021		Fair Value Measurement Adjustments		Payment Premium		Cash Payment		Conversion into Class A Common Stock
March 1, 2021 Notes (1)	March 1, 2022	14%	$	56,695	$	(1,695)	$	—	$	(55,000)	$	—
August 26, 2021 Notes (1)	March 1, 2022	14%	30,924		(924)		2,065		(32,065)		—
June 2021 Notes (3)	October 31, 2026	0%	35,071		917		—		—		(35,988)
Optional Notes (3)	October 31, 2026	15%	31,934		(704)		—		—		(31,230)
PPP Loan (2)	April 17, 2022	1%	193		—		—		(193)		—
			$	154,817	$	(2,406)	$	2,065	$	(87,258)	$	(67,218)

(1) On March ~~31, 2023~~1, 2021, the Company amended the NPA to permit the issuance of additional notes payable with principal amounts up to $85,000. On the same day, the Company entered into notes payable agreements with Ares for an aggregate principal of $55,000. The notes payable were collateralized by a first lien on virtually all tangible and ~~December 31,~~intangible assets of the Company, bore interest at 14% per annum and matured on March 1, 2022. On February 25, 2022, ~~(dollars~~the Company repaid the $55,000 principal amount of the March 1, 2021 Notes with accrued interest of $7,721.

On August 26, 2021, the Company exercised its option under the March 1, 2021 notes payable agreement with Ares to draw an additional principal amount of $30,000 which matured on March 1, 2022. As the August 26, 2021 Notes mature in ~~thousands):~~less than one year, according to the terms of the amended NPA, the Company expected to repay them with payment premium of 14% (“Payment Premium”). On February 25, 2022, the Company repaid the $30,000 principal amount of the August 26, 2021 Notes, with accrued interest of $2,135 and Payment Premium of $2,065.

March 31, 2023
Note Name Contractual
Maturity Date Contractual
Interest
Rates Unpaid Principal
Balance Fair Value
Measurement
Adjustments Original issue discount and proceeds allocated to warrants Net
Carrying
Value Interest Expense for the Three Months Ended March 31, 2023 Accrued Interest
Bridge Notes (1)
Various 11%-15% $ 165,034 $ (37,937) $ (34,432) $ 92,665 $ 4,360 $ 2,482
Notes payable – China other Due on Demand —% 5,065 — — 5,065 — —
Auto loans October 2026 7% 94 — — 94 2 —
$ 170,193 $ (37,937) $ (34,432) $ 97,824 $ 4,362 $ 2,482

December 31, 2022
Note Name Contractual
Maturity Date Contractual
Interest
Rates Unpaid Principal
Balance Fair Value
Measurement
Adjustments Original issue discount and proceeds allocated to warrants Net
Carrying
Value Interest Expense for the three months Ended March 31, 2022 Accrued Interest
Bridge Notes (1)
October 27, 2028 10% $ 36,622 $ 264 $ (10,878) $ 26,008 $ 1,272 $ 1,676
Notes payable – China other Due on Demand —% 4,997 — — 4,997 — —
Auto loans October 2026 7% 100 — — 100 — —
$ 41,719 $ 264 $ (10,878) $ 31,105 $ 1,272 $ 1,676
The settlement of the March 1, 2021 Notes and August 26, 2021 Notes are summarized below:

2125

Faraday Future Intelligent Electric Inc.

Notes to Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

(Unaudited)

~~(1)~~


	September 30, 2022		December 31, 2021
March 1, 2021 Notes
Outstanding principal	$	—	$	55,000
Accrued interest	—		6,455
Interest expense for the nine months ended September 30, 2022	1,266		—
Principal payments	55,000		—
Interest payments	7,721		—


	September 30, 2022		December 31, 2021
August 26, 2021 Notes
Outstanding principal	$	—	$	30,000
Accrued interest	—		1,473
Interest expense for the nine months ended September 30, 2022	662		—
Principal payments	30,000		—
Interest payments	2,135		—
Payment Premium payments	2,065		—

(2) In April 2022, the Company paid the remaining principal and accrued interest in an aggregate amount of $193.

(3) On July 26, 2022, the Company entered into an agreement (the “ATW July Amendment”) with entities affiliated with ATW Partners LLC (collectively, the “Investors”), to extend the maturity date, adjust the conversion price and otherwise amend the terms (as described further below) of the Optional Notes and the June 2021 Notes (together, “ATW NPA Notes”).

Pursuant to the ATW July Amendment:

(a) the maturity date of each of the ATW NPA Notes was extended to October 31, 2026. This extension does not, however, defer the accrual of interest to the new maturity date. Interest shall accrue on the Notes at 10% per annum following February 10, 2023;

(b) the conversion price of each of the ATW NPA Notes was adjusted to equal the lesser of (x) $10, (y) 95% of the per share daily volume weighted average prices (“VWAP”) of the Company’s Class A Common Stock during the 30 trading days immediately prior to the applicable conversion date and (z) the lowest effective price per share of Class A Common Stock (or equivalents) issued or issuable by the Company in any financing of debt or equity after July 26, 2022, subject to possible adjustment as set forth therein (the “Set Price”). However, from July 26, 2022 to December 30, 2022, the conversion price of each of the ATW NPA Notes is equal to the lesser of (i) the Set Price, and (ii) 92% of the lowest of the VWAP during the seven (7) trading days immediately prior to the applicable conversion date;

(c) a “forced conversion” feature was added to each of the ATW NPA Notes that allows the Company, on or after December 31, 2022, to cause the conversion of all or part of, in the aggregate among all of the ATW NPA Notes, up to $35,000 principal amount of the ATW NPA Notes less any principal amount of the ATW NPA Notes voluntarily converted by the holder thereof after July 26, 2022, subject to certain conditions as set forth in the ATW July Amendment;

(d) the date by which the Investors must exercise their option to purchase additional June 2021 Notes of up to $40,000 from the Company under the terms of the NPA was extended to July 20, 2023; and

(e) within 45 days of the date on which at least $50,000 in senior secured convertible term loans have been funded to the Company by the Investors or their affiliates under the “Tranche A Loans” facility (the “Tranche A Facility”) (which funding by the Investors or their affiliates is conditioned upon the Company obtaining binding commitments for at least $100,000 in additional financing) (the “Collateral Trigger Date”), subject to agreement by the Company and the Investors on the terms of such Tranche A Facility, the Amendment provides that the

Faraday Future Intelligent Electric Inc.

Notes to Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

(Unaudited)

Company and the Investors will enter into a security agreement to secure the obligations under the Notes with a junior lien on substantially all of the assets that secure the Tranche A Facility (the “Lien Security Agreement”).

The ATW July Amendment was accounted for as a troubled debt restructuring under ASC 470-60, Troubled Debt Restructuring, because the Company was experiencing financial difficulty and the conversion mechanism results in the effective borrowing rate decreasing after the restructuring which was determined to be a concession. Since the future undiscounted cash flows of the restructured notes payable exceed the net carrying value of the original note payable due to the maturity date extension, the modification was accounted for prospectively with no gain or loss recorded in the unaudited Consolidated Statements of Operations and Comprehensive Loss.

Interest expense on the ATW NPA Notes is computed using the contractual interest rate. The Company concluded that the conversion feature does not require bifurcation based on the derivative accounting scope exception in ASC 815 for certain contracts involving an entity’s own equity.

Between August 16, 2022 and September 14, 2022, the Investors converted $67,218 of principal at conversion prices ranging from $0.84 to $2.29 per share into 64,843,850 shares of Class A Common Stock, resulting in a $22,764 Loss on settlement of notes payable being recognized in the Condensed Consolidated Statement of Operations and Comprehensive Loss during the three and nine months ended September 30, 2022.

The Tranche A Facility was funded on October 10, 2022 (as further described below with regards to the Fourth Bridge Notes), which was considered the Collateral Triggered Date. On the same day and on October 19, 2022, the remaining ATW NPA Notes in the aggregate amount of $6,699 were exchanged for 11,496,868 shares of Class A Common Stock of the Company (see Note 16, Subsequent Events) and, therefore, the requirement to enter into the Lien Security Agreement was terminated.

(4) On August 14, 2022, the Company entered into a Securities Purchase Agreement ~~(the “SPA”~~(“SPA”) with certain entities affiliated with ATW Partners LLC and RAAJJ Trading LLC (and together with Senyun, as defined below, the “Purchasers”) to issue and sell the Company’s senior secured convertible notes (the “Bridge Notes”) in three tranches aggregating to ~~$52.0 million~~$52,000 in principal (as increased on September 23, 2022 to ~~$57.0 million,~~$57,000, which increase was subsequently terminated upon the Initial Senyun Funding Date, as defined below) and maturing on August 14, 2026 (subsequently extended to October 27, 2028). The Bridge Notes are subject to an original issue discount of 10%, and are convertible, along with any interest accrued, into shares of Class A Common Stock at a conversion price equal to $2.69 (or $2.2865 for the initial tranche) (“Conversion Price”), subject to a full ratchet anti-dilution protection. When calculating the shares issuable upon conversion, the converted amount shall be decreased by 50% of the original issue discount pertaining to such amount. As of September 30, 2022, the Purchasers funded $44,500, less total original discounts of $4,450 and transaction costs of $2,813, equating to net proceeds of $37,237.

The Bridge Notes bear interest of 10% per annum payable quarterly and on each conversion and on the maturity date in cash or in shares of Class A Common Stock. Unless earlier paid, the Bridge Notes entitle the Purchasers, at each conversion date, to an interest make-whole (“Make-Whole Amount”), in a combination of cash or Class A Common Stock at the Company’s discretion, in the amount of the interest that would have been payable if such converted amount was held to maturity based on an interest rate of 15% per annum. The conversion price of interest is the lesser of (a) the Conversion Price or (b) 90% of the lowest VWAP for the five consecutive trading ~~days (“Interest Conversion Price”). When calculating the shares issuable upon conversion, the Make-Whole Amount shall be decreased by 50%~~days.

As part of the ~~original issue discount pertaining to such amount.~~

~~The Bridge Notes are secured by the grant of a second lien upon substantially all of the personal and real property of~~SPA, the Company issued to the Purchasers 6,043,623 warrants with ratchet clauses triggering an increase to 42,342,839 warrants (“Bridge Warrants"), with an exercise price of $5.00 per share, subject to full ratchet anti-dilution protection and ~~its subsidiaries, as well as guarantee by substantially all~~other adjustments, exercisable for seven years from the date of issuance (see Note 13, Stockholders' Equity). The Company may repurchase the Bridge Warrants for $0.01 per share if and to the extent the VWAP of the Company’s ~~domestic subsidiaries.~~Class A Common Stock during 20 of out 30 trading days prior to the repurchase is greater than $15 per share, subject to certain additional conditions.

Total commitments under the SPA shall not exceed ~~$300.0 million,~~$300,000, however each Purchaser has the option within 12 months from November 12, 2022 (the “Form S-1 Effective Date”) to purchase additional senior secured convertible notes under similar terms for a total potential commitments of up to ~~$300.0 million~~$600,000 (“Tranche B Notes”).

~~The Company elected the fair value option afforded by ASC 825,~~ ~~Financial Instruments~~, with respect to the Bridge Notes because the notes include features, such as a contingently exercisable put option, which meets the definition of an embedded derivative. The Company expenses original issue discount and transaction costs to Changes in fair value measurements in the unaudited Condensed Consolidated Statement of Operations and Comprehensive Loss.

On September 23, 2022, the SPA was amended (the “SPA Amendment”), pursuant to which the Purchasers agreed to accelerate their funding obligations, with ~~$7.5 million~~$7,500 aggregate principal amount (the “Third Bridge Notes”) being funded and issued on the same day, and the remaining ~~$7.5 million~~$7,500 aggregate principal amount (the “Fourth Bridge Notes”) being funded

Faraday Future Intelligent Electric Inc.

Notes to Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

(Unaudited)

and issued on October 10, 2022. The Third Bridge Notes and Fourth Bridge Notes are convertible into shares of Class A Common Stock at a conversion price of $1.05 per share, mature on October 27, 2028, and are otherwise subject to the same terms and conditions in the SPA as applicable to the Bridge Notes described therein.

The Bridge Notes are secured by the grant of a second lien upon substantially all of the personal and real property of the Company and its subsidiaries, as well as guarantee by substantially all of the Company’s domestic subsidiaries.

Additionally, the SPA Amendment modified the conversion price of ~~$25.0 million~~$25,000 of principal of the Bridge Notes, which were funded on August 14, 2022, to $1.05 per share. The Company evaluated the SPA Amendment in accordance with ASC 470-50, Debt, and determined that it constitutes an extinguishment because the change in the conversion price is substantial. ~~Accordingly,~~According, the Company recognized a loss in Loss on extinguishment or settlement of related party notes payable, notes payable and vendor payables in trust, net in the unaudited Condensed Consolidated Statements of Operations and Comprehensive for the three and nine months ended September 30, 2022 in the amount of $7,690, calculated as the cumulative change in fair value from initial recognition through to the date of amendment.

~~Third and Fourth Amendments to the SPA~~

On ~~October 24,~~September 25, 2022, the Company entered into a ~~Limited Consent~~Joinder and ~~Third~~ Amendment Agreement to the SPA (the ~~“Third Amendment”~~“Joinder”) with Senyun International Ltd., an affiliate of Daguan International Limited (“Senyun”), pursuant to which Senyun agreed to purchase incremental notes under the ~~maturity~~SPA in an aggregate principal amount of up to $60,000, subject to the completion of due diligence by the Company of Senyun and its financing sources. Senyun has all of the same rights and obligations as a Purchaser under the SPA.

Pursuant to the Joinder and following the completion of the Company’s due diligence of Senyun and its financing sources, Senyun is expected to fund its commitments according to the following schedule (subject, in each case to the satisfaction of certain conditions): (a) $10,000 in principal which was funded on October 27, 2022 (“First Senyun Funding Date”), out of which the Company received $8,800, net of original issue discount and transaction costs); (b) $10,000 in principal on the later of (x) 14 business days after the First Senyun Funding Date and (y) the receipt of approval of the Company’s stockholders of certain proposals (which was obtained on November 3, 2022), and was funded on November 15, 2022, out of which the Company received $8,970, net of original issue discount and transaction costs (“Second Senyun Funding Date”); (c) $10,000 in principal amount not later than 15 business days after the Form S-1 Effective Date; (d) $10,000 in principal amount within 30 business days after the Form S-1 Effective Date; and (e) $20,000 in principal amount on a date ~~for~~that is no later than ten (10) business days after the launch of the FF 91.

Upon the First Senyun Funding Date, the Purchasers’ obligation to purchase an additional $5,000 in aggregate principal amount of senior secured convertible notes automatically terminated.

The Company elected the fair value option afforded by ASC 825, Financial Instruments, with respect to the Bridge Notes ~~was extended from August 14, 2026 to October 27, 2028. In addition, pursuant to~~because the ~~Third Amendment, each Purchaser and the Agent waived certain defaults and events of default under the SPA, any~~ notes ~~issued pursuant to the SPA and other related documents. The amendment was accounted for~~include features, such as a ~~troubled debt restructuring under ASC 470-60,~~ ~~Debt – Troubled Debt Restructurings by Debtors, because~~contingently exercisable put option, which meets the definition of an embedded derivative. Upon their issuance, the Company ~~was experiencing financial difficulty and~~determined that the ~~extension~~aggregated fair value of the ~~maturity date following the restructuring results~~Bridge Notes and Bridge Warrants was $33,079 and $6,971, respectively. The Company expenses original issue discount and transaction costs to Changes in ~~a reduced effective borrowing rate for the Company. The amendment was accounted for prospectively with no gain or loss recorded~~fair value measurements in the unaudited Condensed Consolidated ~~Statements~~Statement of Operations and Comprehensive ~~Loss for the year ended December 31, 2022.~~

~~On November 8, 2022, the~~Loss. The Company ~~entered into a Limited Consent and Amendment~~did not separately report interest expense attributable to the ~~SPA (the “Fourth Amendment”),~~Bridge Notes accounted for pursuant to ~~which~~ the ~~parties agreed that (i) in no event will the effective conversion price of any interest or~~

~~Faraday Future Intelligent Electric Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

interest make-whole amount payable in shares of Class A Common Stock in respect of Bridge Notes issued or issuable under the SPA be lower than $0.21 per share of Class A Common Stock, and (ii) in order for the Company to make payment of any interest or interest make-whole amount in shares of Class A Common Stock, certain price and volume requirements must be met, namely that (x) the VWAP of the Class A Common Stock is not less than $0.21 per share on any trading day during the preceding seven trading day period, and (y) the total volume of the Class A Common Stock does not drop below $1.5 million on any trading day during the same period (in each case, as adjusted for any stock splits, stock dividends, stock combinations, recapitalizations or other similar transactions). The amendment was accounted for as a troubled debt restructuring under ASC 470-60, ~~Debt – Troubled Debt Restructurings by Debtors~~, because the Company was experiencing financial difficulty and the addition of a floor price on the conversion of the convertible notes is assessed as a concession to the Company. The amendment was accounted for prospectively with no gain or loss recordedfair value option in the Consolidated Statements of Operations and Comprehensive Income (Loss).

~~Senyun Amendment~~

~~On December 28, 2022,~~ because such interest was included in the Company entered into a Letter Agreement and Amendment to the SPA (the “Senyun Amendment”) with Senyun International Ltd. (“Senyun”) pursuant to which the conversion rate of notes totaling $19.0 million was lowered from $1.05 to $0.89 and future funding timeframes were renegotiated. As the terms of this modification were determined to not be substantially different, the new debt is accounted for as a continuationdetermination of the ~~original debt at~~ fair value ~~using the now lower conversion rate. As a result~~ of the new conversion rate the Company was obligated for the year then ended to issue additional shares to Senyun based on the lower conversion rate. The Company accounted for this obligation by crediting Other current liabilities and debiting Additional paid-in capital for an amount of $0.9 million in the Consolidated Balance Sheet as of December 31, 2022.

~~Sixth Amendment to the SPA~~

On February 3, 2023, the Company entered into Amendment No. 6 to SPA (“Amendment No. 6”) in which the Company agreed to sell up to $135.0 million in aggregate principal amount of the Company’s senior secured convertible notes (the “Tranche C Notes”) with terms largely congruent to prior issuances and $1.05 base conversion price subject to full ratchet anti-dilution price protection. Each Purchaser has the option to purchase additional convertible senior secured notes and warrants on the same terms as the Tranche C Notes in an amount not to exceed 50% of the initial principal amount of the Tranche C Notes issued to such Purchaser pursuant to the terms of the SPA (the “Tranche D Notes”).

Pursuant to Amendment No. 6, certain outstanding Tranche A Notes issued by the Company to Purchasers with an aggregate outstanding principal amount of $31.0 million were replaced by the same principal amount of new notes (each, a “Replacement Note”) with a $0.89 base conversion price. In accordance with ASC 470-50, ~~Debt, the change in conversion price qualifies as an extinguishment because the change in the conversion price was substantial. Accordingly, the Company recognized a Loss on settlement of~~ notes payable ~~in the unaudited Condensed Consolidated Statements of Operations~~ and ~~Comprehensive (Income) Loss for the three months ended March 31, 2023 in the amount of $3.0 million, calculated as the difference between the reacquisition price and net carrying amount of the notes.~~

Pursuant to Amendment No. 6 the Company entered into an agreement with certain Purchasers (“an Exchange Agreement”) holding a total of 198,129,990 NPA Warrants and SPA Warrants to exchange them for an aggregate 90,489,346 NPA Warrants and SPA Warrants and principal convertible notes totaling $41.0 million. The issued warrants have terms that limit down-round ratchet clauses to price adjustments only. The issued senior secured convertible notes (the “Exchange Notes”) have terms congruent to existing SPA notes but carry a $0.89 base conversion price and no original issuance discount. Pursuant to the Exchange Agreement, equity-classified warrants were exchanged for warrants which satisfy liability classification per ASC 480, ~~Distinguishing Liabilities from Equity~~, and were reclassified from equity to Bridge Warrants in the unaudited Condensed Consolidated Balance Sheet in a total amount of $6.8 million. As a result of the transaction the Company recognized no loss or gain in the Consolidated Statements of Operations and Comprehensive Income (Loss).

~~Seventh Amendment to the SPA~~

On March 23, 2023, the Company entered into an Amendment No. 7 to the SPA (the “Seventh Amendment”) with Senyun and entities affiliated with ATW Partners LLC, pursuant to which the parties agreed to accelerate the funding timeline of Tranche C Notes in the amount of $40.0 million, and an entity affiliated with ATW Partners LLC agreed to purchase additional Tranche B Notes in the amount of $5.0 million, in each case, subject to meeting certain conditions, in exchange for an agreement to increase original issuance costs associated with such funding. As part of the agreement,

~~Faraday Future Intelligent Electric Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

~~original issuance discount related to $25.0 million in principal amount of Tranche C Notes and Tranche B notes was agreed to be 14% and 16%, respectively.~~

During the three months ended March 31, 2023, the Company received gross proceeds of $105.0 million and $34.0 ($92.6 million and $29.3 million net of original issuance costs) in exchange for the issuance of Tranche C Notes and Tranche B Notes, respectively. The Company also received gross proceeds of $10.0 million ($8.8 million net of original issuance costs) in exchange for the issuance of Tranche A Notes.

During the three months ended March 31, 2023, the Company issued to the Purchasers a total of 48,714,277 warrants (“Bridge Warrants" or “SPA Warrants”). Upon their issuance, the Bridge Warrants had an exercise price of $0.89 to $1.05 per share, subject to anti-dilution ratchet price protection, exercisable for seven years from the date of issuance (see ~~Note 12,Stockholders' Equity~~). The Company may repurchase the Bridge Warrants for $0.01 per share if and to the extent the VWAP of the Company’s Class A Common Stock during 20 out of 30 trading days prior to the repurchase is greater than $15.0 per share, subject to certain additional conditions. During the three months ended March 31, 2023, the Purchasers exercised 35,314,752 Bridge Warrants. As of March 31, 2023, there were 93,571,419 Bridge Warrants outstanding.changes thereto.

On ~~March 31, 2023~~September 30, 2022, the Company determined that the fair value of the Bridge Notes and Bridge Warrants was ~~$92.7 million~~$40,769 and ~~$28.5 million,~~$4,686, respectively, resulting in a ~~gain~~loss in ~~Change~~Changes in fair value measurements in the unaudited Condensed Consolidated Statement of Operations and Comprehensive ~~Income (Loss)~~Loss for the three and nine months ended ~~March 31, 2023~~September 30, 2022 in the amount of ~~$79.5 million~~$7,690 and ~~$18.2 million~~$(2,285), respectively.

During the three months ended March 31, 2023, total Bridge Notes principal of $61.6 million with a fair value of $42.7 million and accrued interest of $3.6 million was converted to Additional paid-in capital. Total settlement of notes payable transaction costs for the three months ended March 31, 2023 totaled $1.1 million.

Fair Value of Notes Payable Not Carried at Fair Value

The estimated fair value of the Company’s notes payable not carried at fair value, using inputs from Level 3 under the fair value hierarchy, was ~~$4.9 million~~$4,857 and $5,350 as of ~~March 31, 2023~~September 30, 2022 and December 31, ~~2022.~~2021, respectively.

Faraday Future Intelligent Electric Inc.

Notes to Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

(Unaudited)

Schedule of Principal Maturities of Notes Payable

The future scheduled principal maturities of notes payable as of ~~March 31, 2023~~September 30, 2022 are as ~~follows (dollars in thousands):~~follows:
Due on demand $ 5,065
2023 —
2024 —
2025 41,000
2026 94
2027 —
Thereafter 124,034
$ 170,193


Due on demand	$	4,902
2022	4,012
2023	2,687
2026	44,606
	$	56,207

* On October 24, 2022, the Company entered into a Limited Consent and Third Amendment to the SPA (the “Third Amendment”) pursuant to which the maturity date for the Bridge Notes was extended from August 14, 2026 to October 27, 2028 (see Note 16, Subsequent Events).

Notes payable consists of the following as of December 31, 2021:


	December 31, 2021
Note Name	Contractual Maturity Date	Contractual Interest Rates		Unpaid Balance		Fair Value Measurement Adjustments		Original issue discount and proceeds allocated to warrants		Net Carrying Value
March 1, 2021 Notes	March 1, 2022	14	%	$	55,000	$	7,692	$	(5,997)	$	56,695
August 26, 2021 Notes	March 1, 2022	14	%	30,000		1,011		(87)		30,924
June 9, 2021 Note 1 and Note 2	December 9, 2022	—	%	40,000		8,503		(9,522)		38,981
August 10, 2021 Optional Notes	February 10, 2023	15	%	33,917		12,283		(11,518)		34,682
Notes payable - China various other	Due on demand	—	%	5,458		—		—		5,458
PPP Loan	April 17, 2022	1	%	193		—		—		193
Auto loans	Various	Various		121		—		—		121
Total notes payable				$	164,689	$	29,489	$	(27,124)	$	167,054

~~10.~~11. Leases

The Company determines if an arrangement is a lease at its commencement if the Company is both able to identify an asset and conclude the Company has the right to control the identified asset. Leases are classified as finance or operating based on the principle of whether or not the lease is effectively a financed purchase by the lessee. An ROU asset represents the Company’s right to use an underlying asset for the lease term and a lease liability represents the Company’s obligation to make lease payments related to the lease. The Company recognizes operating and finance lease ROU assets and liabilities at the commencement date based on the present value of lease payments over the lease term. The lease term includes renewal options when it is reasonably certain that the option will be exercised, and excludes termination options. The Company’s leases do not provide an implicit rate therefore, the Company uses its incremental borrowing rate based on information available at the commencement date to determine the present value of lease payments. The incremental borrowing rate used is estimated based

~~Faraday Future Intelligent Electric Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

on what the Company would be required to pay for a collateralized loan for a similar asset over a similar term. The Company’s leases do not include any material residual value guarantees, bargain purchase options, or asset retirement obligations.

To the extent that the Company’s agreements have variable lease payments, the Company includes variable lease payments that depend on an index or a rate in the measurement and classification of a lease and excludes those that depend on facts or circumstances occurring after the commencement date, other than the passage of time. Lease expense for operating leases is recognized on a straight-line basis over the lease term and is recorded in operating expenses on the unaudited Condensed Consolidated Statements of Operations and Comprehensive ~~Income (Loss).~~Loss. Amortization of ROU assets on finance leases is recorded on a straight-line basis within operating expenses in the unaudited Condensed Consolidated Statements of Operations. Interest expense incurred on finance lease liabilities is recorded in Interest expense on the unaudited Condensed Consolidated Statements of Operations and Comprehensive ~~Income (Loss).~~Loss. The Company has elected not to recognize ROU assets and lease liabilities that arise from short-term (12 months or less) leases for any class of underlying asset. Additionally, the Company does not separate lease and non-lease components. Operating leases are included in ROU assets, Operating leases liabilities, current

Faraday Future Intelligent Electric Inc.

Notes to Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

(Unaudited)

portion and Operating lease liabilities, less current portion in the Company's unaudited Condensed Consolidated Balance Sheets. Finance leases are included in Property and equipment, net, Finance lease liabilities, current portion, and Finance lease liabilities, less current portion in the Company's unaudited Condensed Consolidated Balance Sheets.

The Company’s lease arrangements consist primarily of its ieFactory California production facility, corporate office, store, equipment, and vehicle lease agreements. The leases expire at various dates through 2032, some of which include options to extend the lease term for additional ~~5-year~~5 years periods.

Total lease costs for the three and nine months ended ~~March 31, 2023 and~~September 30, 2022 ~~were (dollars in thousands):~~were:


		Three Months Ended March 31, 2023		Three Months Ended March 31, 2022			Three Months Ended September 30, 2022		Nine Months Ended September 30, 2022
Finance lease cost	Finance lease cost					Finance lease cost
Amortization of right-of-use assets	Amortization of right-of-use assets	$	91	$	500	Amortization of right-of-use assets	$	91	$	273
Interest on lease liabilities	Interest on lease liabilities	96		177		Interest on lease liabilities	169		520
Total finance lease cost	Total finance lease cost	187		677		Total finance lease cost	260		793

Operating lease cost	Operating lease cost	1,481		882		Operating lease cost	434		1,966
Variable lease cost	Variable lease cost	112		134		Variable lease cost	24		425
Total lease cost	Total lease cost	$	1,780	$	1,693	Total lease cost	$	718	$	3,184

The following table summarizes future lease payments as of ~~March 31, 2023 (dollars in thousands):~~September 30, 2022:


Fiscal year	Fiscal year	Operating Leases		Finance Leases		Fiscal year	Operating Leases		Finance Leases
2023 (nine months)		$	4,151	$	1,292
2022						2022	$	1,289	$	643
2023						2023	5,259		2,166
2024	2024	5,496		1,757		2024	5,482		1,757
2025	2025	5,257		1,792		2025	5,243		1,792
2026	2026	5,216		1,828		2026	5,197		1,828
2027		2,896		1,864
Thereafter	Thereafter	9,284		—		Thereafter	12,173		1,864
Total	Total	32,300		8,533		Total	34,643		10,050
Less: Imputed Interest	Less: Imputed Interest	12,293		934		Less: Imputed Interest	13,516		1,326
Present value of net lease payments	Present value of net lease payments	20,007		7,599		Present value of net lease payments	21,127		8,724

Lease liability, current portion	Lease liability, current portion	$	2,609	$	1,390	Lease liability, current portion	$	2,487	$	1,807
Lease liability, net of current portion	Lease liability, net of current portion	17,398		6,209		Lease liability, net of current portion	18,640		6,917
Total lease liability	Total lease liability	$	20,007	$	7,599	Total lease liability	$	21,127	$	8,724

Supplemental information and non-cash activities related to operating and finance leases are as follows:


	Nine Months Ended September 30, 2022
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	1,966
Operating cash flows from finance leases	520
Financing cash flows from finance leases	1,410
	3,896
Lease liabilities arising from new right-of-use assets
Operating leases	11,906

430

Faraday Future Intelligent Electric Inc.

Notes to Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

(Unaudited)


	As of September 30, 2022
Weighted average remaining lease term (in years)
Operating leases	6.2
Finance leases	5

Weighted average discount rate
Operating leases	15.6	%
Finance leases	5.7	%

~~Supplemental information~~

Disclosures Related to Periods Prior to Adoption of the New Lease Standard:

The Company recorded rent expense of $1,131 and ~~non-cash activities related to~~$2,361 for the three and nine months ended September 30, 2021, respectively.

The minimum aggregate future obligations under non-cancelable operating leases as of December 31, 2021 were as follows:


Year ended December 31,
2022	$	2,384
2023	2,695
2024	2,775
2025	2,859
2026	2,944
Thereafter	991
	$	14,648

The Company has three capital leases, one in Hanford, California for its ieFactory California production facility, and ~~finance~~two equipment leases.

The minimum aggregate future minimum lease payments under capital leases ~~are~~ as ~~follows (dollars in thousands):~~
Three Months Ended
March 31, 2023 Three Months Ended
March 31, 2022
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases $ 1,323 $ 833
Operating cash flows from finance leases 96 177
Financing cash flows from finance leases 335 466
$ 1,754 $ 1,476
Lease liabilities arising from new right-of-use assets
Operating leases $ — $ 8,206
Finance leases $ — $ —
of December 31, 2021 were as follows:

As of March 31, 2023 As of December 31, 2022
Weighted average remaining lease term (in years)
Operating leases 6.2 6.4
Finance leases 4.8 5.0
Weighted average discount rate
Operating leases 15.6 % 15.6 %
Finance leases 5.0 % 5.0 %


Year ended December 31,
2022	$	2,574
2023	2,166
2024	1,757
2025	1,792
2026	1,840
Thereafter	1,864
	$	11,993

~~11.~~12. Commitments and Contingencies

Legal ~~Proceedings~~Matters

The Company is, from time to time, subject to claims and disputes arising in the normal course of business. In the opinion of management, the outcome of any such claims and disputes cannot be predicted with certainty.

~~Class and Derivative Actions~~

On December 23, 2021, a putative class action lawsuit alleging violations of the Securities Exchange Act of 1934 was filed in the United States District Court, Central District of California, against the Company, among others, and its current Global CEO, its former ~~Chief Executive Officer and Chief Financial Officer,~~CFO, its current Chief Product and User Ecosystem Officer, as well as the CFO of Legacy FF ~~three independent directors of PSAC,~~ and ~~the Co-CEOs of PSAC (the “Putative Class Action”).~~

On March 7, 2022, the following individuals were appointed as Lead Plaintiffs: Byambadorj Nomin, Hao Guojun, Peihao Wang and Shentao Ye. On the same date, Wolf Haldenstein and Pomerantz LLP were appointed as Co-Lead Counsel. Lead Plaintiffs filed an amended complaint on May 6, 2022.

On July 5, 2022, the Company and all other Defendants filed a joint motion to dismiss the amended complaint. In their opposition, Plaintiffs withdrew their claim under Section 11 of the 1933 Securities Act. After complete briefing and a hearing on the motion, on October 20, 2022, the District Court issued its decision, denying in part and granting in part the Defendant’s motion to dismiss. The court found, among other things, that Plaintiffs had sufficiently pled a claim for violation of Sections 10(b), 14(a) and 20(a) of the Securities Exchange Act of 1934 with respect to certain statements made in 2021 concerning Legacy FF’s receipt of 14,000 reservations for the FF 91 vehicle. The District Court also found, however, that Plaintiffs had failed to sufficiently plead a claim with respect to forward-looking statements made concerning the expected schedule for the production and delivery of the FF 91 vehicle. The District Court’s dismissal was without prejudice and leave to amend the complaint was granted. Defendants filed a motion for reconsideration of court’s ruling sustaining the claim under Section 14(a) of the 1933 Securities Act, which was denied on December 12, 2022.

531

Faraday Future Intelligent Electric Inc.

Notes to Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

(Unaudited)

On January 6, 2023, the plaintiffs declined to again amend their complaint to attempt to reallege the claims dismissed by the District Court. As a result, the amended complaint filed on May 6, 2022 is the operative complaint with the exceptionformer CFO of the ~~voluntarily withdrawn and judicially dismissed claims, which include all claims against the Company’s former Chief Financial Officer~~Company, and the ~~three independent PSAC directors. The Company~~Co-CEOs of PSAC. Also, on March 8, March 21, April 11, and ~~other Defendants~~April 25 2022, putative stockholder derivative lawsuits were filed ~~answers on February 10, 2023. The Company has asserted that~~in the ~~suit is without merit~~United States District Court, Central District of California and ~~stated its intention to vigorously defend the suit. Given the early stages~~United States District Court, District of Delaware against numerous current and former officers and directors of the ~~legal proceedings, it is not possible to predict the outcome~~Company alleging violations of the Securities Exchange Act of 1934 and various common law claims. Also, on June 14, 2022, a verified stockholder class action complaint was filed in the Court of Chancery of the State of Delaware against, among others, the Company, its current Global CEO, its former CFO and its current Chief Product and User Ecosystem Officer alleging breaches of fiduciary duties. Lastly, on September 21, 2022, a verified stockholder class action complaint was filed in the Court of Chancery of the State of Delaware against, among others, the Company, the Co-CEOs and independent directors of PSAC, and certain third-party advisors to PSAC, alleging breaches of fiduciary duties, and aiding and abetting the alleged breaches, in connection with disclosures and stockholder voting leading up to the Business Combination.

On March 8, 2022 and March 21, 2022, ~~respectively, two~~ putative derivative lawsuits alleging violations of the Securities Exchange Act of 1934 and various common law claims were filed in the United States District Court, Central District of ~~California, and~~California. On April 8, 2022, these two derivative lawsuits were ~~subsequently~~ consolidated. On May 24, 2022, ~~those~~the consolidated derivative actions were stayed pending resolution of ~~certain proceedings~~a motion to dismiss in the ~~Putative Class Action. The stay was continued on December 15, 2022, and the cases currently remain active.~~putative class action described above. Additionally, on April 11 and April 25, 2022, ~~respectively, two~~ putative derivative lawsuits alleging violations of the Securities Exchange Act of 1934 and various common law claims were filed in the United States District Court, District of Delaware. ~~Those actions were stayed pending resolution of certain proceedings in the Putative Class Action and currently remain stayed.~~ These lawsuits purport to assert claims on behalf of the Company against ~~various~~numerous current and former officers and directors of the Company. Lastly, on June 14, 2022, a verified stockholder class action complaint was filed in the Court of Chancery of the State of Delaware against, among others, the Company, its current Global CEO, its former CFO and ~~Legacy FF.~~its founder and Chief Product and User Ecosystem Officer alleging breaches of fiduciary duties. Given the early stages of the legal proceedings, it is not possible to predict the outcome of the claims.

On June 14, 2022, a verified stockholder class action complaint was filed in the Court of Chancery of the State of Delaware against, among others, the Company, its ~~former~~current Global CEO, ~~and~~its former CFO and its current Chief Product and User Ecosystem Officer alleging breaches of fiduciary ~~duties (the “Yun Class Action,”).~~duties. On August 11, 2022, the Court of Chancery granted a stipulation and order governing briefing on a motion to dismiss the complaint. On September 21, 2022, ~~another~~an additional verified stockholder class action complaint was filed in the Court of Chancery of the State of Delaware against, among others, ~~FFIE,~~ the ~~Co-CEOs and independent directors of PSAC, and certain third-party advisors to PSAC,~~Company alleging, ~~breaches of contract and fiduciary duties, and aiding and abetting alleged~~among other issues, breaches of fiduciary ~~duties, in connection with disclosures~~duties. On October 12, 2022, plaintiff filed a motion to consolidate the Cleveland and ~~stockholder voting leading up to~~Yun actions and appoint Cleveland’s counsel as lead counsel for the ~~Business Combination (the “Cleveland Class Action”). The Yun and Cleveland Class Action were subsequently~~ consolidated ~~action (the “Consolidated Delaware Class Action”).~~action. On ~~April 4, 2023, Defendants~~October 20, 2022, the Company filed ~~opening briefs in support of their respective motions~~a motion to dismiss the complaint.

On September 23, 2022, plaintiff and defendants of the original June 14, 2022 action filed a stipulation and proposed order vacating the briefing schedule set forth pending consolidation of the action alongside the September 21, 2022 complaint. If the proposed order is entered by the court, the parties will meet and confer regarding a schedule governing further proceedings following consolidation of the actions. Given the early stages of the legal proceedings, itthe Company is ~~not possible~~unable to ~~predict~~evaluate the likelihood of an unfavorable outcome and/or the amount or range of ~~the claims.~~potential loss.

On September 19, 2022, ~~a verified complaint was filed in the Court of Chancery of the State of Delaware against FFIE~~three Company employees and stockholders brought an action seeking to compel the Company to comply with its obligations under Delaware law to hold an annual ~~general~~ meeting of ~~stockholders. The~~stockholders for the purpose of electing directors. Plaintiffs have stayed this action ~~was dismissed without prejudice on~~until January 10, ~~2023.~~2022. Given the early stages of the legal proceedings, the Company is unable to evaluate the likelihood of an unfavorable outcome and/or the amount or range of potential loss.

~~Additionally, on September 19,~~On October 20, 2022, FF ~~Global, an indirect stockholder of FFIE, filed~~received a ~~lawsuit in the Chancery Court of the State of Delaware against FFIE, seeking the removal of Ms. Susan Swenson and Mr. Brian Krolicki~~subpoena from the ~~Board. On September 27, 2022,~~SEC requiring FF to produce certain documents relating to FF’s transactions with Senyun International Ltd. FF intends to fully comply with the ~~case was dismissed without prejudice pursuant to an agreement between FF Global and FF Top (the “Heads~~subpoena.

As of Agreement”). Shortly following the execution of the Heads of Agreement, FF Global began making additional demands of the Company which were beyond the scope of the terms contemplated by the Heads of Agreement and pertained to, among other things, the Company’s management reporting lines and certain governance matters. On September 30, 2022 FF Global alleged that the Company was in material breach of the spirit of the Heads of Agreement. The Company believes it has complied with the applicable terms of the Heads of Agreement, and disputes any characterization to the contrary. Such disputes divert management and Board resources and are costly. There can be no assurance that this or any other dispute between the Company and FF Global will not result in litigation. On October 3, 2022, Ms. Swenson and Mr. Scott Vogel, a member of the Board, tendered their resignation from the Board effective immediately. On October 3, 2022, Mr. Jordan Vogel also tendered his resignation from the Board effective on October 5, 2022 upon his receipt of a supplemental release pursuant to the Mutual Release. On October 28, 2022, Mr. Brian Krolicki tendered his resignation from the Board effective immediately.

~~Governance Matters~~

Following the completion of the Special Committee investigation, the Company and certain of its directors and officers received numerous e-mail communications from a group of self-described “employee whistleblowers” and from various individuals and entities who represented themselves as current investors of the Company. These communications have included various allegations (including, for example, that certain directors have conspired to push the Company into bankruptcy for their own personal gain) and requests for certain organizational and governance changes. The Company engaged an independent law firm to conduct a thorough independent external investigation with respect to these allegations. The independent investigation found that all such allegations have been without merit. In September 2022, certain members of the Board received threats of physical violence and death threats, which the Company has referred to appropriate law enforcement authorities, including state and local police, the Federal Bureau of Investigation, the SEC, the DOJ and relevant international authorities.

~~Faraday Future Intelligent Electric Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

~~Other Legal Matters~~

~~As of March 31, 2023~~ and December 31, ~~2022,~~2021, the Company had accrued legal contingencies of ~~$16.0 million~~$22,417 and ~~$18.9 million,~~$16,881, respectively, ~~recorded~~ within Accrued expenses and other current liabilities, and Accounts Payable on the unaudited Condensed Consolidated Balance Sheets for potential financial exposure related to ongoing legal matters primarily related to breach of contracts and employment matters which are deemed both probable of loss and reasonably estimable. ~~For the~~Accrued legal ~~matters involving third-party vendors, such as suppliers~~contingencies recorded to Accounts Payable relate to disputes with service providers, whereas legal contingencies recorded to Accrued expenses and equipment manufacturers, the Company recorded an accrual in Accounts payable in the Consolidated Balance Sheets based on the amount invoiced by such vendors, which represents the minimum amount of loss out of the range of potential outcomes in accordance with ASC 450-20-30-1.other current liabilities include all other anticipated legal accruals.

During the ~~year ended December 31,~~nine months ending September 30, 2022, the Company settled a legal dispute for breach of lease under which the Company was named a co-defendant, in a civil action case ~~filed in~~with the ~~Superior Court of the State of California for the County of Santa Clara by Han’s San Jose Hospitality, LLC, which was~~plaintiff seeking damages including unpaid rent, future unpaid rent, unpaid expenses, and unpaid taxes related to the lease for a total of ~~$6.4 million.~~$6,400. Pursuant to the settlement agreement, the Company agreed to pay ~~$1.8 million~~$1,800 in cash in January 2022 and an additional ~~$3.4 million~~$3,400 plus 5% interest in October 2022 and was

Faraday Future Intelligent Electric Inc.

Notes to Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

(Unaudited)

liable for the remainder of the settlement, in the amount of ~~$1.2 million,~~$1,200, in the event the co-defendants failed to make the payment in January 2022. In January 2022, the Company made the initial settlement payment of ~~$1.8 million~~$1,800 and was relieved of the liability of ~~$1.2 million. The~~$1,200. As of the date of issuing these unaudited Condensed Consolidated Financial Statements, the Company ~~failed to make~~has not made the ~~$3.4 million~~additional $3,400 settlement and interest payments, as prescribed in ~~October 2022.~~the settlement agreement. On October 26, 2022, the plaintiff filed a motion to enforce the settlement agreement in the Superior Court of the State of California for the County of Santa Clara, seeking no material additional damages. OnSuch hearing is scheduled for December 22, 2022, the court granted the plaintiff’s motion to enforce the settlement. As of December 31, 2022, the balance of $3.4 million was included in Accrued expense and other current liabilities on the Consolidated Balance Sheet. On January 3, 2023, the plaintiff served the parties notice of entry of the order. On January 19, 2023, the court issued judgment in the amount of approximately $3.5 million and a writ of execution. On February 9, 2023, the Company paid $3.6 million consisting of payment in full for the outstanding judgment and accrued interest. Additionally, the Company made a payment of approximately $0.2 million on behalf of an indemnified co-defendant in connection with money seized from such indemnified co-defendant’s bank account. Such indemnification payment was returned to the Company in April 2023.2022.

On January 30, 2023, Riverside Management Group, LLC (“Riverside”) filed a verified complaint seeking to enforce its alleged contractual right to the advancement of costs and expenses, including attorneys’ fees, it has and will incur as a named defendant in the Consolidated Delaware Class Action under its October 13, 2020 Transaction Services Agreement with the PSAC Sponsor, LLC, pursuant to which Riverside provided advisory services in connection with the PSAC/Legacy FF merger. The Company entered into a Stipulation and Order with Riverside under which it agreed to conditionally advance Riverside the reasonable attorneys’ fees and costs it incurs in defense of the Consolidated Delaware Action, subject to, and in express reservation of, the Company’s right to recover all such fees and expenses following disposition of the Consolidated Delaware Class Action. Given the early stages of the legal proceedings, the Company is unable to evaluate the likelihood of an unfavorable outcome and/or the amount or range of potential loss.

Other than disclosed herein, as of the date hereof FF is not a party to any legal proceedings the outcome of which, if determined adversely to FF, would individually or in the aggregate be reasonably expected to have a material adverse effect on FF’s business, financial condition, or results of operations.

Special Committee Investigation

As previously disclosed on November 15, 2021, the Company’s Board of Directors (the “Board”) established a special committee of independent directors (“Special Committee”) to investigate allegations of inaccurate Company disclosures, including those made in an October 2021 short seller report and whistleblower allegations, which resulted in ~~FFIE~~the Company being unable to timely file its third quarter 2021 Quarterly Report on Form 10-Q, Annual Report on Form 10-K for the year ended December 31, 2021, first quarter 2022 Quarterly Report on Form 10-Q and amended Registration Statement on Form S-1 (File No. 333-258993) (the “Form S-1"). The Special Committee engaged outside independent legal counsel and a forensic accounting firm to assist with its review. On February 1, 2022, ~~FFIE~~the Company announced that the Special Committee completed its review. On April 14, 2022, ~~FFIE~~the Company announced the completion of additional investigative work based on the Special Committee’s findings which were performed under the direction of the Executive Chairperson, reporting to the Audit Committee. In connection with the Special Committee’s review and subsequent investigative work, the following findings were made:

•

~~Faraday Future Intelligent Electric Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

In connection with the Business Combination, statements made by certain Company employees to certain investors describing the role of ~~Mr.~~ Yueting (“YT”) Jia, the Company’s founder and former CEO, within the Company were inaccurate and his involvement in the management of the Company post-Business Combination was more significant than what had been represented to certain investors.

•The Company’s statements leading up to the Business Combination that it had received more than 14,000 reservations for the FF 91 vehicle were potentially misleading because only several hundred of those reservations were paid, while the others (totaling 14,000) were unpaid indications of interest.


●•Consistent with the Company’s previous public disclosures regarding identified material weaknesses in its internal control over financial reporting, the Company’s internal control over financial reporting requires an upgrade in personnel and systems.			The Company’s statements leading up to the Business Combination that it had received more than 14,000 reservations for the FF 91 vehicle were potentially misleading because only several hundred of those reservations were paid, while the others (totaling 14,000) were unpaid indications of interest.


●•The Company’s corporate culture failed to sufficiently prioritize compliance.			Consistent with FFIE’s previous public disclosures regarding identified material weaknesses in its internal control over financial reporting, the Company’s internal control over financial reporting requires an upgrade in personnel and systems.


●•Mr. Jia’s role as an intermediary in leasing certain properties which were subsequently leased to the Company was not disclosed in the Company’s corporate housing disclosures.			~~The Company’s corporate culture failed to sufficiently prioritize compliance.~~


●•In preparing the Company’s related party transaction disclosures, the Company failed to investigate and identify the sources of loans received from individuals and entities associated with Company employees.			~~Mr. Jia’s role as an intermediary in leasing certain properties which were subsequently leased to the Company was not disclosed in FFIE’s corporate housing disclosures.~~


●			In preparing FFIE’s related party transaction disclosures, the Company failed to investigate and identify the sources of loans received from individuals and entities associated with Company employees.

In addition, the investigation found that certain individuals failed to fully disclose to individuals involved in the preparation of ~~FFIE’s~~the Company’s SEC filings their relationships with certain related parties and affiliated entities in connection with, and following, the Business Combination, and failed to fully disclose relevant information, including but not limited to, information in connection with related parties and corporate governance to ~~FFIE’s~~the Company’s former independent registered public accounting firm PricewaterhouseCoopers LLP.

The investigation also found that certain individuals failed to cooperate and withheld potentially relevant information in connection with the Special Committee investigation. Among such individuals were non-executive officers or members of the management team of FF, and remedial action was taken with respect to such individuals based on the extent of non-cooperation and/or withholding of information. The failure to cooperate with the investigation was taken into consideration in connection with the remedial actions outlined below with respect to ~~Jerry~~Mr. Jiawei (“Jerry”) Wang, the Company’s former Vice President, Global Capital Markets, and withholding of information also affected the remedial action taken with respect to Mr. Matthias ~~Aydt.~~Aydt, Senior Vice President, Business Development and Product Definition and a director of the Company.

Faraday Future Intelligent Electric Inc.

Notes to Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

(Unaudited)

Based on the results of the investigation, the Special Committee concluded that, except as described above, other substantive allegations of inaccurate FF disclosures that it evaluated, were not supported by the evidence reviewed. Although the investigation did not change any of the above findings with respect to the substantive allegations of inaccurate FF disclosures, the investigation did confirm the need for remedial actions to help ensure enhanced focus on compliance and disclosure within FF.

Based on the results of the Special Committee investigation and subsequent investigative work described above, the Board approved the following remedial actions designed to enhance oversight and corporate governance of the Company:

•certain remedial actions designed to enhance oversight and corporate governance of the Company, namely the following:


●•the appointment of Ms. Swenson, a former member of the Board, to the then newly created position of Executive Chairperson of FF;			~~the appointment of Susan Swenson, a former member of the Board, to the then newly created position of Executive Chairperson of FF.~~


●•Carsten Breitfeld, FF’s Global Chief Executive Officer, reporting directly to Ms. Swenson and receiving a 25% annual base salary reduction; •the removal of Mr. Jia as an executive officer, although continuing in his position as Chief Product & User Ecosystem Officer of the Company. Certain dual-reporting arrangements were eliminated with respect to Mr. Jia, and he is required to report directly to Ms. Swenson, a non-independent director nominated by FF Top Holding LLC (“FF Top”). Mr. Jia also received a 25% annual base salary reduction, and his role was limited from a policy-making position to focusing on (a) Product and Mobility Ecosystem and (b) Internet, Artificial Intelligence, and Advanced R&D technology; •Mr. Matthias Aydt, Senior Vice President, Business Development and Product Definition and a director of the Company, being placed on probation as an executive officer for a six-month period, during which period he will remain as a non-independent member of the Board; •the appointment of Mr. Jordan Vogel as Lead Independent Director; certain changes to the composition of Board committees, including Brian Krolicki stepping down from his role as Chairman of the Board and Chair of the Nominating and Corporate Governance Committee and becoming a member of the Audit and Compensation Committees of the Board; Mr. Jordan Vogel stepping down from the Nominating and Corporate Governance Committee; and Scott Vogel becoming the Chair of the Audit Committee and the Nominating and Corporate Governance Committee of the Board; •the suspension without pay of Mr. Jiawei (“Jerry”) Wang, the Company’s former Vice President, Global Capital Markets, who subsequently notified the Board of his decision to resign from FF on April 10, 2022; •the assessment and enhancement of FF’s policies and procedures regarding financial accounting and reporting and the upgrading of FF’s internal control over financial accounting and reporting, including by hiring additional financial reporting and accounting support, in each case at the direction of the Audit Committee; •the implementation of enhanced controls around FF’s contracting and related party transactions, including regular attestations by FF’s employees with authority to bind FF to contracts and related party transactions, for purposes of enabling FF to make complete and accurate disclosures regarding related party transactions; •the hiring of a Chief Compliance Officer, who reports on a dotted line to the Chair of the Audit Committee, and assessing and enhancing FF’s compliance policies and procedures (and a search for a Chief Compliance Officer of FF is still pending as of the date of this Report); •the implementation of a comprehensive training program for all directors and officers regarding, among other things, internal FF policies; •the separation of Mr. Jarret Johnson, FF’s Vice President, General Counsel and Secretary; and •certain other disciplinary actions and terminations of employment with respect to other FF employees (none of whom is an executive officer).			~~Dr. Carsten Breitfeld, FF’s former Global CEO, reporting directly to Ms. Swenson and receiving a 25% annual base salary reduction;~~

834

Faraday Future Intelligent Electric Inc.

Notes to Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

(Unaudited)


●			the removal of Mr. Jia as an executive officer, although continuing in his position as Chief Product & User Ecosystem Officer of FFIE. Certain dual-reporting arrangements were eliminated with respect to Mr. Jia, and he is required to report directly to Ms. Swenson, a non-independent director nominated by FF Top. Mr. Jia also received a 25% annual base salary reduction, and his role was limited from a policy-making position to focusing on (a) Product and Mobility Ecosystem and (b) Internet, Artificial Intelligence, and Advanced R&D technology. On February 26, 2023, after an assessment by the Board of the Company’s management structure, the Board approved Mr. Yueting Jia (alongside Mr. Xuefeng Chen) reporting directly to the Board, as well as FF’s product, mobility ecosystem, I.A.I., and advanced R&D technology departments reporting directly to Mr. Jia. The Board also approved FF’s user ecosystem, capital markets, human resources and administration, corporate strategy and China departments reporting to both Mr. Jia and Mr. Xuefeng processes and controls to be determined by the Board after consultation with the Company’s management. The Company’s remaining departments continue to report to Mr. Xuefeng. On February 26, 2023, after an assessment by the Board of the Company’s management structure, the Board the Board approved Mr. Yueting Jia (alongside Mr. Xuefeng Chen) reporting directly to the Board, as well as FF’s product, mobility ecosystem, I.A.I., and advanced R&D technology departments reporting directly to Mr. Jia. The Board also approved FF’s user ecosystem, capital markets, human resources and administration, corporate strategy and China departments reporting to both Mr. Jia and Mr. Xuefeng Chen, subject to processes and controls to be determined by the Board after consultation with the Company’s management. The Company’s remaining departments continue to report to Mr. Xuefeng Chen. Based on the changes to his responsibilities within the Company, the Board determined that Mr. Jia is an “officer” of the Company within the meaning of Section 16 of the Exchange Act and an “executive officer” of the Company under Rule 3b-7 under the Exchange Act;


●			Matthias Aydt, then Senior Vice President, Business Development and Product Definition and a director of FFIE, and currently Senior Vice President, Product Execution and a director of FFIE, being placed on probation as an executive officer for a six-month period, during which period he remained a non-independent member of the Board, which probationary period has since ended;


●			the appointment of Jordan Vogel as Lead Independent Director; certain changes to the composition of Board committees, including Brian Krolicki stepping down from his role as Chairman of the Board and Chair of the Nominating and Corporate Governance Committee and becoming a member of the Audit and Compensation Committees of the Board; Jordan Vogel stepping down from the Nominating and Corporate Governance Committee; and Scott Vogel becoming the Chair of the Audit Committee and the Nominating and Corporate Governance Committee of the Board;


●			the suspension without pay of Jiawei (“Jerry”) Wang, FFIE’s former Vice President, Global Capital Markets, who subsequently notified the Board of his decision to resign from FF on April 10, 2022;


●			the assessment and enhancement of FF’s policies and procedures regarding financial accounting and reporting and the upgrading of FF’s internal control over financial accounting and reporting, including by hiring additional financial reporting and accounting support, in each case at the direction of the Audit Committee;


●			the implementation of enhanced controls around FF’s contracting and related party transactions, including regular attestations by FF’s employees with authority to bind FF to contracts and related party transactions, for purposes of enabling FF to make complete and accurate disclosures regarding related party transactions;


●			the hiring of a chief Compliance Officer, who reports on a dotted line to the Chair of the Audit Committee, and assessing and enhancing FF’s compliance policies and procedures. The Company hired a Compliance Officer with the title of Deputy General Counsel in March 2023, who will report on a dotted line to the Chair of the Audit committee, and is looking to hire a Director of Risks and Internal Controls;


●			~~the implementation of a comprehensive training program for all directors and officers regarding, among other things, internal FF policies;~~


●			~~the separation of Jarret Johnson, FF’s Vice President, General Counsel and Secretary; and~~


●			~~certain other disciplinary actions and terminations of employment with respect to other FF employees (none of whom is an executive officer).~~

As of the date ~~of this Report,~~hereof, FF is continuing to implement ~~certain of~~ the remedial actions approved by the Board. However, ~~certain of these remedial actions are no longer in effect and~~ no assurance can be provided that ~~those~~such remedial

~~Faraday Future Intelligent Electric Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

measures ~~that continue to be implemented~~ will be implemented in a timely manner ~~or at all,~~ or will be successful to prevent inaccurate disclosures in the future.

However, pursuant to the Heads of Agreement, FF has implemented certain governance changes that impact certain of the above-discussed remedial actions, including significant changes in the composition of the BoardSEC and ~~a change in Board leadership.~~DOJ Investigations

Subsequent to ~~FFIE~~FF announcing the completion of the Special Committee investigation on February 1, 2022, ~~FFIE,~~FF, certain members of the management team and employees of ~~FFIE~~FF received a notice of preservation and subpoena from the staff of the SEC stating that the SEC had commenced a formal investigation relating to the matters that were the subject of the Special Committee investigation. ~~FFIE~~FF, which had previously voluntarily contacted the SEC in connection with the Special Committee investigation in October 2021, is cooperating fully with the SEC’s ~~investigation, including responding to multiple subpoenas and requests for information.~~investigation. The outcome of such an investigation is difficult to predict. FF has incurred, and may continue to incur, significant expenses related to legal and other professional services in connection with the SEC investigation. At this stage, FF is unable to assess whether any material loss or adverse effect is reasonably possible as a result of the SEC’s investigation or estimate the range of any potential loss. In addition, in June 2022, FF received a preliminary request for information from the ~~DOJ~~U.S. Department of Justice (“DOJ”) in connection with the matters that were the subject of the Special Committee investigation. FF has responded to that request and intends to fully cooperate with any future requests from the DOJ.

13. Stockholders’ Equity

The number of authorized, issued and outstanding stock, were as follows:


	September 30, 2022
	Authorized Shares	Issued Shares
Preferred Stock	10,000,000	—
Class A Common Stock	750,000,000	345,794,368
Class B Common Stock	75,000,000	64,000,588
	835,000,000	409,794,956

~~The Palantir License~~

In July 2021, the Company and Palantir entered into a master agreement that sets forth the terms of the Palantir’s platform hosting arrangement which is expected to be used as a central operating system for data and analytics. Palantir invested $25.0 million in the Company through the PIPE Financing and became a stockholder of the Company. Under the platform hosting agreement, the Company committed to pay a total of $47.0 million of hosting fees over a six-year term, $5.3 million of which was paid during the year ended December 31, 2021. No payments were made during the three months ended March 31, 2023 and in 2022. The software is cloud hosted for the entirety of the subscription term and the Company cannot take possession of the software. Accordingly, the Company determined that the subscription agreement represents a hosting arrangement that is a service contract. The Company recognize hosting costs on a straight-line basis over the agreement term.

~~Unconditional Contractual Obligations~~

An unconditional contractual obligation is defined as an agreement to purchase goods or services that is enforceable and legally binding (non-cancelable, or cancelable only in certain circumstances). As of March 31, 2023, we estimate FFIE’s total unconditional contractual commitments, including purchases of inventory, tooling, machinery and equipment as well as items to be used in research and development activities; lease minimum payments and other contractual commitments, totaling $422.2 million, which included $279.8 million for the year ended December 31, 2023, $74.8 million for the two years ended December 31, 2025, $21.7 million for the two years ended December 31, 2027 and $45.9 million thereafter.

The $279.8 million unconditional contractual obligations for the year ended December 31, 2023 included $245.7 million of open purchase orders. Although open purchase orders are generally considered enforceable and legally binding, some of the Company’s purchase orders gives it the option to cancel, reschedule and/or adjust its requirements based on its business needs prior to the delivery of goods or performance of services and to inspect and reject products, for example, if they do not comply with its specifications. Obligations to purchase inventory and other commitments are generally expected to be fulfilled within one year.


	December 31, 2021
	Authorized Shares	Issued Shares	Shares to be Issued	Total Issued and to be Issued Shares
Preferred Stock	10,000,000	—	—	—
Class A Common Stock	750,000,000	168,693,323	89,152,130	257,845,453
Class B Common Stock	75,000,000	—	64,000,588	64,000,588
	835,000,000	168,693,323	153,152,718	321,846,041

1035

Faraday Future Intelligent Electric Inc.

Notes to Condensed Consolidated Financial Statements

~~(Unaudited)~~

~~12. Stockholders’ Equity~~

~~The number of authorized, issued~~(in thousands, except share and ~~outstanding stock, were as follows:~~

March 31, 2023
Authorized
Shares Issued and Outstanding Shares
Class A Common Stock 1,690,000,000 838,872,039
Class B Common Stock 75,000,000 64,000,588
Preferred Stock 10,000,000 —
1,775,000,000 902,872,627

December 31, 2022
Authorized
Shares Issued and Outstanding Shares
Class A Common Stock 815,000,000 563,346,216
Class B Common Stock 75,000,000 64,000,588
Preferred Stock 10,000,000 —
890,000,000 627,346,804

~~Amendments to the Company’s Certificate of Incorporation~~

On the Closing Date of the Business Combination, the Company’s stockholders adopted the Company’s Second Amended and Restated Certificate of Incorporation. The amendment set forth the rights, privileges, and preferences of the Company’s Class A Common Stock and Class B Common Stock (collectively “Common Stock”). The amendment authorizes the issuance of 10,000,000 shares of Preferred Stock with such designations, rights and preferences as may be determined from time to time by the Company’s Board of Directors. The Company’s Board of Directors are empowered, without stockholder approval, to issue the Preferred Stock with dividend, liquidation, conversion, voting or other rights which could adversely affect the voting power or other rights of the holders of Common Stock; provided that any issuance of Preferred Stock with more than one vote per share ~~will require the prior approval of the holders of a majority of the outstanding shares of Class B Common Stock.~~

At a special meeting of the Company’s stockholders held on November 3, 2022, stockholders approved, among other things, an increase to the number of the Company’s authorized shares from 825,000,000 to 900,000,000. On November 22, 2022, the Company filed an amendment to its Second Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to effect the increase.

A special meeting of the Company’s stockholders held on February 28, 2023, the Company’s stockholders approved a further increase to the number of the Company’s authorized shares of Class A Common Stock from 815,000,000 to 1,690,000,000, increasing the Company’s total number of authorized shares of Common Stock and preferred stock from 900,000,000 to 1,775,000,000. On March 1, 2023, the Company filed an amendment to its Second Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to reflect such amendment.

data)

~~Faraday Future Intelligent Electric Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

(Unaudited)

Warrants

The number of outstanding warrants to purchase the Company’s Class A Common Stock as of ~~March 31, 2023 are as follows:~~

Number of Warrants Exercise Price Expiration Date
SPA Warrants 93,571,419 $0.23 to $5.00 Various through September 23, 2029
Other warrants 29,454,593 $0.23 August 5, 2027
Public Warrants 23,540,988 $11.50 July 21, 2026
Private Warrants 111,131 $11.50 July 21, 2026
Total 146,678,131

~~The number of outstanding warrants to purchase the Company’s Class A Common Stock as of~~September 30, 2022 and December 31, ~~2022~~2021 were as follows:

Number of Warrants Exercise Price Expiration Date
SPA Warrants 346,453,115 $0.23 Various through September 23, 2029
ATW NPA Warrants(1)
76,804,450 $0.23 Various through August 10, 2028
Other warrants 29,454,593 $0.23 August 5, 2027
Public Warrants(2)
23,540,988 $11.50 July 21, 2026
Private Warrants(3)
111,131 $11.50 July 21, 2026
Total 476,364,277


	Number of Warrants	Exercise Price		Expiration Date
Public Warrants (1)	23,375,988	$	11.50	July 21, 2026
Private Warrants(2)	276,131	11.50		July 21, 2026
ATW NPA Warrants(3)	28,431,635	0.64		Various through August 10, 2028
Bridge Warrants(4)	42,342,839	0.71		Various through September 23, 2029
Other warrants	1,429,068	4.69		August 5, 2027
Total	95,855,661

(1) The ATW NPA Warrants were fully exercised during the three months ended March 31, 2023, through which the Company received aggregated proceeds of $0.3 million which was recorded as an increase to Additional paid-in capital.

~~(2) During~~On August 9, 2022, PSAC Sponsor transferred ~~563,420~~398,420 Private Warrants to unaffiliated third-party purchasers on the open market. Upon such transfer the transferred warrants became subject to identical terms to the Public Warrants underlying the units offered in the initial public offering of PSAC. Therefore, upon their transfer the Company classified the warrants to APIC at their fair value.

~~(3)~~(2) The Private Warrants are recorded in Other liabilities, less current portion in the unaudited Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, ~~2022.~~

~~Insufficient Authorized Shares~~2021.

~~From time~~(3) On September 23, 2022, the Company and Purchasers of the ATW NPA Notes entered into an agreement to ~~time,~~place a total of 31,118,718 outstanding warrants related to the Optional Notes and the June 2021 Notes (see Note 10, Notes Payable) into a warrant reserve with an exercise price now set to $0.6427 per warrant (“Warrant Reserve”). Upon the completion of certain milestones and conditions, the Company may elect a forced conversion clause settleable in cash through January 23, 2023 on the warrants, requiring the warrant holders to exercise their warrants on a cash basis in exchange for newly issued shares of the Company’s ~~equity-linked financial instruments may be classified as derivative liabilities under ASC 815,~~ ~~Derivatives and Hedging, due~~Class A Common Stock. The aggregate exercise price of the Warrant Reserve is $20,000. The remaining outstanding warrants not in the Warrant Reserve but also issued pursuant to the ~~Company having insufficient authorized shares~~Optional Notes and the June 2021 Notes totaling 29,158,364 warrants, are agreed to ~~fully settle~~have their exercise price set at $0.50 per warrant. As of the ~~equity-linked financial instruments in shares. In such case,~~date the unaudited Consolidated Condensed Financial Statements were issued, the Company ~~applies a sequencing policy under ASC 815-40,~~did not force the conversion of any of the warrants underlying the Warrant Reserve. ~~Contracts in Entity’s Own Equity, whereby,~~

The amendment of the warrants issued pursuant to the Optional Notes and the June 2021 Notes, which set the exercise price to $0.50 per warrant, resulted in the ~~event that reclassification~~recognition of ~~contracts from equity to assets or~~expense of $1,238 in Change in fair value measurements in the unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2022.

(4) The Bridge Warrants are recorded in Accrued expenses and other current liabilities ~~is necessary due~~in the unaudited Condensed Consolidated Balance Sheets as of September 30, 2022. The warrants were issued pursuant to the Company’s inability to demonstrate it has sufficient authorized shares to settle the equity-linked financial instrument in shares, the Company will reclassify contracts that have overlapping settlement dates with the latest inception date as derivative instruments. The contracts reclassified as derivative instruments are recognizedSPA and recorded at fair value ~~with changes in fair value recognized in earnings until such time~~at each issuance date and at September 30, 2022.

The number of outstanding warrants to purchase the Company’s Class A Common Stock as the conditions giving rise to such derivative liability classification were settled or the Company has sufficient authorized, unissued shares to settle such contracts with shares. The Company has elected to apply the same sequencing policy for share-based compensation arrangements if the Company granted share-based payment arrangements where the Company may have insufficient shares to settle the contract.

As of December 31, ~~2022, the Company reclassified the earnout shares from equity classification to liability classification~~2021 were as ~~a result of the Company having insufficient authorized shares to share-settle the earnout, which was previously~~follows:


	Number of Warrants	Exercise Price		Expiration Date
Public Warrants	22,977,568	$	11.50	July 21, 2026
Private Warrants(1)	674,551	11.50		July 21, 2026
Other warrants	4,544,258	10.00		Various through August 10, 2028
Total	28,196,377

1236

Faraday Future Intelligent Electric Inc.

Notes to Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

(Unaudited)

determined to be equity classified under ASC 815-40. As a result of the reclassification, the Company reclassified $2.2 million out of Additional paid-in capital into the Earnout liability, which is included(1) The Private Warrants are recorded in Other liabilities, less current ~~liabilities on~~portion in the unaudited Condensed Consolidated Balance Sheet as of December 31, ~~2022.~~

As of December 31, 2022, the Company reclassified 53,820,670 shares of outstanding share-based payment arrangements from equity classification to liability classification as a result of the Company having insufficient authorized shares to settle the share-based payment arrangements when the awards vest or is exercised. As a result of the reclassification, the Company reclassified an amount of $4.0 million out of Additional paid-in capital into Share-based payment liability, which is included in Other current liabilities on the Consolidated Balance Sheet as of December 31, 2022.

On February 28, 2023, upon shareholder approval to increase the Company’s authorized shares, the Company had sufficient authorized shares to fully settle all outstanding equity-linked financial instruments. Accordingly, the Company reclassified the fair value of the Earnout liability of $5.0 million and the fair value of the Share-based payment liability of $6.7 million into Additional paid-in capital.2021.

~~13.~~14. Stock-Based Compensation (As Restated)

2021 SI Plan

In July 2021, the Company adopted the 2021 Stock Incentive Plan (“2021 SI Plan”). The 2021 SI Plan ~~allowed~~allows the Board of Directors to grant up to 49,573,570 incentive and nonqualified stock options, restricted shares, unrestricted shares, restricted share units, and other stock-based awards for the Company’s Class A Common Stock to employees, directors, and non-employees. The number of shares of Class A Common Stock available under the 2021 SI Plan will increase annually on the first day of each calendar year, beginning with the calendar year ending December 31, 2022, and continuing until (and including) the calendar year ending December 31, 2031. Annual increases are equal to the lesser of (i) 5 percent of the number of shares of Class A Common Stock issued and outstanding on December 31 of the immediately preceding fiscal year and (ii) an amount determined by the Board of Directors. As of the ~~date of issuance of the unaudited Condensed Consolidated Financial Statements, the Board of Directors is evaluating the timing and extent of such increases. As of the~~ effective date of the 2021 SI Plan, no further stock awards have been or will be granted under the EI Plan or STI Plan (defined below).

As of ~~March 31, 2023 and December 31,~~September 30, 2022, the Company had ~~2,759,373 and 25,057,455~~43,410,364 shares of Class A Common Stock available for future issuance under its 2021 SI Plan.

A summary of the Company’s stock option activity under the SI Plan is as follows:


	Number of Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Outstanding as of December 31, 2021	—
Granted	6,632,387	3.68
Exercised	—	—
Cancelled/forfeited	(469,181)	5.32
Outstanding as of September 30, 2022	6,163,206	$	3.56	9.55	$	—

The weighted-average assumptions used in the Black-Scholes option pricing model for awards granted during the nine months ended September 30, 2022 are as follows:


	September 30, 2022		September 30, 2021
Risk-free interest rate:	2.46	%	0.79	%
Expected term (in years):	7.16		6.05
Expected volatility:	42.17	%	42.10	%
Dividend yield:	0.00	%	0.00	%

As of September 30, 2022, the total remaining stock-based compensation expense for unvested stock options was $4,790, which is expected to be recognized over a weighted average period of 2.47 years.

EI Plan

On February 1, 2018, the Board of Directors adopted the Equity Incentive Plan (“EI Plan”), under which the Board of Directors authorized the grant of up to 42,390,000 incentive and nonqualified stock options, restricted stock, unrestricted stock, restricted stock units, and other stock-based awards for Legacy FF’s Class A Ordinary Stock to employees, directors, and non-employees.

Faraday Future Intelligent Electric Inc.

Notes to Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

(Unaudited)

A summary of the Company’s stock option activity under the EI Plan is as follows:


	Number of Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Outstanding as of December 31, 2021	31,962,921	$	2.81	7.77	$	86,075
Granted	—
Exercised	(1,606,795)	2.52			3,658
Cancelled/forfeited	(5,083,652)	2.57
Outstanding as of September 30, 2022	25,272,474	$	2.82	7.17	$	74

As of September 30, 2022, the total remaining stock-based compensation expense for unvested stock options was $9,039, which is expected to be recognized over a weighted average period of 2.52 years.

STI Plan

~~Pursuant to the~~The Special Talent Incentive Plan (“STI Plan”), allows the Board of Directors ~~may~~to grant up to 14,130,000 incentive and nonqualified stock options, restricted shares, unrestricted shares, restricted share units, and other stock-based awards for Legacy FF’s Class A Ordinary Stock to employees, directors, and non-employees.

The STI Plan does not specify a limit on the number of stock options that can be issued under the plan. Per the terms of the STI Plan, the Company must reserve and keep available a sufficient number of shares to satisfy the requirements of the STI Plan.

~~Faraday Future Intelligent Electric Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

A summary of the Company’s stock option activity ~~is as follows (dollars in thousands except weighted average exercise price):~~

Number of
Options Weighted
Average
Exercise
Price Weighted
Average
Remaining
Contractual Life (Years) Aggregate
Intrinsic
Value
Outstanding as of December 31, 2022 35,687,240 $ 3.37 7.3 $ 22
Granted 4,000,000 1.08
Exercised (49,456) 0.89 $ 10
Cancelled/forfeited (2,455,912) 3.37
Outstanding as of March 31, 2023 37,181,872 $ 3.15 7.5 $ 31

~~The weighted-average assumptions used in~~under the ~~Black-Scholes option pricing model are~~STI Plan is as follows:

Three Months Ended
March 31,
2023 2022
Risk-free interest rate: 3.5 % 1.6 %
Expected term (in years): 8.6 7.0
Expected volatility: 90.2 % 43.5 %
Dividend yield: 0 % 0 %


	Number of Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Outstanding as of December 31, 2021	9,526,727	$	5.55	8.0	$	13,905
Granted	—	—
Exercised	(2,181,335)	2.5			1,678
Cancelled/forfeited	(888,381)	8.04
Outstanding as of September 30, 2022	6,457,011	$	6.51	7.99	$	—

As of ~~March 31, 2023,~~September 30, 2022, the total remaining stock-based compensation expense for unvested stock options was ~~$22.8 million,~~$5,630, which is expected to be recognized over a ~~weighted-average~~weighted average period of ~~2.98 years.~~

~~A summary of the Company’s RSU activity is as follows:~~
Shares Weighted Average Fair Value
Outstanding as of December 31, 2022 17,869,663 $ 1.09
Granted 5,932,766 1.08
Released (1,145,334) 1.24
Forfeitures (2,525,984) 1.11
Outstanding as of March 31, 2023 20,131,111 $ 1.08

The Company’s subsidiaries in China have employees who are citizens of People’s Republic of China (PRC). Pursuant to regulation Circular 78 and Circular 7 issued by the Central State Administration of Foreign Exchange of PRC (“SAFE”), the Company cannot release vested RSUs to it’s PRC citizen employees before they have completed the required SAFE registration with a dedicated account set up for each of them to repatriate proceeds back to China under the SAFE. As a result, the outstanding RSU’s for the period ended March 31, 2023 and December 31, 2022, include 1,614,088 and 1,448,697 RSUs of the

~~Faraday Future Intelligent Electric Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

~~Company’s PRC citizens employees. These are unreleased RSUs as these employees have not completed the SAFE registration process.~~

~~As of March 31, 2023, the total remaining stock-based compensation expense for unvested RSU’s was $11.4 million, which is expected to be recognized over a weighted-average period of 4.22~~approximately 3.6 years.

The following table presents stock-based compensation expense included in each respective expense category in the unaudited Condensed Consolidated Statements of Operations and Other Comprehensive ~~Loss (dollars in thousands):~~Loss:


		Three Months Ended March 31,				Three Months Ended September 30,				Nine Months Ended September 30,
		2023		2022				2022 (As Restated)		2021		2022 (As Restated)		2021
Research and development	Research and development	$	11,294	$	1,622		Research and development	$	1,831	$	1,879	$	6,532	$	2,873
Sales and marketing	Sales and marketing	1,280		374			Sales and marketing	236		538		861		847
General and administrative	General and administrative	2,528		1,350			General and administrative	603		2,636		1,751		4,801
		$	15,102	$	3,346			$	2,670	$	5,053	$	9,144	$	8,521

1538

Faraday Future Intelligent Electric Inc.

Notes to Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

(Unaudited)

~~14.~~15. Net ~~Income (Loss)~~Loss per Share

Net Loss Per Share Attributable to Common Stockholders

~~The following table presents the reconciliation of net income (loss) to~~Basic net loss ~~used in computing~~per share attributable to common stockholders is calculated by dividing net loss attributable to common stockholders by the weighted-average number of shares issued and shares to be issued under the commitment to issue shares, as these shares are issuable for no consideration.

Diluted net loss per share attributable to common stockholders adjusts the basic net loss per share attributable to common stockholders and the weighted-average number of shares issued and shares to be issued under the commitment to issue shares for potentially dilutive instruments.

For purposes of presentation of basic and diluted net ~~income (loss)~~loss per share, ~~of Common Stock attributable~~the Company includes shares to ~~common stockholders:~~
March 31, 2023 March 31, 2022
Net income (loss) used in computing basic net income (loss) per share of Common Stock attributable to common stockholders $ 6,487 $ (153,098)
Less: Dilutive impact of SPA Warrants (11,897) —
Less: Dilutive impact of conversion of SPA notes and settlement of make-whole provisions (59,331) —
Net loss used in computing diluted net loss per share of Common Stock attributable to common stockholders $ (64,741) $ (153,098)

~~The following table presents~~be issued in the reconciliation of basic to diluted weighted average shares used in computing net income/(loss) per share of Common Stock attributable to common stockholders. In computing the weighted average shares using the “if-converted” methoddenominator in accordance with ASC ~~260-10,~~710-10-54-4 and ASC 260-10-45-48 as if they had been issued on the date of the merger, as such shares are non-contingent and are issuable for no consideration (see Note 4, ~~Earning~~Business Combination).

The net loss per ~~Share~~common share was the same for the Class A and Class B Common Stock because they are entitled to the same liquidation and dividend rights and are therefore, combined on the unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2022 and 2021.

Because the Company ~~uses~~reported net losses for all periods presented, all potentially dilutive Common Stock equivalents were determined to be antidilutive for those periods and have been excluded from the ~~average Interest Conversion Price during the three months ended March 31, 2023.~~
March 31, 2023 March 31, 2022
Weighted average shares used in computing net income per share of common stock, basic 657,565,442 322,211,392
Add: Shares issuable upon exercise of SPA Warrants 19,121,103 —
Add: Shares issuable upon conversion of SPA notes and settlement of make-whole provisions 311,952,117 —
Weighted average shares used in computing net loss per share of common stock, diluted 988,638,662 322,211,392
calculation of net loss per share.

The following table presents the ~~potentially dilutive~~number of anti-dilutive shares ~~that were~~ excluded from the ~~computation~~calculation of diluted net ~~income (loss)~~loss per share as of ~~Common Stock attributable to common stockholders, because their effect was anti-dilutive:~~the following dates:

March 31, 2023 March 31, 2022
Shares issuable upon exercise of SPA Warrants, excluding amounts included above in Diluted EPS 45,571,419 —
Shares issuable upon conversion of notes and settlement of Make-Whole provisions, excluding amounts included above in Diluted EPS — 9,009,210
Other warrants 29,454,593 4,544,258
Stock-based compensation awards – Options 37,181,872 43,781,815
Stock-based compensation awards – RSUs 20,131,111 —
Public warrants 23,540,988 22,977,568
Private warrants 111,131 674,551
Total 155,991,114 80,987,402


	September 30, 2022	September 30, 2021
Stock-based compensation awards – SI Plan	6,163,206	—
Stock-based compensation awards – EI Plan	25,272,474	32,137,760
Stock-based compensation awards – STI Plan	6,457,011	9,529,482
Restricted stock awards	—	1,364,018
Public Warrants	23,375,988	22,977,568
Private Warrants	276,131	674,551
ATW NPA Warrants	28,431,635	3,874,166
Bridge Warrants	42,342,839	—
Other Warrants	1,429,068	670,092
ATW NPA Notes	8,982,677	9,009,210
Bridge Notes	46,918,768	—
Make-Whole Amount	32,954,973	—
Total	222,604,770	80,236,847

~~15.~~16. Subsequent Events

The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the unaudited Condensed Consolidated Financial Statements were issued. Other than as described below and in Note 3, Liquidity and Capital Resources with respect to the Company entering into the SEPA, in Note 10, Notes Payable with respect to the Lien Security Agreement, the funding of the Fourth Bridge Notes, the First Senyun Funding Date and the Second Senyun Funding Date and in Note 12, Commitments and Contingencies with respect to certain legal matters, the Company did not identify any subsequent events that would have required adjustment or disclosure in the unaudited Condensed Consolidated Financial ~~Statements~~.Statements.

~~Tranche~~ ~~B SPA Funding~~

In April 2023, Senyun, a Purchaser affiliated with ATW Partners LLC and RAAJJ Trading LLC purchased additional senior secured notes and SPA Warrants of the Company. The Company received gross proceeds of $4.0 million ($3.6 million net of original issuance discount) in exchange for such issuances.Exchange Agreements

1639

Faraday Future Intelligent Electric Inc.

Notes to Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

(Unaudited)

On October 10, 2022 and October 19, 2022, the Company exchanged $4,012 and $2,687, respectively, in aggregate principal amounts of the remaining outstanding ATW NPA Notes for 6,269,031 and 5,227,837 shares of Class A Common Stock, reflecting a price per share of Class A Common Stock of $0.64 and $0.51, respectively.

Third and Fourth Amendments to the SPA

On October 24, 2022, the Company entered into a Limited Consent and Third Amendment to the SPA (the “Third Amendment”), pursuant to which the maturity date for the Bridge Notes was extended from August 14, 2026 to October 27, 2028. In addition, pursuant to the Third Amendment, each Purchaser and the Agent waived certain defaults and events of default under the SPA, any notes issued pursuant to the SPA and other related documents.

On November 8, 2022, the Company entered into a Limited Consent and Amendment to the SPA (the “Fourth Amendment”), pursuant to which the parties agreed that (i) in no event will the effective conversion price of any interest or interest make-whole amount payable in shares of Class A Common Stock in respect of Bridge Notes issued or issuable under the SPA be lower than $0.21 per share of Class A Common Stock, and (ii) in order for the Company to make payment of any interest or interest make-whole amount in shares of Class A Common Stock, certain price and volume requirements must be met, namely that (x) the VWAP of the Class A Common Stock is not less than $0.21 per share on any trading day during the preceding seven trading day period, and (y) the total volume of the Class A Common Stock does not drop below $1,500 on any trading day during the same period (in each case, as adjusted for any stock splits, stock dividends, stock combinations, recapitalizations or other similar transactions).

Bridge Notes Conversions

Between November 10, 2022 and November 21, 2022, the Purchasers converted portions of the aggregate principal amount of the outstanding convertible notes of $13,500 of principal of Bridge Notes at a conversion price of $0.89 per share into 14,369,722 shares of Class A Common Stock with an additional 26,910,917 Class A Common Stock issued at conversion prices of $0.35 to $0.53 per share in accordance with Make-Whole Amount provisions.

~~Tranche~~Equity Awards ~~C SPA Funding~~

In April and May 2023, Senyun and a Purchaser affiliated with ATW Partners LLC purchased additional senior secured notes and SPA Warrants of the Company. The Company received gross proceeds of $15.0 million ($13.5 million net of original issuance discount) in exchange for such issuances.

~~Equity Awards~~

On ~~April 17, 2023,~~ October 15, 2022, the Board granted, under the 2021 SI Plan, ~~a total of 54,011 fully vested RSUs,~~1,393,616 restricted stock units (“RSUs”), with a grant date value of ~~$0.35,~~$0.50, to ~~non-employee directors~~certain non-executive employees of the Company.

On ~~April 27, 2023,~~October 25, 2022, the Board granted, under the 2021 SI Plan, ~~a total of 386,574~~1,379,310 RSUs, with a grant date value of ~~$0.27,~~$0.58, to ~~certain employees~~Ms. Yun Han, the Company’s Chief Accounting Officer and Interim Chief Financial Officer. Ms. Han’s RSUs vest according to the following schedule: (a) 25% on the 30th day following the grant date; (b) 37.5% in four equal installments on each of the ~~Company.~~

~~Amendment No. 8 to the SPA~~

~~On May 8, 2023, and May 9, 2023, the Company amended the terms~~first four anniversaries of the ~~SPA with Senyun, FF Simplicity~~grant date; and ~~FF Prosperity (together, “ATW Parties”) (“Amendment No. 8”), pursuant to which: (i) the definition of Floor Price (as defined~~(c) 37.5% in three equal installments on each ~~such Secured SPA Note), was amended from $0.21 to $0.10; (ii) Make-whole Interest shall be paid upon conversion of principal~~ of the Secured SPA Notes; (iii) the conversion price for the Secured SPA Notes was amended from $1.05 to $0.89, subject to adjustment as set forth in the Secured SPA Notes; and (iv) the exercise price for the Secured SPA Warrants was amended from $1.05 to $0.89, subject to adjustment as set forth in the Secured SPA Warrants.

~~Unsecured Securities Purchase Agreement~~

On May 8, 2023, the Company entered into the Unsecured SPA with Unsecured SPA Purchasers to issue and sell, subject to the satisfaction of certain closing conditions, $100.0 million aggregate principal amountfirst three anniversaries of the ~~Company’s senior unsecured convertible promissory notes. The Unsecured SPA Purchasers committed to fund in eight subsequent closings fifteen days apart, subject to the satisfaction~~start of certain closing conditions. In addition, any Unsecured SPA Purchaser may postpone or cancel any closing pursuant to the Unsecured SPA in its reasonable discretion if it reasonably determines, based on public information, that the first phaseproduction of the Company’s three-phase delivery plan as disclosed in public filings has not begun or will not begin prior to May 31, 2023 and/or the second phase of such delivery plan has not begun or will not begin prior to June 30, 2023, in each case within 15 calendar days of such deadline.FF 91.

The Unsecured SPA Notes are subject to an original issue discount of 10%, accrue interest at 10% per annum, and are convertible into shares of Class A Common Stock of the Company, at a conversion price equal to $0.89, plus an interest make-whole amount, subject to certain adjustments including full ratchet anti-dilution price protection. Each Unsecured SPA Note matures on the date that is six years.

Under the Unsecured SPA Notes, at each closing, the Unsecured SPA Purchaser is entitled to receive an Unsecured SPA Warrant registered in the name of such Unsecured SPA Purchaser to purchase up to a number of shares of Common Stock equal to 33% of such shares issuable to such Unsecured SPA Purchaser upon conversion of the aggregate principal amount under the Unsecured SPA Note funded at such closing, with an exercise price equal to $0.89 per share, subject to full ratchet anti-dilution price protection and other adjustments, and are exercisable for seven years on a cash or cashless basis.

Each Unsecured SPA Purchaser has the option, from time to time for 12 months after the date of the Unsecured SPA, to purchase additional convertible senior unsecured notes and warrants on the same terms as the Unsecured SPA Notes in an aggregate amount not to exceed 50% of the initial principal amount of the Unsecured SPA Notes issued to such Unsecured SPA Purchaser, subject to certain conditions.

~~On May 10, 2023, the Company received gross proceeds pursuant to the Unsecured SPA totaling $3.3 million ($3.0 million net of original issuance cost).~~

~~Faraday Future Intelligent Electric Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

~~Note Conversions~~

~~Between April 1, 2023 and May 12, 2023 the~~ ~~Purchasers converted portions of an aggregate principal amount of $60.2 million of the SPA Notes at a conversion price of $1.05 to $0.14 per share into 299,648,761 shares of Class A Common Stock.~~

~~Between April 1, 2023 and May 12, 2023 the~~ ~~Purchasers converted portions of an aggregate principal amount of $3.3 million of the Unsecured Notes at a conversion price of~~ ~~$0.89 to $0.14 per share into 23,691,100 shares of Class A Common Stock.~~

Authorized Shares

As of the date of ~~the~~ issuance of the unaudited Condensed Consolidated Financial Statements, and as a result of securing additional commitments subsequent to September 30, 2022, as described above, the Company ~~may~~does not have sufficient remaining authorized shares of Class A Common Stock to fulfill its obligation to issue shares upon exercise of all of the warrants and conversion of all of the notes issued or issuable under the NPA and SPA, or to pay interest Make-Whole Amounts in shares upon conversion of such notes. Under the SPA, each Purchaser has the option, from time to time until November 10, 2023, to purchase additional Tranche B Notes and warrants of the Company, subject to certain conditions, in an aggregate amount not to exceed the initial principal amount of the Bridge Notes and Incremental Notes issued to such Purchaser. Under the NPA, the Investors have a similar option to acquire additional Optional Notes and warrants of the Company, subject to certain conditions. If there is an insufficient number of remaining authorized shares of Class A Common Stock, the Company would be required to pay the interest “Make-Whole Amount” in cash, which could adversely affect the Company’s liquidity position, business and results of operations. At a special meeting of the Company’s stockholders held on November 3, 2022, the Company’s stockholders approved (among other proposals) a proposal to amend the Amended and Restated Charter to increase the Company’s authorized number of shares of common stock from 825,000,000 to 900,000,000 shares. In order to have a sufficient number of authorized shares of common stock to issue to the Purchasers and/or Investors pursuant to the NPA and SPA, the Company ~~may~~intends to call a subsequent special meeting to obtain stockholder approval to further increase the Company’s authorized shares of common stock.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (AS RESTATED)

The following discussion and analysis is intended to help the reader understand FF’s results of operations and financial condition. This discussion and analysis is provided as a supplement to, and should be read in conjunction with FF’s unaudited Condensed Consolidated Financial Statements and Notes thereto included elsewhere in this quarterly report on Form 10-Q (this “Report”). Some of the information contained in this discussion and analysis or set forth elsewhere in this Report, including information with respect to FF’s plans and strategy for FF’s business, includes forward-looking statements that involve risks and uncertainties. FF’s actual results may differ materially from management’s expectations as a result of various factors, including but not limited to those discussed in the sections entitled “Risk Factors” in the Company’s ~~Annual Report on~~ Form 10-K, ~~filed on March 9, 2023 (“Form 10-K”),~~ as updated by Part II, Item 1A of this Report and “Cautionary Note Regarding ~~Forward-Looking~~Forward Looking Statements” below. The objective of this section is to provide investors an understanding of the financial drivers and levers in FF’s business and describe the financial performance of the business.

Cautionary Note Regarding Forward-Looking Statements

This Report includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements can be identified by the use of forward-looking terminology, including the words “believes,” “estimates,” “anticipates,” “expects,” “intends,” “plans,” “may,” “will,” “potential,” “projects,” “predicts,” “continue,” or “should,” or, in each case, their negative or other variations or comparable terminology. There can be no assurance that actual results will not materially differ from expectations. Such statements include, but are not limited to, any statements relating to our financial and business performance, market acceptance and success of our business model, our ability to expand the scope of our offerings, and our ability to comply with the extensive, complex, and evolving regulatory requirements. These statements are based on management's current expectations, but actual results may differ materially due to various factors.

The forward-looking statements contained in this Report are based on our current expectations and beliefs concerning future developments and their potential effects on us. Future developments affecting us may not be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control), and other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the section titled “Risk Factors” in the Form 10-K, ~~and~~ in this Report. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation (and expressly disclaim any obligation) to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. These risks and others described under the section titled “Risk Factors” in the Form 10-K, as updated in this Report may not be exhaustive.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and developments in the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements contained in this Report. In addition, even if our results or operations, financial condition and liquidity, and developments in the industry in which we operate are consistent with the forward-looking statements contained in this Report, those results or developments may not be indicative of results or developments in subsequent periods.

Restatement

The accompanying Management’s Discussion and Analysis of Financial Condition and Results of Operations gives effect to the correction of errors in our previously reported consolidated financial statements as of and for the three and nine month periods ended September 30, 2022. For additional information and a detailed discussion of these error corrections, refer to the Explanatory Note and Part I, Item 1, Notes to the Condensed Consolidated Financial Statements, Note 2, Restatement.

Overview

Faraday Future Intelligent Electric, Inc. (together with its consolidated subsidiaries, “FF,” “the Company,” “we,” “us” or “our”) is a California-based, global, shared, intelligent, mobility ecosystem company founded in 2014 with a vision to disrupt the automotive industry.

On July 21, 2021 (the “Closing Date”), Faraday Future Intelligent Electric Inc. (f/k/a Property Solutions Acquisition Corp. (“PSAC”)), a Delaware corporation, consummated the previously announced business combination pursuant to that certain Agreement and Plan of Merger, dated as of January 27, 2021 (as amended, the “Merger Agreement”), by and among PSAC, PSAC Merger Sub Ltd., an exempted company with limited liability incorporated under the laws of the Cayman Islands and wholly-owned subsidiary of PSAC (“Merger Sub”), and Legacy FF. Pursuant to the terms of the Merger Agreement, Merger Sub merged with and into Legacy FF, with Legacy FF surviving the merger as a wholly-owned subsidiary of the Company ~~(the “Business~~(“Business Combination”).

Upon the consummation of the Business Combination (“Closing”), PSAC changed its name from Property Solutions Acquisition Corp. to Faraday Future Intelligent Electric Inc., (“FF”) and FF’s Class A Common Stock and warrants (“Public ~~Warrants~~Warrants”) originally issued in the initial public offering of PSAC began trading on The Nasdaq Global Select Market (“Nasdaq”) under the ticker symbols ~~“FFIE”~~FFIE and ~~“FFIEW,”~~FFIEW, respectively.

With headquarters in Los Angeles, California, FF designs and engineers next-generation, intelligent, connected, electric vehicles. FF ~~manufactures~~intends to manufacture vehicles at its ieFactory California production facility in Hanford, California, with additional future production capacity needs addressed through a contract manufacturing agreement with Myoung Shin Co., Ltd., (“Myoung Shin”), an automotive manufacturer headquartered in South Korea. FF has additional engineering, sales, and operational capabilities in China and is exploring opportunities for potential manufacturing capabilities in China through a joint venture or other arrangement.

Since its founding, FF has created major innovations in technology, products, and a user-centered business model. FF believes these innovations will enable FF to set new standards in luxury and performance that will redefine the future of intelligent mobility.

FF’s innovations in technology include its proprietary Variable Platform Architecture (“VPA”), propulsion system, and Internet Artificial Intelligence (“I.A.I.”) system. We believe the following combination of capabilities of FF’s products, technology, ~~the recent upgrade to PT Gen 2.0,~~ team, and business model distinguish FF from its competitors:

•FF has designed and developed a breakthrough mobility platform — its proprietary VPA.


●•FF’s propulsion system provides a competitive edge in acceleration and range, enabled by an expected industry-leading inverter design, and propulsion system.			~~FF has designed and developed a breakthrough mobility platform — its proprietary VPA.~~


●•FF’s advanced I.A.I. technology offers high-performance computing, high speed internet connectivity, Over the Air (“OTA”) updating, an open ecosystem for third-party application integration, and a Level 3 autonomous driving-ready system, in addition to several other proprietary innovations that enable FF to build an advanced, highly-personalized user experience.			~~FF’s propulsion system provides a competitive edge in acceleration and range, enabled by an expected industry-leading inverter design, and propulsion system.~~


●•Since inception, FF has developed a portfolio of intellectual property, established its proposed supply chain, and assembled a global team of automotive and technology experts and innovators to achieve its goal of redefining the future of the automotive industry. As of September 30, 2022, FF has been granted approximately 650 patents globally.			FF’s advanced I.A.I. technology offers high-performance computing, high speed internet connectivity, Over the Air (“OTA”) updating, an open ecosystem for third-party application integration, and a Level 3 autonomous driving-ready system, in addition to several other proprietary innovations that enable FF to build an advanced, highly-personalized user experience.


●•FF’s B2C (business-to-customer) passenger vehicle launch pipeline over the next five years includes the FF 91 series, the FF 81 series, and the FF 71 series.			Since inception, FF has developed a portfolio of intellectual property, established its proposed supply chain, and assembled a global team of automotive and technology experts and innovators to achieve its goal of redefining the future of the automotive industry. As of May 5, 2023, FF has been granted approximately 660 patents globally.


●•FF believes that the FF 91 will be the first ultra-luxury EV to offer a highly-personalized, fully-connected user experience for driver and passengers. FF previously expected deliveries of the FF 91 series to begin in the fourth quarter of 2022. However, in light of its delayed timing in securing funding commitments needed to fund its projected use of cash, FF no longer expects to launch the FF 91 in the fourth quarter of 2022. The timing of launch of FF 91 vehicles is uncertain and remains subject to various conditions, many of which are outside of FF’s control, including the timing, size, and availability of additional financing as well as the implementation and effectiveness of FF’s headcount reductions and other expense reduction and payment delay measures. It is also subject to suppliers meeting their commitments on program deliverables including parts, and timely and successful certification testing.			~~FF’s B2C (business-to-customer) passenger vehicle pipeline over the next five years is planned to include the FF 91 series, the FF 81 series, and the FF 71 series.~~


●			FF believes that the FF 91 Futurist will be the first ultra-luxury EV to offer a highly-personalized, fully-connected user experience for driver and passengers. FF announced the start of production of the FF 91 Futurist on March 29, 2023, and FF’s first production FF 91 Futurist vehicle came off the line on April 14, 2023. FF has developed a three-phase delivery plan for the FF 91 Futurist. The first phase is expected to begin at the end of May 2023, and the second phase is expected to begin at the end of the second quarter of 2023, followed by the third phase. The first phase is the “Industry Expert Futurist Product Officer (FPO) Co-Creation Delivery.” In this first phase, the Industry Expert FPO(s) will pay in full for an FF 91 vehicle in order to reserve the vehicle and be trained in the use of the vehicle. The reserved FF 91 vehicle will be delivered to the FPO at the beginning of the second phase. The second phase is the “FPO Co-Creation Delivery.” In this second phase, FPO(s) will take possession of the FF 91 vehicle. The third phase is the “Full Co-Creation Delivery.” In this third phase, FF will deliver FF 91 vehicles to all spire users that pay in full for an FF 91 vehicle. FF expects to need substantial additional financing to start the third phases of the delivery plan and is in discussions with additional potential investors to obtain such financing. As FF executes the three-phase delivery plan, it plans to continue to move vehicles into production and off-the-line with high quality and high product power. The successful beginning of the second phase is contingent on receiving parts on our required timeframes and completion of requisite tests. Further, FF expects to need substantial additional financing to start the third phase of the delivery plan and is in discussions with additional potential investors to obtain such financing.


●			~~Subject to future financing, FF plans to produce and deliver~~•Subject to future financing, FF plans to launch its second passenger vehicle, the FF 81, which will be a premium, mass-market electric vehicle positioned to compete against the Tesla Model S, Tesla Model X, the BMW 5-series, and the Nio ES8.

2042


●			~~Subject to future financing, FF plans to develop a mass-market passenger vehicle, the FF 71. FF expects to start production and deliveries~~•Subject to future financing, FF plans to develop a mass-market passenger vehicle, the FF 71. FF expects to launch the FF 71 subsequent to the launch of ~~the FF 71 subsequent to production and deliveries of the~~ FF 81. The FF 71 will integrate full connectivity and advanced technology into a smaller vehicle size and is positioned to compete against the Tesla Model 3, Tesla Model Y, and the BMW 3-series.


●•			Subject to future financing, FF plans to develop a Smart Last Mile Delivery (“SLMD”) vehicle to address the high-growth, last-mile delivery opportunity, particularly in Europe, China and the U.S. FF’s modular VPA facilitates entry into the last-mile delivery segment, allowing FF to expand its total addressable market and avenues of growth.

FF has adopted a hybrid manufacturing strategy consisting of its refurbished manufacturing facility in Hanford, California and a collaboration with Myoung ~~Shin in South Korea.~~Shin. FF is also exploring other potential contract manufacturing options in addition to the contract manufacturing agreement in South ~~Korea along with~~Korea. FF is also exploring the possibility of manufacturing capacity in China through a joint venture or other arrangements. All passenger vehicles as well as the SLMD vehicle are expected to be available for sale in the U.S. and ~~China, with potential expansion to~~China. European ~~markets.~~markets may be added as early as 2024.

Emerging Growth Company Status

Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can choose not to take advantage of the extended transition period and comply with the requirements that apply to non-emerging growth companies. Any such election to not take advantage of the extended transition period is irrevocable.

FF is an “emerging growth company” as defined in Section 2(a) of the Securities Act of 1933, as amended, and has elected to take advantage of the benefits of the extended transition period for new or revised financial accounting standards. FF expects to continue to take advantage of the benefits of the extended transition period, although it may decide to early adopt such new or revised accounting standards to the extent permitted by such standards. This may make it difficult or impossible to compare our financial results with the financial results of another public company that is either not an emerging growth company or is an emerging growth company that has chosen not to take advantage of the extended transition period exemptions because of the potential differences in accounting standards used.

Segment Information

On February 26, 2023, after an assessment by the Board of the Company’s management structure, the Board approved Mr. Yueting Jia (alongside Mr. Xuefeng Chen) reporting directly to the Board, as well as FF’s product, mobility ecosystem, I.A.I., and advanced R&D technology departments reporting directly to Mr. Jia. The Board also approved FF’s user ecosystem, capital markets, human resources and administration, corporate strategy and China departments reporting to both Mr. Jia and Mr. Xuefeng Chen, subject to processes and controls to be determined by the Board after consultation with the Company’s management. The Company’s remaining departments continue to report to Mr. Xuefeng Chen. Based on the changes to his responsibilities within the Company, the Board determined that Mr. Jia is an “officer” of the Company within the meaning of Section 16 of the Exchange Act and an “executive officer” of the Company under Rule 3b-7 under the Exchange Act.

~~Therefore, the Company’s co-CODM's are both its Global Chief Executive Officer and Founder. The Company~~FF has determined that itFF operates ~~in one operating segment and~~as one reportable segment, aswhich is the ~~co-CODM’s review financial information presented on a consolidated basis for purposes~~design, development, manufacture, engineering, sale, and distribution of ~~making operating decisions, allocating resources,~~electric vehicles and ~~evaluating financial performance. Substantially all of~~related products in the Company’s consolidated operating activities, including its long-lived assets, are located within the United States of America. Given the Company’s pre-revenue operating stage, it currently has no concentration exposure to products, services or customers.global market.

Impact of COVID-19 on FF’s Business (in thousands)

~~The residual effects of~~There continues to be worldwide impact from the COVID-19 ~~pandemic continue to impact global and domestic economic conditions, which have affected our operations, our suppliers and other business partners.~~pandemic. The impact of COVID-19 includes changes in consumer and business behavior, pandemic fears, market downturns, restrictions on business, and individual activities have created significant volatility in the global economy and have led to reduced economic activity. ~~Consequently, we have experienced increased levels~~The spread of ~~overall cost inflation and challenges within our supply chain. Such residual impact~~COVID-19 has also ~~continue to create~~created a disruption in the manufacture, delivery, and overall supply chain of vehicle manufacturers and suppliers and has led to a global decrease in vehicle sales in markets around the world.

~~Consumer trends that originated during~~The pandemic has resulted in government authorities implementing numerous measures to try to contain the ~~pandemic~~virus, such as travel bans, restrictions, quarantines, stay-at-home or shelter-in-place orders, and business shutdowns. For example, FF’s employees based in California have been subject to stay-at-home orders from state and local governments. While the stay-at-home orders were lifted on June 15, 2021, FF continues to operate under various return-to-work protocols and must continue to ~~persist~~follow certain safety and COVID-19 protocols. These measures may ~~also have long-lasting adverse~~adversely impact FF’s employees and operations, the operations of FF’s suppliers and business partners, and could negatively impact the construction schedule of FF’s manufacturing facility and the production schedule of the FF 91. In addition, various aspects of FF’s business and manufacturing facility cannot be conducted remotely. These measures by government authorities may remain in place for a significant period of time and could adversely affect FF’s construction and manufacturing plans, sales and marketing activities, and business operations. The extent of the continuing impact of the COVID-19 pandemic on ~~us. We cannot predict the extent~~FF’s operational and ~~duration of such trends or their impact on us, which~~financial performance is uncertain and will depend on many factors outside FF’s ~~control. In addition, any future outbreaks or~~control, including, without limitation, the timing, extent, trajectory and duration of the pandemic; the availability, distribution and effectiveness of vaccines; the imposition of protective public safety measures; and the impact of the pandemic on the global economy, including FF’s supply chain, and on the demand for consumer products. Future measures taken by government authorities in response ~~to such outbreaks~~the COVID-19 pandemic could adversely affect FF’s construction and manufacturing plans, sales and marketing activities, and business operations.

In response to the pandemic, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) administered by the United States Small Business Administration (“SBA”). In 2020, Legacy FF received a Paycheck Protection Program (“PPP”) loan in the amount of $9,168. The Company was notified by East West Bank that a principal amount of $8,975 as well as accrued interest of $155 relating to the PPP Loan had been forgiven as of December 31, 2021. The Company paid an amount of $193 in April 2022 to settle the PPP loan.

The COVID-19 vaccine is currently being administered. Any ~~further~~resurgence may slow down FF’s ability to ramp-up FF’s production program on time to satisfy investors and potential customers. Any delay to production will delay FF’s ability to ~~produce and deliver~~launch the FF 91 and begin generating revenue. The COVID-19 pandemic could limit the ability of FF’s suppliers and business partners to perform, including third-party suppliers’ ability to provide components and materials used in the FF 91. FF may also experience an increase in the cost of raw materials. FF does not ~~currently~~ anticipate any material impairments as a result of COVID-19; however, FF will continue to evaluate conditions on an ongoing basis. Even after the COVID-19 pandemic has subsided, FF may continue to experience an adverse impact to its business as a result of the global economic impact and any lasting effects on the global economy, including any recession that has occurred or may occur in the future. Refer to the section titled ~~“Risk Factors” in Item 1A~~“Risk Factors” of the Form 10-K for a full discussion of the risks associated with the COVID-19 pandemic.

Business Combination

On June 24, 2021, the registration statement on Form S-4 (File No. 333-255027), initially filed with the U.S. Securities and Exchange Commission (“SEC”) on April 5, 2021 (as amended, the “Registration Statement”), relating to the Business Combination was declared effective by the SEC, and (ii) PSAC established a record date of June 24, 2021 and a meeting date of July 21, 2021 for its special meeting of stockholders, where the Business Combination was approved. For purposes of the discussions in this section related to conversion on the ~~closing of the Business Combination~~Closing Date of all issued and outstanding Legacy FF Ordinary Stock into shares of Common Stock of ~~FFIE~~FF in accordance with the terms and conditions of the Merger Agreement and the settlement of liabilities in conjunction with the closing of the Business Combination, we refer to that parties’ right to receive Class A and Class B Common Stock.

Recent Developments

~~During~~FF accomplished the following major milestones during the three months ended ~~March~~September 30, 2022:

•Announced that Mathias Hofmann, Head of Global Supply Chain, would assume the additional position of Head of Manufacturing Operations, on an interim basis.

•Announced its sponsorship and attendance at the 2022 Pebble Beach Concours d'Elegance taking place from August 18-21, 2022. FF’s flagship FF 91 EV was available for demo rides and made a special appearance on the Concept Lawn on August 21, 2022.

•Announced a joint partnership with Gameloft, a leader in the creation and development of games. FF’s first concept car, the FFZERO1, is featured inside Asphalt 8.

•Announced the FF 91 Futurist, the Ultimate Intelligent TechLuxury EV, was officially certified to have a robust rating of 381 miles of EV range from the U.S. Environmental Protection Agency (“EPA”).

•Announced that PricewaterhouseCoopers LLP (“PwC”) notified Faraday Future Intelligent Electric Inc. (the “Company”) that it would not stand for re-election as the Company’s independent registered public accounting firm for the year ending December 31, ~~2023,~~2022 and, effective August 23, 2022, was no longer the Company’s independent registered public accounting firm.

•Announced that a thorough independent external investigation found that allegations that certain directors were conspiring to pursue an unnecessary bankruptcy of the Company were without merit.

•Announced an agreement relating to its governance dispute with FF Top. SeeRecent Governance Developments for more information.

Subsequent to September 30, 2022, FF accomplished these additional events and milestones:

•Announced the resignation of Becky Roof, the Company’s former Interim Chief Financial Officer, resigned from the Company effective October 12, 2022. Ms. Roof’s departure from the Company followed the successful completion of key milestones in the Company’s SEC reporting and ~~events took place:~~


●			~~Announced Faraday Future’s return to the Consumer Electronics Show, CES 2023, in Las Vegas, NV.~~


●			~~Announced the shipment of one of the latest production-intent FF 91 Futurist testing vehicles to China for market testing and validation, including charging and infrastructure compatibility along~~fundraising activities, and was not a result of any disagreement with ~~other hardware and software applications.~~


●			Announced that FF is targeting a start of production date for its flagship FF 91 Futurist of March 30, 2023, assuming timely receipt of funds from the Company’s investors, at the Company’s Hanford California manufacturing facility, “FF ieFactory California.”


●			Announced, on March 29, 2023, the start of production of FF’s flagship FF 91 Futurist at the Company’s Hanford California manufacturing facility, “FF ieFactory California”.

In the ~~period subsequent to March 31, 2023, these additional milestones and events took place:~~


●Company’s independent auditors or any member of Company management on any matter of accounting principles or practices, financial statement disclosure, or internal controls.			Announced the completion of FF’s first production build vehicle, the FF 91 Futurist, which came off its production line at FF ieFactory California on April 14, 2023.


●			announced the launch of FF’s Generative AI Product Stack, which will be integrated in the Company’s flagship vehicle, the FF 91. FF is one of the first automotive manufacturers to integrate and demonstrate generative AI capabilities in a vehicle.


●			Appointed Rich Schmidt as vice president of manufacturing. Mr. Schmidt will be responsible for leading all facets of FF’s production and manufacturing, focusing on the Hanford, CA manufacturing plant, FF ieFactory California. He will oversee the continued development, component tooling, and hiring related to the production of the FF 91. Mr. Schmidt succeeds Mathias Hofmann, FF’s Senior Vice President of Global Supply Chain.


●			Announced 365 non-binding, fully refundable pre-orders as of May 5, 2023. Pre-orders are fully refundable, non-binding, paid deposits for the FF 91 Futurist vehicles available initially for sale to customers in the U.S. and China. FF 91 Futurist pre-orders require a $5,000 or $1,500 deposit, depending on the edition selected, for customers in the U.S. and up to CNY 50,000 or CNY 20,000 deposit, depending on the edition selected, for customers in China.

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•Appointed Yun Han as Chief Accounting Officer and Interim Chief Financial Officer, effective October 25, 2022. Ms. Yun Han was most recently Senior Vice President and Chief Accounting Officer of Romeo Power, Inc., and spent over 13 years with PwC. Ms. Yun Han is a Certified Public Accountant licensed in the State of California.

•Appointed Mazars USA LLP as the Company’s independent registered public accounting firm as of and for the year ending December 31, 2022, effective October 27, 2022.

•Announced 369 pre-orders as of November 17, 2022. Pre-orders are fully refundable, non-binding, paid deposits for the FF 91 Futurist Alliance Edition and/or the FF 91 Futurist vehicles available initially for sale to customers in the U.S. and China. FF 91 Futurist Alliance Edition pre-orders require a $5,000 deposit for customers in the U.S. and an CNY 50,000 deposit for customers in China. FF 91 Futurist pre-orders require a $1,500 deposit for customers in the U.S. and an CNY 20,000 deposit for customers in China.

•Announced the achievement of Production Milestone #6, completion of construction and equipment installation in final vehicle manufacturing areas at FF’s Hanford, California manufacturing facility (“ieFactory California”).

•Announced the California Air Resources Board (CARB) has certified the FF 91 Futurist as a zero-emissions vehicle (ZEV). The ZEV program is part of CARB's Advanced Clean Cars package of coordinated standards that control smog-causing pollutants and greenhouse gas emissions of passenger vehicles in California.

Recent Governance Developments


●			As previously disclosed, from June to September 2022, FF and FF Global were party to a dispute over various terms of the Shareholder Agreement as then in effect, including relating to FF Global’s right to remove its designees from the Board of Directors. On September 23, 2022, the Company, FF Global and FF Top entered into a governance settlement with FF Top, the largest holder of the Company’s Common Stock, including with respect to the composition of the Board, resignation of Ms. Susan Swenson and Mr. Brian Krolicki, and the appointment of Adam (Xin) He to the Board. In connection with the Heads of Agreement, on September 23, 2022, the Company and FF Global entered into a mutual release agreement (the “Mutual Release”), pursuant to which, the Company and FF agreed to a mutual general release of claims and to settle fully and finally all differences between them, including any differences that arose out of the Company directors’ service as a director, employee, officer or manager of the Company up through and including the date of the Mutua~~l Release subject to customary exceptions.~~ Pursuant to the Heads of Agreement, FF Top and FF Global caused all actions in the Court of Chancery of the State of Delaware, and any other forum, filed by FF Top, FF Global and/or any of their respective controlled affiliates as of the effective date of the Heads of Agreement, naming the Company or any of its directors or officers to be dismissed without prejudice as of September 27, 2022. Shortly following the execution of the Heads of Agreement, FF Global began making additional demands of the Company which were beyond the scope of the terms contemplated by the Heads of Agreement and pertained to, among other things, the Company’s management reporting lines and certain governance matters. On September 30, 2022, FF Global alleged that the Company was in material breach of the spirit of the Heads of Agreement. The Company believes it has complied with the applicable terms of the Heads of Agreement, and disputes any characterization to the contrary. Such•As previously disclosed, from June to September 2022, FF and FF Global Partners LLC (“FF Global”) were party to a dispute over various terms of the Shareholder Agreement as then in effect, including relating to FF Global’s right to remove its designees from the Board of Directors. On September 23, 2022, the Company, FF Global and FF Top entered into a governance settlement with FF Top, the largest holder of the Company’s Common Stock, including with respect to the composition of the Board, resignation of Ms. Susan Swenson and Mr. Brian Krolicki, and the appointment of Adam (Xin) He to the Board. In connection with the Heads of Agreement, on September 23, 2022, the Company and FF Global entered into a mutual release agreement (the “Mutual Release”), pursuant to which, the Company and FF agreed to a mutual general release of claims and to settle fully and finally all differences between them, including any differences that arose out of the Company directors’ service as a director, employee, officer or manager of the Company up through and including the date of the Mutual Release subject to customary exceptions. See “Governance Agreement with FF Top and FF Global” for more information. Pursuant to the Heads of Agreement, FF Top and FF Global caused all actions in the Court of Chancery of the State of Delaware, and any other forum, filed by FF Top, FF Global and/or any of their respective controlled affiliates as of the effective date of the Heads of Agreement, naming the Company or any of its directors or officers to be dismissed without prejudice as of September 27, 2022. Shortly following the execution of the Heads of Agreement, FF Global began making additional demands of the Company which were beyond the scope of the terms contemplated by the Heads of Agreement and pertained to, among other things, the Company’s management reporting lines and certain governance matters. On September 30, 2022, FF Global alleged that the Company was in material breach of the spirit of the Heads of Agreement. The Company believes it is in full compliance with the Heads of Agreement and intends to comply with its terms, and disputes any characterization to the contrary. While the Company is in discussions with FF Global regarding these additional demands, such disputes divert management and Board resources and are costly. There can be no assurance that this or any other dispute between the Company and FF Global will not result in litigation. See “Item 1A. Risk Factors — Disputes with our shareholders are costly and distracting.” On October 3, 2022, Ms. Swenson and Mr. Scott Vogel, a member of the Board, tendered their resignation from the Board effective immediately. On October 3, 2022, Mr. Jordan Vogel also tendered his resignation from the Board ~~effective on October 5, 2022 upon his receipt of a supplemental release pursuant to the Mutual Release.~~


●			On October 14, 2022, FF Top delivered to the Company a “Notice of Nomination of Replacement FF Top Designees” stating, among other things, that FF Top was nominating a director to fill the vacancy on the Board left by Ms. Swenson’s resignation. FF Top asserted the right to nominate a director to fill the vacancy created by Ms. Swenson’s resignation because such resignation was not effected in accordance with the Heads of Agreement, and thus, the provision that Ms. Swenson’s seat would remain empty until the Annual Meeting did not apply. FF Top maintained that it believed that Ms. Swenson’s vacancy should be filled with a nominee of FF Top, notwithstanding the current level of FF Top’s beneficial ownership of the Company shares, in light of substantial dilution in its ownership of the Company shares based on recent financing transactions entered into by the Company.


●			On October 22, 2022, FFIE and FF Top entered into the FF Top Amendment to the FF Top Voting Agreement. Pursuant to the FF Top Amendment, FF Top (among other things) reaffirmed its commitment under the FF Top Voting Agreement, in light of the extension of the maturity date of the Bridge Notes under the Third Amendment, to vote all of its shares of the Company voting stock in favor of the proposal to approve (for purposes of the Nasdaq listing rules) the issuance, in the aggregate, of shares in excess of 19.99% of the total issued and outstanding shares of the Company Common Stock pursuant to the Financing Documents at the special meeting of the Company’s stockholders held on November 3, 2022. FF Top’s obligations pursuant to the FF Top Amendment are conditioned on (i) the appointment of Mr. Chad Chen (or a substitute nominee, as applicable), to the Board of Directors of the Company as the fourth FF Top designee no later than October 27, 2022 (provided that Mr. Chen or a substitute nominee, as applicable, is reasonably acceptable to the Nominating and Corporate Governance Committee of the Board with respect to the Nasdaq independence rules and legal compliance and criminal compliance) (provided that if Mr. Chen is not so reasonably acceptable to the Nominating and Corporate Governance Committee of the Board, then FF Top will be permitted to nominate another individual to the Board); and (ii) constructive engagement by Mr. Adam (Xin) He, the Chairman of the Board, directly with representatives of FF Top on certain additional governance and management matters and, to the extent the Chairman of the Board so determines, in his discretion, such matters will be put to a discussion and a vote of the full Board. On October 27, 2022, Mr. Chad Chen was appointed to the Board. On October 28, 2022, Mr. Brian Krolicki tendered his resignation from the Board effective immediately.


●			On November 26, 2022, the Board appointed Mr. Xuefeng Chen as Global CEO, effective as of November 27, 2022. Mr. Xuefeng Chen replaced Dr. Carsten Breitfeld, who was removed from the Global CEO position by the Board on November 26, 2022.


●			On November 29, 2022, Mr. Robert Kruse, FF’s former Senior Vice President, Product Execution, resigned from the Company. On December 13, 2022, Mr. Matthias Aydt took on the role of Senior Vice President, Product Execution, effective immediately.


●			On December 15, 2022, Mr. Lee Liu tendered his resignation from the Board, which resignation was effective on December 18, 2022. On December 18, 2022, Mr. Jie Sheng was appointed to the Board, effective immediately, following the resignation of Mr. Liu. On December 25, 2022, Mr. Edwin Goh tendered his resignation from the Board, which resignation was effective on December 26, 2022. On December 27, 2022, Ms. Ke Sun was appointed to the Board, effective immediately, following the resignation of Mr. Goh. Mr. Sheng and Ms. Sun are designees of FF Top pursuant to the Amended Shareholder Agreement. On December 26, 2022, Dr. Carsten Breitfeld tendered his resignation from the Board, which resignation was effective immediately. On December 27, 2022, Mr. Xuefeng Chen was appointed to the Board, effective immediately, following the resignation of Dr. Breitfeld. On January 20, 2023, Mr. Qing Ye tendered his resignation from the Board, which resignation was effective immediately. Mr. Ye remains a consultant of the Company as an independent contractor until November 18, 2023, at which time both parties will mutually reassess the relationship. On January 25, 2023, Mr. Chui Tin Mok was appointed to the Board, effective immediately, following the resignation of Mr. Ye. On March 9, 2023, Mr. Matthias Aydt tendered his resignation from the Board, effective upon the nomination and approval by the Board of a replacement director. On March 13, 2023, upon the recommendation of the Nominating and Corporate Governance Committee, the Board appointed Li Han to fill the vacancy on the Board due to Mr. Aydt’s resignation.


●			On February 26, 2023, after an assessment by the Board of FF’s management structure, the Board approved Mr. Yueting Jia (alongside Mr. Xuefeng Chen) reporting directly to the Board, as well as FF’s product, mobility ecosystem, I.A.I., and advanced R&D technology departments reporting directly to Mr. Jia. The Board also approved FF’s user ecosystem, capital markets, human resources and administration, corporate strategy and China departments reporting to both Mr. Jia and Mr. Xuefeng Chen, subject to processes and controls to be determined by the Board after consultation with the Company’s management. The Company’s remaining departments continue to report to Mr. Xuefeng Chen. Based on the changes to his responsibilities within the Company, the Board determined that Mr. Jia is an “officer” of the Company within the meaning of Section 16 of the Exchange Act and an “executive officer” of the Company under Rule 3b-7 under the Exchange Act.


●			On January 13, 2023, the Company entered into an Amended and Restated Shareholder Agreement (the “Amended Shareholder Agreement”) with FF Top and, solely for purposes of certain amendments to the Heads of Agreement, FF Global, which amended and restated the Shareholder Agreement, as amended by the Heads of Agreement. Pursuant to the Amended Shareholder Agreement, (a) FF Top has the right to nominate certain designees to the Board, (b) the Company agreed not to elect to be treated as a “controlled company” as defined under Nasdaq rules, (c) the Company agreed to cooperate with any written requests by FF Top relating to any pledge, hypothecation or grant of shares of Common Stock, (d) FF Top informed the Company that FF Top expects certain proposals to be submitted to Company stockholders for approval to amend provisions of the Company’s Amended and Restated Charter related to voting power of Class B Common Stock, FF Top designees to the Board and written consent of stockholders, (e) the Company agreed not to enter into any transaction or series of related transactions that would require a stockholder vote under Nasdaq Listing Rule 5635(d) (without giving effect to Section 5635(f) thereof) without FF Top’s prior written consent, which written consent shall not be unreasonably withheld, conditioned or delayed, (f) the Company agreed that investors under the SPA shall have the right to enter into any voting agreement or grant a voting proxy, at any time and on any terms, with or to FF Top with respect to any shares of Common Stock held by such investors, (g) FF Top agreed (i) to vote all shares of Common Stock that it beneficially owns in favor of an increase in the Company’s authorized shares of Class A Common Stock from 815.0 million to 1.69 billion (as such number may be adjusted due to any stock split, reverse stock split or other similar corporate action after January 13, 2023) at the next meeting of the Company’s stockholders held to consider such proposal (as such meeting may be adjourned or postponed) and (ii) not to transfer, convert or otherwise take any action that would result in the conversion of any shares of Class B Common Stock into Class A Common Stock of the Company prior to the Company’s receipt of stockholder approval for an increase in the number of authorized shares of Class A Common Stock in accordance with the foregoing, (h) (i) FF Top released and waived claims it or any other “FF Top Parties” (i.e., FF Top, FF Peak Holding LLC, a Delaware limited liability company, Pacific Technology Holding LLC, a Delaware limited liability company, FF Global and each of their affiliates, and their respective successors and assigns) may have had against the Company and the Company Parties (described below; such claims, the “FF Top Claims”) relating to matters occurring at any time after September 23, 2022 but prior to the execution of the Amended Shareholder Agreement (the “FF Top Release”), and (ii) the Company released and waived any and all claims it or any other “Company Parties” (i.e., the Company and each of the Company’s controlled affiliates, each individual currently serving as a director or on the management team of the Company or any of its controlled affiliates, and the respective successors and assigns of any of the foregoing) may have against FF Top Parties relating to any matters occurring at any time after September 23, 2022 but prior to the execution of the Amended Shareholder Agreement, and (i) the Company, FF Top and FF Global agreed that certain conditions in the Heads of Agreement have been satisfied, that there are no Definitive Documents (as such term is defined in the Heads of Agreement) beyond the Heads of Agreement and the Amended Shareholder Agreement, and to certain other amendments of the Heads of Agreement.

~~Recent Financing Developments~~


●			On August 14, 2022, FFIE entered into a definitive Securities Purchase Agreement with FF Simplicity and RAAJJ Trading LLC for $52.0 million of committed near-term convertible senior secured notes financing and the potential for an additional $248.0 million of incremental senior secured convertible notes financing to be funded within 90 days after the initial closing.


●			On September 23, 2022, FFIE entered into Amendment No. 1 to the SPA and Convertible Senior Secured Promissory Notes, to amend, among other things (a) the SPA, (b) that certain Convertible Senior Secured Promissory Note in favor of FF Simplicity in the principal amount of $25.0 million, dated as of August 15, 2022, and (c) that certain Convertible Senior Secured Promissory Note in favor of FF Simplicity in the principal amount of $10.0 million, dated as of September 14, 2022.


●			On September 25, 2022, FFIE entered into a Joinder and Amendment Agreement with Senyun, FF Simplicity and RAAJJ Trading LLC, for the purchase of up to $60.0 million under the SPA, subject to the completion of due diligence by the Company of Senyun and its financing sources.


●			On October 24, 2022, FFIE entered into a Limited Consent and Third Amendment to the SPA (the “Third Amendment”) with FF Simplicity as administrative and collateral agent and purchaser, Senyun as purchaser, and RAAJJ Trading LLC as purchaser.


●			On November 8, 2022, FFIE entered into a Limited Consent and Amendment to the SPA (the “Fourth Amendment”) with FF Simplicity as administrative and collateral agent and purchaser, Senyun as purchaser, and RAAJJ Trading LLC as purchaser.


●			~~On December 28, 2022, FFIE entered into a Letter Agreement and Amendment to the SPA (the “Senyun Amendment”) with FF Simplicity as administrative and collateral agent and Senyun as purchaser.~~


●			~~On January 25, 2023, FFIE entered into a Limited Consent and Amendment No. 5 to the SPA (the “Fifth Amendment”) with FF Simplicity as administrative and collateral agent and Senyun as purchaser.~~


●			On February 3, 2023, FFIE entered into an Amendment No. 6 to Securities Purchase Agreement (The “Sixth Amendment”) with FF Simplicity as administrative and collateral agent and Senyun, FF Top, FF Simplicity, FF Prosperity, Acuitas and other purchasers.


●			On March 27, 2023, FFIE entered into an Amendment No. 7 to Securities Purchase Agreement (The “Seventh Amendment”) with FF Simplicity as administrative, collateral agent and purchaser, and Senyun and FF Prosperity as purchasers.


●			On May 9, 2023, FFIE entered into an Amendment No. 8 to Securities Purchase Agreement (The “Eighth Amendment”) with FF Simplicity as administrative, collateral agent and purchaser, and Senyun and FF Prosperity as purchasers.


●			On May 8, 2023, the Company entered into a Securities Purchase Agreement (the “Unsecured SPA”) with Metaverse Horizon Limited and V W Investment Holding Limited, as purchasers (collectively with additional purchasers from time to time party thereto, the “Unsecured SPA Purchasers”), to issue and sell, subject to the satisfaction of certain closing conditions (as described further below), $100.0 million aggregate principal amount of the Company’s senior unsecured convertible promissory notes.


●			Beginning on August 16, 2022, FF Aventuras SPV XI, LLC, FF Adventures SPV XVIII LLC, FF Ventures SPV IX LLC and FF Venturas SPV X LLC, entities affiliated with ATW Partners LLC (the “ATW Investors”), converted portions of the aggregate principal amount of the outstanding convertible notes issued by the Company in a private placement pursuant to a Second Amended and Restated Note Purchase Agreement, dated as of October 9, 2020 (as amended from time to time, the “NPA,” and such convertible notes issued under the NPA, the “ATW NPA Notes”), into shares of Class A Common Stock, as follows below:

Conversion Period
Total Principal
Amount of
ATW NPA Notes
Converted
(in thousands)
Conversion
Price Total Number of Shares
of Class A Common
Stock Issued
August 16, 2022 to September 14, 2022 $67,218 $0.84 to $2.29 64,843,850


●			On September 26, 2022, the ATW Investors exercised 2,687,083 ATW NPA Warrants, each with an exercise price of $0.64 per share, into an equivalent number of shares of Class A Common Stock, resulting in net cash exercise proceeds to FFIE of $1.7 million.


●			~~On September 27, 2022, the ATW Investors exercised 29,158,364 ATW NPA Warrants, each with an exercise price of $0.50 per share, on a cashless basis into 14,339,110 shares of Class A Common Stock.~~


●			On September 27, 2022, the Board approved the issuance of 3,169,822 stock option awards, each exercisable into one share of Class A Common Stock, as part of the Company’s 2021 Stock Incentive Plan. Vesting terms include annual vesting in 25% increments from the vesting start date, 100% vesting as of the vesting start date, and vesting upon the start of production of the FF 91 Futurist.


●			On October 10, 2022, FFIE entered into an exchange agreement with the ATW Investors, pursuant to which, on October 10, 2022, the ATW Investors exchanged $4.0 million in aggregate principal amount of the outstanding ATW NPA Notes for 6,269,031 newly issued shares of Class A Common Stock, reflecting a price per share of Class A Common Stock of $0.64.


●			On October 19, 2022, FFIE and the ATW Investors entered into an exchange agreement, pursuant to which, on October 19, 2022, the ATW Investors exchanged $2.7 million in aggregate principal amount of the outstanding ATW NPA Notes for 5,227,837 newly issued shares of the Class A Common Stock, reflecting a price per share of Class A Common Stock of $0.51. Following the completion of such exchange, there were no outstanding ATW NPA Notes.


●			Between November 22, 2022 and February 28, 2023, FF Simplicity, Senyun and RAAJJ Trading LLC converted portions of the aggregate principal amount of the outstanding convertible notes of $68.9 million issued by the Company pursuant to the SPA at a conversion price of $0.23 to $1.05 per share into 258,909,938 shares of Class A Common Stock.


●			Between November 22, 2022 and February 7, 2023, FF Simplicity, Senyun and RAAJJ Trading LLC exercised 43,874,615 SPA Warrants using exercise prices of $0.28 to $0.2275 per share into 39,647,862 shares of Class A Common Stock. Between December 15, 2022 and February 6, 2023, the ATW Investors exercised 28,597,331 NPA ATW Warrants using an exercise price of $0.2275 per share into 23,557,189 shares of Class A Common Stock.


●			On November 14, 2022, FFIE announced entry into the SEPA with Yorkville, with an initial commitment of $200.0 million. Under the terms of the SEPA, FFIE has the right, but not the obligation, to issue and sell to Yorkville up to $200.0 million in shares Class A Common Stock subject to customary conditions including an effective registration statement for the resale of such shares. FFIE has the right to increase the $200.0 million commitment by up to $150.0 million in one or more installments. The shares will be sold to Yorkville at a discounted price of 97% of the three-day VWAP at the time of funding, and generally limited to one-third of FFIE’s trading volume during such time period. On December 8, 2022, FFIE filed with the SEC a registration statement on Form S-1 (File No. 333-268722) to register shares of Class A Common Stock to be issued under the SEPA. Such registration statement was declared effective by the SEC on March 22, 2023.


●			~~Between April 1, 2023 and May 12, 2023 the~~ ~~Purchasers converted portions of an aggregate principal amount of $60.2 million of the SPA Notes at a conversion price of $1.05 to $0.14 per share into 299,648,761shares of Class A Common Stock.~~
●			~~Between April 1, 2023 and May 11, 2023 the Purchasers converted portions of an aggregate principal amount of~~ ~~$3.3~~ ~~million of the Unsecured Notes at a conversion price of $0.89 to $0.14 per share into 23,691,100 shares of Class A Common Stock.~~

~~Special Committee Investigation~~

As previously disclosed on November 15, 2021, the Board established a special committee of independent directors (“Special Committee”) to investigate allegations of inaccurate Company disclosures, including those made in an October 2021 short seller report and whistleblower allegations, which resulted in FFIE being unable to timely file its third quarter 2021 Quarterly Report on Form 10-Q, Annual Report on Form 10-K for the year ended December 31, 2021, first quarter 2022 Quarterly Report on Form 10-Q and amended Registration Statement on Form S-1 (File No. 333-258993). The Special Committee engaged outside independent legal counsel and a forensic accounting firm to assist with its review. On February 1, 2022, FFIE announced that the Special Committee completed its review. On April 14, 2022, FFIE announced the completion of additional investigative work based on the Special Committee’s findings which were performed under the direction of the Executive Chairperson, reporting to the Audit Committee. In connection with the Special Committee’s review and subsequent investigative work, the following findings were made:

In connection with the Business Combination, statements made by certain Company employees to certain investors describing the role of Mr. Yueting Jia, the Company’s founder and former CEO, within the Company were inaccurate and his involvement in the management of the Company post-Business Combination was more significant than what had been represented to certain investors.


●			The Company’s statements leading up to the Business Combination that it had received more than 14,000 reservations for the FF 91 vehicle were potentially misleading because only several hundred of those reservations were paid, while the others (totaling 14,000) were unpaid indications of interest.


●			Consistent with FFIE’s previous public disclosures regarding identified material weaknesses in its internal control over financial reporting, the Company’s internal control over financial reporting requires an upgrade in personnel and systems.


			●			~~The Company’s corporate culture failed to sufficiently prioritize compliance.~~


●			~~Mr. Jia’s role as an intermediary in leasing certain properties which were subsequently leased to the Company was not disclosed in FFIE’s corporate housing disclosures.~~


●			In preparing FFIE’s related party transaction disclosures, the Company failed to investigate and identify the sources of loans received from individuals and entities associated with Company employees.

In addition, the investigation found that certain individuals failed to fully disclose to individuals involved in the preparation of FFIE’s SEC filings their relationships with certain related parties and affiliated entities in connection with, and following, the Business Combination, and failed to fully disclose relevant information, including but not limited to, information in connection with related parties and corporate governance to FFIE’s former independent registered public accounting firm PricewaterhouseCoopers LLP.

The investigation also found that certain individuals failed to cooperate and withheld potentially relevant information in connection with the Special Committee investigation. Among such individuals were non-executive officers or members of the management team of FF, and remedial action was taken with respect to such individuals based on the extent of non-cooperation and/or withholding of information. The failure to cooperate with the investigation was taken into consideration in connection with the remedial actions outlined below with respect to Jerry Wang, and withholding of information also affected the remedial action taken with respect to Matthias Aydt.


●			~~the appointment of Susan Swenson, a former member of the Board, to the then newly created position of Executive Chairperson of FF.~~


●			~~Dr. Carsten Breitfeld, FF’s former Global CEO, reporting directly to Ms. Swenson and receiving a 25% annual base salary reduction;~~


●			the removal of Mr. Jia as an executive officer, although continuing in his position as Chief Product & User Ecosystem Officer of FFIE. Certain dual-reporting arrangements were eliminated with respect to Mr. Jia, and he is required to report directly to Ms. Swenson, a non-independent director nominated by FF Top. Mr. Jia also received a 25% annual base salary reduction, and his role was limited from a policy-making position to focusing on (a) Product and Mobility Ecosystem and (b) Internet, Artificial Intelligence, and Advanced R&D technology;


●			Matthias Aydt, then Senior Vice President, Business Development and Product Definition and a former director of FFIE, and currently Senior Vice President, Product Execution, being placed on probation as an executive officer for a six-month period, during which period he remained a non-independent member of the Board, which probationary period has since ended;


●			the appointment of Jordan Vogel as Lead Independent Director; certain changes to the composition of Board committees, including Brian Krolicki stepping down from his role as Chairman of the Board and Chair of the Nominating and Corporate Governance Committee and becoming a member of the Audit and Compensation Committees of the Board; Jordan Vogel stepping down from the Nominating and Corporate Governance Committee; and Scott Vogel becoming the Chair of the Audit Committee and the Nominating and Corporate Governance Committee of the Board;


●			the suspension without pay of Jiawei (“Jerry”) Wang, FFIE’s former Vice President, Global Capital Markets, who subsequently notified the Board of his decision to resign from FF on April 10, 2022;


●			the assessment and enhancement of FF’s policies and procedures regarding financial accounting and reporting and the upgrading of FF’s internal control over financial accounting and reporting, including by hiring additional financial reporting and accounting support, in each case at the direction of the Audit Committee;


●			the implementation of enhanced controls around FF’s contracting and related party transactions, including regular attestations by FF’s employees with authority to bind FF to contracts and related party transactions, for purposes of enabling FF to make complete and accurate disclosures regarding related party transactions;


●			~~the implementation of a comprehensive training program for all directors and officers regarding, among other things, internal FF policies;~~


●			~~the separation of Jarret Johnson, FF’s Vice President, General Counsel and Secretary; and~~


●			~~certain other disciplinary actions and terminations of employment with respect to other FF employees (none of whom is an executive officer).~~

As of the date of this Report, FF is continuing to implement certain of the remedial actions approved by the Board. However, certain of these remedial actions are no longer in effect. For instance, Ms. Swenson resigned from the Board on October 3, 2022. Moreover, effective on February 26, 2023, certain departments within the Company report to both Mr. Jia and Mr. Xuefeng Chen, including the Company’s user ecosystem, capital markets, human resources and administration, corporate strategy and China departments, subject to processes and controls to be determined by the Board after consultation with the Company’s management. The Company’s product, mobility ecosystem, I.A.I., and advanced R&D technology departments report directly to Mr. Jia, while the remaining departments continue to report to Mr. Xuefeng Chen. Further, based on the changes to his responsibilities within FF, the Board determined that Mr. Jia is an “officer” of the Company within the meaning of Section 16 of the Exchange Act, and an “executive officer” of the Company under Rule 3b-7 under the Exchange Act.

In addition to the above, the Company is strengthening its compliance policies and procedures, including the hiring of a Compliance Officer with the title of Deputy General Counsel (hired in March 2023), who will report on a dotted line to the Chair of the Audit Committee, and a Director of Risks and Internal Controls. However there is no assurance can be provided that the remedial measures that continue to be implemented and additional actions by the Company to enhance its compliance policies and procedures will be implemented in a timely manner or at all, or will be successful to prevent inaccurate disclosures in the future. However, pursuant to the Heads of Agreement, FF has implemented certain governance changes that impact certain of the above-discussed remedial actions. On October 3, 2022, Ms. Swenson tendered her resignation from her role as both Executive Chairperson and member of the Board effective immediately. In addition, on October 3, 2022, Mr. Scott Vogel resigned from the Board effective immediately and Mr. Jordan Vogel resigned effective on October 5, 2022 upon his receipt of a supplemental release pursuant to the Mutual Release.

•On October 14, 2022, FF Top delivered to the Company a “Notice of Nomination of Replacement FF Top Designees” stating, among other things, that FF Top was nominating Ms. Li Han to fill the vacancy on the Board left by Ms. Swenson’s resignation. FF Top asserted the right to nominate Ms. Li Han to fill the vacancy created by Ms. Swenson’s resignation because such resignation was not effected in accordance with the Heads of Agreement, and thus, the provision that Ms. Swenson’s seat would remain empty until the 2022 Annual General Meeting of Stockholders (the “2022 AGM”) did not apply. FF Top maintained that it believed that Ms. Swenson’s vacancy should be filled with a nominee of FF Top, notwithstanding the current level of FF Top’s beneficial ownership of the Company shares, in light of substantial dilution in its ownership of the Company shares based on recent financing transactions entered into by the Company. See “Governance Agreement with FF Top and FF Global” for more information.

•On October 22, 2022, the Company and FF Top entered into the FF Top Amendment to the FF Top Voting Agreement. Pursuant to the FF Top Amendment, FF Top (among other things) reaffirmed its commitment under the FF Top Voting Agreement, in light of the extension of the maturity date of the Bridge Notes under the Third Amendment, to vote all of its shares of the Company voting stock in favor of the proposal to approve (for purposes of the NASDAQ listing rules) the issuance, in the aggregate, of shares in excess of 19.99% of the total issued and outstanding shares of the Company Common Stock pursuant to the Financing Documents at the special meeting of the Company’s stockholders held on November 3, 2022. FF Top’s obligations pursuant to the FF Top Amendment are conditioned on (i) the appointment of Mr. Chad Chen (or a substitute nominee, as applicable), in lieu of Ms. Li Han, to the Board of Directors of the Company as the fourth FF Top designee no later than October 27, 2022 (provided that Mr. Chen or a substitute nominee, as applicable, is reasonably acceptable to the Nominating and Corporate Governance Committee of the Board with respect to the Nasdaq independence rules and legal compliance and criminal compliance) (provided that if Mr. Chen is not so reasonably acceptable to the Nominating and Corporate Governance Committee of the Board, then FF Top will be permitted to nominate another individual to the Board); and (ii) constructive engagement by Mr. Adam (Xin) He, the Chairman of the Board, directly with representatives of FF Top on certain additional governance and management matters and, to the extent the Chairman of the Board so determines, in his discretion, such matters will be put to a discussion and a vote of the full Board. On October 27, 2022, Mr. Chad Chen was appointed to the Board. On October 28, 2022, Mr. Brian Krolicki tendered his resignation from the Board effective immediately.

Recent Financing Developments

•On ~~December~~August 14, 2022, the Company entered into a definitive Securities Purchase Agreement (“SPA”) with FF Simplicity Ventures LLC, an entity affiliated with ATW Partners LLC (“FF Simplicity”), for $52 million of committed near-term convertible senior secured notes financing and the potential for an additional $248 million of incremental senior secured convertible notes financing to be funded within 90 days after the initial closing. See Note 10, Notes Payable in FF’s unaudited Condensed Consolidated Financial Statements included above, and the Company’s Form 8-Ks filed with the SEC on August 15, 2022 for additional information.

•On September 23, 2022, the Company entered into Amendment No. 1 to Securities Purchase Agreement and Convertible Senior Secured Promissory Notes (the “Amendment”) with its subsidiaries party thereto, FF Simplicity as administrative and collateral agent (in such capacity, the “Agent”) and purchaser and RAAJJ Trading LLC, as purchaser (together with FF Simplicity Ventures LLC, the “Purchasers”), to amend, among other things, (a) that certain Securities Purchase Agreement, dated as of August 14, 2022, by and among the Company, its subsidiaries party thereto, the Purchasers and the Agent (the “Existing SPA”), (b) that certain Convertible Senior Secured Promissory Note in favor of FF Simplicity in the principal amount of $25.0 million, dated as of August 15, 2022, and (c) that certain Convertible Senior Secured Promissory Note in favor of FF Simplicity in the principal amount of $10.0 million, dated as of September 14, 2022. Please refer to the Current Report on Form 8-K that was filed by the Company with the the SEC on August 15, 2022 for a description of the key terms of the Existing SPA.

•On September 25, 2022, the Company entered into a Joinder and Amendment Agreement with Senyun International Ltd., an affiliate of Daguan International Limited (“Senyun”), FF Simplicity and RAAJJ Trading LLC (“RAAJJ”), for the purchase of up to $60 million under the SPA, subject to the completion of due diligence by the Company of Senyun and its financing sources. See Note 10, Notes Payable for additional information.

•Beginning on August 16, 2022, FF Aventuras SPV XI, LLC, FF Adventures SPV XVIII LLC, FF Ventures SPV IX LLC and FF Venturas SPV X LLC, entities affiliated with ATW Partners LLC (“Investors”), converted portions of the aggregate principal amount of the outstanding convertible notes issued by the Company in a private placement pursuant to a Second Amended and Restated Note Purchase Agreement, dated as of October 9, 2020 (as amended from time to time, the “NPA,” and such convertible notes issued under the NPA, the “ATW NPA Notes”), into shares of Class A Common Stock, as follows below:

Conversion Period

Total Principal Amount of ATW NPA Notes Converted (in thousands)

Conversion Price

Total Number of Shares of Class A Common Stock Issued

August 16, 2022 to September 14, 2022

$67,218

$0.84 to $2.29

64,843,850

•On September 26, 2022, the Investors exercised 2,687,083 ATW NPA Warrants, each with an exercise price of $0.6427 per share, into an equivalent number of shares of Class A Common Stock, resulting in net cash exercise proceeds to the Company of $1.7 million.

•On September 27, 2022, the Investors exercised 29,158,364 ATW NPA Warrants, each with an exercise price of $0.50 per share, on a cashless basis into 14,339,110 shares of Class A Common Stock.

•On October 10, 2022, the Company entered into an exchange agreement with the Investors, pursuant to which, on October 10, 2022, the Investors exchanged $4,012,180 in aggregate principal amount of the outstanding ATW NPA Notes for 6,269,031 newly issued shares of Class A Common Stock, reflecting a price per share of Class A Common Stock of $0.64.

•On October 19, 2022, the Company and the Investors entered into an exchange agreement, pursuant to which, on October 19, 2022, the Investors exchanged $2,687,109 in aggregate principal amount of the outstanding ATW NPA Notes for 5,227,837 newly issued shares of the Class A Common Stock, reflecting a price per share of Class A Common Stock of $0.51. Following the completion of such exchange, there were no outstanding ATW NPA Notes.

•Between November 10, 2022 and November 21, 2022, FF Simplicity and RAAJJ Trading LLC converted portions of the aggregate principal amount of the outstanding convertible notes of $13,500 issued by the Company pursuant to the SPA at a conversion price of $0.89 per share into 14,369,722 shares of Class A Common Stock with an additional 26,910,917 Class A Common Stock issued at conversion prices of $0.35 to $0.53 per share in accordance with Make-Whole Amount provisions, as defined in the SPA.

•On November 14, 2022,the Company announced entry into a definitive Standby Equity Purchase Agreement (“SEPA”) for a new standby equity line of credit with an affiliate of Yorkville Advisors Global, LP (“Yorkville”), with an initial commitment of $200 million. Under the terms of the SEPA, Faraday Future will have the right, but not the obligation, to issue and sell to Yorkville up to $200 million in shares of the Company’s Class A common stock subject to customary conditions including an effective registration statement for the resale of such shares. The Company has the right to increase the $200 million commitment by up to $150 million in one or more installments. The shares will be sold to Yorkville at a discounted price of 97% of the 3-day volume-weighted average price at the time of funding, and generally limited to one-third of the Company’s trading volume during such time period. Additional information about the SEPA can be found in our 8-K filed on November 14, 2022.

Governance Agreement with FF Top and FF Global

As previously disclosed, beginning in June 2022 the Company was party to a dispute with FF Global, its largest stockholder, over various terms of the Shareholder Agreement (as then in effect), including relating to FF Global’s right to remove its designees from the Board. On September 23, 2022, the Company entered into the Heads of Agreement with FF Global and FF Top, pursuant to which, effective as of September 23, 2022, the Company (a) increased the size of the Board from nine to ten, (b) appointed Mr. ~~Lee Liu~~He to fill the vacancy resulting from such increase in the size of the Board until the 2022 AGM, (c) appointed Mr. He to the Audit Committee and the Nominating and Corporate Governance Committee of the Board and (d) agreed to not remove Mr. He from either committee prior to the 2022 AGM. Pursuant to the Heads of Agreement, FF Top and FF Global caused all actions in the Court of Chancery of the State of Delaware, and any other forum, filed by FF Top, FF Global and/or any of their respective controlled affiliates as of the effective date of the Heads of Agreement, naming the Company or any of its directors or officers, to be dismissed without prejudice as of September 27, 2022. Pursuant to the Heads of Agreement, the Company, FF Global and FF Top agreed to the following matters, and have further agreed to work expeditiously, cooperatively and in good faith to draft, negotiate, execute and deliver definitive documentation, including an amendment to the Shareholder Agreement by no later than December 2, 2022 (or such later date as may be agreed by the Company, FF Global and FF Top in writing), with the Heads of Agreement constituting the binding agreement of the parties with respect to such matters unless and until such further definitive documentation is entered into:

•the Company will call, convene, hold and complete the 2022 AGM on the earliest date permitted under Delaware law and applicable Nasdaq and SEC requirements;

•the size of the Board will be reduced to seven members effective with the directors to be elected at the 2022 AGM;

•the following individuals will be nominated for election to the Board and included on the Board’s recommended slate at the 2022 AGM: (a) Dr. Breitfeld, (b) three directors selected by FF Top, at least one of whom will be an independent director, and (c) three independent directors selected by a committee, consisting of Mr. He (the designee from the Nominating and Corporate Governance Committee of the Board reasonably acceptable to FF Top), Dr.

Breitfeld and Mr. Chui Tin Mok (the individual designated by FF Top and reasonably acceptable to the Company) (the “Selection Committee”), from a pool of candidates recruited with the assistance of an executive search firm;

•no re-nomination of existing directors of the Company (other than Dr. Breitfeld and Mr. He) at the 2022 AGM without the consent of the Selection Committee;

•FF Top’s right to maintain three FF Top-nominated directors on the Board through the Company’s 2026 annual general meeting of stockholders (subject to certain conditions) and thereafter the right to nominate directors to the Board based on the formula in the Shareholder Agreement between the Company and FF Top, in each case as long as FF Top maintains a Shareholder Share Percentage (as defined in the Shareholder Agreement) of at least five percent (5%); and

•the resignation of Ms. Swenson and Mr. Krolicki as directors of the Company. It was also agreed that (i) Ms. Swenson and Mr. Krolicki would not thereafter seek or accept re-appointment, re-nomination or re-election to the Board and (ii) that following their resignations from the Board, their seats would be left empty until the 2022 AGM (which would result in the Company having an eight-person Board until the 2022 AGM).

On October 3, 2022, Ms. Swenson and Mr. Scott Vogel, a member of the Board, tendered ~~his~~their resignation from the Board which resignation was effective on December 18, 2022. On December 18, 2022, Mr. Jie Sheng was appointed to the Board, effective immediately, following the resignation of Mr. Liu. On December 25, 2022, Mr. Edwin Goh tendered his resignation from the Board, which resignation was effective on December 26, 2022. On December 27, 2022, Ms. Ke Sun was appointed to the Board, effective immediately, following the resignation of Mr. Goh. Mr. Sheng and Ms. Sun are designees of FF Top pursuant to the Amended Shareholder Agreement. On December 26, 2022, Dr. Carsten Breitfeld tendered his resignation from the Board, which resignation was effective immediately. On ~~December 27,~~October 3, 2022, Mr. Xuefeng Chen was appointed to the Board, effective immediately, following the resignation of Dr. Breitfeld. On January 20, 2023, Mr. Qing Ye tendered his resignation from the Board, which resignation was effective immediately. Mr. Ye remains a consultant of the Company as an independent contractor until November 18, 2023, at which time both parties will mutually reassess the relationship. On January 25, 2023, Mr. Chui Tin Mok was appointed to the Board, effective immediately, following the resignation of Mr. Ye. On March 9, 2023, Mr. Matthias AydtJordan Vogel also tendered his resignation from the Board effective on October 5, 2022 upon his receipt of a supplemental release pursuant to the ~~nomination~~Mutual Release (described below). On October 28, 2022, Mr. Brian Krolicki tendered his resignation from the Board effective immediately.

As of November 17, 2022, the Company had executed $80 million in financing commitments toward satisfaction of the Implementation Condition, $19.5 million of which have been funded and ~~approval~~made available for the Company’s general use.

In connection with the Heads of Agreement, on September 23, 2022, the Company entered into a Mutual Release (the “Mutual Release”) with FF Global, its executive committee members and their controlled affiliates, FF Global’s controlled affiliates (including FF Top), and the directors of the Company and their controlled affiliates (collectively, and together with the Company, the “Release Parties”), pursuant to which the Release Parties agreed to a mutual release of claims and to settle various matters among them, including with respect to any differences that arose out of the Company directors’ service as a director, employee, officer or manager of the Company up through and including the date of the Mutual Release, subject to customary exceptions.

As a result of the governance settlement described above, we expect that the composition of the Board will change substantially effective as of the completion of the 2022 AGM. See “Item 1A. Risk Factors– The composition of the Company’s Board has changed, and is expected to further change substantially prior to or immediately following completion of the 2022 AGM.” In addition, as a result of these developments, Mr. Jia and FF Global have strengthened their already significant influence over the Company. See “Item 1A. Risk Factors– Yueting Jia and FF Global, over which Mr. Jia exercises influence, have the ability to significantly influence the Company’s management, business and operations, and may use this ability in ways that are not aligned with the Company’s business or financial objectives or strategies or that are otherwise inconsistent with the Company’s interests. Such significant influence may increase if and to the extent the current members of the Board and management are removed and replaced with individuals who are aligned with Mr. Jia and/or FF Global.”

Shortly following the execution of the Heads of Agreement, FF Global began making additional demands of the Company which were beyond the scope of the terms contemplated by the ~~Board~~Heads of ~~a replacement director.~~Agreement and pertained to, among other things, the Company’s management reporting lines and certain governance matters. On ~~March 13, 2023, upon~~September 30, 2022, FF Global alleged that the ~~recommendation~~Company was in material breach of the ~~Nominating~~spirit of the Heads of Agreement. The Company believes it is in full compliance with the Heads of Agreement and ~~Corporate Governance Committee,~~intends to comply with its terms, and disputes any characterization to the ~~Board appointed~~contrary.

On October 14, 2022, FF Top delivered to the Company a “Notice of Nomination of Replacement FF Top Designees” stating, among other things, that FF Top was nominating Ms. Li Han to fill the vacancy on the Board ~~due~~left by Ms. Swenson’s resignation. FF Top asserted the right to ~~Mr. Aydt’s resignation. On April 14, 2023, FF held its 2023 Annual Meeting and nominated directors for election as contemplated~~nominate Ms. Li Han to fill the vacancy created by Ms. Swenson’s resignation because such resignation was not effected in accordance with the Heads of ~~Agreement.~~

~~Subsequent to FFIE announcing~~Agreement, and thus, the ~~completion~~provision that Ms. Swenson’s seat would remain empty until the 2022 AGM did not apply. FF Top maintained that it believed that Ms. Swenson’s vacancy should be filled with a nominee of FF Top, notwithstanding the current level of FF Top’s beneficial ownership of the ~~Special Committee investigation on February 1, 2022, FFIE, certain members~~Company shares, in light of substantial dilution in its ownership of the ~~management team,~~Company shares based on recent financing transactions entered into by the Company.

On October 22, 2022, the Company and ~~employees of FFIE received a notice of preservation and subpoena from~~FF Top entered into the ~~staff~~FF Top Amendment to the FF Top Voting Agreement. Pursuant to the FF Top Amendment, FF Top (among other things) reaffirmed its commitment under the FF Top Voting Agreement, in light of the ~~SEC stating that~~extension of the ~~SEC had commenced a formal investigation relating~~maturity date of the Bridge Notes under the Third Amendment, to ~~the matters that were the subject~~vote all of ~~the~~its

2948

~~Special Committee investigation. FFIE is cooperating fully with~~shares of the ~~SEC’s investigation, including responding~~Company voting stock in favor of the proposal to ~~multiple subpoenas~~approve (for purposes of the Nasdaq listing rules) the issuance, in the aggregate, of shares in excess of 19.99% of the total issued and ~~requests for information. The outcome~~outstanding shares of ~~such an investigation is difficult~~the Company Common Stock pursuant to ~~predict.~~the Financing Documents at the special meeting of the Company’s stockholders held on November 3, 2022. FF ~~has incurred, and may continue~~Top’s obligations pursuant to ~~incur, significant expenses related~~the FF Top Amendment are conditioned on (i) the appointment of Mr. Chen (or a substitute nominee, as applicable), in lieu of Ms. Li Han, to ~~legal and other professional services in connection with~~ the ~~SEC investigation. At this stage,~~Board as the fourth FF ~~is unable to assess whether any material loss~~Top designee no later than October 27, 2022 (provided that Mr. Chen or ~~adverse effect~~a substitute nominee, as applicable, is reasonably ~~possible as a result~~acceptable to the Nominating and Corporate Governance Committee of the ~~SEC’s investigation or estimate~~Board with respect to the ~~range~~Nasdaq independence rules and legal compliance and criminal compliance) (provided that if Mr. Chen is not acceptable to the Nominating and Corporate Governance Committee of ~~any potential loss. In addition,~~the Board, then FF Top will be permitted to nominate another individual to the Board); and (ii) constructive engagement by Mr. He, the Chairman of the Board, directly with representatives of FF Top on certain additional governance and management matters and, to the extent the Chairman of the Board so determines, in ~~June~~his discretion, such matters will be put to a discussion and a vote of the full Board. On October 27, 2022, ~~FF received a preliminary request for information~~Mr. Chen was appointed to the Board. On October 28, 2022, Mr. Krolicki tendered his resignation from the ~~DOJ in connection with the matters that were the subject of the Special Committee investigation. FF has responded to that request and intends to fully cooperate with any future requests from the DOJ.~~Board effective immediately.

~~South Korea Contract Manufacturing~~

~~In February 2022,~~While the Company ~~entered into a definitive contract manufacturing~~is in discussions with FF Global regarding these additional demands, such disputes divert management and ~~supply agreement with Myoung Shin Co., Ltd. (“Myoung Shin”), a South Korea-based automotive manufacturer~~Board resources and parts supplier, to manufacture the Company’s second vehicle, the FF 81. The agreement has an initial term of nine years from the start of production of the FF 81, which is scheduled as early as 2024. Pursuant to the agreement, Myoung Shin shall maintain sufficient manufacturing capabilities and capacity to supply FF 81 vehicles toare costly. There can be no assurance that this or any other dispute between the Company and FF Global will not result in ~~accordance~~litigation. See “Item 1A. Risk Factors– Disputes with ~~the Company’s forecasts~~our stockholders are costly and ~~purchase orders. The Company and Myoung Shin will each manufacture and supply certain FF 81 parts that Myoung Shin will use in the manufacture and assembly of FF 81 vehicles.~~

distracting.”

Financing Discussions and New Convertible Note and Warrant ~~Financings~~Financing

~~On March 29, 2023, FF announced the start of production of~~In order to fund its ongoing operations and business plan, including to launch the FF 91, ~~Futurist and, on April 14, 2023, FF’s first production~~ FF ~~91 Futurist vehicle came off the line.~~is seeking to raise additional capital from various fundraising efforts currently underway. Although FF has successfully obtained commitments ~~since August 2022~~ from several investors ~~totaling $267.0 million in convertible note financing, subject to certain conditions,~~ and continues financing discussions with multiple parties, FF has experienced delays in securing additional funding commitments relative to its business plan included in the Form 8-K filed on July 25, 2022, which have exacerbated the supply chain pressures on FF’s business. These factors, in addition to the continued rise in inflation and other challenging macroeconomic conditions, have led FF to take steps to preserve its current cash position, including implementing headcount reductions and other expense reduction and payment delay measures. Further efforts, including additional headcount reductions, may be undertaken in response to FF’s financial condition and market conditions. ~~FF has developed a three-phase delivery plan for the FF 91 Futurist.~~ The timing of first ~~phase is expected to begin at the end~~deliveries of May 2023, and the second phase is expected to begin at the end of the second quarter of 2023, followed by the third phase. The first phase is the “Industry Expert Futurist Product Officer (FPO) Co-Creation Delivery.” In this first phase, the Industry Expert FPO(s) will pay in full for an FF 91 vehicle in order to reserve the vehicle and be trained in the use of the vehicle. The reserved FF 91 vehicle will be delivered to the FPO at the beginning of the second phase. The second phase is the “FPO Co-Creation Delivery.” In this second phase, FPO(s) will take possession of the FF 91 vehicle. The third phase is the “Full Co-Creation Delivery.” In this third phase, FF will deliver FF 91 vehicles is uncertain and is not expected to ~~all spire users that pay~~occur in ~~full for an FF 91 vehicle. The successful beginning~~2022 and remains subject to various conditions, many of which are outside of FF’s control, including the ~~second phase is contingent on receiving parts on our required timeframes~~timing, size, and ~~completion~~availability of ~~requisite tests. Further, FF expects to need substantial~~ additional financing as well as the implementation and effectiveness of FF’s headcount reductions and other expense reduction and payment delay measures. It is also subject to ~~start the third phase of the delivery plan~~suppliers meeting their commitments on program deliverables including parts, and ~~is in discussions with additional potential investors to obtain such financing.~~

~~The Company needs to raise additional capital to support the production~~timely and ~~delivery of the FF 91 Futurist and satisfy its other capital needs.~~successful certification testing. There is no assurance FF will be able to ~~timely receive~~raise sufficient funding ~~under existing financing commitments~~ to ~~produce and deliver~~launch the FF 91, Futurist on that timeline or at all. If unable to receive sufficient funding, FF will be required to obtain new financing commitments, which may not be available to it under reasonable commercial terms. Further, there cannot be any assurance that FF will be able to develop the manufacturing capabilities and processes, or secure reliable sources of component supply to meet the quality, engineering, design or production standards, or ~~to meet~~ the required production volumes to successfully grow into a viable ~~cash flow positive~~ business.

On August 14, 2022, FF entered into a definitive Securities Purchase Agreement (the “SPA”) with FF Simplicity Ventures LLC, an entity affiliated with ATW Partners LLC, and RAAJJ Trading LLC for $52.0 million of committed near-term convertible senior secured notes financing subject to certain conditions (which was increased on September 23, 2022 to $57.0 million, which increase was subsequently terminated upon the funding of the initial $10.0 million tranche of SPA Notes to Senyun, which occurred on October 27, 2022, another $10.0 million on November 15, 2022, and another $10.0 million in December 2022), and the potential for an additional $243.0 million of incremental senior secured convertible notes financing to be funded within 90 days after the initial closing. A committed amount of $52.0 million ($43.3 million net of original issue discount and transaction costs) has been funded to date. On September 23, 2022, FF and certain investors affiliated with ATW Partners LLC entered into a Warrant Exercise Agreement (the “Warrant Exercise Agreement”), pursuant to which, subject to the satisfaction of certain minimum trading price, minimum trading volume and certain other Equity Conditions (as described below), FF will have the right, exercisable on one or more occasions prior to January 23, 2023, to require the ATW Investors to

exercise on a cash basis (each, a “Forced Exercise”) certain warrants held by the ATW Investors, in part, in exchange for newly issued shares of Class A Common Stock in an amount not to exceed (a) for any single Forced Exercise, $7.0 million in aggregate exercise price, and (b) for all Forced Exercises in the aggregate, the difference of (x) the maximum exercise price amount allowed under the Warrant Exercise Agreement (which is approximately $20.0 million) less (y) the aggregate exercise price of any voluntary exercises of the same warrants held by the ATW Investors after the date of the Warrant Exercise Agreement. The “Equity Conditions” are defined in the Warrant Exercise Agreement to include (among others): (a) the effectiveness of one or more registration statements under the Securities Act, (b) the availability of the Annual Report on Form 10-K contained in such registration statement(s) for the resale of the applicable Warrant shares, (c) the continued listing of shares of the Company’s Class A Common Stock on a national securities exchange, (d) no occurrence of any “Price Failure” (~~i.e.~~, the VWAP of the Class A Common Stock failing to exceed $0.85 per share (as adjusted for stock splits, stock dividends, stock combinations, recapitalizations or other similar transactions) on any two (2) trading days during the ten (10) trading day measurement period immediately preceding the relevant determination date), subject to certain permitted adjustments, and (e) no occurrence of any “Volume Failure” (~~i.e.~~, the aggregate daily dollar trading volume (as reported on Bloomberg) falling below $10.0 million on any two (2) trading days during the ten (10) trading day measurement period immediately preceding the relevant determination date).

On September 25, 2022, FFIE entered into a Joinder and Amendment Agreement with Senyun, FF Simplicity and RAAJJ Trading LLC, for the purchase of up to $60.0 million under the SPA (with potential increase to $90.0 million), of which $35.6 million (net of original issue discount and transaction costs) has been funded to date. The initial $10.0 million tranche was funded on October 27, 2022, the second $10.0 million tranche was funded on November 15, 2022, and the third $10.0 million tranche was funded in parts on different dates in December 2022.

On October 24, 2022, FFIE entered into a Limited Consent and Third Amendment to the SPA with FF Simplicity as administrative and collateral agent and purchaser, Senyun as purchaser, and RAAJJ Trading LLC as purchaser.

On November 8, 2022, FFIE entered into a Limited Consent and Amendment to the SPA (the “Fourth Amendment”) with FF Simplicity as administrative and collateral agent and purchaser, Senyun as purchaser, and RAAJJ Trading LLC as purchaser.

~~On December 28, 2022, FFIE entered into a Letter Agreement and Amendment to the SPA (the “Senyun Amendment”) with FF Simplicity as administrative and collateral agent and Senyun as purchaser.~~

~~On January 25, 2023, FFIE entered into a Limited Consent and Amendment No. 5 to the SPA (the “Fifth Amendment”) with FF Simplicity as administrative and collateral agent and Senyun as purchaser.~~

On February 3, 2023, FFIE entered into an Amendment No. 6 to Securities Purchase Agreement (The “Sixth Amendment”) with FF Simplicity as administrative and collateral agent and Senyun, FF Top, FF Simplicity, FF Prosperity, Acuitas and other purchasers. As of the date this Report, we have received $120.0 million ($106.1 million net of original issue discount and transaction costs) in Tranche C SPA Notes under the Sixth Amendment.

FF is actively engaged in confidential discussions and negotiations with entities affiliated with FF Top and other potential investors with respect to purchasing incremental convertible senior secured notes ~~and/or convertible junior secured notes~~ on the same terms as FF Simplicity Ventures LLC under the SPA.

There can be no assurance that FF will ~~need further~~be able to successfully obtain additional incremental convertible senior secured note Purchasers under the SPA or other debt or equity financing ~~to support the ramp up and development of its sales and service systems for its flagship FF 91 vehicle and beyond.~~in a timely manner or on acceptable terms, if at all. In particular, the Company is currently conducting due diligence on potential financing sources. This

process has been time consuming and may result in the Company not being able to consummate any financing from these or other financing sources on a timely basis or at all. Additionally, certain investors under the SPA may not fund their commitments until the Company increases the number of authorized shares of its Class A Common Stock and registers the securities underlying the SPA Warrants and SPA Notes in an effective registration statement.IfIf we are unable to raise sufficient additional funds in the near term, we may be required to further delay our ~~production and delivery~~launch plans for the FF 91, ~~Futurist,~~ reduce headcount, liquidate our assets, file for bankruptcy, reorganize, merge with another entity, and/or cease operations.

FF’s cash needs after the ~~start of production~~launch of the FF 91 ~~Futurist~~ will depend on the extent to which FF’s actual costs vary from FF’s estimates and FF’s ability to control these costs and raise additional funds. Any challenges in supplier engagements, delays in ramping capacity or labor at the Hanford facility or for sales and service engagements, rising prices of materials, or ongoing global supply chain disruptions may further increase the need for additional capital to ~~produce and deliver~~launch the FF 91 series. In particular, recently, some suppliers have threatened to terminate their relationship with the Company because of late payments or requested accelerated payments and other terms and conditions as a result of our past payment history and concerns about the Company’s financial condition, leading to less favorable payment terms than the Company had anticipated, and delaying or putting at risk certain deliveries. FF is in active negotiations with these suppliers to minimize these risks. Apart from the FF 91 series, substantial additional capital will be required to fund operations, research, development, and design efforts for future vehicles.

Components of FF’s Results of Operations

Key Factors Affecting Operating Results (in thousands)

FF’s performance and future success depend on several factors that present significant opportunities but also pose risks and challenges including those discussed below and in the section titled “Risk Factors” in the Form 10-K, as updated in this Report.

Faraday Future Vehicle ~~Production and Delivery~~Launch

FF expects to derive revenue from ~~sales~~the sale of the FF 91. FF previously expected deliveries of the FF 91 ~~Futurist. The start~~series to begin in the fourth quarter of ~~production~~2022. However, in light of delayed timing in securing funding commitments needed to fund its projected use of cash, FF no longer expects to begin deliveries of the FF 91 ~~Futurist was announced on March 29, 2023, and FF’s~~in the fourth quarter of 2022. The timing of first ~~production~~deliveries of FF 91 ~~Futurist vehicle came off~~vehicles is uncertain and is not expected to occur in 2022 and remains subject to various conditions, many of which are outside of FF’s control, including the ~~line~~timing, size, and availability of additional financing as well as the implementation and effectiveness of FF’s headcount reductions and other expense reduction and payment delay measures. It is also subject to suppliers meeting their commitments on ~~April 14, 2023.~~program deliverables including parts, and timely and successful certification testing. FF ~~has developed a three-phase delivery plan for~~plans to manufacture the FF 91 Futurist. The first phase is expected to begin at the end of May 2023, and the second phase is expected to begin at the end of the second quarter of 2023, followed by the third phase. The first phase is the “Industry Expert Futurist Product Officer (FPO) Co-Creation Delivery.” In this first phase, the Industry Expert FPO(s) will pay in ~~full for an FF 91 vehicle~~its own manufacturing facility in order to reserve the vehicle and be trained in the use of the vehicle. The reserved FF 91 vehicle will be delivered to the FPO at the beginning of the second phase. Delivery of the reserved FF 91 vehicle will occur at the beginning of phase two. The second phase is the “FPO Co-Creation Delivery.” In this second phase, FPO(s) will take possession of the FF 91 vehicle. The third phase is the “Full Co-Creation Delivery.” In this third phase, FF will deliver FF 91 vehicles to all spire users that pay in full for an FF 91 vehicle. The successful beginning of the second phase is contingent on receiving parts on our required timeframes and completion of requisite tests. Further, FF expects to need substantial additional financing to start the third phase of the delivery plan and is in discussions with additional potential investors to obtain such financing.

Hanford, California. The FF 81, FF 71, and SLMD electric vehicle models are in various stages of ~~planning or~~ development and ~~expected~~are planned to be released after the FF ~~91 series depending on availability of adequate funding and other strategic factors.~~91.

Production and Operations

FF expects to continue to incur significant operating costs that will impact its future profitability, including research and development expenses as it introduces new models and improves existing models; capital expenditures for the expansion of its manufacturing capacities; additional operating costs and expenses for production ramp-up; raw material procurement costs; general and administrative expenses as it scales its operations; interest expense from debt financing activities; and selling and distribution expenses as it builds its brand and markets its vehicles. FF may incur significant costs in connection with its services once it delivers the FF 91, ~~Futurist,~~ including servicing and warranty costs. FF’s ability to become profitable in the future will depend on its ability to successfully market its vehicles and control its costs.

To date, FF has not yet sold any electric vehicles. As a result, FF will require substantial additional capital to develop products and fund operations for the foreseeable future. Until FF can generate sufficient revenue from product sales, FF will fund its ongoing operations through a combination of various funding and financing alternatives, including equipment leasing and construction financing of the Hanford, California, ieFactory California, manufacturing facility, secured syndicated debt financing, convertible notes, working capital loans, and equity offerings, among other options. The particular funding mechanisms, terms, timing, and amounts are dependent on the Company’s assessment of opportunities available in the marketplace and the circumstances of the business at the relevant time. Any delays in the successful completion of its ieFactory California manufacturing facility will impact FF’s ability to generate revenue. For additional discussion of the substantial doubt about FF’s ability to continue as a going concern, see Note 2,3, Liquidity and Capital Resources in the notes to the unaudited Condensed Consolidated Financial Statements and for further details on liquidity, please see the “Liquidity and Capital Resources” section below.

Revenues

FF is a development stage company and has not generated any revenue to date. FF’s anticipated introduction of the FF 91, ~~Futurist,~~ its first vehicle launch, is expected to generate the majority of FF’s future revenue while other vehicles are in development.

Operating Expenses

Research and Development

Research and development activities represent a significant part of FF’s business. FF’s research and development efforts focus on the design and development of FF’s electric vehicles and continuing to prepare its prototype electric vehicles to exceed industry standards for compliance, innovation, and performance. Research and development expenses consist of personnel-related costs (including salaries, bonuses, benefits, and stock-based compensation) for FF’s employees focused on research and development activities, other related costs, depreciation, and an allocation of overhead. FF expects research and development expenses to increase as FF continues to develop its vehicles. FF anticipates an increase in activities in the U.S. and China, where FF’s research and development operations are primarily located.

~~Sales and Marketing~~

Sales and marketing expenses consist primarily of personnel-related costs (including salaries, bonuses, benefits, and stock-based compensation) for FF’s employees focused on sales and marketing, costs associated with sales and marketing activities, and an allocation of overhead. Marketing activities are those related to introducing FF’s brand and its electric vehicle prototypes to the market. FF expects selling and marketing expenses to continue to increase as FF brings its electric vehicles to market and seeks to generate sales.

~~General and Administrative~~

General and administrative expenses consist primarily of personnel-related costs, (including salaries, bonuses, benefits, and stock-based compensation) for employees associated with administrative services such as legal, human resources, information technology, accounting and finance, other related costs, and legal loss contingency expenses, which are FF’s estimates of future legal settlements. These expenses also include certain third-party consulting services, certain facilities costs, and any corporate overhead costs not allocated to other expense categories. FF expects its general and administrative expenses to increase as FF continues to grow its business. FF also anticipates that it will incur additional costs for employees and third-party consulting services now that it operates as a public company.

~~Loss on Disposal of Property and Equipment~~

Loss on disposal of property and equipment relates to the abandonment of certain FF 91 program construction in progress assets, primarily vendor tooling, machinery, and equipment, due to the redesign of the related FF 91 components and implementation of FF’s cost reduction program. Charges associated with disposals are recognized within operating expenses in the unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

~~Non-operatingExpenses~~

~~Change in Fair Value Measurements~~

Change in fair value measurements consists of the losses and gains as a result of fair value measurements of certain financial instruments which FF records at fair value. Changes in fair value measurement of related party notes payable and

~~notes payable have decreased following the Business Combination as the majority of the liabilities converted to equity or were paid in cash.~~

~~Interest Expense~~

Interest expense primarily consists of interest on outstanding notes payable, capital leases, certain supplier payables, and vendor payables in trust. Interest expense decreased as the majority of notes payable and vendor payables in trust were either settled in cash or converted to equity upon completion of the Business Combination.

~~Related Party Interest Expense~~

Related party interest expense consists of interest expense on notes payable with related parties. Related party interest expense has decreased relative to prior periods, as the majority of related party notes payable converted to equity upon completion of the Business Combination.

~~Other Expense, net~~

Other expense, net consists of foreign currency transaction gains and losses and other expenses such as bank fees and late charges. Foreign currency transaction gains and losses are generated by revaluation of debt and the settlements of invoices denominated in currencies other than the functional currency. FF expects other expense to fluctuate as FF continues to transact internationally.

~~Loss on Settlement of Notes Payable~~

~~Loss on settlement of notes payable consists of losses resulting from the settlement of notes payable as part of the Company’s ongoing financing activities.~~

~~Results of Operations (in thousands) (Unaudited)~~

~~To date, FF has not generated any revenue from the design, development, manufacturing, engineering, sale, or distribution of its electric vehicles. Please refer to the section “Risk Factors” in the Form 10-K, as updated in this Report for a full discussion on the risks and uncertainties related to costs.~~

~~Comparison of the Three Months Ended March 31, 2023 and 2022~~ ~~(dollars in thousands)~~

Three Months Ended March 31,
2023 2022
Consolidated Statements of Operations
Operating expenses
Research and development $ 46,160 $ 114,935
Sales and marketing 5,585 6,186
General and administrative 27,584 27,880
Loss on disposal of property and equipment 3,698 —
Total operating expenses 83,027 149,001
Loss from operations (83,027) (149,001)
Change in fair value measurements 94,917 1,186
Interest expense (4,651) (3,746)
Related party interest expense (140) (622)
Other (expense) income, net 2,409 (915)
Loss on settlement of notes payable (3,021) —
Income (Loss) before income taxes 6,487 (153,098)
Income tax provision — —
Net income (loss) $ 6,487 $ (153,098)

~~Research and Development~~

Three Months Ended March 31, Change
2023 2022 Amount %
Research and development $ 46,160 $ 114,935 $ (68,775) (60) %

~~The~~ decrease in research and development expense during the three months ended March 31, 2023 versus the same period in 2022 was primarily due to the decrease in engineering, design, and testing ("ED&T") services of $72,918 as the Company substantially completed R&D activities related to the FF 91 vehicle in 2022 and was focused on capitalizable activities attributable to Start of Production which was achieved on March 29, 2023; the decrease in personnel and compensation related expenses of $4,213 due to decreased headcount as part of cost saving measures implemented by the Company in light of its financial position and the focus on achieving Start of Production; $1,422 decrease in professional services due to termination of consulting services in China and lower use of professional services in general as part of the above mentioned cost savings measures; partially offset by an increase in stock based compensation of $9,824mostly related to the portion of stock options measured at fair value through the increase in authorized shares on February 28, 2023 and partially offset by a decrease in headcount coupled with a decreased in the Company’s stock price.

Sales and Marketing

Three Months Ended March 31, Change
2023 2022 Amount %
Sales and marketing $ 5,585 $ 6,186 $ (601) (10) %

~~The decrease in~~Sales and marketing expenses consist primarily of personnel-related costs (including salaries, bonuses, benefits, and stock-based compensation) for FF’s employees focused on sales and marketing, ~~expense during the three months ended March 31, 2023 versus the same period in 2022 was primarily due~~costs associated with sales and marketing activities, and an allocation of overhead. Marketing activities are those related to introducing FF’s brand and its electric vehicle prototypes to the ~~decrease in personnel~~market. FF expects selling and ~~compensation related~~marketing expenses ~~of $1,638, mainly attributable~~ to ~~a decrease in headcount~~continue to increase as FF brings its electric vehicles to market and ~~a decrease in marketing expense of $680 as part of cost saving measures implemented by the Company in light of~~ ~~its financial position and~~ ~~the focus on achieving Start of Production; partially offset by an increase in stock based compensation of $1,072 mostly related~~seeks to the portion of stock options measured at fair value through the increase in authorized shares on February 28, 2023 and partially offset by a decrease in headcount coupled with a decreased in the Company’s stock price; and an increase in rent of $530 due to entering into new office leases agreements at the end of the first quarter of 2022 and; an increase in software subscription expense as the Company prepares the infrastructure for production.generate sales.

General and Administrative

Three Months Ended March 31, Change
2023 2022 Amount %
General and administrative $ 27,584 $ 27,880 $ (296) (1) %

~~The decrease in~~General and administrative expenses consist primarily of personnel-related costs, (including salaries, bonuses, benefits, and stock-based compensation) for employees associated with administrative services such as legal, human resources, information technology, accounting and finance, other related costs, and legal loss contingency expenses, which are FF’s estimates of future legal settlements. These expenses also include certain third-party consulting services, certain facilities costs, and any corporate overhead costs not allocated to other expense categories. FF expects its general and administrative ~~expense during the three months ended March 31, 2023 versus the same period in 2022 was primarily due~~expenses to ~~the~~ increase ~~in stock based compensation~~as FF continues to grow its business. FF also anticipates that it will incur additional costs for employees and third-party consulting services now that it operates as a public company.

Loss on Disposal of ~~$844~~ ~~mostly related to the portion of stock options measured at fair value through the increase in authorized shares on February 28, 2023,~~Property and ~~partially offset by a decrease in headcount coupled with a decreased in the Company’s stock price~~; an increase in insurance expense of $3648 due to increased premiums associated with a new D&O policy entered into in the third quarter of 2022; an increase of $628 due to entering into new office leases agreements at the end of the first quarter of 2022; and an increase in depreciation expense of $— from increased capital expenditures related to Start of Production; partially offset by a decrease in professional service expense of $4,459 due to the conclusion of the Special Committee Investigation in 2022; and a decrease in personnel and compensation related expenses of $1,414 due to a decrease in headcount as part of cost saving measures implemented by the Company in light ~~of its financial position and~~ ~~the focus on achieving Start of Production.~~Equipment

Loss on disposal of property and equipment

Three Months Ended March 31, Change
2023 2022 Amount %
Loss on disposal of property and equipment $ 3,698 $ — $ 3,698 100 %

~~The increase~~ relates to the abandonment of certain FF 91 program construction in ~~loss of disposal on property~~progress assets, primarily vendor tooling, machinery, and equipment, is due to the ~~write off~~redesign of ~~$3,698~~the related FF 91 components and implementation of ~~certain construction~~FF’s cost reduction program. Charges associated with disposals are recognized within operating expenses in ~~process assets that are not expected to be used as part~~the unaudited Condensed Consolidated Statements of ~~Start of Production.~~Operations and Comprehensive Loss.

Non-operatingExpenses

Change in Fair Value Measurements

Three Months Ended March 31, Change
2023 2022 Amount %
Change in fair value measurements $ 94,917 $ 1,186 $ 93,731 (7,903) %

~~The change~~Change in fair value measurements ~~for~~consists of the ~~three months ended March 31, 2023 is primarily due to~~losses and gains as a result of fair value measurements of certain financial instruments which FF records at fair value. Changes in fair value measurement of related party notes payable and ~~warrants that were measured at fair value in~~notes payable have decreased following the ~~comparative period in 2022 and were revalued during 2023 at predominantly lower fair values due to pricing inputs that use~~Business Combination as the ~~market price~~majority of the ~~Company’s Common Stock which~~liabilities converted to equity or were paid in cash.

Related Party Interest Expense

Related party interest expense consists of interest expense on notes payable with related parties. Related party interest expense has ~~experienced a decline. These gains are partially offset by~~decreased relative to prior periods, as the ~~issuance~~majority of ~~new~~related party notes ~~and warrants during~~payable converted to equity upon completion of the ~~period which contained significant original issue discounts and favorable conversion features, resulting in income charged to fair value measurement expense.~~Business Combination.

Interest Expense

Three Months Ended March 31, Change
2023 2022 Amount %
Interest expense $ (4,651) $ (3,746) $ (905) (24) %
Interest expense primarily consists of interest on outstanding notes payable, capital leases, certain supplier payables, and vendor payables in trust. Interest expense decreased as the majority of notes payable and vendor payables in trust were either settled in cash or converted to equity upon completion of the Business Combination.

Other Expense, net

Loss on Extinguishment or Settlement of Related Party Notes Payable, Notes Payable and Vendor Payables in Trust, net

Loss on extinguishment or settlement of related party notes payable, notes payable, and vendor payables in trust, net consists of losses resulting from the settlement of related party notes payable, notes payable, and vendor payables in trust in connection with the Business Combination.

Results of Operations (in thousands) (Unaudited)

FF has not generated any revenue from the design, development, manufacturing, engineering, sale, or distribution of its electric vehicles. Please refer to the section “Risk Factors” in the Form 10-K, as updated in this Report for a full discussion on the risks and uncertainties related to costs.

Comparison of the Three Months Ended September 30, 2022 and 2021


	Three Months Ended September 30,
	2022 (As Restated)		2021
Consolidated Statements of Operations
Operating expenses
Research and development	$	47,582	$	79,757
Sales and marketing	3,823		6,832
General and administrative	28,551		36,725
Loss on disposal of property and equipment	—		62,342
Total operating expenses	79,956		185,656

Loss from operations	(79,956)		(185,656)
Change in fair value measurements	(1,764)		(22,747)
Interest expense	(245)		(296)
Related party interest expense	(996)		(1,597)
Other (expense) income, net	(6,457)		1,117
Loss on extinguishment or settlement of related party notes payable, notes payable and vendor payables in trust, net	(30,454)		(94,727)
Loss before income taxes	(119,872)		(303,906)
Income tax provision	—		—
Net loss	$	(119,872)	$	(303,906)

Research and Development


	Three Months Ended September 30,				Change
	2022 (As Restated)		2021		Amount		%
Research and development	$	47,582	$	79,757	$	(32,175)	(40)	%

The decrease in research and development expense of$32,175 was primarily due to the occurrence of expense in the three months ended September 30, 2021, related to a non-exclusive, perpetual, irrevocable, and sublicensable license to use an electric vehicle manufacturing platform owned by Liankong, a subsidiary of Geely Holdings, for $50,000, reserve for unrecoverable value added taxes of $2,984, and expense associated with the grant of restricted stock awards issued as a bonus to employees and other service providers in connection with the closing of the Business Combination of $6,061 with no comparable activity in the three months ended September 30, 2022. The decrease is further derived from a $5,985 reduction in bonus accruals given the Company’s liquidity needs and as part of the implementation of costs saving measures. These decreases were partially offset by higher expenses for engineering, design, and testing (“ED&T”) services of $13,991, professional services of $8,363 and employee compensation related expenses of $11,795, incurred to support the development of the FF 91.

Sales and Marketing


	Three Months Ended September 30,				Change
	2022 (As Restated)		2021		Amount		%
Sales and marketing	$	3,823	$	6,832	$	(3,009)	(44)	%

The decrease in sales and marketing expense of $3,009 was primarily due to the occurrence of expense in the three months ended September 30, 2021, related to restricted stock awards issued as a bonus to employees and other service providers in connection with the closing of the Business Combination of $1,797, with no comparable activity in the three

months ended September 30, 2022, lower allocations of overhead expenses based on headcount of $1,526, and a decrease in marketing-related expenses due to the implementation of cost saving measures of $706, partially offset by an increases in employee compensation and related expenses of $794 and stock-based compensation expense of $213 due to an increase in ~~interest~~headcount.

General and Administrative


	Three Months Ended September 30,				Change
	2022 (As Restated)		2021		Amount		%
General and administrative	$	28,551	$	36,725	$	(8,174)	(22)	%

The decrease in general and administrative expense of $8,174 was primarily related to restricted stock awards issued as a bonus to employees and other service providers in connection with the closing of the Business Combination of $1,797 during the three months ended ~~March 31, 2023, was~~September 30, 2021, with no comparable activity in the three months ended September 30, 2022, lower accruals for legal contingencies of $18,753, and lower allocated expenses resulting from cost reduction initiatives of $1,431, partially offset by an increase in professional services primarily related to the Special Committee investigation, financing efforts and governance matters totaling $26,049, an increase in information technology related expense, including software licenses, of $688, and an increase in employee benefits and stock compensation of $647 and $405, respectively, both due to an increase in headcount.

Loss on disposal of property and equipment


	Three Months Ended September 30,				Change
	2022		2021		Amount		%
Loss on disposal of property and equipment	$	—	$	62,342	$	(62,342)	(100)	%

During the three months ended September 30, 2021, the Company wrote off $62,342 relating to the abandonment of certain construction in progress FF 91 program assets, primarily vendor tooling, machinery and equipment, due to the ~~Company issuing new notes~~redesign of the related FF 91 components and implementation of FF’s cost reduction program. For the three month period ended September 30, 2022, there was no comparable activity.

Change in Fair Value Measurements


	Three Months Ended September 30,				Change
	2022 (As Restated)		2021		Amount		%
Change in fair value measurements	$	(1,764)	$	(22,747)	$	20,983	92	%

The decrease in the ~~principal amount~~change in fair value measurements is primarily due to notes payable that were measured at fair value in the comparative period in 2021 and were converted into shares of ~~$190,000.~~Class A Common Stock during the three-months ended September 30, 2022, partially offset by the issuance of liability-classified warrants under the Company’s Secured Purchase Agreement in August of 2022.

Interest Expense


	Three Months Ended September 30,				Change
	2022 (As Restated)		2021		Amount		%
Interest expense	$	(245)	$	(296)	$	51	17	%

Interest expense decreased from $296 during the three months ended September 30, 2021 to $245 during the three months ended September 30, 2022.

Related Party Interest Expense

Three Months Ended March 31, Change
2023 2022 Amount %
Related party interest expense $ (140) $ (622) $ 482 77 %


	Three Months Ended September 30,				Change
	2022		2021		Amount		%
Related party interest expense	$	(996)	$	(1,597)	$	601	38	%

The decrease in related party interest expense for the three months ended ~~March 31, 2023~~September 30, 2022 as compared to the same period in ~~2022~~2021 was primarily due to ~~an agreement, dated December 27, 2022, with Chongqing Leshi Small Loan Co., Ltd, a~~the Company’s settlement of $91,420 principal amounts of related party ~~according to~~notes payable upon closing of the Business Combination in July 2021, which ~~it was agreed that a portion of principal and all outstanding~~ accrued interest ~~would be waived. The reduction in interest bearing debt and a lowered interest rate pursuant~~from July 1, 2021, to ~~the new agreement further contributed to this decrease.~~July 21, 2021.

Other ~~(Expense) Income,~~Expense, Net

Three Months Ended March 31, Change
2023 2022 Amount %
Other (expense) income, net $ 2,409 $ (915) $ 3,324 363 %


	Three Months Ended September 30,				Change
	2022		2021		Amount		%
Other (expense) income, net	$	(6,457)	$	1,117	$	(7,574)	NM

The change in ~~other~~Other (expense) income, net of ~~$3,300~~$7,574 was primarily due to foreign currency transaction losses of $5,986 in the three months ended September 30, 2022, resulting from the revaluation of transactions denominated in currencies other than local currencies, including $3,026 related to vendor deposits paid by the U.S. ~~Dollars that are remeasured~~operations, franchise, other taxes and bank fees of $448 and penalties related to late vendor payments of $405.

Loss on extinguishment or settlement of related party notes payable, notes payable and vendor payables in trust, net


	Three Months Ended September 30,				Change
	2022 (As Restated)		2021		Amount		%
Loss on extinguishment or settlement of related party notes payable, notes payable and vendor payables in trust, net	$	(30,454)	$	(94,727)	$	64,273	68	%

The loss in the three months ended September 30, 2022 represents a $22,764 loss on settlement of NPA Notes due to their conversion into Class A Common Stock and a $7,690 loss on extinguishment due to the change in the conversion price relating to an amendment to convertible notes issued during the period. The loss in the three months ended September 30, 2021 represents the conversion of certain related party notes payable, notes payable, and vendor payables in trust to equity at $10 per share which was below the ~~end~~fair value of ~~each~~the stock on the date of conversion in connection with the closing of the Business Combination.

Comparison of the Nine Months Ended September 30, 2022 and 2021


	Nine Months Ended September 30,
	2022 (As Restated)		2021
Consolidated Statements of Operations
Operating expenses
Research and development	$	259,741	$	94,506
Sales and marketing	16,207		11,099
General and administrative	89,069		64,148
Loss on disposal of property and equipment	1,407		62,987
Total operating expenses	366,424		232,740

Loss from operations	(366,424)		(232,740)
Change in fair value measurements	4,580		(60,394)
Interest expense	(5,119)		(26,550)
Related party interest expense	(2,931)		(15,765)
Other expense, net	(14,307)		(718)
Loss on extinguishment or settlement of related party notes payable, notes payable and vendor payables in trust, net	(30,454)		(96,036)
Loss before income taxes	(414,655)		(432,203)
Income tax provision	(9)		(3)
Net loss	$	(414,664)	$	(432,206)

Research and Development


	Nine Months Ended September 30,				Change
	2022 (As Restated)		2021		Amount		%
Research and development	$	259,741	$	94,506	$	165,235	175	%

The increase in research and development expense was primarily due to the increase in ED&T services of $153,954 and professional services related expense of $12,224 as the Company re-engaged suppliers and made significant purchases of ED&T services to progress the development of the FF 91; an increase in personnel and compensation related expenses and stock-based compensation expenses due to increased headcount of $45,382 and $5,391, respectively; an increase in information technology related expense due to increases in business activities and headcount of $7,896, partially offset by a decrease in general expenses of $57,365, primarily due to expensing a one-time amount of $50,000 for a non-exclusive, perpetual, irrevocable, and sublicensable license to use a platform owned by Liankong, a subsidiary of Geely Holdings, and recognition of restricted stock awards issued as a bonus to employees and other service providers in connection with the closing of the Business Combination during the nine months ended September 30, 2022, of $6,061.

Sales and Marketing


	Nine Months Ended September 30,				Change
	2022 (As Restated)		2021		Amount		%
Sales and marketing	$	16,207	$	11,099	$	5,108	46	%

The increase in sales and marketing expense was primarily due to an increase in personnel and compensation related expenses of $6,703, stock-based compensation expense of $528 and employee benefits relates expenses of $489 due to an increase in headcount; an increase in marketing expenses due to an increase in marketing efforts of $614 and an increase in rent relates expense of $865 due to increase in business activity, partially offset by primarily restricted stock awards issued as a bonus to employees and other service providers in connection with the closing of the Business Combination during the nine months ended September 30, 2022 and other overhead expenses of $3,408 and a decrease in professional services related expenses of $644.

General and Administrative


	Nine Months Ended September 30,				Change
	2022 (As Restated)		2021		Amount		%
General and administrative	$	89,069	$	64,148	$	24,921	39	%

The increase in general and administrative expense was primarily due to an increase in professional service expenses primarily related to the Special Committee investigation in the amount of $50,311; an increase in personnel and compensation related expenses of $11,574 due to headcount changes; an increase in insurance related expenses of $7,236, partially offset primarily by lower provisions for legal contingencies of $18,753; decrease in general expenses of $13,003 primarily related to expenses recognized in connection with issuance of restricted stock awards as compensation for prior salary reductions during the nine months ended September 31, 2021 with no comparable activity in the nine months ended September 31, 2022; decrease in stock based compensation of $1,572 and a decrease in depreciation and amortization expense and other overhead expenses primarily due to change in allocations of expenses to Research and development and Sales and Marketing of $5,170.

Loss on disposal of property and equipment


	Nine Months Ended September 30,				Change
	2022		2021		Amount		%
Loss on disposal of property and equipment	$	1,407	$	62,987	$	(61,580)	(98)	%

The loss on disposal of property and equipment during the nine months ended September 30, 2022, is due to the continued refinement of the bill of materials of the FF 91. During the nine months ended September 30, 2021, the Company wrote off $62,342 relating to the abandonment of certain construction in progress FF 91 program assets, primarily vendor tooling, machinery and equipment, due to the redesign of the related FF 91 components and implementation of FF’s cost reduction program.

Change in Fair Value Measurements


	Nine Months Ended September 30,				Change
	2022 (As Restated)		2021		Amount		%
Change in fair value measurements	$	4,580	$	(60,394)	$	64,974	108	%

During the nine months ended September 30, 2021, the fair value of the Company’s debt obligations increased substantially due to tightening of the credit spreads of the Company due to the increased probability of the close of the Business Combination, which ultimately occurred in July 2021. Change in fair value measurements for the nine months ended September 30, 2021 also includes an increase in fair value of The9 Conditional Obligation in the amount of $1,735 and there was no comparable activity during the nine month period ended September 30, 2022. During the nine months ended September 30, 2022, the Company settled, through cash or shares of Class A Common Stock, approximately $154.5 million of its NPA notes payable measured at fair value, which were not fully replaced by the August issuance of the SPA notes payable measured at fair value. Additionally, the Company’s stock price in 2022 was lower and more volatile than in 2021 resulting in decreased fair value of its notes payable period over period.


	Nine Months Ended September 30,				Change
	2022 (As Restated)		2021		Amount		%
Interest expense	$	(5,119)	$	(26,550)	$	21,431	81	%

The decrease in interest expense during the nine months ended September 30, 2022 was due to the Company’s settlement of $85,202 principal of notes payable upon closing of the Business Combination in 2021 which resulted in a decrease of interest between the periods. Further decreases resulted from the repayment of $85,193 in notes payable principal in the nine months ended September 30, 2022 and interest related to finance leases as a result of the successful sale leaseback transaction of the Company’s Gardena, California headquarters in the three months ended December 31, 2021. These decreases were partially offset by increases in interest expense related to the ATW NPA Notes which bore interest in 2022 due to the triggering of interest clauses.

Related Party Interest Expense


	Nine Months Ended September 30,				Change
	2022		2021		Amount		%
Related party interest expense	$	(2,931)	$	(15,765)	$	12,834	81	%

The decrease in related party interest expense for the nine months ended September 30, 2022, as compared to the same period in 2021, was primarily due to the Company’s settlement of $91,420 principal amounts of related party notes payable upon closing of the Business Combination in July 2021, which accrued interest from July 1, 2021, to July 21, 2021.

Other Expense, Net


	Nine Months Ended September 30,				Change
	2022		2021		Amount		%
Other expense, net	$	(14,307)	$	(718)	$	(13,589)	NM

The change in other expense, net was primarily due to increase in foreign exchange loss of $13,304 resulting from transactions denominated in currencies other than local currencies.

Loss on extinguishment or settlement of related party notes payable, notes payable and vendor payables in trust, net


	Nine Months Ended September 30,				Change
	2022 (As Restated)		2021		Amount		%
Loss on extinguishment or settlement of related party notes payable, notes payable and vendor payables in trust, net	$	(30,454)	$	(96,036)	$	65,582	68	%

The loss in the nine months ended September 30, 2022 represents a $22,764 loss on settlement of ATW NPA Notes due to their conversion into Class A Common Stock and a $7,690 loss on extinguishment due to the change in the conversion price relating to an amendment to convertible notes issued during the period. The loss in the nine months ended September 30, 2021 represents the conversion of certain related party notes payable, notes payable, and vendor payables in trust to equity at $10 per share which was below the fair value of the stock on the date of conversion in connection with the closing of the Business Combination.

Liquidity and Capital Resources (in thousands)

As described in the “Overview” section of this MD&A, the COVID-19 pandemic impacted FF’s ability to raise funds and may have a material adverse impact on future periods as FF prepares to bring its vehicles to market, including its cash flows from financing activities, which fund its operations. The extent of COVID-19’s impact on FF’s liquidity will depend upon, among other things, the duration and severity of the outbreak or subsequent outbreaks and related government responses, such as required physical distancing, restrictions on business operations and travel, the pace of recovery of economic activity and the impact to consumers, all of which are uncertain and difficult to predict. ~~In addition, FF’s ability to raise additional funds is subject to a number of other material risks and assumptions.~~ Refer to the section titled “Risk Factors” in the Form 10-K for a full discussion of the risks associated with the COVID-19 pandemic.

As of ~~March 31, 2023,~~September 30, 2022, the Company’s principal source of liquidity was cash ~~on hand~~ totaling ~~$31.8~~ ~~million~~,$31,766, which was held for working capital and general corporate purposes.

The timing of first deliveries of FF ~~announced~~91 vehicles is uncertain and is not expected to occur in 2022 and remains subject to various conditions, many of which are outside of FF’s control, including the ~~start~~timing, size, and availability of ~~production~~additional financing as well as the implementation and effectiveness of FF’s headcount, temporary salary and other expense reductions as well as payment deferral measures. It is also subject to suppliers meeting their commitments on program deliverables including parts, and timely and successful certification testing. In order to fund its ongoing operations and business plan, including to launch the FF 91, ~~Futurist~~FF is seeking to raise additional capital from various fundraising efforts currently underway to supplement its cash on March 29, 2023, and FF’s first production FF 91 Futurist vehicle came off the line on April 14, 2023. FF has developed a three-phase delivery plan for the FF 91 Futurist. The first phase is expected to begin at the end of May 2023, and the second phase is expected to begin at the end of the second quarter of 2023, followed by the third phase. The first phase is the “Industry Expert Futurist Product Officer (FPO) Co-Creation Delivery.” In this first phase, the Industry Expert FPO(s) will pay in full for an FF 91 vehicle in order to reserve the vehicle and be trained in the use of the vehicle. The reserved FF 91 vehicle will be delivered to the FPO at the beginning of the second phase. Delivery of the reserved FF 91 vehicle will occur at the beginning of phase two. The second phase is the “FPO Co-Creation Delivery.” In this second phase, FPO(s) will take possession of the FF 91 vehicle. The third phase is the “Full Co-Creation Delivery.” In this third phase, FF will deliver FF 91 vehicles to all spire users that pay in full for an FF 91 vehicle.hand.

~~The successful beginning of the second phase is contingent on receiving parts on our required timeframes and completion of requisite tests. Further,~~ FF expects to need substantial additional financing to start the third phase of the delivery plan and is in discussions with additional potential investors to obtain such financing. As FF executes the three-phase delivery plan, it plans to continue to move vehicles into production and off-the-line with high quality and high product power. ~~There is no assurance FF will~~ be ~~able to timely~~ ~~receive~~ ~~sufficient funding under existing or new financing commitments to produce and deliver the FF 91 Futurist on that timeline or at all.~~ If unable to receive sufficient funding, FF will be required to obtain new financing commitments, which may not be available to it under reasonable commercial terms. Further, there cannot be any assurance that FF will be able to develop the manufacturing capabilities and processes, or secure reliable sources of component supply to meet the quality, engineering, design or production standards, or to meet the required production volumes to successfully grow into a viable, cash flow positive, business.

~~On March 29, 2023, FF announced the start of production of the FF 91 Futurist and, on April 14, 2023, FF’s first production FF 91 Futurist vehicle came off the line.~~ ~~Since~~From August 14, 2022 through September 25, 2022, the Company ~~has~~ obtained commitments from several investors totaling ~~$267.0~~ ~~million~~$132,000 in new convertible note financing and in committed forced warrant exercise proceeds, subject to certain conditions. A

total of ~~$220.3 million~~$72,000 under these commitments has been funded to date, ~~($193.3 million net~~through which the Company received $61,149 (net of original issue discount and transaction costs). Of the remaining balance of ~~$46.7 million,~~$40,000 committed by Senyun, an amount of ~~$20.0 million~~$20,000 is ~~committed~~expected to be received by the end of 2022, subject to the satisfaction of certain conditions, and an amount of $20,000 is contingent upon ~~delivery~~the launch of the FF 91 ~~Futurist~~as well as subject to ~~the first batch of bona fide customers, and an amount of $15.0 million is expected to be funded within five business days after the satisfaction or waiver of~~ certain ~~conditions, including for a portion of such financing an effective registration statement for the shares underlying the applicable notes.~~ ~~In addition, the~~other conditions. The Company ~~had~~also has the right to force the ~~exercise~~conversion of the warrants underlying the Warrant Reserve, as such term is defined in Note ~~12,~~13, ~~Stockholders’~~Stockholders' Equity, ~~in the notes to the unaudited~~ ~~Condensed~~ ~~Consolidated Financial Statements for the three months ended~~ ~~March 31, 2023~~ ~~included elsewhere in this Report,~~ for a total exercise price of ~~$20.0 million~~$20,000 in cash, ~~($10.6 million remaining to be funded to the Company),~~ upon the completion of certain milestones and conditions. ~~The right to force exercise of the Warrant Reserve expired upon the holders exercising their warrants during 2023.~~ In 2023 to date, Senyun, RAAJJ and a purchaser affiliated with ATW Partners LLC exercised their respective options to purchase additional senior secured notes and the accompanying SPA Warrants of the Company. The Company received aggregated gross proceeds of $38.0 million ($32.9 million net of original issuance discount) in exchange for such issuances.

Further, pursuant to the SEPA, the Company has the sole right, but not the obligation, to direct Yorkville from time to time to purchase up to $200.0 million of Class A Common Stock during the commitment period ending November 11, 2025, with an option to increase such amount to $350.0 million at FF’s option. On February 28, 2023, the stockholders approved, as is required by the applicable Nasdaq rules and regulations, advances of Class A Common Stock to be issued under the SEPA, including the issuance of any shares in excess of 19.99% of the issued and outstanding shares of Common Stock.

On May 8, 2023, the Company entered into the Unsecured SPA with the Unsecured SPA Purchasers to issue and sell, subject to the satisfaction of certain closing conditions, $100.0 million aggregate principal amount of the Company’s senior unsecured convertible promissory notes. On May 10, 2023 the Company received gross proceeds pursuant to the Unsecured SPA totaling $3.3 million ($3.0 million net of original issuance cost). The Unsecured SPA Purchasers committed to fund in eight subsequent closings fifteen days apart, subject to the satisfaction of certain closing conditions. In addition, any Unsecured SPA Purchaser may postpone or cancel any closing pursuant to the Unsecured SPA in its reasonable discretion if it reasonably determines, based on public information, that the first phase of the Company’s three-phase delivery plan as disclosed in public filings has not begun or will not begin prior to May 31, 2023 and/or the second phase of such delivery plan has not begun or will not begin prior to June 30, 2023, in each case within 15 calendar days of such deadline. See Note 15. ~~Subsequent Events~~ ~~for more information regarding the Unsecured SPA.~~

FF has received third party beneficiary rights in equity commitment letters with FF Global and the sole stockholder of V W Investment Holding Limited to be able to compel the closing or seek damages subject to the limitations set forth therein. In

the event of a breach by such investors of their obligations under their equity commitment letters with the Company, the Company may not be able to recover the damages caused by, or receive the funding due to, such breach.

The Company has continued financing discussions with multiple parties, but has experienced delays in securing additional funding commitments relative to its business plan included in the Form 8-K filed on July 25, 2022, which have exacerbated the supply chain pressures on FF’s business. Additionally, certain investors under the SPA may not fund their commitments until the Company increases the number of authorized shares of its Class A Common Stock and registers the securities underlying the SPA Warrants and SPA Notes in an effective registration statement. Furthermore, there can be no assurance that FF would be able to satisfy the closing conditions under the Unsecured SPA or that FF will be able further to successfully obtain additional incremental convertible senior secured note purchasers under the SPA or other debt or equity financing in a timely manner or on acceptable terms, if at all, and there is no assurance that the closing conditions under the Unsecured SPA would be satisfied. These factors, in addition to the continued rise in inflation and other challenging macroeconomic conditions, have led FF to take steps to preserve its current cash position, including reducing spending, extending payment cycles and implementing other similar measures. If our ongoing capital raising efforts are unsuccessful or significantly delayed, or if we experience prolonged material adverse trends in our business, our production will be delayed or decreased, and our actual use of cash, production volume and revenue for ~~2023~~2022 will vary from our previously disclosed forecasts, and such variances may be material. While FF ~~continues to be~~is actively engaged in negotiations with potential financing sources, there is no guarantee that it will be able to raise ~~further~~ additional capital on terms acceptable to it or at all. In addition to the risk that FF’s assumptions and analyses may prove incorrect, the projections may underestimate the professional fees and other costs to be incurred related to the pursuit of various financing options currently being considered and ongoing legal risks. Incremental capital needs beyond ~~2023~~2022 to fund development of the Company’s remaining product portfolio will be highly dependent on the market success and profitability of the FF 91 and the Company’s ability to accurately estimate and control costs. ~~Apart~~

As described under “- Financing Discussions and New Convertible Note and Warrant Financing,” on November 11, 2022, the Company entered into a SEPA with Yorkville, which provides the Company the sole right, but not the obligation, to direct Yorkville from time to time to purchase up to $200 million (“Commitment Amount”) of the ~~FF 91 series, substantial additional capital~~Company’s shares of Class A Common Stock during the commitment period ending November 11, 2025, at a 3% discount of the VWAP (as defined below) of the shares during the three preceding days of each issuance. The Company has the option to increase the Commitment Amount to up to $350,000 during the commitment period. The Company agreed to issue 789,016 shares of Class A Common Stock in satisfaction of the commitment fee agreed upon in the SEPA. As of the date the unaudited Condensed Consolidated Financial Statement were issued, the Company did not direct Yorkville to buy any shares of Class A Common Stock. The Company shall use commercially reasonable efforts to prepare and file with the SEC a Registration Statement for the resale by Yorkville of the shares of Class A Common Stock to be issued under the SEPA (including the 789,016 commitment shares). The Company shall not have the ability to draw funds until the effectiveness of such registration statement and the satisfaction of certain other conditions..

Any purchase would be subject to certain limitations, including that Yorkville shall not purchase any shares that would result in it and its affiliates beneficially owning more than 9.99% of the then outstanding voting power or number of shares of Class A Common Stock or any shares that would exceed 19.99% of all shares of Class A Common Stock and Class B Common Stock of the Company outstanding on the date of the SEPA, unless Company shareholder approval was obtained allowing for issuances in excess of such amount (the “Exchange Cap”). The Exchange Cap will ~~be required to fund operations, research, development, and design efforts for future vehicles.~~not apply under certain circumstances, including where the average price of all shares of Class A Common Stock equals or exceeds $0.62 per share.

Despite the access to liquidity resulting from the SEPA when and if it shall become effective, the Warrant Reserve and the unfunded commitments from the SPA, ~~and the Unsecured SPA,~~ the Company projects that it may require additional funds during the remainder of 2022 and will require additional funds beyond 2022 in order to continue operations and support the ramp-up of production of the FF 91 to generate revenues to put the Company on a path to cash flow break-even. Incremental capital needs beyond ~~March 2023~~2022 to fund ~~operations and the~~ development of the Company’s remaining product portfolio ~~and ramp up production~~ will be highly dependent on the market success and profitability of the FF 91 and the Company’s ability to accurately estimate and control costs.

Since its formation, the Company has devoted substantial effort and capital resources to strategic planning, engineering, design, and development of its electric vehicle platform, development of initial electric vehicle models, and capital raising. Since inception, the Company has incurred cumulative losses from operations, negative cash flows from operating activities, and has an accumulated deficit of ~~$3,470.1 million~~$3,339,180 as of ~~March 31, 2023~~September 30, 2022. After the closing of the Business Combination and the PIPE Financing on July 21, 2021, the Company received gross proceeds aggregating ~~$991.0 million~~$990,983 which it used to settle certain liabilities and the remainder of which management has used to finance the ongoing operations of the business.

The Company has funded its operations and capital needs primarily through the net proceeds received from capital contributions, the issuance of related party notes payable and notes payable (see Note 8,9, Related Party Notes Payable and Note 9,10, Notes Payable, the sale of Preferred and Common Stock (see Note ~~12,~~13, ~~Stockholders’~~Stockholders' Equity) and the net proceeds received from the Business Combination and the PIPE Financing (see Note 1,4, ~~Nature of~~ Business ~~and Organization and Basis of Presentation~~)Combination).

The Company’s ongoing liquidity needs will depend on the extent to which the Company’s actual costs vary from the Company’s estimates and the Company’s ability to control these costs, as well as the Company’s ability to raise additional funds. The timely achievement of the Company’s operating plan as well as its ability to maintain an adequate level of liquidity are subject to various risks associated with the Company’s ability to continue to successfully close additional sources of funding, control and effectively manage its costs, as well as factors outside of the Company’s control, including those related to global supply chain disruptions, the rising prices of materials, potential impact of the COVID-19 pandemic, and general macroeconomic conditions. Refer to the section titled “Risk Factors” of the Company’s Form 10-K, as updated in this Report, for a full discussion of the risks. The Company’s forecasts and projections of working capital reflect significant judgment and estimates for which there are inherent risks and uncertainties. The Company expects to continue to generate significant operating losses for the foreseeable future. The plans are dependent on the Company being able to continue to raise significant amounts of capital through the issuance of additional notes payable and equity securities.

The Company has evaluated whether there are certain conditions and events, when considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the unaudited Condensed Consolidated Financial Statements were issued. Based on its recurring losses from operations since inception and continued cash outflows from operating activities, the Company has concluded that there is substantial doubt about its ability to

continue as a going concern for a period of one year from the date that these unaudited Condensed Consolidated Financial Statements were issued.

There can be no assurance that the Company will be successful in achieving its strategic plans, that the Company’s future funding raises will be sufficient to support its ongoing operations, or that any additional financing will be available in a timely manner or on acceptable terms, if at ~~all or that the Company will be able to satisfy the closing conditions under its financing agreements.~~all. If events or circumstances occur such that the Company does not meet its strategic plans, the Company will be required to reduce discretionary spending, alter or scale back vehicle development programs, be unable to develop new or enhanced production methods, or be unable to fund capital expenditures. Any such events would have a material adverse effect on the Company’s financial position, results of operations, cash flows, and ability to achieve its intended business objectives.

Significant Related Party Notes Payable and Notes Payable Facilities

The Company has been significantly funded by notes payable from related parties and third parties. The related parties include employees as well as affiliates of employees and affiliates and other companies controlled or previously controlled by the Company’s founder and Chief Product and User Ecosystem Officer.

The following tables summarize the outstanding related party notes payable and notes payable as well as the related schedules of maturities of the related party notes payable and notes payable. See Note 8,9, Related Party Notes Payable and Note 9,10, Notes Payable in FF’s unaudited Condensed Consolidated Financial Statements.

Related party notes payable consists of the following as of ~~March 31, 2023 (dollars in thousands):~~September 30, 2022:


									September 30, 2022
Note Name	Note Name	Contractual Maturity Date	Contractual Interest Rates	Balance as of March 31, 2023		Interest Expense for the Three Months Ended March 31, 2023		Note Name	Contractual Maturity Date	Contractual Interest Rates	Balance as of September 30, 2022		Interest Expense for the Three Months Ended September 30, 2022		Interest Expense for the Nine Months Ended September 30, 2022
Related party notes - China		December 31, 2023	12.0%	$	4,715	$	140
Related party notes – China								Related party notes – China	Due on Demand	18%	$	8,451	$	996	$	2,931
Related party notes – China various other	Related party notes – China various other	Due on Demand	—%	3,928		—		Related party notes – China various other	Due on Demand	0%	3,802		—		—
				$	8,643	$	140				$	12,253	$	996	$	2,931

Schedule of Principal Maturities of Related Party Notes Payable~~(dollars in thousands):~~

The future scheduled principal maturities of related party notes payable as of ~~March 31, 2023~~September 30, 2022 were as ~~follows (dollars in thousands):~~follows:

Due on demand $ 3,928
2023 4,715
$ 8,643


Due on demand						$	12,253

Related party notes payable consists of the following as of December 31, ~~2022 (dollars in thousands):~~

Due on demand $ 3,755
2023 4,651
$ 8,406
2021:


	December 31, 2021
Note Name	Contractual Maturity Date	Contractual Interest Rates	Unpaid Balance		Net Carrying Value at 12/31/21
Related party notes - China	Due on Demand	18%	$	9,411	$	9,411
Related party notes - China various other	Due on Demand	0%	4,244		4,244
Total related party notes payable			$	13,655	$	13,655

The Company has entered into notes payable agreements with third parties, which consists of the following as of ~~March 31, 2023 (dollars in thousands):~~September 30, 2022:


	September 30, 2022
Note Name	Contractual Maturity Date	Contractual Interest Rates	Unpaid Principal Balance		Fair Value Measurement Adjustments		Original issue discount and proceeds allocated to warrants		Net Carrying Value		Interest Expense for the Three Months Ended September 30, 2022 (As Restated)		Interest Expense for the Nine Months Ended September 30, 2022 (As Restated)
June 2021 Notes (3)	October 31, 2026	0%	$	4,012	$	612	$	(955)	$	3,669	$	—	$	—
Optional Notes (3)	October 31, 2026	15%	2,687		737		(912)		2,512		28		2,572
Bridge Notes (as restated) (4)	August 14, 2026	10%	44,500		7,690		(11,421)		40,769		—		—
Notes payable – China various other	Due on Demand	0%	4,902		—		—		4,902		—		—
Auto loans	October 26, 2026	7%	106		—		—		106		—		—
			$	56,207	$	9,039	$	(13,288)	$	51,958	$	28	$	2,572

The Company settled certain notes payable during the nine months ended September 30, 2022 as follows:

March 31, 2023
Note Name Contractual
Maturity Date Contractual
Interest
Rates Unpaid Principal
Balance Fair Value
Measurement
Adjustments Original issue discount and proceeds allocated to warrants Net
Carrying
Value Interest Expense for the Three Months Ended March 31, 2023
Bridge Notes (1)
Various 11%-15% 165,034 (37,937) (34,432) 92,665 4,360
Notes payable – China other Due on Demand —% 5,065 — — 5,065 —
Auto loans October 2026 7% 94 — — 94 2
$ 170,193 $ (37,937) $ (34,432) $ 97,824 $ 4,362


	Nine months ended September 30, 2022
Note Name	Contractual Maturity Date	Contractual Interest Rates	Net carrying value at 12/31/2021		Fair Value Measurement Adjustments		Payment Premium		Cash Payment		Conversion into Class A Common Stock
March 1, 2021 Notes (1)	March 1, 2022	14%	$	56,695	$	(1,695)	$	—	$	(55,000)	$	—
August 26, 2021 Notes (1)	March 1, 2022	14%	30,924		(924)		2,065		(32,065)		—
June 2021 Notes (3)	October 31, 2026	0%	35,071		917		—		—		(35,988)
Optional Notes (3)	October 31, 2026	15%	31,934		(704)		—		—		(31,230)
PPP Loan (2)	April 17, 2022	1%	193		—		—		(193)		—
			$	154,817	$	(2,406)	$	2,065	$	(87,258)	$	(67,218)

Schedule of Principal Maturities of Notes Payable

The future scheduled principal maturities of notes payable as of ~~March 31, 2023~~September 30, 2022 are as ~~follows (dollars in thousands):~~follows:

Due on demand $ 5,065
2023 —
2024 —
2025 41,000
2026 94
2027 —
Thereafter 124,034
$ 170,193


Due on demand	$	4,902
2022	4,012
2023	2,687
2026	44,606
	$	56,207

Notes payable consists of the following as of December 31, 2021:


	December 31, 2021
Note Name	Contractual Maturity Date	Contractual Interest Rates		Unpaid Balance		Fair Value Measurement Adjustments		Original issue discount and proceeds allocated to warrants		Net Carrying Value
March 1, 2021 Notes	March 1, 2022	14	%	$	55,000	$	7,692	$	(5,997)	$	56,695
August 26, 2021 Notes	March 1, 2022	14	%	30,000		1,011		(87)		30,924
June 9, 2021 Note 1 and Note 2	December 9, 2022	—	%	40,000		8,503		(9,522)		38,981
August 10, 2021 Optional Notes	February 10, 2023	15	%	33,917		12,283		(11,518)		34,682
Notes payable - China various other	Due on demand	—	%	5,458		—		—		5,458
PPP Loan	April 17, 2022	1	%	193		—		—		193
Auto loans	Various	Various		121		—		—		121
Total notes payable				$	164,689	$	29,489	$	(27,124)	$	167,054

Cash Flow Analysis

Presented below is a summary of FF’s cash flows for the periods ~~indicated (dollars in thousands):~~indicated:


		Three Months Ended March 31,					Nine Months Ended September 30,
		2023		2022			2022		2021
Net cash provided by (used in)	Net cash provided by (used in)					Net cash provided by (used in)
Operating activities	Operating activities	$	(102,980)	$	(122,364)	Operating activities	$	(355,109)	$	(237,878)
Investing activities	Investing activities	(16,873)		(44,398)		Investing activities	(112,099)		(37,264)
Financing activities	Financing activities	134,443		(85,676)		Financing activities	(40,935)		966,995
Effect of exchange rate changes on cash and restricted cash	Effect of exchange rate changes on cash and restricted cash	170		(653)		Effect of exchange rate changes on cash and restricted cash	11,594		(2,536)

Operating Activities

FF continues to experience negative cash flows from operations as FF designs and develops its vehicles and builds its infrastructure both in the United States and China. FF’s cash flows from operating activities are significantly affected by FF’s cash investments to support the growth of FF’s business in areas such as research and development associated with FF’s electric

vehicles, corporate planning, and general and administrative functions. FF’s operating cash flows are also affected by its working capital needs to support growth and fluctuations in personnel-related expenditures, accounts payable, accrued interest, other current liabilities, deposits, and other current assets.

Net cash used in operating activities was ~~$(103.0) million~~$355,109 and ~~$(122.4) million~~$237,878 for the ~~three~~nine months ended ~~March 31, 2023~~September 30, 2022 and ~~2022,~~2021, respectively. The largest components of FF’s cash used by operating activities during the ~~three~~nine months ended ~~March 31, 2023,~~September 30, 2022, were for professional and contracted services totaling ~~$12.5 million, and~~$119,526, compensation, benefits and related expenses totaling ~~$26.3 million.~~$95,251 and prepaid insurance totaling $21,732. The largest components of FF’s cash used by operating activities during the ~~three~~nine months ended ~~March 31, 2022,~~September 30, 2021, were ~~$33.6 million~~$69,466 for wages and compensation related expenses, $50,000 for a non-exclusive, perpetual, irrevocable, and ~~$9.4 million~~sublicensable license to use a platform, the Geely License, owned by Liankong, a subsidiary of Geely Holdings, and $18,792 for professional services. Net cash used by operating activities for the nine months ended September 30, 2021, included cash used of $3,000 for prepayment of hosting costs. Other movements ~~in both periods~~ were related to changes in working capital.

Investing Activities

Net cash used in investing activities was ~~$(16.9) million~~$112,099 and ~~$(44.4) million~~$37,264 for the ~~three~~nine months ended ~~March 31, 2023,~~September 30, 2022, and ~~2022,~~2021, respectively, related to acquisition of fixed assets.

Financing Activities

Net cash ~~provided by~~ (used in) ~~financing activities was $134.4 million and $(85.7) million for the three months ended March 31, 2023, and 2022, respectively.~~

~~Net cash~~ provided by financing activities was ($40,935) and $966,995 for the nine months ended September 30, 2022, and 2021, respectively.

Net cash used in financing activities during the ~~three~~nine months ended ~~March 31, 2023,~~September 30, 2022, primarily consists of ~~$131.8 million~~$87,258 in repayment of notes payable, including payment premium, and $2,813 in payments of finance lease obligations partially offset by 40,050 and 9,535 in proceeds from notes payable, net of original issue discount and ~~$4.1 million in proceeds from the exercise of warrants, partially offset by $(1.1) million in payments of finance lease obligations.~~

Net cash used in financing activities during the three months ended March 31, 2022, primarily consists of $(87.1) million in repayment of notes payable, including liquidation premiums, and $(0.5) million in payments of finance lease obligations partially offset by $1.9 million in proceeds from exercise of stock options, respectively.

Cash provided from financing activities during the nine months ended September 30, 2021, primarily consists of $229,583 in cash proceeds from the issuance of Class A Common Stock, net of redemptions of $206 as a result of the Business Combination; $761,400 in cash proceeds from the aggregate purchase price in the PIPE Financing; $172,231 in proceeds from the issuance of notes payable net of original issuance discounts; and $10,492 from the exercise of stock options. These were partially offset by cash payments of $61,130 for PIPE Financing transaction costs; $48,210 for settling notes payable and accrued interest; $38,217 for settling related party notes payable and accrued interest; $27,722 for settling vendor payables in trust; $23,148 for Business Combination transaction costs; $3,355 for debt transaction costs; $2,691 for capital lease obligations; and $1,071 for stock issuance costs.

Effect of Exchange Rate Changes on Cash and Restricted Cash

The exchange rates effect on Cash and Restricted cash was ~~$0.2 million~~$11,594 and ~~$(0.7) million~~$(2,536) for the ~~three~~nine months ended ~~March 31, 2023~~September 30, 2022 and ~~2022,~~2021, respectively. The effects of exchange rate changes on cash and restricted cash result from fluctuations on the translation of assets and liabilities denominated in foreign currencies, primarily Chinese Renminbi. Fluctuations in exchange rates against the U.S. dollar may positively or negatively affect FF’s operating results.

Contractual Obligations and Commitments

The following table sets forth, as of September 30, 2022, significant cash obligations that affect FF’s future liquidity:


	Payments Due by Period
	Total		2022 (3 months)		2023 - 2024		2025 - 2026		Thereafter
	(in thousands)
Operating lease obligations	$	34,643	$	1,289	$	10,741	$	10,440	$	12,173
Finance lease obligations	10,050		643		3,923		3,620		1,864
Related party notes payable	12,253		12,253		—		—		—
Related party accrued interest	12,760		12,760		—		—		—
Notes payable	56,207		8,914		2,687		44,606		—
Accrued interest (as restated)	123		123		—		—		—
Palantir license	41,667		2,667		19,500		19,500		—
Total contractual obligations	$	167,703	$	38,649	$	36,851	$	78,166	$	14,037

The commitment amounts in the table above are associated with contracts that are enforceable and legally binding and that specify all significant terms, including fixed or minimum services to be used, fixed, minimum or variable price provisions, and the approximate timing of the actions under the contracts. The table does not include obligations under agreements that FF can cancel without a significant penalty.

Critical Accounting Estimates

The preparation of our unaudited Condensed Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent liabilities, and the reported amounts of expenses during the reporting period. Management has based its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values that are not readily apparent from other sources.

Actual results may differ from these estimates under different assumptions or conditions. Changes in the accounting estimates are reasonably likely to occur from period to period. Accordingly, actual results could differ significantly from the estimates made by FF’s management. To the extent that there are material differences between these estimates and actual results, future financial statement presentation, financial condition, results of operations, and cash flows will be affected. Given the global economic climate and unpredictable nature and unknown duration of the COVID-19 pandemic, estimates are subject to additional variability and volatility.

Accounting estimates and assumptions are evaluated on an ongoing basis, which are discussed in more detail under the ~~section titled~~caption “Critical Accounting Policies and Estimates” in Management’s Discussion and Analysis of Financial Condition and Results of Operations, set forth in Part II Item 7, of our ~~2022 Annual Report on~~ Form 10-K ~~filed on March 9, 2022,~~for the year ended December 31, 2021, as well as insee Note 1.Note 1, Nature of Business and Organization and Basis of Presentation ofin the Notes to the unaudited Condensed Consolidated Financial Statements for discussion of estimates related to accounting pronouncements recently adopted.

~~For a description of FF’s significant accounting policies, seeNote 1, Nature of Business and Organization and Basis of Presentation~~ ~~of the Notes to Consolidated Financial Statements included in the Form 10-K.~~ An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the

time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the Consolidated Financial Statements. For a description of the Company’s significant accounting policies, see Note 1, Nature of Business and Organization and Basis of Presentation of the Notes to the Consolidated Financial Statements for the years ended December 31, 2021 and 2020 included in our Form 10-K for the year ended December 31, 2021.

Recent Accounting Pronouncements

See Note 1, Nature of Business and Organization and Basis of Presentation in the Notes to the unaudited Condensed Consolidated Financial Statements for a discussion about accounting pronouncements recently adopted and recently issued, but not yet adopted.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Pursuant to Item 305(e) of Regulation S-K, FF is not required to provide the information required by this Item as it is a “smaller reporting company.”

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

FF’s disclosure controls and procedures are designed to ensure that information required to be disclosed by the issuer in the reports that FF files or submits under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized, and reported within the time periods specified in the Commission's rules and forms, and that such information is accumulated and communicated to management, including its Chief Executive Officer and Interim Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Based on an evaluation of FF’s disclosure controls and procedures (as defined in rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended), FF’s ~~Global~~ Chief Executive ~~Officer and Chief Accounting~~ Officer and Interim Chief Financial Officer (its principal executive officer and principal financial and accounting officer, respectively) have concluded that FF’s disclosure controls and procedures were not effective as of ~~March 31, 2023,~~September 30, 2022, due to the material weaknesses in our internal control over financial reporting described below.

Material Weaknesses in Internal Control Over Financial Reporting (As Restated)

FF identified material weaknesses in FF’s internal control over financial reporting. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of its annual Consolidated Financial Statements or interim unaudited Condensed Consolidated Financial Statements will not be prevented or detected on a timely basis. The material weaknesses are as follows:

•FF did not design and maintain an effective control environment commensurate with its financial reporting requirements. Specifically, FF lacked a sufficient number of professionals with an appropriate level of accounting knowledge, training, and experience to appropriately analyze, record, and disclose accounting matters timely and accurately. Additionally, management did not establish formal reporting lines in pursuit of its objectives. Further, the lack of a sufficient number of professionals resulted in an inability to consistently establish appropriate authorities and responsibilities in pursuit of its financial reporting objectives, as demonstrated by, among other things, insufficient segregation of duties in its finance and accounting functions.

•FF did not design and maintain effective controls in response to the risks of material misstatement. Specifically, changes to existing controls or the implementation of new controls were not sufficient to respond to changes to the risks of material misstatement to financial reporting due to growth in the business.

•FF did not design and maintain effective controls for communicating and sharing information between the legal, capital markets, and accounting and finance departments. Specifically, the accounting and finance departments were not consistently provided the complete and adequate support, documentation, and information including the nature of relationships with certain counterparties to record transactions within the financial statements timely, completely, and accurately.

These material weaknesses contributed to the following additional material weaknesses:

•FF did not design and maintain effective controls to address the identification of and accounting for certain non-routine, unusual or complex transactions, including the proper application of U.S. GAAP to such transactions. Specifically, FF did not design and maintain controls to timely identify and account for convertible notes under the fair value option, embedded derivatives

related to convertible notes, impute interest on related party notes payable with interest rates below market rates, account for failed sale leaseback transactions, and account for warrant instruments.

•FF did not design and maintain formal accounting policies, procedures, and controls to achieve complete, accurate, and timely financial accounting, reporting, and disclosures, including controls over the period-end financial reporting process addressing areas including financial statement and footnote presentation and disclosures, account reconciliations and journal entries, including segregation of duties, assessing the reliability of reports and spreadsheets used in controls, and the timely identification and accounting for cut-off of expenditures.

These material weaknesses resulted in adjustments primarily related to expense cut-off and the associated accounts including operating expenses, accounts payable and accruals, property and equipment, convertible notes payable and interest expense and related financial disclosures, which were recorded as of and for the year ended December 31, 2019. These material weaknesses also resulted in adjustments primarily related to the extinguishment of a noncontrolling interest, accounts payable, vendor payables in trust and adjustments to the statement of cash flows which were recorded as of and for the year ended December 31, 2019 as well as disclosure errors related to the anti-dilutive shares excluded from the calculation of diluted net loss per share, deferred tax assets and related valuation allowance, accrued interest for certain notes payable, and the fair value of the Vendor Trust as of December 31, 2019. Refer to Note 3 to FF’s Consolidated Financial Statements for the year ended December 31, 2020, included in its Registration Statement on Form S-4 (File Number 333-255027), initially filed with the SEC on April 5, 2021 ~~as amended.~~(as amended, the “Registration Statement”). Additionally, the material weakness related to accounting for warrant instruments resulted in the restatement of the previously issued financial statements as disclosed in Note 2 to PSAC’s Consolidated Financial Statements for the year ended December 31, 2020 within PSAC’s Annual Report on Form 10-K/A, of the entity acquired as part of the July 21, 2021 merger agreement related to warrant liabilities and equity. Finally, these material weaknesses resulted in the restatement of the Company’s previously filed financial statements as of and for the year ended December 31, 2022 and for the quarterly periods ended March 31, 2023 and September 30, 2022 (see Note 2, Restatement) primarily due to an error stemming from a non-cash and non-operating item related to the change in the fair value upon conversion of the notes payable issued under the Company’s debt arrangements.

•FF did not design and maintain effective controls over information technology (“IT”) general controls for information systems that are relevant to the preparation of its financial statements, specifically, with respect to: (i) program change management controls to ensure that IT program and data changes affecting financial IT applications and underlying accounting records are identified, tested, authorized, and implemented appropriately; (ii) user access controls to ensure appropriate segregation of duties and that adequately restrict user and privileged access to financial applications, programs, and data to appropriate company personnel; and (iii) computer operations controls to ensure that critical batch jobs are monitored and data backups are authorized and monitored. These IT deficiencies did not result in a material misstatement to the consolidated financial statements, however, the deficiencies, when aggregated, could result in material misstatements potentially impacting all financial statement accounts and disclosures.

In connection with the Special Committee investigation, and the completion of additional investigative and remedial work based on Special Committee findings, which were performed under the direction of the newly-appointed Executive Chairperson, reporting to the Audit Committee, additional material weaknesses were identified in FF’s internal control over financial reporting (as disclosed in Note 3 to FF’s consolidated financial statements for the years ended December 31, 2021 and 2020 included in ~~FF’s Annual Report on~~the Form ~~10-K for the fiscal year ended December 31, 2021)~~10-K). Specifically, in addition to the material weaknesses described above relating to management not establishing formal reporting lines in pursuit of its objectives as well as maintaining effective controls for communicating and sharing information between the legal, capital markets, and accounting and finance departments, the following material weaknesses were identified:

•FF did not maintain an effective control environment or demonstrate a commitment to maintain integrity and ethical values. Specifically, certain members of senior management failed to reinforce the need for an attitude of compliance and internal control awareness with certain of FF’s governance, accounting and finance policies and procedures. This resulted in the inaccurate and incomplete disclosures of certain relationships, arrangements, and transactions.

This material weakness contributed to the following additional material weakness:

•FF did not design and maintain effective controls related to the identification and disclosure of certain arrangements and transactions with related parties.

The material weaknesses identified in connection with the Special Committee investigation resulted in the revision of ~~the Company’s~~our previously filed financial statements as of and for the period ended December 31, 2020 (as disclosed in Note 9 to FF’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021) and for the periods ended March 31, 2021 (as disclosed in Note 1 to ~~FFIE’s~~FF’s Quarterly Report on Form 10-Q for the quarterly period ended on March 31, 2022) and ~~June~~September 30, 2021 ~~(as disclosed in Note 1~~related to ~~FFIE’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2022) related to~~

notes payable, related party notes payable, accrued interest, related party accrued interest, interest expense, and related party interest ~~expense.~~expense as disclosed in Note 1, Nature of Business and Organization and Basis of Presentation within the unaudited Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

Additionally, each of the material weaknesses described above could result in a material misstatement to substantially all of our accounts or disclosures.

Remediation Plan for Material Weaknesses in Internal Control Over Financial Reporting

Management is actively engaged and committed to taking the steps necessary to remediate the control deficiencies that constituted the material weaknesses. ~~Since identifying~~During 2021 and the ~~material weaknesses described above,~~first nine months of 2022, FF made the following enhancements to our internal control over financial reporting:

•FF added finance and accounting personnel to the organization to strengthen our finance and accounting teams. The additional personnel are expected to provide oversight, structure, reporting lines, and additional review over our disclosures;

•FF implemented certain new accounting policies and procedures, and an IT system relevant to the preparation of our financial statements to improve communication of key areas across the different departments at FF and to provide adequate structure, accountability, and segregation of duties;

•FF appointed Ms. Becky Roof as Interim Chief Financial Officer (CFO) and engaged an affiliate of AlixPartners LLP to accelerate implementation of Special Committee recommendations including, but not limited to remediation of the material weaknesses in internal control over financial ~~reporting. On~~reporting (on October 12, 2022, Ms. Roof resigned from FF upon the successful completion of key milestones in FF’s reporting and fundraising activities, ~~and~~ on October 22, 2022, the Company appointed Ms. Yun Han as Chief Accounting Officer and Interim CFO, effective as of October 25, ~~2022.~~2022, on July 5, 2023, Ms. ~~Han’s responsibilities include, but are not limited to,~~Han resigned from her positions as Interim Chief Financial Officer, principal financial officer and principal accounting officer (but will continue in her role as Chief Accounting Officer), and on July 11, 2023, the ~~remediation~~Board appointed Jonathan Maroko as Interim Chief Financial Officer, principal financial officer and principal accounting officer effective as of ~~the material weaknesses in internal control over financial reporting;~~July 24, 2023.);

•FF implemented enhanced controls around FF’s related party transactions, including regular attestations;

•FF removed ~~Mr.~~ Yueting (“YT”) Jia, FF’s founder, as an Executive Officer, although he ~~will continue~~continued in his position as Chief Product & User Ecosystem Officer of ~~FFIE,~~the Company, reporting to the Executive Chairperson with his role limited to focusing on (a) Product and Mobility Ecosystem and (b) Internet, Artificial Intelligence, and advanced R&D ~~technology (however, as of February 26, 2023, this remedial measure is no longer being implemented as further discussed below);~~technology;

•Functions previously dual-reporting to Mr. Jia and Mr. Breitfeld ~~would report~~reported only to Ms. Swenson (but Mr. Jia ~~may remain~~remained involved in long-term strategy) (and following the resignation of Ms. Swenson on October 3, 2022, all FF management (including Mr. Jia) ~~reported~~now report directly or indirectly to Dr. Breitfeld, the Global CEO of FF, ~~(previously Dr. Breitfeld and currently Mr. Xuefeng Chen) indefinitely~~until December 9, 2022 or the next Board meeting thereafter while the Board continues to evaluate the appropriate FF management reporting ~~lines) (however, as of February 26, 2023, this remedial measure is no longer being implemented as further discussed below);~~lines; and

•FF adopted an Insider Investment Reporting ~~Policy to enhance internal reporting of related party transactions.~~Policy.

Our remediation activities are continuing during ~~2023, although certain of the remedial efforts described above are no longer applicable given recent developments. For instance, Ms. Swenson resigned from the Board on October 3,~~ 2022. There have also been substantial changes to the composition of the Board as a result of the governance settlement entered into between FF and FF Global, as well as substantial turnover in key management personnel, including legal and compliance personnel, which could impact our ability to implement the above described remedial measures.

Moreover, effective on February 26, 2023, certain departments within the Company report to both Mr. Jia and Mr. Xuefeng Chen, including the Company’s user ecosystem, capital markets, human resources and administration, corporate strategy and China departments, subject to processes and controls to be determined by the Board after consultation with the Company’s management. The Company’s product, mobility ecosystem, I.A.I., and advanced R&D technology departments report directly to Mr. Jia, while the remaining departments continue to report to Mr. Xuefeng Chen. Further, based on the changes to his responsibilities within FF, the Board determined that Mr. Jia is an “officer” of the Company within the meaning of Section 16 of the Exchange Act, and an “executive officer” of the Company under Rule 3b-7 under the Exchange Act. FF has

or is planning to put in place processes and controls to mitigate the risks associated with the changes in Mr. Jia’s responsibilities as well as to enhance oversight and corporate governance, including but not limited to:

•~~segregating responsibilities and duties in the Company’s user ecosystem, capital markets, human resources and administration, corporate strategy and China departments;~~

•requiring Board, or a designated committee of the Board, to approve the signing of financing agreements, the hiring, promoting or terminating vice presidents of the Company and above (including additional Section 16 officers), the approval of Company-wide compensation policies;

•hiring of a Compliance Officer with the title of Deputy General Counsel (hired in March 2023), who will report on a dotted line to the Chair of the Audit committee, and a Director of Risks and Internal Controls; and

•~~engaging an external consulting firm to work in the capacity of an internal audit function (engaged in March 2023), who will report on a dotted line to the Chair of the Audit committee.~~

In addition to the above actions, ~~and in view of the governance changes that the Company implemented pursuant to the Heads of Agreement and Amended Shareholder Agreement and otherwise,~~ FF expects to engage in additional activities, including, but not limited to:

•Continuing to hire key finance and accounting personnel as FF scales and until FF has sufficient technical accounting resources, combined with engaging external consultants to provide support and to assist us in our evaluation of more complex applications of U.S. GAAP and to assist us with documenting and assessing our accounting policies and procedures;

•Designing and implementing controls in response to the risks of material misstatement to identify and evaluate changes in our business and the impact on our internal controls;

•Designing and implementing controls for communicating and sharing information between legal, capital markets, and accounting to facilitate transactions being recorded timely and accurately;

•Designing and implementing formal processes, accounting policies, procedures, and controls supporting certain business processes and our financial close process, including creating standard balance sheet reconciliation templates and journal entry controls assessing the reliability of reports and spreadsheets used in controls; and the timely identification and accounting for cut-off of expenditures;

•Designing and implementing controls to address the identification of and accounting for certain non-routine, unusual or complex transactions;

•Designing and implementing controls related to the identification and disclosure of certain arrangements and transactions with related parties;

•Continuing to implement additional IT systems relevant to the preparation of our financial statements and controls over financial reporting to improve communication of key areas across the different departments at FF and to provide adequate structure, accountability, and segregation of duties; and

•Designing and implementing IT general controls, including controls over change management, the review and update of user access controls and controls over critical batch jobs and data backups.

While FF has made progress, the material weaknesses will not be considered remediated until FF completes the design and implementation of the enhanced controls, the controls operate for a sufficient period of time, and FF has concluded, through testing, that these controls are effective. FF believes that our remediation plan will be sufficient to remediate the identified material weakness and strengthen our internal control over financial reporting.

As we continue to evaluate and work to improve our internal control over financial reporting, FF may determine that additional measures or modifications to the remediation plan are necessary.

We are working to remediate the material weaknesses as efficiently and effectively as possible and expect full remediation could potentially go beyond December 31, 2023. At this time, we cannot provide an estimate of costs expected to be incurred in connection with implementing this remediation plan; however, these remediation measures will be time consuming, will result in FF incurring significant costs, and will place significant demands on our financial and operational resources.

While FF believes these efforts will remediate the material weaknesses, FF may not be able to complete its evaluation, testing or any required remediation in a timely fashion, or at all. FF cannot assure you that the measures it has taken to date and may take in the future, will be sufficient to remediate the control deficiencies that led to its material weaknesses in internal control over financial reporting or that they will prevent or avoid potential future material weaknesses. The effectiveness of FF’s internal control over financial reporting is subject to various inherent limitations, including cost limitations, judgments used in decision making, assumptions about the likelihood of future events, the possibility of human error and the risk of fraud. Further loss and/or turnover in key management personnel, particularly accounting, finance and legal personnel, may negatively impact our ability to implement our remediation plan. If FF is unable to remediate its material weaknesses, FF’s ability to record, process and report financial information accurately, and to prepare financial statements within the time periods specified by the forms of the SEC, could be adversely affected which, in turn, may adversely affect FF’s reputation and business and the market price of the Class A Common Stock. Any such failures could result in litigation or regulatory actions by the SEC or other regulatory authorities, loss of investor confidence, delisting of FF’s securities and harm to FF’s reputation and financial condition, or diversion of financial and management resources from the operation of FF’s business.

Changes in Internal Control Over Financial Reporting

~~Other than as described in the preceding paragraphs, there~~There have been no changes in internal control over financial reporting during the quarter ended ~~March 31, 2023,~~September 30, 2022, that have materially affected, or are reasonably likely to materially affect, FF’s internal control over financial reporting.

4666

PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we are party to litigation and subject to claims incident to the ordinary course of business. As our growth continues, we may become party to an increasing number of litigation matters and claims. The outcome of litigation and claims cannot be predicted with certainty, and the resolution of these matters could materially affect our future results of operations, cash flows, or financial position. Other than disclosed under Note ~~11,~~12, Commitments and Contingencies to FF’s unaudited Condensed Consolidated Financial Statements included in this Report, we are not presently party to any legal proceedings that, in the opinion of management, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, financial condition, or cash flows.

ITEM 1A. RISK FACTORS

~~Except as set forth below, as~~Factors that could cause our actual results to differ materially from those in this report include the risk factors described in our Annual Report on Form10-K/A for the year ended December 31, 2022 filed with the SEC on August 21, 2023. As of the date of this ~~Report,~~report, there have been no material changes ~~from~~to the risk factors disclosed in ~~the section~~ ~~“Risk Factors”~~ ~~in the~~our Annual Report on Form ~~10-K.~~

~~FF has a limited operating history and faces significant barriers to growth in the electric vehicle industry.~~

On March 29, 2023, FF announced the start of production of its first electric vehicle, the FF 91 Futurist and, on April 14, 2023, FF’s first production FF 91 Futurist vehicle came off the line. FF has developed a three-phase delivery plan10-K/A for the FF 91 Futurist. The first phase is expected to begin at the end of May 2023, and the second phase is expected to begin at the end of the second quarter of 2023, followed by the third phase. The first phase is the “Industry Expert Futurist Product Officer (FPO) Co-Creation Delivery.” In this first phase, the Industry Expert FPO(s) will pay in full for an FF 91 vehicle in order to reserve the vehicle and be trained in the use of the vehicle. The reserved FF 91 vehicle will be delivered to the FPO at the beginning of the second phase. The second phase is the “FPO Co-Creation Delivery.” In this second phase, FPO(s) will take possession of the FF 91 vehicle. The third phase is the “Full Co-Creation Delivery.” In this third phase, FF will deliver FF 91 vehicles to all spire users that pay in full for an FF 91 vehicle.

The successful beginning of the second phase is contingent on receiving parts on our required timeframes and completion of requisite tests. Further, FF expects to need substantial additional financing to start the third phase of the delivery plan and is in discussions with additional potential investors to obtain such financing. As FF executes the three-phase delivery plan, it plans to continue to move vehicles into production and off-the-line with high quality and high product power. There is no assurance FF will be able to timely receive sufficient funding under existing or new financing commitments to produce and deliver the FF 91 Futurist on that timeline or at all. If unable to receive sufficient funding, FF will be required to obtain new financing commitments, which may not be available to it under reasonable commercial terms. Further, there cannot be any assurance that FF will be able to develop the manufacturing capabilities and processes, or secure reliable sources of component supply to meet the quality, engineering, design or production standards, or to meet the required production volumes to successfully grow into a viable, cash flow positive, business.

At a special meeting of FFIE stockholders held on February 28, 2023, FFIE stockholders approved a proposal to increase FFIE’s authorized shares of Class A Common Stock from 815,000,000 to 1,690,000,000, increasing the total authorized shares from 900,000,000 to 1,775,000,000. On March 1, 2023, FFIEyear ended December 31, 2022 filed ~~an amendment to its Amended and Restated Charter~~ with the ~~Delaware Secretary of State increasing FFIE’s authorized shares of Class A Common Stock~~SEC on August 21, 2023. We may disclose changes to ~~1,690,000,000 and its total authorized shares to 1,775,000,000. FFIE expects to need~~such factors or disclose additional ~~authorized shares to get to cash flow breakeven. There is no assurance that FFIE stockholder approval of any additional authorized share increase will be obtained in a timely manner or at all.~~

Furthermore, although FF has started production on its first electric vehicle, it faces significant barriers to growth in the electric vehicle industry, including continuity in development and production of safe and quality vehicles, brand recognition, customer base, marketing channels, pricing policies, talent management, value-added service packages and sustained technological advancement. If FF fails to address any or all of these risks and barriers to entry and growth, its business and results of operation may be materially and adversely affected.

Given FF’s limited operating history, the likelihood of its success must be evaluated especially considering the risks, expenses, complications, delays and the competitive environment in which it operates. There is, therefore, no assurance that FF’s business plan will prove successful. FF will continue to encounter risks and difficulties frequently experienced by early commercial stage companies, including scaling its infrastructure and headcount, and may encounter unforeseen expenses,

difficulties or delays in connection with its growth. In addition, due to the capital-intensive nature of FF’s business, it can be expected to continue to incur substantial operating expenses without generating sufficient revenues to cover those expenditures. There is no assurance FF will ever be able to generate revenue, raise additional capital when required or operate profitably. Any investment in FF is therefore highly speculative.

FF’s operating results forecast relies in large part upon assumptions and analyses developed by its management. If these assumptions and analyses prove to be incorrect, its actual operating results could suffer.

The Company has received financing commitments for the funds required for the start of production of the FF 91 Futurist. On March 29, 2023, FF announced the start of production of the FF 91 Futurist and, on April 14, 2023, FF’s first production FF 91 Futurist vehicle came off the line. ~~Since August 14, 2022, the Company has obtained commitments from several investors totaling~~ ~~$267.0~~ ~~million in convertible note financing and in committed forced warrant exercise proceeds, subject to certain conditions. A total of~~ ~~$171.4~~ ~~million under these commitments has been funded to date~~ ~~$150.4~~ million net of original discount and transaction costs). Of the remaining balance of $46.7 million, an amount of $20.0 million is committed and contingent upon delivery of the FF 91 Futurist to the first batch of bona fide customers, and an amount of $15.0 million is expected to be funded within five business days after the satisfaction or waiver of certain conditions, including for a portion of such financing an effective registration statement for the shares underlying the applicable notes. ~~In addition, the Company had the right to force the exercise of the warrants underlying the Warrant Reserve, as such term is defined in Note 12,~~ ~~Stockholders’ Equity, in the notes to the unaudited~~ ~~Condensed~~ ~~Consolidated Financial Statements for the three months ended~~ ~~March 31, 2023~~ included elsewhere in this Report, for a total exercise price of $20.0 million in cash ($10.6 million remaining to be funded to the Company), upon the completion of certain milestones and conditions. The right to force exercise of the Warrant Reserve expired upon the holders exercising their warrants during 2023. In 2023 to date, Senyun, RAAJJ and a purchaser affiliated with ATW Partners LLC exercised their respective options to purchase additional senior secured notes and the accompanying SPA Warrants of the Company. The Company received aggregated gross proceeds of $38.0 million ($32.9 million net of original issuance discount) in exchange for such issuances.

~~Further, pursuant to the SEPA, the Company has the sole right, but not the obligation, to direct Yorkville~~factors from time to time to purchase up to $200.0 million of Class A Common Stock during the commitment period ending November 11, 2025, with an option to increase such amount to $350.0 million at FF’s option. On February 28, 2023, the stockholders approved, as is required by the applicable Nasdaq rules and regulations, advances of Class A Common Stock to be issued under the SEPA, including the issuance of any shares in excess of 19.99% of the issued and outstanding shares of Common Stock.

On May 8, 2023, the Company entered into a Securities Purchase Agreement (the “Unsecured SPA”) with Metaverse Horizon Limited and V W Investment Holding Limited (the ”Unsecured SPA Purchasers”) to issue and sell, subject to the satisfaction of certain closing conditions, $100.0 million aggregate principal amount of the Company’s senior unsecured convertible promissory notes. The Unsecured SPA Purchasers committed to fund in eight subsequent closings fifteen days apart, subject to the satisfaction of certain closing conditions. In addition, any Unsecured SPA Purchaser may postpone or cancel any closing pursuant to the Unsecured SPA in its reasonable discretion if it reasonably determines, based on public information, that the first phase of the Company’s three-phase delivery plan as disclosed in public filings has not begun or will not begin prior to May 31, 2023 and/or the second phase of such delivery plan has not begun or will not begin prior to June 30, 2023, in each case within 15 calendar days of such deadline.

Class A Common Stock and registers the securities underlying the SPA Warrants and SPA Notes in an effective registration statement. These factors, in addition to the continued rise in inflation and other challenging macroeconomic conditions, have led FF to take steps to preserve its current cash position, including reducing spending, extending payment cycles and implementing other similar measures. If our ongoing capital raising efforts are unsuccessful or significantly delayed, or if we experience prolonged material adverse trends in our ~~business, our production will be~~ ~~delayed~~ or decreased, and our actual use of cash, production volume and revenue for 2023 will vary from our previously disclosed forecasts, and such variances may be material. While FF is actively engaged in negotiations with potential financing sources, there is no guarantee that it will be able to raise additional capital on terms acceptable to it or at all. In addition to the risk that FF’s assumptions and analyses may prove incorrect, the projections may underestimate the professional fees and other costs to be incurred related to the pursuit of various financing options currently being considered and the ongoing legal risks related to these financing transactions. Incremental capital needs beyond the date hereof to fund operations and the development of the Company’s remaining product portfolio and to ramp up production will be highly dependent on the market success and profitability of the FF 91 and the Company’s ability to accurately estimate and control costs. Apart from the FF 91 series, substantial additional capital will be required to fund operations, research, development, and design efforts for future ~~vehicles.~~

Despite the access to liquidity resulting from the SEPA, when and if it will become effective, the unfunded commitments from the SPA, and the Unsecured SPA, the Company projects that it will require additional funds in order to continue operations and support the ramp-up of production of the FF 91 to generate revenues to put the Company on a path to cash flow break-even. Incremental capital needs beyond March 2023 to fund development of the Company’s remaining product portfolio will be highly dependent on the market success and profitability of the FF 91 and the Company’s ability to accurately estimate and control costs.

FF’s cash needs after the start of production and delivery of the FF 91 Futurist will depend on the extent to which FF’s actual costs vary from FF’s estimates and FF’s ability to control these costs and raise additional funds. Any challenges in supplier engagements, delays in ramping capacity or labor at the Hanford facility or for sales and service engagements, rising prices of materials, or ongoing global supply chain disruptions may further increase the need for additional capital to produce and deliver the FF 91 series. In particular, recently, some suppliers have threatened to terminate their relationship with FF because of late payments or requested accelerated payments and other terms and conditions as a result of our past payment history and concerns about the Company’s financial condition, leading to less favorable payment terms than FF had anticipated, and delaying or putting at risk certain deliveries. FF is in active negotiations with these suppliers to minimize these risks and has been successful to date in retaining the majority of key suppliers. Apart from the FF 91 series, substantial additional capital will be required to fund operations, research, development, and design efforts for future vehicles.

FF’s operating results forecast largely relies on management’s assumptions and analyses, which could be incorrect. Additionally, there cannot be any assurance that FF’s current fundraising efforts will be successful. Whether actual operating and financial results and business developments will be consistent with FF’s expectations and assumptions as reflected in the forecast depends on a number of factors, many of which are outside FF’s control, including, but not limited to:


			●			~~whether it can obtain sufficient and timely capital to sustain and grow its business, including the development of future vehicle models;~~

			●			~~its ability to manage growth;~~

			●			~~whether it can manage relationships with key suppliers;~~

			●			~~whether it can sign up and manage relationships with business partners for them to invest in and operate sales and service centers;~~

			●			~~the ability to obtain necessary regulatory approvals;~~

			●			~~demand for its products and services in its target markets;~~

			●			~~the timing and cost of new and existing marketing and promotional efforts;~~

			●			~~competition, including established and future competitors;~~



			●			~~its ability to retain existing key management, to integrate recent hires and to attract, retain and motivate qualified personnel;~~


			●			~~the overall strength and stability of domestic and international economies;~~

			●			~~regulatory, legislative and political changes; and~~

			●			~~consumer spending habits.~~

Specifically, FF’s results forecast is based on projected purchase prices, unit costs for materials, manufacturing, labor, packaging and logistics, warranty, sales, marketing and service, tariffs, and its projected number of orders for the vehicles with factors such as industry benchmarks taken into consideration. Any of these factors could turn out to be different than those anticipated. Unfavorable changes in any of these or other factors, most of which are beyond FF’s control, could materially and adversely affect its business, prospects, financial results and results of operations.

~~FF needs to raise additional capital to support the production and delivery of the FF 91 Futurist and satisfy its other capital needs.~~

FF operates in a capital-intensive industry which requires significant cash to fund its operations. FF expects its capital expenditures to continue to be significant for the foreseeable future as it continues to develop and grow its business. In response to the delay in obtaining funding commitments and negative macroeconomic trends in the industry in which FF operates, such as supply chain pressures and cost inflation, FF has identified and begun implementation of certain cost reduction and cash conservation measures, including headcount and temporary salary reductions, supplier payment deferrals, and other cost-cutting measures. FF does not believe that the incremental impact of these cost reduction and cash conservation measures will have a material adverse impact on the timing of delivery of the FF 91 Futurist. On March 29, 2023, FF announced the start of production of the FF 91 Futurist and, on April 14, 2023, FF’s first production FF 91 Futurist vehicle came off the line. FF has developed a three-phase delivery plan for the FF 91 Futurist. The first phase is expected to begin at the end of May 2023, and the second phase is expected to begin at the end of the second quarter of 2023, followed by the third phase. The first phase is the “Industry Expert Futurist Product Officer (FPO) Co-Creation Delivery.” In this first phase, the Industry Expert FPO(s) will pay in full for an FF 91 vehicle in order to reserve the vehicle and be trained in the use of the vehicle. The reserved FF 91 vehicle will be delivered to the FPO at the beginning of the second phase. The second phase is the “FPO Co-Creation Delivery.” In this second phase, FPO(s) will take possession of the FF 91 vehicle. The third phase is the “Full Co-Creation Delivery.” In this third phase, FF will deliver FF 91 vehicles to all spire users that pay in full for an FF 91 vehicle. The successful beginning of the second phase is contingent on receiving parts on our required timeframes and completion of requisite tests. Further, FF expects to need substantial additional financing to start the third phase of the delivery plan and is in discussions with additional potential investors to obtain such financing.

As of May 5, 2023, FF’s cash position was $20.4 million, including restricted cash of $1.5 million. The successful beginning of the second phase is contingent on receiving parts on our required timeframes and completion of requisite tests. Further, FF expects to need substantial additional financing to start the third phase of the delivery plan and is in discussions with additional potential investors to obtain such financing. As FF executes the three-phase delivery plan, it plans to continue to move vehicles into production and off-the-line with high quality and high product power. There is no assurance FF will be able to timely receive sufficient funding under existing or new financing commitments to produce and deliver the FF 91 Futurist on that timeline or at all. If unable to receive sufficient funding, FF will be required to obtain new financing commitments, which may not be available to it under reasonable commercial terms. Further, there cannot be any assurance that FF will be able to develop the manufacturing capabilities and processes, or secure reliable sources of component supply to meet the quality, engineering, design or production standards, or to meet the required production volumes to successfully grow into a viable, cash flow positive, business.

In addition, FFIE expects to need additional authorized shares to get to cash flow breakeven. There is also no assurance that FFIE stockholder approval of an additional authorized share increase will be obtained in a timely manner or at all.

Given that FF had 365 non-binding, fully refundable pre-orders as of May 5, 2023 and vehicle deliveries were not made in 2022, no revenue was realized in 2022. In addition to the risk that FF’s assumptions and analyses may prove incorrect, the projections may underestimate the professional fees and other costs to be incurred related to the pursuit of various financing

~~options currently being considered and the ongoing legal risks related to these financing transactions. FF will be required to seek additional capital to fund operations.~~

Since August 14, 2022, the Company has obtained commitments from several investors totaling $267.0 million in convertible note financing and in committed forced warrant exercise proceeds, subject to certain conditions. A total of $220.3 million under these commitments has been funded to date ($193.3 million net of original discount and transaction costs). Of the remaining balance of $46.7 million, an amount of $20.0 million is committed and contingent upon delivery of the FF 91 Futurist to the first batch of bona fide customers, and an amount of $15.0 million is expected to be funded within five business days after the satisfaction or waiver of certain conditions, including for a portion of such financing an effective registration statement for the shares underlying the applicable notes. ~~In addition, the Company had the right to force the exercise of the warrants underlying the Warrant Reserve, as such term is defined in Note 12,~~ ~~Stockholders’ Equity, in the notes to the unaudited~~ ~~Condensed~~ ~~Consolidated Financial Statements for the three months ended~~ ~~March 31, 2023~~ included elsewhere in this Report, for a total exercise price of $20.0 million in cash ($10.6 million remaining to be funded to the Company), upon the completion of certain milestones and conditions. The right to force exercise of the Warrant Reserve expired upon the holders exercising their warrants during 2023. In 2023 to date, Senyun, RAAJJ and a purchaser affiliated with ATW Partners LLC exercised their respective options to purchase additional senior secured notes and the accompanying SPA Warrants of the Company. The Company received aggregated gross proceeds of $38.0 million ($32.9 million net of original issuance discount) in exchange for such issuances.

~~On May 8, 2023, the Company entered into the Unsecured SPA~~filings with the Unsecured SPA Purchasers to issue and sell, subject to the satisfaction of certain closing conditions, $100.0 million aggregate principal amount of the Company’s senior unsecured convertible promissory notes. The Unsecured SPA Purchasers committed to fund in eight subsequent closings fifteen days apart, subject to the satisfaction of certain closing conditions. In addition, any Unsecured SPA Purchaser may postpone or cancel any closing pursuant to the Unsecured SPA in its reasonable discretion if it reasonably determines, based on public information, that the first phase of the Company’s three-phase delivery plan as disclosed in public filings has not begun or will not begin prior to May 31, 2023 and/or the second phase of such delivery plan has not begun or will not begin prior to June 30, 2023, in each case within 15 calendar days of such deadline. See Note 15. ~~Subsequent Events~~ ~~for more information regarding the Unsecured SPA.~~

The Company has continued financing discussions with multiple parties, but has experienced delays in securing additional funding commitments, which have exacerbated the supply chain pressures on FF’s business. Additionally, certain investors under the SPA may not fund their commitments until the Company increases the number of authorized shares of its Class A Common Stock and registers the securities underlying the SPA Warrants and SPA Notes in an effective registration statement. Furthermore, there can be no assurance that FF would be able to satisfy the closing conditions under the Unsecured SPA or that FF will be able further to successfully obtain additional incremental convertible senior secured note purchasers under the SPA or other debt or equity financing in a timely manner or on acceptable terms, if at all. These factors, in addition to the continued rise in inflation and other challenging macroeconomic conditions, have led FF to take steps to preserve its current cash position, including reducing spending, extending payment cycles and implementing other similar measures. If our ongoing capital raising efforts are unsuccessful or significantly delayed, or if we experience prolonged material adverse trends in our business, our production will be ~~delayed~~ or decreased, and our actual use of cash, production volume and revenue for 2023 will vary from our previously disclosed forecasts, and such variances may be material. While FF continues to be actively engaged in negotiations with potential financing sources, there is no guarantee that it will be able to raise further additional capital on terms acceptable to it or at all. In addition to the risk that FF’s assumptions and analyses may prove incorrect, the projections may underestimate the professional fees and other costs to be incurred related to the pursuit of various financing options currently being considered and the ongoing legal risks related to these financing transactions. Incremental capital needs beyond the date hereof to fund operations and the development of the Company’s remaining product portfolio and ramp production will be highly dependent on the market success and profitability of the FF 91 and the Company’s ability to accurately estimate and control costs. Apart from the FF 91 series, substantial additional capital will be required to fund operations, research, development, and design efforts for future vehicles.

beyond March 2023 to fund development of the Company’s remaining product portfolio will be highly dependent on the market success and profitability of the FF 91 and the Company’s ability to accurately estimate and control costs.

It is difficult to predict the demand for FF’s vehicles and appropriately budget for such expenses; and FF may have limited insight into trends that could emerge and affect its business. As a company, FF does not have experience manufacturing vehicles, and as such, there is no historical basis for FF to make judgments on the demand for its vehicles. If FF is unable to accurately estimate the demand for its vehicles, match the timing and quantities of component purchases to actual needs or successfully implement inventory management and other systems to accommodate the increased complexity in FF’s supply chain, FF may incur unexpected production disruption, and storage, transportation and other costs, which could have a material adverse effect on its business, prospects, financial condition and operating results.

FF may raise additional funds through the issuance of equity, equity related or debt securities, or through obtaining credit from financial institutions or governmental organizations. FF cannot be certain that additional funds will be available on favorable terms when required, or at all, and any such financing is expected to dilute FF’s stockholder value. If FF is unable to obtain funding in a timely manner or on commercially acceptable terms, or at all, its financial condition, results of operations, business and prospects could be materially and adversely affected.

To the extent FF were to further meaningfully delay the production and delivery of the FF 91 series, potential consumers may lose confidence in FF, and customers who have placed pre-orders for FF 91 may cancel pre-orders, which may curtail FF’s growth prospects. Additionally, FF’s competitors may move more quickly to market than FF, which could impact FF’s ability to grow its market share.

Start of production of FF’s first vehicle, the FF 91 Futurist, has been recently announced, and the production and delivery of the FF 91 Futurist has experienced, and may continue to experience, significant delays.

FF announced the start of production of its first electric vehicle, the FF 91 Futurist, on March 29, 2023, and FF’s first production FF 91 Futurist vehicle came off the line on April 14, 2023. However, FF has not recognized any revenue as of the date hereof. FF’s future business depends in large part on its ability to execute its plans to develop, manufacture, market, and deliver electric vehicles, including FF 91, FF 81, FF 71 series, and SLMD electric vehicle models that appeal to customers. Based on certain management assumptions, including timely completion of certain testing and the suppliers meeting our supply chain requirement, FF originally expected deliveries of the FF 91 to users to begin before the end of April 2023. However, certain of FF’s suppliers informed FF that they will be unable to meet FF’s timing requirements and, therefore, FF has updated the timing for the start of deliveries for its FF 91 vehicle. Based on the revised delivery plan, FF expects the first phase of the three-phase delivery plan to begin at the end of May 2023, and the second phase of the three-phase delivery plan to begin at the end of the second quarter of 2023, followed by the third phase. The first phase is the “Industry Expert Futurist Product Officer (FPO) Co-Creation Delivery.” In this first phase, the Industry Expert FPO(s) will pay in full for an FF 91 vehicle in order to reserve the vehicle and be trained in the use of the vehicle. The reserved FF 91 vehicle will be delivered to the FPO at the beginning of the second phase. The second phase is the “FPO Co-Creation Delivery.” In this second phase, FPO(s) will take possession of the FF 91 vehicle. The third phase is the “Full Co-Creation Delivery.” In this third phase, FF will deliver FF 91 vehicles to all spire users that pay in full for an FF 91 vehicle.

Production or delivery of the FF 91 Futurist may experience further delays due to reasons such as insufficient capital, supply shortages, design defects, talent gaps, and/or force majeure. For example, FF relies on third-party suppliers for the

provision and development of many key components used in the FF 91 Futurist and other models and during the second quarter of 2023, certain of the Company’s suppliers informed the Company that they will be unable to meet the Company’s timing requirements, which resulted in the Company updating the timing for the start of deliveries for its FF 91 vehicle, and the previously announced three-phase delivery plan. To the extent FF’s suppliers experience any further delays in providing or developing necessary components, or if they experience quality issues, FF could experience further delays in delivering on its timelines. In addition, if FF has to adjust and/or reduce or suspend certain payments to suppliers, such adjustments and/or reductions could further delay the production and deliveries of the FF 91 Futurist.

To the extent FF were to further meaningfully delay the production and delivery of the FF 91 series, potential consumers may lose confidence in FF, and customers who have placed pre-orders for the FF 91 Futurist may cancel pre-orders, which may curtail FF’s growth prospects. Additionally, FF’s competitors may move more quickly to market than FF, which could impact FF’s ability to grow its market share.

FF’s recurring losses from operations raise substantial doubt about FF’s ability to continue as a going concern. There is no assurance that FF will be successful in executing upon its operating plan and be able to maintain an adequate level of liquidity, which would result in FF not being able to continue as a going concern.

Since inception, FF has incurred cumulative losses from operations, negative cash flows from operating activities and has an accumulated deficit of $3,470.1, $3,476.6 million and $2,907.6 million as of March 31, 2023, December 31, 2022 and 2021, respectively. FF expects to continue to generate significant operating losses for the foreseeable future. Based on FF’s recurring losses from operations since inception and continued cash outflows from operating activities, in FF’s audited consolidated financial statements for the years ended December 31, 2022 and 2021, FF concluded that this circumstance raised substantial doubt about FF’s ability to continue as a going concern within one year from the original issuance date of such financial statements. Similarly, in its report on the consolidated financial statements for the years ended December 31, 2022 and 2021, FF’s current and former independent registered public accounting firms included an explanatory paragraph stating that FF’s recurring losses from operations and continued cash outflows from operating activities raised substantial doubt about FF’s ability to continue as a going concern. FF’s consolidated financial statements for the years ended December 31, 2022 and 2021 do not include any adjustments that may result from the outcome of this uncertainty. However, after the closing of the Business Combination and the PIPE Financing on July 21, 2021, FF received gross proceeds aggregating $991.0 million which it used to pay $84.3 million in transaction costs and $139.6 million (in addition to equity) to settle certain liabilities.

As of March 31, 2023, the Company’s principal source of liquidity was cash totaling $31.8 million, which was held for working capital and general corporate purposes. As of May 5, 2023, 2023, FF’s cash position was $20.4 million, including restricted cash of $1.5 million.

FF operates in a capital-intensive industry which requires significant cash to fund its operations. FF expects its capital expenditures to continue to be significant for the foreseeable future as it continues to develop and grow its business. In response to the delay in obtaining funding commitments and negative macroeconomic trends in the industry in which FF operates, such as supply chain pressures and cost inflation, FF has identified and begun implementation of certain cost reduction and cash conservation measures, including headcount and temporary salary reductions, supplier payment deferrals, and other cost-cutting measures. FF does not believe that the incremental impact of these cost reduction and cash conservation measures will have a material adverse impact on the timing of delivery of the FF 91. FF announced the start production of a saleable FF 91 Futurist on March 29, 2023, and FF’s first production FF 91 Futurist vehicle came off the line on April 14, 2023. FF has developed a three-phase delivery plan for the FF 91 Futurist. The first phase is expected to begin at the end of May 2023, and the second phase is expected to begin at the end of the second quarter of 2023, followed by the third phase. The first phase is the “Industry Expert Futurist Product Officer (FPO) Co-Creation Delivery.” In this first phase, the Industry Expert FPO(s) will pay in full for an FF 91 vehicle in order to reserve the vehicle and be trained in the use of the vehicle. The reserved FF 91 vehicle will be delivered to the FPO at the beginning of the second phase. The second phase is the “FPO Co-Creation Delivery.” In this second phase, FPO(s) will take possession of the FF 91 vehicle. The third phase is the “Full Co-Creation Delivery.” In this third phase, FF will deliver FF 91 vehicles to all spire users that pay in full for an FF 91 vehicle.

The successful beginning of the second phase is contingent on receiving parts on our required timeframes and completion of requisite tests. Further, the Company expects to need substantial additional financing to start the third phase of the delivery plan and is in discussions with additional potential investors to obtain such financing. As the Company executes the three-phase delivery plan, it plans to continue to move vehicles into production and off-the-line with high quality and high product power. There can be no assurance that FF will be successful in implementing these measures.

In addition to the risk that the Company’s assumptions and analyses may prove incorrect, the projections may underestimate the professional fees and other costs to be incurred related to the pursuit of various financing options currently being considered and ongoing legal risks. FF is seeking to raise further additional capital from fundraising efforts currently underway (in addition to $267.0 million that has been committed to date) to supplement its cash on hand to fund the production and delivery of the FF 91, which may not be successful. FF is actively engaged in confidential discussions and negotiations with entities affiliated with FF Top and other potential investors with respect to purchasing incremental convertible senior secured notes and/or convertible junior secured notes on the same terms as FF Simplicity under the SPA On May 8, 2023, the Company entered into the Unsecured SPA to issue and sell, subject to the satisfaction of certain closing conditions, $100.0 million aggregate principal amount of the Company’s senior unsecured convertible promissory notes. However, there can be no assurance that FF would be able to satisfy the closing conditions under the Unsecured SPA.

FF will need further financing to support its continued ramp up and development of its sales and service systems for its flagship FF 91 vehicle and beyond. There can be no assurance that FF would be able to satisfy the closing conditions under the Unsecured SPA or that FF will be able further to successfully obtain additional incremental convertible senior secured note purchasers under the SPA or other debt or equity financing in a timely manner or on acceptable terms, if at all. Moreover, engaging in due diligence on potential financing sources. This process has been time consuming and may result in the Company not being able to consummate any financing from these or other financing sources on a timely basis or at all. Additionally, certain investors under the SPA may not fund their commitments until the Company increases the number of authorized shares of its Class A Common Stock and registers the securities underlying the SPA Warrants and SPA Notes in an effective registration statement. If we are not able satisfy the closing conditions under the Unsecured SPA and otherwise are unable to raise sufficient additional funds in the near term, we may be required to further delay our production and delivery plans for the FF 91, reduce headcount, liquidate our assets, file for bankruptcy, reorganize, merge with another entity, and/or cease operations.

FF’s cash needs for the FF 91 Futurist will depend on the extent to which FF’s actual costs vary from FF’s estimates and FF’s ability to control these costs and raise additional funds. Any challenges in supplier engagements, delays in ramping capacity or labor at the Hanford facility or for sales and service engagements, rising prices of materials, or ongoing global supply chain disruptions may further increase the need for additional capital to produce and deliver the FF 91 series. Apart from the FF 91 series, substantial additional capital will be required to fund operations, research, development, and design efforts for future vehicles.

The timely achievement of FF’s operating plan as well as its ability to maintain an adequate level of liquidity are subject to various risks associated with FF’s ability to continue to successfully obtain additional sources of funding, and control and effectively manage its costs, as well as factors outside of the Company’s control, including those related to global supply chain disruptions, and the rising prices of materials and ongoing impact of the COVID-19 pandemic. FF’s forecasts and projections of working capital reflect significant judgment and estimates for which there are inherent risks and uncertainties.

There can be no assurance that FF will be successful in achieving its strategic plans, that FF’s capital raises will be sufficient to support its ongoing operations, or that any additional financing will be available in a timely manner or on acceptable terms, if at all. If events or circumstances occur such that FF does not meet its strategic plans, FF will be required to reduce discretionary spending, alter or scale back vehicle development programs, be unable to develop new or enhanced production methods, or be unable to fund capital expenditures. Any such events would have a material adverse effect on FF’s financial position, results of operations, cash flows, and ability to achieve its intended business objectives. Based on its recurring losses from operations since inception and continued cash outflows from operating activities, FF has concluded that there is substantial doubt about its ability to continue as a going concern for a period of one year from the date that FF’s unaudited Condensed Consolidated Financial Statements for the three months ended March 31, 2023 were issued.

If FF is unable to continue as a going concern, it may have to seek protection under applicable bankruptcy laws and/or liquidate or reorganize its assets and may receive less than the value at which those assets are carried on its consolidated financial statements. If this were to happen, it is likely investors would lose part or all of their investment. Future reports from FF’s independent registered public accounting firm may also contain statements expressing substantial doubt about FF’s ability to continue as a going concern. If such doubt about FF continues, investors or other financing sources may be unwilling to provide additional funding to FF on commercially reasonable terms, or at all, and FF’s business may be harmed.

~~There can be no assurance that FFIE will be able to comply with the continued listing standards of Nasdaq.~~

If Nasdaq delists FF’s shares from trading on its exchange for failure to meet the applicable listing standards, we and our stockholders could face significant material adverse consequences including:


			●			~~a limited availability of market quotations for our securities;~~


			●			~~reduced liquidity for our securities;~~


			●			a determination that our Common Stock is a “penny stock” which will require brokers trading in our Common Stock to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for shares of our Common Stock;


			●			~~a limited amount of news and analyst coverage; and~~


			●			~~a decreased ability to issue additional securities or obtain additional financing in the future.~~

On April 21, 2023, we received notice from Nasdaq that our application was approved. Effective as of market open on April 25, 2023, FFIE’s Class A Common Stock and warrants commenced trading on The Nasdaq Capital Market. On May 2, 2023, we were notified that we would have an additional 180-calendar day period (i.e., until October 30, 2023) to regain compliance with the Minimum Bid Price Requirement. However, if during such compliance period, our Class A Common Stock has a closing bid of $0.10 per share or less for at least 10 consecutive trading days, then it will be subject to delisting pursuant to Nasdaq Listing Rule 5810(c)(3)(A)(iii). In connection with our application to transfer to The Nasdaq Capital Market, we notified Nasdaq of our intention to cure the non-compliance with the Minimum Bid Price Requirement during the additional compliance period, if necessary by effecting a reverse stock split. On May 10, 2023, the closing bid of our Class A Common Stock was $0.1979.We are monitoring the closing bid price of our Class A Common Stock and will consider options to regain compliance with the Minimum Bid Price Requirement. However, there can be no assurance that we will be able to regain compliance with the Minimum Bid Price Requirement or avoid delisting pursuant to Nasdaq Listing Rule 5810(c)(3)(A)(iii).

At a special meeting of FFIE stockholders held on November 3, 2022, FFIE stockholders approved (among other proposals) a proposal to approve an amendment to the Amended and Restated Charter to effect a reverse stock split of the Common Stock by a ratio of any whole number in the range of 1-for-2 to 1-for-10, and a corresponding reduction in the number of authorized shares of Common Stock (after adjustment of the number of authorized shares, if applicable, resulting from stockholder approval of the proposal to increase FFIE’s total authorized shares from 825,000,000 to 900,000,000 (the Share Authorization Proposal)), with such ratio to be determined in the discretion of the Board and with such action to be effected at such time and date, if at all, as determined by the Board within one year after the conclusion of such special meeting of stockholders. This approval gives the Board the discretion to amend the Amended and Restated Charter to effect a reverse stock split (with such ratio to be determined in the discretion of the Board in the range of 1-for-2 to 1-for-10) of the Common Stock at any time within one year of the date of such special meeting of stockholders. A reverse stock split may allow us to meet the Minimum Bid Requirement. However, we cannot assure you that the reverse stock split will be implemented by our Board or that such reverse stock split, if implemented, will be sufficient to enable us to maintain our Nasdaq listing.

Additionally, the right granted to FF Top under the Amended Shareholder Agreement or other similar rights granted to other investors in the future may cause FFIE to fall out of compliance with certain of Nasdaq’s listing rules, in particular Nasdaq Rule 5640, which disallows the voting rights of existing stockholders to be disparately reduced through any corporate action or issuance, and cause FFIE’s Class A Common Stock to be delisted from Nasdaq.

~~If FFIE implements a reverse stock split, the liquidity of its Common Stock and warrants may be adversely effected.~~

Charter to effect a reverse stock split (with such ratio to be determined in the discretion of the Board in the range of 1-for-2 to 1-for-10) of the Common Stock at any time within one year of the date of such special meeting of stockholders.

On October 31, 2022, we received written notice from Nasdaq that we were not in compliance with the Nasdaq requirement for the bid price for Class A Common Stock to be at least $1.00 per share (the “Minimum Bid Price Requirement”). Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), we had 180 calendar days, or until May 1, 2023, for the bid price for Class A Common Stock to close at $1.00 per share or more for a minimum of 10 consecutive business days, to regain compliance with the Minimum Bid Price Requirement. On April 5, 2023, we applied to transfer the listing of our Common Stock from The Nasdaq Global Market to The Nasdaq Capital Market. On April 21, 2023, we received notice from Nasdaq that our application was approved. Effective as of market open on April 25, 2023, FFIE’s Common Stock and warrants commenced trading on The Nasdaq Capital Market. On May 2, 2023, we were notified that we would have an additional 180-calendar day period (i.e., until October 30, 2023) to regain compliance with the Minimum Bid Price Requirement. During such compliance period, our Class A Common Stock will be subject to delisting pursuant to Nasdaq Listing Rule 5810(c)(3)(A)(iii) if it has a closing bid of $0.10 per share or less for at least 10 consecutive trading days. In connection with our application to transfer to The Nasdaq Capital Market, we notified Nasdaq of our intention to cure the non-compliance with the Minimum Bid Price Requirement during the additional compliance period, if necessary by effecting a reverse stock split.

On May 10, 2023, the closing bid of our Class A Common Stock was $0.1979. We are monitoring the closing bid price of our Class A Common Stock and will consider options to regain compliance with the Minimum Bid Price Requirement. However, there can be no assurance that we will be able to regain compliance with the Minimum Bid Price Requirement or avoid delisting pursuant to Nasdaq Listing Rule 5810(c)(3)(A)(iii).

If compliance is not regained by October 28, 2023 (unless Nasdaq exercises its discretion to extend this period), our Class A Common Stock will be subject to a delisting action by Nasdaq. If we are unable to cure the deficiency or regain compliance, the Class A Common Stock will be delisted from Nasdaq. See “~~– There can be no assurance that FFIE will be able to comply with the continued listing standards of Nasdaq~~” above for more information. A reverse stock split may allow us to meet the Minimum Bid Requirement. However, we cannot assure you that the reverse stock split will be implemented by our Board or that such reverse stock split, if implemented, will be sufficient to enable us to maintain our Nasdaq listing.

However, if a reverse stock split is implemented, there can be no assurance that the market price per new share of our Common Stock after the reverse stock split will remain unchanged or increase in proportion to the reduction in the number of old shares of our Common Stock outstanding before the reverse stock split. The liquidity of the shares of our Common Stock and warrants may be affected adversely by any reverse stock split given the reduced number of shares of our Common Stock that will be outstanding following the reverse stock split, especially if the market price of our Common Stock does not increase as a result of the reverse stock split.

Following any reverse stock split, the resulting market price of our Common Stock may not attract new investors and may not satisfy the investing requirements of those investors. Although we believe that a higher market price of our Common Stock may help generate greater or broader investor interest, there can be no assurance that the reverse stock split will result in a share price that will attract new investors, including institutional investors. In addition, there can be no assurance that the market price of our Common Stock will satisfy the investing requirements of those investors. As a result, the trading liquidity of our Common Stock may not necessarily improve.SEC.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable

ITEM 5. OTHER INFORMATION

None

5667

ITEM 6. EXHIBITS


Exhibit No.			Description
4.1			Form of Common Stock Purchase Warrant (under Securities Purchase Agreement, dated as of August 14, 2022) (incorporated by reference to Exhibit 4.1 to Faraday Future Intelligent Electric Inc,’s Current Report on Form 8-K filed August 15, 2022)
4.2			Form of Common Stock Purchase Warrant (under Amendment No. 1 to the Securities Purchase Agreement and Convertible Senior Secured Promissory Notes, dated as of September 23, 2022) (incorporated by reference to Exhibit 4.1 to Faraday Future Intelligent Electric Inc.’s Current Report on Form 8-K filed September 26, 2022)
4.3			Form of Adjustment Warrant (under Amendment No. 1 to Securities Purchase Agreement and Convertible Senior Secured Promissory Notes, dated as of September 23, 2022) (incorporated by reference to Exhibit 4.2 to Faraday Future Intelligent Electric Inc.’s Current Report on Form 8-K filed September 26, 2022)
10.1#			Second Amendment to Amended and Restated Employment Agreement by and among Faraday Future Intelligent Electric Inc., Faraday&Future Inc. and Carsten Breitfeld dated September 3, 2022 (incorporated by reference to Exhibit 10.1 to Faraday Future Intelligent Electric Inc.’s Current Report on Form 8-K filed on September 6, 2022)
10.2			Amendment letter agreement, dated as of July 26, 2022, among Faraday Future Intelligent Electric Inc., FF Aventuras SPV XI, LLC, FF Adventures SPV XVIII LLC, FF Ventures SPV IX LLC and FF Venturas SPV X LLC (incorporated by reference to Exhibit 10.1 to Faraday Future Intelligent Electric Inc.’s Current Report on Form 8-K filed on August 2, 2022)
10.3^			Securities Purchase Agreement, dated as of August 14, 2022, among Faraday Future Intelligent Electric Inc., FF Simplicity Ventures LLC and the purchasers from time to time party thereto incorporated by reference to Exhibit 10.1 to Faraday Future Intelligent Electric Inc.’s Current Report on Form 8-K filed on August 15, 2022)
10.4			Form of Convertible Senior Secured Promissory Note (under Securities Purchase Agreement, dated as of August 14, 2022) (incorporated by reference to Exhibit 10.2 to Faraday Future Intelligent Electric Inc.’s Current Report on Form 8-K filed on August 15, 2022)
10.5+			Amendment No. 1 to Securities Purchase Agreement and Convertible Senior Secured Promissory Notes, dated as of September 23, 2022, by and among Faraday Future Intelligent Electric Inc, the credit parties from time to time party thereto, the financial institutions or other entities from time to time party thereto and FF Simplicity Ventures LLC, as administrative and collateral agent (incorporated by reference to Exhibit 10.3 to Faraday Future Intelligent Electric Inc.’s Current Report on Form 8-K filed on September 26, 2022)
10.6			Form of Convertible Senior Secured Promissory Note (under Amendment No. 1 to Securities Purchase Agreement and Convertible Senior Secured Promissory Notes, dated as of September 23, 2022) (incorporated by reference to Exhibit 10.4 to Faraday Future Intelligent Electric Inc.’s Current Report on Form 8-K filed on September 26, 2022)
10.7			Joinder and Amendment Agreement, dated as of September 25, 2022, by and among Senyun International Ltd., FF Simplicity Ventures LLC, RAAJJ Trading LLC and Faraday Future Intelligent Electric Inc. (incorporated by reference to Exhibit 10.5 to Faraday Future Intelligent Electric Inc.’s Current Report on Form 8-K filed on September 26, 2022)
10.8			Warrant Exercise Agreement, dated as of September 23, 2022, among Faraday Future Intelligent Electric Inc. and the investors listed on the signature pages thereto (incorporated by reference to Exhibit 10.6 to Faraday Future Intelligent Electric Inc.’s Current Report on Form 8-K filed on September 26, 2022)
10.9+			Letter Agreement Regarding Advanced Approval, dated as of September 23, 2022, between Faraday Future Intelligent Electric Inc. and FF Top Holding LLC (incorporated by reference to Exhibit 10.7 to Faraday Future Intelligent Electric Inc.’s Current Report on Form 8-K filed on September 26, 2022)
10.10+			Letter Agreement Regarding Advanced Approval, dated as of September 23, 2022, between Faraday Future Intelligent Electric Inc. and Season Smart Ltd. (incorporated by reference to Exhibit 10.8 to Faraday Future Intelligent Electric Inc.’s Current Report on Form 8-K filed on September 26, 2022)
10.11			Heads of Agreement, dated as of September 23, 2022, by and among Faraday Future Intelligent Electric Inc., FF Global Partners LLC and FF Top Holding LLC (incorporated by reference to Exhibit 10.1 to Faraday Future Intelligent Electric Inc.’s Current Report on Form 8-K filed on September 26, 2022)
10.12			Mutual Release, dated as of September 23, 2022, among Faraday Future Intelligent Electric Inc., FF Global Partners LLC, FF Top Holding LLC and the other parties thereto (incorporated by reference to Exhibit 10.2 to Faraday Future Intelligent Electric Inc.’s Current Report on Form 8-K filed on September 26, 2022)
10.13			Exchange Agreement, dated October 10, 2022, by and among Faraday Future Intelligent Electric Inc., FF Aventuras SPV XI LLC, FF Venturas SPV X LLC, FF Ventures SPV IX LLC and FF Adventures SPV XVIII LLC (incorporated by reference to Exhibit 10.1 to Faraday Future Intelligent Electric Inc.’s Current Report on Form 8-K filed on October 11, 2022)


~~Exhibit No.~~10.14	~~Description of Exhibits~~		~~Incorporation~~Exchange Agreement, dated October 19, 2022, by ~~Reference~~

~~3.1~~	~~Second Certificate of Amendment to the Second Amended~~ and ~~Restated Certificate of Incorporation of~~among Faraday Future Intelligent		Electric Inc., FF Aventuras SPV XI LLC, FF Venturas SPV X LLC, FF Ventures SPV IX LLC and FF Adventures SPV XVIII LLC (incorporated by reference to Exhibit ~~3.1~~10.1 to ~~the~~Faraday Future Intelligent Electric Inc.’s Current Report on Form 8-K filed on ~~March 3, 2023~~October 20, 2022)
~~10.1~~10.15	Summary of Amendment dated October 22, 2022 to the Letter ~~to Stockholders~~Agreement Regarding Advanced Approval, dated as of ~~March 9, 2023~~September 23, 2022, between Faraday Future Intelligent Electric Inc. and FF Top Holding LLC (incorporated by reference to Exhibit 10.47 to Faraday Future Intelligent Electric Inc.’s Amendment 6 to the Registration Statement on Form S-1 filed on November 8, 2022)
10.16		Limited Consent and Third Amendment to Securities Purchase Agreement, dated as of October 24, 2022, by and among Senyun International Ltd., FF Simplicity Ventures LLC, RAAJJ Trading LLC and Faraday Future Intelligent Electric Inc. (incorporated by reference to Exhibit 10.1 to ~~the~~Faraday Future Intelligent Electric Inc.’s Current Report on Form 8-K filed on ~~March 9, 2023~~October 25, 2022)
~~10.2~~10.17#	~~Amendment No. 7 to Securities Purchase Agreement,~~Offer Letter, dated ~~March 23, 2023,~~October 22, 2022, by and ~~among~~between Faraday Future Intelligent Electric Inc.~~, FF Simplicity Ventures LLC, Senyun International Ltd.,~~ and ~~FF Prosperity Ventures LLC~~		Yun Han (incorporated by reference to Exhibit 10.1 to ~~the~~Faraday Future Intelligent Electric Inc.’s Current Report on Form 8-K filed on ~~March 23, 2023~~October 26, 2022)
10.18	Limited Consent and Amendment, dated as of November 8, 2022, by and among Senyun International Ltd., FF Simplicity Ventures LLC, RAAJJ Trading LLC and Faraday Future Intelligent Electric Inc. (incorporated by reference to Exhibit 10.1 to Faraday Future Intelligent Electric Inc.’ Current Report on Form 8-K filed on November 8, 2022)
10.19	Standby Equity Purchase Agreement, dated as of November 11, 2022, by and between YA II PN, Ltd. and Faraday Future Intelligent Electric Inc. (incorporated by reference to Exhibit 10.1 to Faraday Future Intelligent Electric Inc.’s Current Report on Form 8-K filed on November 14, 2022)
31.1*	Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2**	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101	Inline XBRL Document Set for the unaudited ~~Condensed Consolidated Financial Statements~~condensed consolidated financial statements and accompanying notes to unaudited ~~Condensed Consolidated Financial Statements~~condensed consolidated financial statements
104	Cover Page Interactive Data File - formatted in Inline XBRL and included in Exhibit 101

* Filed herewith.

** Furnished herewith.

+ The schedules and exhibits to this agreement have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished to the SEC upon request.

# Indicates management contract or compensatory plan or arrangement.

^ Portions of this exhibit have been redacted pursuant to Item 601(b)(10)(iv) of Regulation S-K.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Faraday Future Intelligent Electric Inc.

Date: ~~May 12,~~August 21, 2023


By:			/s/ Xuefeng Chen
Name:			Xuefeng Chen
Title:			Global Chief Executive Officer
			(Principal Executive Officer)

By:			/s/ ~~Yun Han~~Jonathan Maroko
Name:			~~Yun Han~~Jonathan Maroko
Title:			~~Chief Accounting Officer and~~ Interim Chief Financial Officer
			(Principal Accounting and Financial Officer)

5870


	March 31, 2023		December 31, 2022
Buildings and leasehold improvements	$	95,519	$	19,778
Computer hardware	2,094		3,112
Tooling, machinery, and equipment	235,290		9,542
Vehicles	337		337
Computer software	4,125		4,212
Construction in process	120,971		392,935
Less: Accumulated depreciation	(11,812)		(12,113)
Total property and equipment, net	$	446,524	$	417,803


	Bridge Warrants		Notes Payable, Bridge		Private Warrants		Earnout Shares Liability		Liability for Insufficient Authorized Shares Related to Stock Options and RSUs
Balance as of December 31, 2022	$	95,130	$	26,008	$	52	$	2,250	$	3,977
Additions	33,266		190,000		—		—		—
Disposals pursuant to warrant exchange	(77,577)		—		—		—		—
Exercises	(4,079)		—		—		—		—
Settlement of transaction costs	—		(1,139)		—		—		—
Change in fair value measurements	(18,219)		(79,462)		—		2,764		—
Stock-based compensation expense	—		—		—		—		5,002
Conversions of liability to Common Stock	—		—		—		(5,014)		(8,979)
Conversions of notes to Common Stock	—		(42,742)		—		—		—
Balance as of March 31, 2023	$	28,521	$	92,665	$	52	$	—	$	—


Due on demand	$	5,065
2023	—
2024	—
2025	41,000
2026	94
2027	—
Thereafter	124,034
	$	170,193


	Three Months Ended March 31, 2023		Three Months Ended March 31, 2022
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	1,323	$	833
Operating cash flows from finance leases	96		177
Financing cash flows from finance leases	335		466
	$	1,754	$	1,476
Lease liabilities arising from new right-of-use assets
Operating leases	$	—	$	8,206
Finance leases	$	—	$	—


	As of March 31, 2023		As of December 31, 2022
Weighted average remaining lease term (in years)
Operating leases	6.2		6.4
Finance leases	4.8		5.0

Weighted average discount rate
Operating leases	15.6	%	15.6	%
Finance leases	5.0	%	5.0	%


	March 31, 2023
	Authorized Shares	Issued and Outstanding Shares
Class A Common Stock	1,690,000,000	838,872,039
Class B Common Stock	75,000,000	64,000,588
Preferred Stock	10,000,000	—
	1,775,000,000	902,872,627


	Shares	Weighted Average Fair Value
Outstanding as of December 31, 2022	17,869,663	$	1.09
Granted	5,932,766	1.08
Released	(1,145,334)	1.24
Forfeitures	(2,525,984)	1.11
Outstanding as of March 31, 2023	20,131,111	$	1.08


	March 31, 2023		March 31, 2022
Net income (loss) used in computing basic net income (loss) per share of Common Stock attributable to common stockholders	$	6,487	$	(153,098)
Less: Dilutive impact of SPA Warrants	(11,897)		—
Less: Dilutive impact of conversion of SPA notes and settlement of make-whole provisions	(59,331)		—
Net loss used in computing diluted net loss per share of Common Stock attributable to common stockholders	$	(64,741)	$	(153,098)


	March 31, 2023	March 31, 2022
Shares issuable upon exercise of SPA Warrants, excluding amounts included above in Diluted EPS	45,571,419	—
Shares issuable upon conversion of notes and settlement of Make-Whole provisions, excluding amounts included above in Diluted EPS	—	9,009,210
Other warrants	29,454,593	4,544,258
Stock-based compensation awards – Options	37,181,872	43,781,815
Stock-based compensation awards – RSUs	20,131,111	—
Public warrants	23,540,988	22,977,568
Private warrants	111,131	674,551
Total	155,991,114	80,987,402


	Three Months Ended March 31,
	2023		2022
Consolidated Statements of Operations
Operating expenses
Research and development	$	46,160	$	114,935
Sales and marketing	5,585		6,186
General and administrative	27,584		27,880
Loss on disposal of property and equipment	3,698		—
Total operating expenses	83,027		149,001

Loss from operations	(83,027)		(149,001)
Change in fair value measurements	94,917		1,186
Interest expense	(4,651)		(3,746)
Related party interest expense	(140)		(622)
Other (expense) income, net	2,409		(915)
Loss on settlement of notes payable	(3,021)		—
Income (Loss) before income taxes	6,487		(153,098)
Income tax provision	—		—
Net income (loss)	$	6,487	$	(153,098)