FARADAY FUTURE INTELLIGENT ELECTRIC INC. 10-K/A

Item 7A. 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.”. 121 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Audited Consolidated Financial Statements Report of Independent Registered Public Accounting Firm (PCAOB Firm ID 339 ) 123 Report of Independent Registered Public Accounting Firm (PCAOB Firm ID 238 ) 124 Consolidated Balance Sheets as of December 31, 2022 and 2021 125 Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2022 and 2021 126 Consolidated Statements of Stockholders’ Equity (Deficit) for the years ended December 31, 2022 and 2021 127 Consolidated Statements of Cash Flows for the years ended December 31, 2022 and 2021 129 Notes to Consolidated Financial Statements 131 122 Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of Faraday Future Intelligent Electric Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of Faraday Future Intelligent Electric Inc. and subsidiaries (the Company) as of December 31, 2022, and the related consolidated statements of operations and comprehensive loss, stockholders’ equity (deficit), and cash flows for the year then ended, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America. Restatement of Previously Issued Financial Statements As discussed in Note 2 to the consolidated financial statements, the Company has restated its 2022 financial statements to correct misstatements. Explanatory Paragraph Regarding Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company has incurred operating losses since inception, has continued cash outflows from operating activities, and has an accumulated deficit. These conditions raise substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters also are described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion. /s/ Mazars USA LLP We have served as the Company’s auditor since 2022. New York, NY March 9, 2023, except for the effects of the restatement discussed in Note 2, as to which the date is August 21, 2023 123 Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of Faraday Future Intelligent Electric Inc. Opinion on the Financial Statements We have audited the consolidated balance sheet of Faraday Future Intelligent Electric Inc. and its subsidiaries (the “Company”) as of December 31, 2021, and the related consolidated statements of operations and comprehensive loss, of stockholders’ equity (deficit) and of cash flows for the year ended, including the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. Substantial Doubt about the Company’s Ability to Continue as a Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 (not presented herein) to the consolidated financial statements appearing in the 2021 Annual Report on Form 10-K, the Company has suffered recurring losses from operations and has cash outflows from operating activities that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2 (not presented herein). The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion. /s/ PricewaterhouseCoopers LLP Los Angeles, California May 13, 2022 We served as the Company's auditor from 2018 to 2022. 124 Table of Contents Faraday Future Intelligent Electric Inc. Consolidated Balance Sheets Years Ended December 31, 2022 and 2021 (in thousands, except share and per share data) 2022 2021 As Restated Assets Current assets Cash $ 16,968 $ 505,091 Restricted cash 1,546 25,386 Deposits 44,066 63,370 Other current assets 21,946 13,410 Total current assets 84,526 607,257 Property and equipment, net 418,682 293,135 Operating lease right-of-use assets 19,588 — Other non-current assets 6,492 7,040 Total assets $ 529,288 $ 907,432 Liabilities and stockholders’ equity Current liabilities Accounts payable $ 91,603 $ 37,773 Accrued expenses and other current liabilities 65,709 87,938 Bridge warrants 92,781 — Related party accrued interest — 11,231 Accrued interest 189 8,263 Operating leases liabilities, current portion 2,538 — Finance leases liabilities, current portion 1,364 2,574 Related party notes payable 8,964 13,655 Notes payable, current portion 5,097 132,372 Total current liabilities 268,245 293,806 Finance leases liabilities, less current portion 6,570 7,570 Operating leases liabilities, less current portion 18,044 — Other liabilities 9,429 3,720 Notes payable, less current portion 26,008 34,682 Total liabilities 328,296 339,778 Commitments and contingencies (Note 14) Stockholders’ equity Class A Common Stock, $ 0.0001 par value; 815,000,000 and 750,000,000 shares authorized; 563,346,216 and 168,693,323 shares issued and outstanding as of December 31, 2022 and 2021, respectively 56 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 December 31, 2022 and 2021, respectively 6 — Additional paid-in capital 3,724,180 3,482,226 Accumulated other comprehensive income (loss) 3,505 ( 6,945 ) Accumulated deficit ( 3,526,755 ) ( 2,907,644 ) Total stockholders’ equity 200,992 567,654 Total liabilities and stockholders’ equity $ 529,288 $ 907,432 The accompanying notes are an integral part of these consolidated financial statements. 125 Table of Contents Faraday Future Intelligent Electric Inc. Consolidated Statements of Operations and Comprehensive Loss Years Ended December 31, 2022 and 2021 (in thousands, except share and per share data) 2022 2021 As Restated Operating expenses Research and development $ 299,989 $ 174,935 Sales and marketing 21,689 17,118 General and administrative 112,771 97,905 Loss on disposal of property and equipment 2,695 64,191 Total operating expenses 437,144 354,149 Loss from operations ( 437,144 ) ( 354,149 ) Change in fair value measurements ( 70,512 ) ( 22,700 ) Interest expense ( 5,561 ) ( 30,181 ) Related party interest expense ( 3,879 ) ( 16,663 ) Other expense, net ( 11,878 ) ( 5,668 ) Loss on settlement of related party notes payable, notes payable, and vendor payables in trust, net ( 73,204 ) ( 86,904 ) Loss before income taxes ( 602,178 ) ( 516,265 ) Income tax provision ( 61 ) ( 240 ) Net loss $ ( 602,239 ) $ ( 516,505 ) Per share information (Note 18): Net loss per Common Stock – Class A and Class B – basic and diluted $ ( 1.64 ) $ ( 2.21 ) Weighted average Common Stock outstanding – Class A and Class B – basic and diluted 367,254,444 233,390,675 Total comprehensive loss Net loss $ ( 602,239 ) $ ( 516,505 ) Change in foreign currency translation adjustment 10,450 ( 971 ) Total comprehensive loss $ ( 591,789 ) $ ( 517,476 ) The accompanying notes are an integral part of these consolidated financial statements. 126 Table of Contents Faraday Future Intelligent Electric Inc. Consolidated Statements of Stockholders’ Equity (Deficit) Years Ended December 31, 2022 and 2021 (in thousands, except share data) Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholder’s Equity (Deficit) Class A Class B Shares Amount Shares Amount Balance as of December 31, 2020 93,099,596 $ 9 64,000,588 $ 6 $ 1,817,760 $ ( 5,974 ) $ ( 2,391,139 ) $ ( 579,338 ) Conversion of The9Conditional Obligation 423,053 — — — 2,863 — — 2,863 Conversion of related party notes payable into Class A Common Stock (Note 10) 22,454,776 2 — — 294,794 — — 294,796 Conversion of notes payable into Class A Common Stock (Note 11) 7,688,153 1 — — 98,374 — — 98,375 Issuance of Class A Common Stock in the Business Combination, net of transaction costs (Note 4) 27,798,411 3 — — 170,111 — — 170,114 Conversion of assumed PSAC convertible and promissory notes payable into Class A Common Stock (Note 10) 80,000 — — — 790 — — 790 Conversion of liabilities into Class A Common Stock in the Business Combination (Note 4) 22,586,392 3 — — 311,795 — — 311,798 Conversion of liabilities into the commitment to issue Class A Common Stock in the Business Combination (Note 4) — — — — 25,877 — — 25,877 Legacy FF Ordinary Stock exchanged in the Business Combination for a commitment to issue Class A and Class B Common Stock (Note 4) ( 87,273,528 ) ( 9 ) ( 64,000,588 ) ( 6 ) 15 — — — Issuance of Class A Common Stock in the PIPE Financing, net of transaction costs (Note 4) 76,140,000 8 — — 692,397 — — 692,405 Settlement of lawsuit with issuance of vested stock options (Note 15) — — — — 8,459 — — 8,459 Settlement of accrued rent with issuance of vested stock options — — — — 951 — — 951 Vesting of restricted stock award for employee bonus 1,350,970 — — — 18,617 — — 18,617 Stock-based compensation — — — — 11,345 — — 11,345 Exercise of stock options 4,388,596 — — — 10,587 — — 10,587 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 — — — — — ( 971 ) — ( 971 ) Net loss — — — — — — ( 516,505 ) ( 516,505 ) Balance as of December 31, 2021 168,693,323 $ 17 — $ — $ 3,482,226 $ ( 6,945 ) $ ( 2,907,644 ) $ 567,654 The accompanying notes are an integral part of these consolidated financial statements. 127 Table of Contents Faraday Future Intelligent Electric Inc. Consolidated Statements of Stockholders’ Equity (Deficit) Years Ended December 31, 2022 and 2021 (in thousands, except share data) Commitment to Issue Class A Common Stock Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Gain (Loss) Accumulated Deficit Total Stockholders’ Equity (Deficit) Class A Class B Shares Amount Shares Amount Shares Amount (As Restated) (As Restated) (As Restated) (As Restated) 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 ) Reclassification of deferred gain upon adoption of ASC 842 — — — — — — — — 3,393 3,393 Conversion of notes payable into Class A Common Stock (Note 11) (as restated) — — 257,041,879 26 — — 164,043 — — 164,069 Class A Common Stock to be delivered for conversion of notes payable (Note 11) (as restated) — — — — — — — — — — Issuance pursuant to commitment to issue registered shares — ( 32,900 ) 2,387,500 — — — 32,900 — — 32,900 Stock-based compensation (as restated) — — — — — — 17,664 — — 17,664 Chongqing related party note payable restructuring (Note 10) (as restated) — — — — — — 16,841 — — 16,841 Exercise of stock options and settlement on restricted stock tax withholding — — 4,100,008 — — — 9,015 — — 9,015 Exercise of warrants (as restated) — — 29,102,536 3 — — 7,416 — — 7,419 Amended exercise price of ATW NPA warrants (Note 15) — — — — — — 1,238 — — 1,238 Transfer of private warrants to unaffiliated parties — — — — — — 264 — — 264 Repurchase and retirement of Class A Common Stock — — ( 96,759 ) — — — ( 767 ) — — ( 767 ) Receipt of Class A Common Stock in consideration of exercises of options — — ( 311,878 ) — — — ( 669 ) — — ( 669 ) Issuance of shares pursuant to the commitment to issue Class A and Class B Common Stock — — 89,152,131 9 64,000,588 6 ( 15 ) — — — Issuance of shares for restricted stock vesting — — 12,488,460 1 — — ( 1 ) — — — Liability for insufficient authorized shares related to stock options and RSUs — — — — — — ( 3,977 ) — — ( 3,977 ) Liability for insufficient authorized shares related to earnout — — — — — — ( 2,250 ) — — ( 2,250 ) Issuance of SEPA commitment shares of Class A Common Stock (see Note 9) (as restated) — — 789,016 — — — 252 — — 252 Foreign currency translation adjustment — — — — — — — 10,450 — 10,450 Net loss (as restated) — — — — — — — — ( 602,239 ) ( 602,239 ) Balance as of December 31, 2022 (as restated) $ — $ — 563,346,216 $ 56 64,000,588 $ 6 $ 3,724,180 $ 3,505 $ ( 3,526,755 ) $ 200,992 The accompanying notes are an integral part of these consolidated financial statements. 128 Table of Contents Faraday Future Intelligent Electric Inc. Consolidated Statements of Cash Flows Years Ended December 31, 2022 and 2021 (in thousands) 2022 2021 As Restated Cash flows from operating activities Net loss $ ( 602,239 ) $ ( 516,505 ) Adjustments to reconcile net loss to net cash used in operating activities Depreciation and amortization expense 2,975 2,979 Amortization of operating lease right-of-use assets and intangible assets 2,520 368 Stock-based compensation 17,664 11,345 Vesting of restricted stock awards for employee bonus — 18,617 Loss on disposal of property and equipment 2,695 64,191 Change in fair value measurement of related party notes payable and notes payable ( 22,281 ) 22,700 Change in fair value measurement of warrant liability 92,781 — Loss (gain) on foreign exchange 2,484 ( 845 ) Loss (gain) on forgiveness of accounts payable and deposits, net (see Note 6) 5,200 ( 7,005 ) Non-cash interest expense 8,403 41,014 Loss on extinguishment of related party notes payable, notes payable and vendor payables in trust, net 73,204 86,904 Gain on forgiveness of vendor payables in trust — ( 1,731 ) Reserve for unrecoverable value added taxes — 6,404 Other 1,028 842 Changes in operating assets and liabilities: Deposits 10,874 ( 48,503 ) Other current and non-current assets ( 9,700 ) ( 16,906 ) Accounts payable 60,369 ( 36,625 ) Accrued expenses and other current and non-current liabilities ( 14,947 ) 31,824 Operating lease liabilities ( 1,620 ) — Accrued interest expense ( 12,468 ) — Transfers between vendor payables in trust and accounts payable — 1,167 Net cash used in operating activities ( 383,058 ) ( 339,765 ) Cash flows from investing activities Payments for property and equipment ( 123,222 ) ( 95,681 ) Net cash used in investing activities ( 123,222 ) ( 95,681 ) Cash flows from financing activities Proceeds from notes payable, net of original issuance discount 73,800 172,031 Proceeds from exercise of stock options 9,535 10,587 Payments of notes payable issuance costs ( 3,834 ) ( 3,355 ) Payments of notes payable, including liquidation premium ( 87,279 ) ( 48,210 ) Payments of related party notes payable ( 517 ) ( 38,217 ) Proceeds from exercise of warrants 4,229 — Repurchase and retirement of Common Stock ( 767 ) — Payments of finance lease obligations ( 1,888 ) — Payments of capital lease obligations — ( 3,212 ) 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 — 761,400 Transaction costs paid in connection with the Business Combination — ( 23,148 ) Transaction costs paid in connection with the PIPE Financing — ( 61,130 ) Payments of vendor payables in trust — ( 27,722 ) Transfers between vendor payables in trust and accounts payable — ( 1,167 ) Proceeds from related party notes payable — 200 Payments of stock issuance costs — ( 1,071 ) Net cash (used in) provided by financing activities ( 6,721 ) 966,569 Effect of exchange rate changes on cash and restricted cash 1,038 ( 2,473 ) Net (decrease) increase in cash and restricted cash ( 511,963 ) 528,650 129 Table of Contents Faraday Future Intelligent Electric Inc. Consolidated Statements of Cash Flows — (Continued) Years Ended December 31, 2022 and 2021 (in thousands) 2022 2021 Cash and restricted cash, beginning of period 530,477 1,827 Cash and restricted cash, end of period $ 18,514 $ 530,477 The following table provides a reconciliation of cash and restricted cash reported within the Consolidated Balance Sheets that aggregate to the total of the same such amounts shown in the Consolidated Statements of Cash Flows: 2022 2021 Cash $ 16,968 $ 505,091 Restricted cash 1,546 25,386 Total cash and restricted cash, end of period $ 18,514 $ 530,477 Supplemental disclosure of cash flow information Cash paid for interest $ 13,577 $ 6,317 Supplemental disclosure of noncash investing and financing activities Recognition of operating ROU assets and lease liabilities as part of the adoption of ASC 842 and for new operating leases entered into during the year ended December 31, 2022 $ 21,865 $ — Conversion of convertible note to equity 164,069 98,375 Issuance of warrants 9,938 17,596 Additions of property and equipment included in accounts payable and accrued expenses (as restated) 12,268 863 Troubled debt restructuring accounted for as a capital transaction (as restated) 16,841 — Liability for insufficient authorized shares related to stock options and restricted stock units 3,976 — Liability for insufficient authorized shares related to earnout 2,250 — Settlement of finance leases with prepaid deposit 709 — Issuance pursuant to commitment to issue registered shares 32,900 — Receipt of class A Common Stock in consideration of exercises of options 669 — Class A Common Stock to be delivered for conversion of notes payable (Note 11) (as restated) — — Transfer of private warrants to unaffiliated parties 264 — Conversion of related party notes payable and related party accrued interest into Class A Common Stock — 294,796 Conversion of assumed convertible and promissory notes payable into Class A Common Stock and Private Warrants — 1,080 Conversion of The9 Conditional Obligation to Class A Common Stock — 2,863 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 $ — $ 859,182 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 — 68,541 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 — 96,186 Reclassification of deferred transaction costs paid in prior periods against the proceeds received in the Business Combination — 7,865 The accompanying notes are an integral part of these consolidated financial statements. 130 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements 1. Nature of Business and Organization, Basis of Presentation and Summary of Significant Accounting Policies 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. On July 21, 2021 (the “Closing Date”), 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., 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 Combination”). Upon the consummation of the Business Combination (the “Closing”), PSAC changed its name from “Property Solutions Acquisition Corp.” to “Faraday Future Intelligent Electric Inc.” For more information regarding the Business Combination, see Note 4, Business Combination. The Company operates in a single operating segment and designs and engineers next-generation, intelligent, electric vehicles. The Company 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 Consolidated Financial Statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) and include the accounts of the Company, its wholly-owned subsidiaries and all other entities in which the Company 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. Foreign Currency The Company determines the functional and reporting currency of each of its international subsidiaries based on the primary currency in which they operate. The functional currency of the Company’s foreign subsidiaries in China is their local currency, Chinese Yuan (“CYN”). For foreign subsidiaries where the functional currency is their local currency, assets and liabilities are translated into U.S. dollars at exchange rates in effect at the balance sheet date, stockholders’ equity (deficit) is translated at the applicable historical exchange rate, and expenses are translated using the average exchange rates during the period. The effect of exchange rate changes resulting from the translation of the foreign subsidiary financial statements is accounted for as a component of accumulated other comprehensive loss on the Consolidated Balance Sheets. 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 Consolidated 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 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 and notes payable; (v) fair value of options granted to employees and non-employees; (vi) fair value of warrants, and (vii) 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. 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 Consolidated Financial Statements were issued, the Company 131 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements is not aware of any specific event or circumstance that would require an update to 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, which may result in changes being recognized in the Company’s 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 those estimates and any such differences may have a material impact on the Company’s Consolidated Financial Statements. Reclassification of Presentation in the Company’s Consolidated Statements of Cash Flow Depreciation and amortization of comparative prior period in the Company’s Consolidated Statements of Cash Flows were reclassified to conform with its current presentation of Depreciation and amortization in the Company’s Consolidated Statement of Cash Flows. In the Consolidated Statement of Cash Flows for the year ended December 31, 2021, we have reclassified (1) $ 0.4 million of amortization of intangibles from Depreciation and amortization to Amortization of operating lease right-of-use assets and intangible assets; and (2) $ 4.6 million of expenses recognized out of pre-paid software subscriptions related to the Company’s master agreement with Palantir ( see Note 6, Deposits and Other Current Assets ) and $ 0.2 million of expenses recognized out of prepaid other noncurrent assets from Depreciation and amortization to Other current and non-current assets. The total cash used in operating activities for the year ended December 31, 2021 is not changed as a result of these reclassifications. Summary of Significant Accounting Policies Cash and Cash Equivalents The Company considers all highly liquid instruments with an original maturity of 90 days or less from the date of purchase to be cash equivalents. 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 at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. When determining the fair value measurements for assets and liabilities required or permitted to be either recorded or disclosed at fair value, the Company considers the principal or most advantageous market in which the Company would transact and assumptions that market participants would use when pricing the asset or liability. The accounting guidance for fair value measurement requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. 132 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements The fair value hierarchy is as follows: Level 1 Valuations 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 2 Valuations 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 3 Valuations for assets and liabilities that are derived from other valuation methodologies, such as option pricing models, discounted cash flow models and 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. ASC 825-10, Financial Instruments , allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (“fair value option”). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. The Company has elected to apply the fair value option to certain related party notes payable and notes payable with conversion features as discussed in Note 9, Fair Value of Financial Instruments. The Company did not separately report interest expense attributable to the notes payable accounted for pursuant to the fair value option in the Consolidated Statements of Operations and Comprehensive Income (Loss) because such interest was included in the determination of the fair value of the notes payable and changes thereto. Concentration of Risk Financial instruments, which subject the Company to concentrations of credit risk, consist primarily of cash, restricted cash, notes receivables, and deposits. Substantially all of the Company’s cash and restricted cash is held at financial institutions located in the United States of America and in the People’s Republic of China. The Company maintains its cash and restricted cash with major financial institutions. At times, cash and restricted cash account balances with any one financial institution may exceed Federal Deposit Insurance Corporation (“FDIC”) insurance limits ($ 250 per depositor per institution) and China Deposit Insurance Regulations limits (CNY 500 per depositor per institution). Management believes the financial institutions that hold the Company’s cash and restricted cash are financially sound and, accordingly, minimal credit risk exists with respect to cash and restricted cash. Cash and restricted cash held by the Company’s non-U.S. subsidiaries is subject to foreign currency fluctuations against the U.S. Dollar. If, however, the U.S. Dollar is devalued significantly against the Chinese Yuan, the Company’s cost to develop its business in China could exceed original estimates. The Company receives certain components from sole suppliers. The inability of a supplier to fulfill the Company’s supply requirements could materially impact future operating results. Property and Equipment, Net Property and equipment are stated at cost less accumulated depreciation and amortization. Expenditures for major renewals and betterments are capitalized, while minor replacements, maintenance and repairs, which do not extend the assets lives, are charged to operating expense as incurred. Upon sale or disposition, the cost and related accumulated depreciation or 133 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements amortization are removed from the Consolidated Balance Sheets and any gain or loss is included in the Consolidated Statements of Operations and Comprehensive Loss. Depreciation and amortization on property and equipment is calculated using the straight-line method over the estimated useful lives of the assets and for leasehold improvements, over the term of the lease, if shorter. Useful Life (in years) Buildings 39 Building improvements 15 Computer hardware 5 Tooling, machinery, and equipment 5 to 10 Vehicles 5 Computer software 3 Leasehold improvements Shorter of 15 years or term of the lease Construction in progress (“CIP”) consists of the construction activities related to the Company’s Hanford, California plant and tooling, machinery and equipment being built to serve the manufacturing of production vehicles. These assets are capitalized and depreciated once put into service. The amounts capitalized in CIP that are held at vendor sites relate to the completed portion of work-in-progress of tooling, machinery and equipment built based on the Company’s specific needs. The Company may incur storage fees or interest fees related to CIP which are expensed as incurred. CIP is presented within Property and Equipment, net on the Consolidated Balance Sheets. Impairment of Long-Lived Assets The Company reviews its long-lived assets, consisting primarily of property and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amount of an assets (or asset groups) may not be recoverable. The Company performs impairment testing at the asset group level that represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Recoverability of these assets is determined by comparing the forecasted undiscounted cash flows attributable to such assets, including any cash flows upon their eventual disposition, to the assets carrying values. If the carrying value of the assets exceeds the forecasted undiscounted cash flows, then the assets are written down to their fair value. Assets classified as held for sale are also assessed for impairment and such amounts are determined at the lower of the carrying amount or fair value, less costs to sell the asset. No impairment charges were recorded during the years ended December 31, 2022 and 2021. See Note 7, Property and Equipment, Net for a discussion of disposals of Construction in process during the year ended December 31, 2022 and 2021. Accumulated Other Comprehensive Loss Accumulated other comprehensive loss encompasses all changes in equity other than those arising from transactions with stockholders. Elements of the Company’s accumulated other comprehensive loss are reported in the Consolidated Statements of Stockholders’ Equity (deficit) and consists of equity-related foreign currency translation adjustments, which are presented in the Consolidated Statements of Operations and Comprehensive Loss. Research and Development Research and development (“R&D”) costs are expensed as incurred and are primarily comprised of personnel-related costs (including salaries, bonuses, benefits, and stock-based compensation) for employees focused on R&D activities, other related costs, license fees, and depreciation and amortization. The Company’s R&D efforts are focused on design and development of the Company’s electric vehicles and continuing to prepare the Company’s prototype electric vehicle to achieve industry standards. Advanced payments for items and services related to R&D activities have been classified as Deposits on the 134 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements Consolidated Balance Sheets and are included in operating activities on the Company’s Consolidated Statements of Cash Flows. The Company expenses deposits as the services are provided and prototype parts are received. Sales and Marketing Sales and marketing expenses consist primarily of personnel-related costs (including salaries, bonuses, benefits, and stock-based compensation) for employees focused on sales and marketing, and direct costs associated with sales and marketing activities. Marketing activities include expenses to introduce the brand and the FF 91 to the market. Advertising costs were immaterial for the years ended December 31, 2022 and 2021. Stock-Based Compensation The Company’s stock-based compensation awards consist of stock options and restricted stock units (“RSUs”) granted to employees, directors and non-employees for the purchase of Common Stock. The Company recognizes stock-based compensation expense in accordance with the provisions of ASC 718, Compensation — Stock Compensation (“ASC 718”) . ASC 718 requires the measurement and recognition of compensation expense for all stock-based compensation awards based on the grant date fair values of the awards. The Company estimates the fair value of stock options using the Black-Scholes option pricing model. For options with service conditions, the value of the award is recognized as expense over the requisite service period on a straight-line basis. For performance-based awards, stock-based compensation expense is recognized over the expected performance achievement period of individual performance milestones when the achievement of each individual performance milestone becomes probable. Determining the grant date fair value of the awards using the Black-Scholes option pricing model requires management to make assumptions and judgments, including, but not limited to the following: Expected term — The estimate of the expected term of awards was determined in accordance with the simplified method, which estimates the term based on an averaging of the vesting period and contractual term of the option grant for employee awards. The Company uses the contractual term for non-employee awards. Expected volatility — The Company determines the expected volatility by weighing the historical average volatilities of publicly traded industry peers and its own trading history. FF intends to continue to consistently apply this methodology using the same or similar public companies until a sufficient amount of historical information regarding the volatility of the Company’s own Class A Common Stock price becomes available, unless circumstances change such that the identified companies are no longer similar to FF, in which case more suitable companies whose stock prices are publicly available would be utilized in the calculation. Risk-free interest rate — The risk-free interest rate used to value awards is based on the United States Treasury yield in effect at the time of grant for a period consistent with the expected term of the award. Dividend yield — The Company has never declared or paid any cash dividends and does not presently plan to pay cash dividends for the foreseeable future. Forfeiture rate — Stock-based compensation expense is reduced for forfeitures, which the Company estimates based on an analysis of actual forfeitures. The Company will continue to evaluate the appropriateness of the forfeiture rate based on actual forfeiture experience, analysis of employee turnover, and other factors. Changes in the estimated forfeiture rate can have a significant impact on the Company’s stock-based compensation expense as the cumulative effect of adjusting the rate is recognized in the period the estimated forfeiture rate is changed. Fair value of Common Stock — Prior to the close of the Business Combination, there was no public market for Legacy FF’s Class A Ordinary Stock. Therefore, Legacy FF’s Board of Directors determined the fair value of Legacy FF’s Class A Ordinary Stock at the time of the grant of stock options by considering a number of objective and subjective factors. The fair value of the stock was determined in accordance with applicable elements of the practice aid issued by the American Institute of Certified Public Accountants titled, “Valuation of Privately Held Company Equity Securities Issued as Compensation” . Legacy FF’s Board of Directors granted stock options with exercise prices equal to the fair value of Legacy FF’s Class A Ordinary 135 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements Stock on the date of grant. After the closing of the Business Combination, the closing price of the Company’s Class A Common Stock on the Nasdaq stock exchange (“Nasdaq”) is used as the fair value of the Common Stock. Income Taxes The Company accounts for its income taxes using the asset and liability method whereby deferred tax assets and liabilities are determined based on temporary differences between the basis used for financial reporting and income tax reporting purposes. Deferred income taxes are provided based on the enacted tax rates in effect at the time such temporary differences are expected to reverse. A valuation allowance is provided for deferred tax assets if it is more likely than not that the Company will not realize those tax assets through future operations. The carrying value of deferred tax assets reflects an amount that is more likely than not to be realized. As of December 31, 2022 and 2021, the Company had recorded a full valuation allowance on net deferred tax assets because the Company expects it is more likely than not that the net deferred tax assets will not be realized. The Company utilizes the guidance in ASC 740-10, Income Taxes , to account for uncertain tax positions. ASC 740-10 contains a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the positions will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount which is more likely than not of being realized and effectively settled. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments and may not accurately forecast actual outcomes. The Company recognizes interest and penalties on unrecognized tax benefits as a component of income tax expense. There were no material such interest or penalties for the years ended December 31, 2022 and 2021. Segments Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s CODM is its Chief Executive Officer. The Company has determined that it operates in one operating segment and one reportable segment, as the CODM reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance. Substantially all of 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. Recent Accounting Pronouncements Recently issued accounting pronouncements not yet adopted In December 2022, the FASB issued ASU No. 2022-06, Deferral of the Sunset Date of Reference Rate Reform (Topic 848) (ASU 2022-06). ASU 2022-06 provides optional expedients 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 occurring as a result of reference rate reform and determine whether to apply the optional guidance on an ongoing basis. Recently Adopted Accounting Pronouncements In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) (“ASC 842”), which outlines a comprehensive lease accounting 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 July 2018, the FASB issued ASU 2018-11, 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 136 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements January 1, 2022 using the modified retrospective basis and recorded operating lease ROU assets of $ 11.2 million and operating lease liabilities of $ 11.2 million on that date. As part of this adoption, the Company reclassified the deferred gain related to a previous sale and leaseback of $ 3.4 million 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 classification of leases as operating or financing, or reassessment of the definition of a lease (see Note 13, Leases ). Finance lease liabilities and related property and equipment assets did not change as a result of the adoption of this standard. 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 Topic 815-40 change the 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 $ 12.6 million from Accrued expenses and other current liabilities and reclassified $ 20.3 million from Accumulated deficit to Commitment to issue Class A Common Stock on the 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 immaterial effect on the Consolidated Financial Statements. 2. Restatement On July 11, 2023, the Company announced that the 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 and its Quarterly Reports on Form 10-Q for the periods ended March 31, 2023 and September 30, 2022. 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 11, Notes Payable ). B etween the third quarter of 2022 and the first quarter of 2023 the purchasers converted certain of the notes into the 137 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements 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 additional $ 65.5 million Loss on settlement of notes payable in the Consolidated Statement of Operations and Comprehensive Income (Loss) for the year ended December 31, 2022 (and a corresponding $ 65.5 million increase in Additional paid-in capital as of December 31, 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 2022. During the course of correcting the aforementioned error, the Company identified an error in its accounting for the exercise of its liability-classified warrants that were previously issued in connection with the issuance of certain convertible notes payable under its debt arrangements. Upon exercise of the warrants the Company did not properly reclassify the fair value of the warrant liabilities on each conversion date to Additional paid-in capital. Rather, the Company incorrectly recognized the extinguishment of the warrant liabilities as a gain in the Change in fair value of warrant liabilities in the Statement of Operations and Comprehensive Income (Loss). Accordingly, the Company should have recognized an increase in Additional paid-in capital of $ 3.2 million as of December 31, 2022 with a corresponding impact on the Change in the fair value of warrant liabilities for the year then ended. 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 most significant of which is the Company’s $ 18.1 million understatement of Deposits with vendors and Inventory as of December 31, 2022 due to improperly recognizing such amount as Research and development expense during the fourth quarter of 2022 and subsequently correcting such error as an out of period adjustment during the first quarter of 2023. The other immaterial errors impacting the Company’s financial statements as of December 31, 2022 and for the year then ended relate to Change in fair value measurement of notes payable and warrant liabilities, Interest expense, Stock-based compensation expense, Other expense, net, Property and equipment, Accounts payable, Bridge Warrant liabilities, Accrued interest, Related party notes payable, Additional paid-in capital, Accumulated deficit, and the misclassification of certain expenses between Research and development, Sales and marketing, and General and administrative expenses. 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 6, Deposits and Other Current Assets; Note 7, Property and Equipment, Net; Note 9, Fair Value of Financial Instruments; Note 10, Related Party Notes Payable; Note 11, Notes Payable; and Note 16, Stock-Based Compensation. Presented below is a reconciliation from the previously reported to the restated amounts as of December 31, 2022 and for the year then ended. The amounts labeled “As Previously Reported” were derived from the Original Filing. The impacts to the Consolidated Statements of Stockholders’ Equity (Deficit) for the year ended December 31, 2022 as a result of the re statement were due to the changes in the Conversion of notes payable into Class A Common Stock, Class A Common Stock to be delivered for conversion of notes payable, Stock-based compensation expense, Chongqing related party note payable restructuring, Issuance of SEPA commitment shares of Class A Common Stock, and Net loss. In addition, there was no impact to net cash used in operating, investing or financing activities for the year ended December 31, 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): 138 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements Summary of Restatement - Consolidated Balance Sheet December 31, 2022 As Previously Reported Restatement Impacts As Restated Assets Current assets Deposits $ 26,804 $ 17,262 $ 44,066 Other current assets 21,087 859 21,946 Total current assets 66,405 18,121 84,526 Property and equipment, net 417,803 879 418,682 Total assets $ 510,288 $ 19,000 $ 529,288 Liabilities and stockholders’ equity Current liabilities Accounts payable $ 87,376 $ 4,227 $ 91,603 Bridge warrants 95,130 ( 2,349 ) 92,781 Accrued interest 1,864 ( 1,675 ) 189 Related party notes payable 8,406 558 8,964 Total current liabilities 267,484 761 268,245 Total liabilities 327,535 761 328,296 Commitments and contingencies (Note 14) Stockholders’ equity Additional paid-in capital 3,655,771 68,409 3,724,180 Accumulated deficit ( 3,476,585 ) ( 50,170 ) ( 3,526,755 ) Total stockholders’ equity 182,753 18,239 200,992 Total liabilities and stockholders’ equity $ 510,288 $ 19,000 $ 529,288 139 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements Consolidated Statement of Operations and Comprehensive Loss Year Ended December 31, 2022 As Previously Reported Restatement Impacts As Restated Operating expenses Research and development $ 311,084 $ ( 11,095 ) $ 299,989 Sales and marketing 20,772 917 21,689 General and administrative 116,437 ( 3,666 ) 112,771 Loss on disposal of property and equipment 2,695 — 2,695 Total operating expenses 450,988 ( 13,844 ) 437,144 Loss from operations ( 450,988 ) 13,844 ( 437,144 ) Change in fair value measurements ( 69,671 ) ( 841 ) ( 70,512 ) Interest expense ( 7,236 ) 1,675 ( 5,561 ) Related party interest expense ( 3,879 ) — ( 3,879 ) Other expense, net ( 12,544 ) 666 ( 11,878 ) Loss on settlement of related party notes payable, notes payable, and vendor payables in trust, net ( 7,690 ) ( 65,514 ) ( 73,204 ) Loss before income taxes ( 552,008 ) ( 50,170 ) ( 602,178 ) Income tax provision ( 61 ) — ( 61 ) Net loss $ ( 552,069 ) $ ( 50,170 ) $ ( 602,239 ) Per share information (Note 18): Net loss per Common Stock – Class A and Class B – basic and diluted $ ( 1.50 ) $ ( 0.14 ) $ ( 1.64 ) Weighted average Common Stock outstanding – Class A and Class B – basic and diluted 367,254,444 — 367,254,444 Total comprehensive loss Net loss $ ( 552,069 ) $ ( 50,170 ) $ ( 602,239 ) Change in foreign currency translation adjustment 10,450 $ — 10,450 Total comprehensive loss $ ( 541,619 ) $ ( 50,170 ) $ ( 591,789 ) 140 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements Summary of Restatement - Consolidated Statement of Cash Flows Year Ended December 31, 2022 As Previously Reported Restatement Impacts As Restated Cash flows from operating activities Net loss $ ( 552,069 ) $ ( 50,170 ) $ ( 602,239 ) Adjustments to reconcile net loss to net cash used in operating activities Depreciation and amortization expense 2,975 — 2,975 Amortization of operating lease right-of-use assets and intangible assets 2,520 — 2,520 Stock-based compensation 17,653 11 17,664 Vesting of restricted stock awards for employee bonus — — — Loss on disposal of property and equipment 2,695 — 2,695 Change in fair value measurement of related party notes payable and notes payable ( 25,471 ) 3,190 ( 22,281 ) Change in fair value measurement of warrant liability 95,130 ( 2,349 ) 92,781 Loss (gain) on foreign exchange 2,484 — 2,484 Loss (gain) on forgiveness of accounts payable and deposits, net (see Note 6) 5,200 — 5,200 Non-cash interest expense 10,078 ( 1,675 ) 8,403 Loss on extinguishment of related party notes payable, notes payable and vendor payables in trust, net 7,690 65,514 73,204 Gain on forgiveness of vendor payables in trust — — — Reserve for unrecoverable value added taxes — — — Other 776 252 1,028 Changes in operating assets and liabilities: Deposits 28,136 ( 17,262 ) 10,874 Other current and non-current assets ( 8,841 ) ( 859 ) ( 9,700 ) Accounts payable 57,021 3,348 60,369 Accrued expenses and other current and non-current liabilities ( 14,947 ) — ( 14,947 ) Operating lease liabilities ( 1,620 ) — ( 1,620 ) Accrued interest expense ( 12,468 ) — ( 12,468 ) Transfers between vendor payables in trust and accounts payable — — — Net cash used in operating activities $ ( 383,058 ) $ — $ ( 383,058 ) Year Ended December 31, 2022 As Previously Reported Restatement Impacts As Restated Supplemental disclosure of noncash investing and financing activities Conversion of notes payable into Class A Common Stock (Note 11) (as restated) $ 99,481 $ 64,588 $ 164,069 Additions of property and equipment included in accounts payable and accrued expenses (as restated) 8,041 4,227 12,268 Troubled debt restructuring accounted for as a capital transaction (as restated) 17,399 ( 558 ) 16,841 Class A Common Stock to be delivered for conversion of notes payable (Note 11) (as restated) 926 ( 926 ) — 3. Liquidity and Capital Resources and Going Concern 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 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 Consolidated Financial Statements were issued. 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, 141 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements and has an accumulated deficit of $ 3,526.8 million of December 31, 2022. 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 10, Related Party Notes Payable and Note 11, Notes Payable ), the sale of Preferred and Common Stock (see Note 15, Stockholders' Equity ), and the net proceeds received from the Business Combination and the PIPE Financing (see Note 4, Business Combination ). The Company has received financing commitments for the funds required for the start of production of the FF 91 assuming timely receipt of funds, but might need to raise additional capital in the event such financing commitments are not received in a timely manner. Based on certain management assumptions, including the timely receipt of approximately $ 38.4 million to $ 58.4 million of additional funding, which commitments have been secured as part of the Sixth Amendment, and approval by stockholders of the 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 , which approval was obtained during the special meeting of stockholders held on February 28, 2023, timely completion of key equipment installation and commissioning work at the ieFactory California in Hanford, California, suppliers meeting their commitments on program deliverables including parts, the implementation and effectiveness of certain expense reduction and payment delay measures, and timely and successful testing and certification, FF expects to start production on the FF 91 Futurist at the end of March 2023, coming off the line in early April, with deliveries to users anticipated to begin before the end of April 2023. There is no assurance FF will be able to timely receive sufficient funding under existing 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 of at all, develop the 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. There is also no assurance that FFIE stockholder approval of an authorized share increase will be obtained in a timely manner or at all. 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. 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 ongoing legal risks. 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. 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 11, 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 $ 171.4 million under these commitments has been funded to date, through which the Company has received $ 150.4 million (net of original discount and transaction costs). The right to force exercise of the Warrant Reserve 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 of the Company under the same terms as the Incremental Notes. The Company received aggregated gross proceeds of $ 18.0 million ($ 16.2 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 to an affiliate of Yorkville Advisors, subject to certain limitations, at the time of the Company choosing during the three year term of the agreement. The Company shall not have the ability to draw funds under the SEPA until the effectiveness of its registration statement on Form S-1, initially filed with the SEC on December 8, 2022 (File No. 333- 268722), registering the resale by 142 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements Yorkville of its shares of Class A Common Stock to be issued under the SEPA (including the 789,016 Commitment Shares) and the satisfaction of certain other conditions under the SEPA. Despite the access to liquidity resulting from the SEPA when and if it shall become effective and the unfunded commitments from the SPA, the Company projects that it may 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. 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 this Form 10-K/A for a full discussion of the risks associated with the COVID-19 pandemic. 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. 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 December 31, 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. The Consolidated Financial Statements do not include any adjustments that might result from the outcome of this uncertainty. Accordingly, the 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. COVID-19 Pandemic The World Health Organization declared a global emergency on March 11, 2020, with respect to the outbreak of a novel strain of coronavirus, or COVID-19 pandemic. There are many uncertainties regarding the current global COVID-19 pandemic. The Company is closely monitoring the impact of the pandemic on all aspects of its business, including the impact on its employees, suppliers, vendors, and business partners. The pandemic has resulted in government authorities implementing numerous measures to try to contain the virus, such as travel bans and restrictions, quarantines, stay-at-home or shelter-in-place orders, and business shutdowns. For example, the Company’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, the Company continues to operate under various return-to-work protocols 143 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements and must continue to follow certain safety and COVID-19 protocols. These measures may adversely impact the Company’s employees and operations and the operations of suppliers and business partners and could negatively impact the construction schedule of the Company’s manufacturing facility and the production schedule of the FF 91 electric vehicle. In addition, various aspects of the Company’s business and manufacturing facility cannot be conducted remotely. The extent of the continuing impact of the COVID-19 pandemic on the Company’s operational and financial performance is uncertain and will depend on many factors outside the Company’s 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 the Company’s supply chain, and on the demand for consumer products. Future measures taken by government authorities in response the COVID-19 pandemic could adversely affect the Company’s construction and manufacturing plans, sales and marketing activities, and business operations. 4. Business Combination On July 21, 2021, the Company consummated the Business Combination. 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. Upon the consummation of the Business Combination, the Company changed its name from Property Solutions Acquisition Corp. to Faraday Future Intelligent Electric Inc. On the Closing Date, and in accordance with the terms and conditions of the Merger Agreement, all issued and outstanding Legacy FF Ordinary Stock and Convertible Preferred Stock were cancelled and converted into the holder’s right to receive shares of the Company’s Common Stock at the exchange ratio of 0.14130 (“Exchange Ratio”). Gross proceeds from the PSAC trust account were $ 229.6 million, out of which the Company received $ 206.4 million in cash, after netting PSAC’s transaction costs related to the Business Combination, and redemptions of $ 0.2 million. Each non-redeemed outstanding share of Common Stock of PSAC was converted into one share of Class A Common Stock of the Company. The shares of Legacy FF held by Legacy FF shareholders were converted into the right to receive 127,949,403 shares of the Company’s Class A Common Stock and 64,000,588 shares of the Company’s Class B Common Stock. The conversion of the right to receive shares in the Company into Class A Common Stock or Class B Common Stock is subject to the shareholders executing and delivering certain customary documents to the Company’s transfer agent (see Note 15, Stockholders' Equity ). 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 lock-up 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. As of December 31, 2021, the Company’s transfer agent issued 167,280,677 legally outstanding shares of Class A Common Stock out of 320,433,395 shares of Class A and Class B Common Stock the Company is obligated to issue as part of the Business Combination, including the conversion of certain notes payable, related party notes payable and Vendor Trust obligations which the Company determined were legally settled upon the Closing pursuant to the terms of the agreements executed with those parties. Until the holder of the right to receive shares of the Company’s Class A and Class B Common Stock is issued shares, that holder does not have any of the rights of a stockholder. During the year ended December 31, 2022, the Company issued 89,152,131 shares of Class A Common Stock 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 obligation 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 obligation 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 Consolidated Balance Sheets and Consolidated Statements of Stockholders’ Equity (Deficit) present legally issued and outstanding shares. For purposes of presentation of basic and diluted net loss per share in the 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 merger, as such shares are non-contingent and are issuable for no consideration. 144 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements Earnout Shares Legacy FF shareholders, as of the Closing Date of the Business Combination until its fifth anniversary, are entitled to contingent consideration of up to 25,000,000 additional shares of Class A Common Stock in the aggregate in two equal tranches upon the occurrence of each earnout triggering event (“Earnout Shares”). The earnout triggering events and related Earnout Shares as defined in the Merger Agreement are: • The minimum earnout of 12,500,000 additional shares is triggered if the Class A Common Stock volume weighted average price (“VWAP”), as defined in the Merger Agreement, is greater than $ 13.50 per share for any period of twenty ( 20 ) trading days out of thirty ( 30 ) consecutive trading days (“Minimum Target Shares”); • The maximum earnout of an additional 12,500,000 additional shares is triggered if the Class A Common Stock VWAP is greater than $ 15.50 per share for any period of twenty ( 20 ) trading days out of thirty ( 30 ) consecutive trading days, plus the Minimum Target Shares, if not previously issued. The Company recognized the Earnout Shares at fair value upon the closing of the Business Combination and classified them in Stockholders’ Equity (Deficit) since the Earnout Shares were determined to be indexed to the Company’s own stock and meet the requirements for equity classification in accordance with ASC 815-40. The Company treated the issuance of the Earnout Shares as a deemed dividend as the Business Combination was accounted for as a reverse recapitalization. Since it had a deficit of retained earnings, the Company recorded the issuance of the Earnout Shares in additional paid-in capital (“APIC”), where it had a net-nil impact on the APIC balance. The Company determined that the fair value of the Earnout Shares at the Closing Date was $ 293.9 million based on a valuation using a Monte Carlo simulation with key inputs and assumptions such as stock price, term, dividend yield, risk-free rate, and volatility. Public and Private Warrants In connection with the Business Combination, the Company assumed 22,977,568 public warrants (“Public Warrants”) and 594,551 private warrants (“Private Warrants”) previously issued by PSAC, each with an exercise price of $ 11.50 per share. The Public Warrants and the Private Warrants are exercisable into Class A Common Stock within a period of five years from the Closing Date. The Company determined that the Public Warrants were indexed to its own stock and met the requirements for equity classification in accordance with ASC 815-40. The Company determined that the Private Warrants failed to meet the equity scope exception because the settlement provisions vary based on the holder of the warrant, which is not an input into a fixed-for-fixed option pricing model. The Company recorded the Private Warrants as a derivative liability measured at fair value within Other Liabilities, less Current Portion on the Consolidated Balance Sheets. The fair value of the Private Warrants was $ 2.2 million upon the Closing of the Business Combination. As of December 31, 2022 and 2021, The fair value of the Private Warrants was $ 0.1 million and $ 0.6 million, respectively. Reverse Recapitalization While the legal acquirer in the Business Combination was PSAC, for accounting and financial reporting purposes under GAAP, Legacy FF was determined to be the accounting acquirer and the Business Combination was accounted for as a “reverse recapitalization” based on the facts and circumstances, including the following: • Legacy FF’s former shareholders hold a majority ownership interest in the combined company; • Legacy FF’s existing senior management team comprise senior management of the combined company; • Legacy FF is the larger of the companies based on historical operating activity and employee base; and • Legacy FF’s operations comprise the ongoing operations of the combined company. A reverse recapitalization does not result in a new basis of accounting and the financial statements of the combined entity represent the continuation of the financial statements of Legacy FF. Under this method of accounting, PSAC was treated as the “acquired” entity. Accordingly, the consolidated assets, liabilities, and results of operations of Legacy FF became the historical financial statements of the Company, and PSAC’s assets and liabilities were consolidated with Legacy FF’s on July 21, 2021. Operations of Legacy FF prior to the Business Combination will be presented as those of the Company in future reports. 145 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements The net assets of PSAC, as well as assumed transaction costs related to the Business Combination, were recognized at their carrying value immediately prior to the Closing Date with no goodwill or other intangible assets recorded and were as follows, net of transaction costs (dollars in thousands): PSAC Balances as of July 21, 2021 Cash in the PSAC trust account at the Closing of the Business Combination $ 229,583 Other current assets 36 Accounts payable, accrued expenses, and other current liabilities ( 225 ) Accrued transaction costs ( 5,108 ) PSAC transaction costs assumed as part of the Business Combination ( 18,040 ) Related party notes payable ( 1,080 ) Private Warrants liability ( 2,152 ) Obligation to issue registered shares of Class A Common Stock assumed as part of the Business Combination ( 32,900 ) Net assets acquired $ 170,114 Pursuant to the terms of the Merger Agreement, immediately prior to the Closing, all of the issued and outstanding Class B Convertible Preferred Stock held by FF Top Holding LLC (which, as of February 2023, changed its name to FF Global Partners Investment LLC) (“FF Top”) converted into Legacy FF Class B Ordinary Stock at a ratio of 1 :1. Upon the consummation of the merger, these shares were cancelled and converted into the holder’s right to receive 64,000,588 shares of Class B Common Stock using the Exchange Ratio. Similarly, immediately prior to the Closing, all other outstanding shares of Legacy FF converted into Legacy FF Class A Ordinary Stock at a ratio of 1 :1. Upon the consummation of the merger, these shares were cancelled and converted into the holder’s right to receive 127,949,403 shares of Class A Common Stock using the Exchange Ratio. Each of the Company’s options that were outstanding immediately prior to the closing of the Business Combination remained outstanding and converted into the right to purchase Class A Common Stock equal to the number of original Legacy FF’s Ordinary Stock, subject to such options, multiplied by the Exchange Ratio at an exercise price per share equal to the current exercise price per share for such option divided by the Exchange Ratio for aggregate outstanding options of 42,193,512 under the EI Plan and the STI Plan (defined under Note 16, Stock-Based Compensation ) as of the Closing. The outstanding warrants issued to a U.S.-based investment firm were adjusted to increase the shares allowed to be purchased to 2,687,083 shares of Class A Common Stock at an exercise price of $ 10.00 per share, in accordance with a down-round provision included in the warrant agreements (see Note 11, Notes Payable ). The aggregate amount of shares of Class A Common Stock issuable upon exercise of these outstanding options and warrants is 44,880,595 . PIPE Financing Concurrently with the execution of the Merger Agreement, the Company entered into separate Subscription 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 per share with an aggregate purchase price of $ 761.4 million (“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. Settlement of Liabilities and Commitment to Issue Shares In conjunction with the closing of the Business Combination, the Company paid $ 139.6 million in cash and committed to issue 24,464,994 shares of Class A Common Stock at a value of $ 10.00 per share to settle liabilities of the Company and to compensate current and former employees, including: (i) notes payable principal amounts of $ 85.2 million and accrued interest of $ 7.4 million; (ii) related party notes payable principal amounts of $ 91.4 million and accrued interest of $ 13.6 million; (iii) interests in the Vendor Trust of $ 124.7 million, including payables of $ 103.0 million and purchase orders in the amount of $ 8.4 million related to goods and services yet to be received, and accrued interest thereon of $ 13.3 million; (iv) $ 19.8 million of amounts due to vendors; and (v) $ 9.6 million to current and former employees as a bonus. In addition, the Company issued 1,350,970 restricted stock awards, net of forfeitures, to current employees as a bonus (see Note 16, Stock-Based Compensation). 146 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements In connection with the Business Combination, the Company converted certain related party notes payable, notes payable, and beneficial interests in the Vendor Trust into the right to receive Class A Common Stock at $ 10.00 per share which was below the fair value of the Class A Common Stock on the date of conversion. The conversion resulted in the Company recording a loss upon settlement of the related party notes payable, notes payables, Vendor Trust, and amounts due to vendors (including accrued interest thereon) of $ 94.7 million in the Consolidated Statements of Operations and Comprehensive Loss for the year ended December 31, 2021. The number of shares of Common Stock the Company committed to issue upon the Closing of the Business Combination were as follows: Number of shares Class A and B Ordinary Stock outstanding on July 1, 2021 30,276,958 Class A Ordinary Stock issued through option exercises between July 1, 2021 and July 21, 2021, net of share repurchases 1,035,399 Ordinary Stock outstanding prior to the Business Combination 31,312,357 Conversion of Redeemable Preference Stock and Class B, Class A-1, Class A-2, and Class A-3 Convertible Preferred Stock into Class A and B Common Stock 160,637,633 Issuance of Class A Common Stock in the Business Combination 27,798,411 Conversion of assumed convertible notes into Class A Common Stock 80,000 Total note conversion and share issuance pursuant to the reverse recapitalization* 188,516,044 Conversion of liabilities into Class A Common Stock in the Business Combination** 24,464,994 Shares attributable to reverse recapitalization 244,293,395 Issuance of Class A Common Stock attributable to PIPE Financing 76,140,000 Total shares of Class A and Class B Common Stock as of the closing of the Business Combination and related transactions 320,433,395 * The corresponding adjustment to APIC relates to the reverse recapitalization. The adjustment is comprised of (i) $ 170.1 million which represents the fair value of the consideration transferred in the Business Combination, less the excess of the fair value of the shares issued over the value of the net monetary assets of PSAC, net of transaction costs related to the business combination (ii) $ 1,815.6 million which represents the conversion of the Redeemable Preference Stock and Convertible Preferred Stock into Ordinary Stock and, (iii) $ 0.8 million to settle an aggregate principal amount of related party convertible notes of PSAC into Class A Common Stock. ** The Company committed to issue 6,921,814 shares of Class A Common Stock to convert related party notes payable (see Note 10, Related Party Notes Payable ), 6,854,013 shares of Class A Common Stock to convert notes payable (see Note 11, Notes Payable ), 9,618,542 shares of Class A Common Stock to convert liabilities in the Vendor Trust (see Note 12, Vendor Payables in Trust ), 838,040 shares of Class A Common Stock to convert Future Work, and 232,585 shares of Class A Common Stock to settle other vendor liabilities. Subsequent to the closing of the Business Combination, the Company issued 80,000 shares of Class A Common Stock and 80,000 Private Warrants to settle related party notes of PSAC with an aggregate principal amount of $ 0.8 million (see Note 10, Related Party Notes Payable ). Reconciliation of transaction costs Total direct and incremental transaction costs aggregated to $ 125.9 million, of which $ 0.9 million were expensed and the remaining $ 125.0 million were recorded as a reduction to APIC as equity transaction costs. 147 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements Below is a reconciliation of the transaction costs related to the Business Combination and the PIPE Financing that were recorded as a reduction to APIC as equity transaction costs (dollars in thousands): Reconciliation at the Closing Date Consolidated Statements of Stockholders’ Equity (Deficit) Proceeds from issuance of Class A Common Stock in the Business Combination $ 229,583 Transaction costs paid in connection with the Business Combination ( 23,148 ) Net proceeds from issuance of Class A Common Stock in the Business Combination 206,435 Net assets acquired and liabilities assumed in the Business Combination, exclusive of cash and accrued transaction costs ( 3,421 ) Obligation to issue registered shares of Class A Common Stock for transaction services ( 32,900 ) Net assets and liabilities acquired in the Business Combination $ 170,114 Proceeds from issuance of Class A Common Stock in the PIPE Financing $ 761,400 Transaction costs paid in connection with the issuance of Class A Common Stock in the PIPE Financing ( 61,130 ) Reclassification of deferred transaction costs paid in prior periods against proceeds received in the Business Combination ( 7,865 ) Net proceeds from issuance of Class A Common Stock in the PIPE Financing $ 692,405 Transaction costs paid in connection with the Business Combination $ ( 23,148 ) Transaction costs paid in connection with the PIPE Financing ( 61,130 ) Reclassification of deferred transaction costs paid in prior periods against proceeds received in the Business Combination ( 7,865 ) Obligation to issue registered shares of Class A Common Stock for transaction services ( 32,900 ) Total transaction costs in connection with the Business Combination and the PIPE Financing $ ( 125,043 ) Retroactive Application of Reverse Recapitalization As discussed above, the Business Combination is accounted for as a reverse recapitalization of the Company’s equity structure. Pursuant to GAAP, the Company recast its Consolidated Statements of Stockholders’ Equity (Deficit) from December 31, 2019, to the Closing Date, the total stockholders’ equity (deficit) within the Company’s Consolidated Balance Sheet as of December 31, 2020, and the weighted average Common Stock outstanding, and Class A and Class B, basic and diluted earnings per share for the year ended December 31, 2020, by applying the recapitalization retroactively. Retroactive Application of Reverse Recapitalization to the Consolidated Statements of Stockholders’ Equity (Deficit) Pursuant to the terms of the Merger Agreement, as part of the closing of the Business Combination, all of the issued and outstanding shares of Class B Convertible Preferred Stock of Legacy FF and all other issued and outstanding shares of Legacy FF Redeemable Preference Stock and Class A-1, Class A-2, and Class A-3 Convertible Preferred Stock and Class A and Class B Ordinary Stock converted into either Legacy FF Class B Ordinary Stock or Legacy FF Class A Ordinary Stock in an amount calculated by dividing them by the Exchange Ratio into a commitment to issue 64,000,588 shares of Class B Common Stock and a commitment to issue 127,949,403 shares of Class A Common Stock. 148 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements Legacy FF Capital Structure New Capital Structure Outstanding Shares The Commitment to issue the Company’s Common Stock Immediately Before Conversion on Closing Date Exchange Ratio Class A Class B Redeemable Preference Stock 470,588,235 0.14130 66,494,117 Class B Convertible Preferred Stock 452,941,177 0.14130 64,000,588 Class A-1 Convertible Preferred Stock 73,306,184 0.14130 10,358,162 Class A-2 Convertible Preferred Stock 138,737,629 0.14130 19,603,624 Class A-3 Convertible Preferred Stock (1) 1,281,976 0.14130 181,143 Class A Ordinary Stock 71,551,672 0.14130 10,109,892 Class B Ordinary Stock 150,052,834 0.14130 21,202,465 1,358,459,707 127,949,403 64,000,588 (1) The Company issued Convertible Preferred Stock Class A-3 immediately prior to the Closing of the Business Combination to settle certain notes payable (see Note 11, Notes Payable ). These shares converted into a commitment to issue Class A Common Stock upon the Closing. Retroactive Application of Reverse Recapitalization to the Consolidated Statements of Operations and Comprehensive Loss Based on the retroactive application of the reverse recapitalization to the Company’s Consolidated Statements of Stockholders’ Equity (Deficit), the Company recalculated the weighted average shares for the year ended December 31, 2021. The redeemable preference stock and convertible preferred stock was converted to Legacy FF Ordinary Stock as of December 31, 2020, and combined with the basic and diluted weighted-average Legacy FF Ordinary Stock which was retroactively converted to the Company’s Class A Common Stock using the Exchange Ratio to conform to the recast Consolidated Statements of Stockholders’ Equity (Deficit) (see Note 18, Net Loss per Share) . Retroactive Application of Reverse Recapitalization to the Consolidated Balance Sheets To conform to the retroactive application of recapitalization of the Company’s Consolidated Statements of Stockholders’ Equity (Deficit), the Company reclassified $ 724.8 million of Legacy FF Redeemable Preference Stock and $ 697.6 million of Legacy FF Class B Convertible Preferred Stock to APIC, less amounts attributable to the par value of the Common Stock as of December 31, 2020. Pursuant to the terms of the Merger Agreement, as part of the closing of the Business Combination, the Company reclassified Convertible Preferred Stock Classes A-1, A-2, and A-3 in the amounts of $ 119.0 million, $ 271.9 million and $ 2.2 million, respectively, to APIC less amounts attributable to the par value of Class A Common Stock. 5. Variable Interest Entities 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 9, Fair Value of 149 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements Financial Instruments ). On November 22, 2020, the parties entered into an agreement to convert the initial deposit into 423,053 shares of Class A Common Stock of the Company, which were issued on February 23, 2021. Neither the Company nor The9 have made contributions to the joint venture as of December 31, 2022 and 2021, and it has yet to commence business activities. 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. On September 7, 2021, the Company paid Liankong Technologies Co., Ltd. (“Liankong”), a subsidiary of Geely Holding, which was also a subscriber in the PIPE Financing, in accordance with the Intellectual Property License Agreement dated January 11, 2021, as supplemented on September 7, 2021, a one-time amount of $ 50.0 million for a non-exclusive, perpetual, irrevocable, and sublicensable license to use a platform, the Geely License. The Geely platform is an electric automotive chassis that the Company plans to use in the development of future electric vehicle models. As the Company intends to use the license in the design, construction, and testing of pre-production prototypes and models of future electric vehicles and the license has no alternative future use, the total cost to acquire the license has been expensed as incurred as research and development within operating expenses in the Consolidated Statements of Operations and Comprehensive Loss for the year ended December 31, 2021. 6. Deposits and Other Current Assets (As Restated) Deposits and other current assets consists of the following as of December 31 (dollars in thousands): 2022 (As Restated) 2021 Deposits Deposits for research and development, prototype parts and other (as restated) $ 40,879 $ 54,990 Deposits for Future Work 3,187 8,380 Total deposits $ 44,066 $ 63,370 Other current assets Prepaid expenses $ 14,437 $ 11,119 Other current assets (as restated) 7,509 2,291 Total other current assets $ 21,946 $ 13,410 During the years ended December 31, 2022 and 2021, the Company made deposits for R&D services, prototype parts, and other 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. As a result of the settlement of interests in the Vendor Trust, certain suppliers to the Company were issued Class A Common Stock and cash for goods and services yet to be received (“Future Work”) which was recorded as part of deposits. As a result of the suspension of projects with specific suppliers, Deposits for Future Work were expensed totaling $ 5.2 million for the year ended December 31, 2022. No goods and services were received against Future Work as of December 31, 2022 and 2021 (see Note 12, Vendor Payables in Trust ). 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. Under the platform hosting agreement, the Company 150 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements committed to pay a total of $ 47.0 million of hosting fees over a six-year term, of which $ 5.3 million was paid during the year ended December 31, 2021. No payments were made in 2022 with respect to this agreement. Recognized expense related to the Palantir hosting arrangement totaled $ 7.9 million and $ 4.6 million for the years ended December 31, 2022 and 2021, respectively. Other prepaid software subscriptions totaled $ 4.1 million and $ 0.7 million for the years ended December 31, 2022 and 2021, respectively. In July 2022, the Company entered into an annual insurance policy for its directors and officers (“D&O Policy”), which required it to make prepayments in the amounts of $ 21.7 million. Recognized expense related to the D&O Policy totaled $ 14.5 million for the year ended December 31, 2022. 7. Property and Equipment, Net (As Restated) Property and equipment, net, consists of the following as of December 31 (dollars in thousands): 2022 (As Restated) 2021 Buildings $ 19,395 $ 14,180 Computer hardware 3,112 3,051 Tooling, machinery and equipment 9,542 8,868 Vehicles 337 337 Computer software 4,212 1,032 Leasehold improvements 383 297 Construction in process (as restated) 393,814 275,048 Less: Accumulated depreciation ( 12,113 ) ( 9,678 ) Total property and equipment, net $ 418,682 $ 293,135 The Company’s construction in process (“CIP”) is primarily related to the construction of tooling, machinery and equipment for the Company’s production facility in Hanford, California. Tooling, machinery, and equipment are either held at Company facilities, primarily the Hanford plant, or at the vendor’s location until the tooling, machinery and equipment is completed. Of the $ 393.8 million and $ 275.0 million of CIP, $ 195.7 million and $ 43.5 million is held at Company facilities and $ 198.1 million and $ 231.6 million is held at vendor locations as of December 31, 2022 and 2021, respectively. Depreciation and amortization expense totaled $ 3.0 million and $ 3.0 million for the years ended December 31, 2022 and 2021, respectively. On October 29, 2021, the purchase option for the HQ Gardena headquarters expired. Accordingly, the Company removed from its Consolidated Balance Sheets the HQ asset, net and finance obligation in the amounts of $ 25.4 million and $ 28.9 million, respectively, resulting in a gain of $ 3.5 million. The Company recognized the gain using the installment method, deferring the gain and recognizing it over the remaining lease term of five years by applying the percentage of profit inherent in the transaction to the remaining lease payments. A total of $ 14.2 million has been recorded within property and equipment as of December 31, 2022 for finance leases and capital leases as of December 31, 2021, respectively. The Company terminated two equipment leases during December 2022 resulting in a loss of $ 0.3 million. At December 31, 2022, the Company has a finance lease for its ieFactory California production facility in Hanford. Due to the build out of the Company’s manufacturing facility in Hanford, California, the Company has an asset retirement obligation (“ARO”) totaling $ 9.4 million and $ 3.0 million for the years ended December 31, 2022 and 2021, respectively. The ARO is recorded to Other liability, less current portion with a corresponding ARO asset within Buildings and Tooling, machinery, and equipment. The ARO asset is depreciated to operating expense over the remaining term of the lease through December 2027. During 2022 and 2021, the Company disposed of $ 9.6 million and $ 72.1 million of CIP relating to the abandonment of certain FF 91 program assets, primarily vendor tooling, machinery and equipment, due to the redesign of the related FF 91 151 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements components and implementation of the Company’s cost reduction program. Disposals of CIP of $ 3.7 million and $ 64.2 million were charged to operating expenses in the Consolidated Statements of Operations and Comprehensive Loss during the year ended December 31, 2022 and 2021, respectively. In addition, there were disposals of CIP of $ 5.9 million and $ 7.9 million for the years ended December 31, 2022 and 2021, which reduced Accounts payable in the Consolidated Balance Sheets as of December 31, 2022 and 2021, respectively . 8. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consist of the following as of December 31 (dollars in thousands): 2022 2021 Accrued payroll and benefits $ 20,502 $ 21,752 Accrued legal contingencies 18,940 16,881 Equipment, engineering, design, and testing services received not invoiced 9,443 13,863 Deposits from customers 3,573 4,354 Due to affiliates — 6,673 Obligation to issue registered shares of Class A Common Stock — 12,635 Other current liabilities 13,251 11,780 Total accrued expenses and other current liabilities $ 65,709 $ 87,938 9. Fair Value of Financial Instruments (As Restated) Cash Equivalents The fair value of the Company’s money market funds is based on the closing price of these assets as of the reporting date, which are included in cash equivalents. The Company’s money market funds are classified within Level 1 of the fair value hierarchy because they are valued using quoted prices for identical instruments in active markets. The Company had no cash equivalents at December 31, 2022 and 2021. 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 11, Notes Payable ). The Company used a binomial lattice model to value the notes payable which is widely used for valuing convertible notes. The significant assumptions used in the binomial lattice model include the risk-free rate, annual dividend yield, expected life, and volatility of the Company's stock. For notes payable issued on March 1, 2021, and August 26, 2021, and other remaining notes payable and related party notes payable, the Company employed the yield method. This valuation method uses a discounted cash flow analysis, estimating the expected cash flows for the debt instrument in different scenarios and then discounting them at the market yield. The significant unobservable input used in the fair value measurement is the market yield. The market yield is determined using external market yield data, including yields exhibited by publicly traded bonds by S&P credit rating as well as the borrowing rates of guideline public companies. The yield is affected by the market movements in credit spreads and bond yields. In general, increases in the yield would decrease the fair value of the liability, and conversely, decreases in the yield would increase the fair value of the liability. The fair value adjustments related to notes payables were recorded in Change in Fair Value Measurements on the Consolidated Statements of Operations and Comprehensive Loss. Fair value measurements associated with Notes Payable liabilities represent Level 3 valuations under the fair value hierarchy. 152 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements Bridge 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 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. Ares Warrants In conjunction with notes payable agreements entered into with Ares Capital Corporation (“Ares”) on March 1, 2021 (see Note 11, Notes Payable ), the Company agreed to issue warrants to purchase a variable number of the Company’s shares (“Ares Warrants”). The commitment to issue the Ares Warrants initially met the definition of a derivative and did not meet the equity scope exception in ASC 815-40 as the warrants were not considered indexed to the entity’s own equity given the variable number of underlying shares and exercise prices, and the fair value was recorded as a liability. The Company determined the commitment to issue warrants was a liability as of March 1, 2021, and estimated the fair value of the warrants to be $ 5.0 million. Upon issuance of the Ares Warrants on August 5, 2021, the number of shares underlying the Ares Warrants and exercise price were fixed at 670,092 and $ 10.00 per share, respectively, and the Ares Warrants met all other requirements of the equity scope exception under ASC 815-40. The issuance of the warrants satisfied the commitment to issue warrants. As such, the Ares Warrants were determined to be equity classified and were recorded in APIC. The Company determined that the fair value of the Ares Warrants as of August 5, 2021 was $ 2.5 million. The Company used the Black-Scholes option pricing model to value the Ares Warrants. The Black-Scholes model requires the use of several assumptions including, the exercise price of the warrant, the term over which the warrants can be exercised, the risk-free rate, the underlying stock price, and the volatility of the underlying stock price. ATW NPA Warrants In conjunction with notes payable issued under the NPA (see Note 11, Notes Payable ), on various dates in September 2020, January 2021 and March 2021, the Company issued warrants to a US-based investment firm to purchase an aggregate of 1,187,083 shares of Class A Common Stock with exercise price of $ 10.00 per share and expiration dates 7 years from the dates of issuance, which were adjusted for down-round provisions in the original warrant agreements. The fair value of the warrants was recorded in APIC because the warrants met the derivative accounting scope exception in ASC 815-40 for certain contracts involving an entity’s own stock. The Company estimated the fair value of warrants issued in January 2021 and March 2021 to be $ 2.0 million and the fair value of the warrants issued in September 2020 to be $ 0.5 million, which were included in APIC on the Consolidated Balance Sheets. The Company utilized the Black-Scholes valuation model to value the September 2020, January 2021, and March 2021 warrants. The Black-Scholes model requires the use of several assumptions including the warrant exercise price, the term of the warrants, the risk-free rate, the underlying stock price, and the volatility of the underlying stock price. On August 10, 2021, these warrants were replaced with the issuance of warrants with the rights to purchase 1,187,083 shares of Class A Common Stock at an exercise price of $ 10.00 per share and with the same expiration dates as the previous warrants. The number of shares and exercise prices were adjusted for down-round provisions in the original warrant agreements. In conjunction with the issuance of additional notes payable to the same US-based investment firm on June 9, 2021 (see Note 11, Notes Payable ), the Company issued warrants to purchase up to 1,500,000 shares of Class A Common Stock with an exercise price of $ 10.00 per share and an expiration date 7 years from the date of issuance, which were adjusted for down-round provisions in the original warrant agreements. The Company determined the warrants are indexed to the Company’s own stock and, as such, meet the scope exception in accordance with ASC 815-40. Upon their issuance, the Company estimated the fair value of the warrants to be $ 5.1 million, which is recorded in APIC on the Consolidated Balance Sheets as of December 31, 2021. The Company utilized the Black-Scholes valuation model to value the warrants. In conjunction with the issuance of the Optional Notes on August 10, 2021 (see Note 11, Notes Payable ), the Company issued warrants to purchase up to 1,187,083 shares of Class A Common Stock with an exercise price of $ 10.00 per share and an expiration date of August 10, 2028. The fair value of the warrants was recorded in equity because the warrants meet the derivative accounting scope exception in ASC 815-40 for certain contracts involving an entity’s own stock. The Company estimated the fair value of the warrants to be $ 8.0 million, which is included in APIC on the Consolidated Balance Sheets as of December 31, 2021. The Company utilized a Black-Scholes valuation model to value the August 10, 2021 warrants. The Black- 153 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements Scholes model requires the use of several assumptions including the warrant exercise price, the term of the warrants, the risk-free rate, the underlying stock price, and the volatility of the underlying stock price. 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 year ended December 31, 2022 and as of the date of issuing the 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 zero at the inception of the SEPA and as of December 31, 2022. Commitment to Issue Class A Common Stock PSAC entered into a transaction services agreement, dated as of October 13, 2020 (and amended on October 28, 2020), pursuant to which Riverside Management Group (“RMG”) provided consulting and advisory services in connection with the Business Combination in exchange for (i) $ 10,000 in cash from PSAC at the closing of the Business Combination, (ii) 1,697,500 unregistered shares of Class A Common Stock with an equal amount of shares of common stock in PSAC being forfeited by the PSAC Sponsor for no consideration immediately prior to the Closing, and (iii) 690,000 unregistered shares of Class A Common Stock issued by the Company in conjunction with the closing of the Business Combination having a value equal to $ 6.9 million and an attributed value of $ 10.00 per share. On July 18, 2021, the Company entered into an omnibus transaction services fee agreement and acknowledgement (“Agreement and Acknowledgement”) with RMG. Pursuant to the Agreement and Acknowledgement, the Company will issue 2,387,500 registered shares of Class A Common Stock to the parties upon effectiveness of the registration statement covering these shares. As of December 31, 2021, the Company’s registration statement was not effective. 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. 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 $ 32.9 million 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 $ 12.6 million resulting in a gain of $ 20.3 million recorded in the Change in fair value measurements in the Consolidated Statements of Operations and Comprehensive Loss for the year ended December 31, 2021. 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. 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 154 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements 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. 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. Public and Private Warrants Upon the Closing of the Business Combination, the Company assumed 22,977,568 Public Warrants and 594,551 Private Warrants from PSAC. The Company also issued 80,000 Private Warrants to settle related party notes of PSAC (see Note 4, Business Combination ). The Public Warrants are indexed to the Company’s own stock and, as such, meet the scope exception in accordance with ASC 815-40 to be classified in equity. 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. The Company estimated the fair value of the Private Warrants to be $ 2.2 million upon their assumption from PSAC on July 21, 2021 and $ 0.1 million and $ 0.6 million as of December 31, 2022 and 2021, respectively. 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 Loss. Fair value measurements associated with the Private Warrants liabilities represent Level 3 valuations under the fair value hierarchy. Transfer of Private Warrants to Unaffiliated Third Parties In the year ended December 31, 2022 PSAC Sponsor transferred a total 563,420 Private Warrants to unaffiliated third-party purchasers on the open market. No transfers were made during the year ended December 31, 2021. 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 of $ 0.6 million and $ 0.0 million, respectively for the years ending December 31, 2022 and 2021. The Public Warrants are indexed to the Company’s own stock and, as such, meet the scope exception in accordance with ASC 815-40 to be classified in equity. 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. 155 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements 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): December 31, 2022 (As Restated) Level 1 Level 2 Level 3 Liabilities: Notes payable $ — $ — $ 26,008 Private warrants — — 52 Bridge warrants (as restated) — — 92,781 December 31, 2021 Level 1 Level 2 Level 3 Liabilities: Notes payable $ — $ — $ 161,282 Private warrants — — 642 Obligation to issue registered shares of Class A Common Stock — — 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. The following table summarizes financial instruments carried at fair value for the year ended December 31, 2022 (dollars in thousands): Bridge Warrants (As Restated) Notes Payable, Ares Notes Payable, Bridge Notes Payable, ATW NPA Private Warrants Obligation to issue Registered Shares of Class A Common Stock Balance as of December 31, 2021 $ — $ 87,619 $ — $ 73,663 $ 642 $ 12,635 Additions (1) 9,938 — 82,000 — — — Payment of transaction costs — — ( 3,834 ) — — — Changes in fair value measurements (as restated) 86,033 ( 554 ) ( 20,874 ) ( 5,466 ) ( 326 ) — Payments of notes payable — ( 87,065 ) — — — — Conversions of notes to Common Stock — — ( 31,284 ) ( 68,197 ) — — Reclassification of Private Warrants to Public Warrants — — — — ( 264 ) — Reclassification of obligation to issue registered shares upon adoption of ASC 2020-06 — — — — — ( 12,635 ) Exercise of warrants ( 3,190 ) — — — — — Balance as of December 31, 2022 (as restated) $ 92,781 $ — $ 26,008 $ — $ 52 $ — (1) Additions during the year ended December 31, 2022 included non-cash conversion of $ 9.9 million Bridge warrants, which was charged to Change in fair value measurements in the Consolidated Statements of Operations for the year ended December 31, 2022, and 156 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements cash contribution of $ 82.0 million to note payable, which was reduced by the original issuance discount of $ 8.2 million, resulting in a net cash contribution of $ 73.8 million. The following table summarizes financial instruments carried at fair value (dollars in thousands) for the year ended December 31, 2021: Related Party Notes Payable at Fair Value Notes Payable at Fair Value The9 Conditional Obligation Private Warrants Obligation to issue Registered Shares of Class A Common Stock Balance as of December 31, 2020 $ 32,949 $ 59,742 $ 1,128 $ — $ — Proceeds, net of original issuance discount — 171,929 — — — Original issue discount (1) — 11,860 — — — Proceeds allocated to equity classified warrants — ( 17,596 ) — — — Issuance of warrant liabilities — — — 290 — Transaction costs and consent fees charged to interest expense — 5,022 — — — Private warrant liability and obligation to issue registered shares assumed in Business Combination — — — 2,152 32,900 Changes in fair value measurements 163 31,008 1,735 ( 1,800 ) ( 20,265 ) Repayment of principal and liquidation premium ( 27,593 ) ( 48,210 ) — — — Conversion of principal and liquidation premium to equity ( 5,519 ) ( 52,473 ) ( 2,863 ) — — Reclassification of warrant liability to equity — — — — — Balance as of December 31, 2021 $ — $ 161,282 $ — $ 642 $ 12,635 (1) Original issue discount represents the amount withheld by the note payable holder upon issuance of the note which will be paid, in addition to the full note payable principal, to the lender upon maturity of the notes payable. The original issue discount is included in Change in Fair Value Measurements on the Consolidated Statements of Operations and Comprehensive Loss. 10. Related Party Notes Payable (As Restated) In prior years, 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 December 31, 2022 and 2021 (dollars in thousands): Note Name Contractual Maturity Date Contractual Interest Rates Balance as of December 31, 2022 (As Restated) Interest Expense for the Year Ended December 31, 2022 Interest Expense for the Year Ended December 31, 2021 Related party notes - China (as restated) (1) December 31, 2023 12.0 % $ 5,209 $ 3,879 $ 3,369 Related party notes – China various other Due on Demand — % 3,755 — — $ 8,964 $ 3,879 $ 3,369 157 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements December 31, 2021 Note Name Contractual Maturity Date Contractual Interest Rates Unpaid Balance Net Carrying Value at 12/31/21 Related party notes - China (1) 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 (1) On December 27, 2022, the Company executed two separate note payable payoff settlement agreements with Chongqing Leshi Small Loan Co., Ltd. (“Chongqing”), a related party, according to which Chongqing agreed to forgive principal and all outstanding accrued interest. The remaining principal balance was agreed to be payable in five installment payments through December 31, 2023 and the current interest rate was set to 12 %. The amendment was accounted for as a troubled debt restructuring under ASC 470-60, because the Company was experiencing financial difficulty and the forgiven principal and accrued interest result in a reduced effective borrowing rate, which constitutes a concession. The Company increased additional paid in capital in the amount of $ 16.8 million with a corresponding decrease in related party notes payable and related party accrued interest of $ 3.4 million and $ 13.4 million, respectively. As of December 31, 2021, the Company was in default on the Chongqing related party note payable, which had a principal balance of $ 9.4 million. As of December 31, 2022 the Company was in compliance with the terms of the related party note payable. 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 $ 8.7 million and $ 13.3 million as of December 31, 2022 and 2021, respectively. Schedule of Principal Maturities of Related Party Notes Payable 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 5,209 $ 8,964 The Company settled select related party notes payable during the year ended December 31, 2021 through the conversion of related party notes payable and accrued interest into Class A Common Stock just prior to the Business Combination and with a combination of cash payments and commitment to issue Class A Common Stock in settlement of outstanding principal plus accrued interest and conversion premiums pursuant to the Closing of the Business Combination, as follows (dollars in thousands): 158 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements December 31, 2021 Note Name Contractual Maturity Date Contractual Interest Rates Net Carrying Value at 12/31/2020 Amortization of Discounts & Fair Value Adjustments Accrued Interest at Settlement Borrowing Cash Payments of Principal and Interest Equity Settlements of Principal and Interest Net Carrying Value at 12/31/2021 Loss (Gain) at Settlement Interest Expense for the year ended December 31, 2021 Settlement prior to the Business Combination: Related party note June 30, 2021 12.00 % $ 220,690 $ 657 $ 73,448 $ — $ — $ ( 294,795 ) $ — $ — $ 8,801 Settlement in the Business Combination: Related party note June 30, 2021 12.00 % 19,196 — — — — ( 19,196 ) 7,256 — Related party note Due on Demand 15.00 % 10,000 — 3,708 — ( 13,708 ) — — — 869 Related party notes – NPA tranche October 9, 2021 10.00 % 32,949 163 5,728 — ( 27,593 ) ( 11,247 ) — 4,257 1,610 Related party notes – China various other Due on Demand 0 % coupon, 10.00 % imputed 774 — — — — ( 774 ) — 292 55 Related party notes – China other Due on Demand 8.99 % 1,407 3 44 — — ( 1,454 ) — 550 41 Related party notes – Other Due on Demand 0.00 % 424 — — 200 ( 624 ) — — — — Related party notes – Other June 30, 2021 6.99 % 4,110 50 — — — ( 4,160 ) — 1,572 211 Related party notes – Other June 30, 2021 8.00 % 6,417 35 1,195 — — ( 7,647 ) — 2,891 321 Related party notes – Other June 30, 2021 1.52 %, 8.99 %, 8.00 %, 2.86 % 8,303 137 819 — — ( 9,259 ) — 3,500 185 Related party notes – Other Due on Demand, June 30, 2021 8.99 %, 6.99 % 1,749 11 378 — — ( 2,138 ) — 808 65 Related party notes – Other June 30, 2021 8.00 % 11,578 57 1,693 — — ( 13,328 ) — 5,038 515 Subtotal settlements in the Business Combination 96,907 456 13,565 200 ( 41,925 ) ( 69,203 ) — 26,164 3,872 Total $ 317,597 $ 1,113 $ 87,013 $ 200 $ ( 41,925 ) $ ( 363,998 ) $ — $ 26,164 $ 12,673 Closing of the Business Combination As described in Note 4, Business Combination, in conjunction with the Closing of the Business Combination, the Company pai d $ 41.9 million in cash and a commitment to issue 6,921,814 sh ares of Class A Common Stock to settle related party notes payable principal amounts of $ 91.4 million, net carrying amounts of $ 96.9 million and accrued interest of $ 13.6 million. Where the Company converted related party notes payable into Class A Common Stock, the Company recorded a loss at settlement of the related party notes payable of $ 26.2 million in the Consolidated Statements of Operations and Comprehensive Loss for the year ended December 31, 2021 due to converting the related party notes payable at $ 10.00 per share which was below the fair value of the stock on the date of conversion. Assumed Related Party Notes Payable in the Business Combination As part of the Business Combination, the Company assumed related party promissory notes of $ 0.5 million and related party convertible notes of $ 0.3 million, which PSAC issued to certain related parties during 2021. The promissory note was non-interest bearing and due on the date on which the Company consummates a Business Combination and was unsecured . The convertible note was non-interest bearing and due on the date on which the Company consummates a Business Combination and was unsecured. The convertible related party notes were fair valued at $ 0.6 million at the Closing Date. As part of the Closing of the Business Combination, the Company issued Class A Common Stock and 80,000 Private Warrants to settle related party notes of PSAC with an aggregate principal amount of $ 0.8 million. Rancho Palos Verdes Real Property Leases 159 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements FFIE leased two real properties, located in Rancho Palos Verdes, California (the “Rancho Palos Verdes Properties”), from Warm Time Inc. (“Warm Time”), a related party, 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) and 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 these two properties. The aggregate amount paid by Legacy FF to Warm Time for calendar years ended December 31, 2022 and 2021 were $ 0.1 million and $ 1.7 million, respectively. FF Top Expense Reimbursements On July 30, 2022, the Company entered into a preliminary term sheet (the “Preliminary Term Sheet”) with FF Top, a subsidiary of FF Global Partners, setting out a summary of the preliminary terms and conditions for FF Top’s assistance in arranging a proposed convertible term loan facility to the Company. In connection with the Preliminary Term Sheet, the Company agreed to reimburse FF Top for its reasonable and documented out-of-pocket legal and diligence fees and expenses incurred in connection with such financing efforts up to a $ 0.3 million cap (the “Original Cap”), irrespective of whether or not closing occurred, with $ 0.2 million to be payable as a deposit upon execution of the Preliminary Term Sheet. Pursuant to the Preliminary Term Sheet, the Company paid FF Top $ 0.2 million on August 9, 2022 and $ 0.2 million on December 16, 2022. On January 31, 2023, the Company entered into a supplemental agreement to the Preliminary Term Sheet (the “Supplemental Agreement”) with 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 Preliminary Term Sheet to increase the Original Cap from $ 0.3 million to $ 0.7 million. The Company agreed to pay the remaining $ 0.4 million of the fee 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 Preliminary Term Sheet, as amended by the Supplemental Agreement, the Company paid FF Top $ 0.2 million on February 1, 2023. 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 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, according to which the Company agreed to pay a monthly consulting fee of $ 0.2 million to FF Global Partners 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 Partners 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. 160 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements Common Units of FF Global Partners LLC During 2021, certain executives and employees of the Company were granted the opportunity to subscribe to 24,000,000 common units of FF Global Partners LLC (“FF Global Partners”), a major shareholder of the Company. The subscription price of $ 0.50 per common unit, payable by the executives and employees of the Company, was financed through non-recourse loans issued by FF Global Partners payable in equal annual installments over ten years . The common units to be purchased with a non-recourse loan are required to be treated for accounting purposes as stock options granted by FF Global Partners to executives and employees of the Legacy FF. The awards were valued using the Black-Scholes option pricing model. The grant date fair value of the units purchased through non-recourse loans was immaterial for the years ended December 31, 2022 and 2021. 11. Notes Payable (As Restated) The Company has existing notes payable agreements with third parties, which consists of the following as of December 31, 2022 and 2021 (dollars in thousands): 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 Twelve Months Ended December 31, 2022 (As Restated) Bridge Notes (as restated) (3) October 27, 2028 10 % - 15 % $ 36,622 $ 264 $ ( 10,878 ) $ 26,008 $ — Notes payable – China other (4) Due on Demand — % 4,997 — — 4,997 — Auto loans October 26, 2026 7 % 100 — — 100 7 $ 41,719 $ 264 $ ( 10,878 ) $ 31,105 $ 7 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 (1) March 1, 2022 14 % $ 55,000 $ 7,692 $ ( 5,997 ) $ 56,695 August 26, 2021 Notes (1) March 1, 2022 14 % 30,000 1,011 ( 87 ) 30,924 June 9, 2021 Note 1 and Note 2 (2) December 9, 2022 — % 40,000 8,503 ( 9,522 ) 38,981 August 10, 2021 Optional Notes (2) February 10, 2023 15 % 33,917 12,283 ( 11,518 ) 34,682 Notes payable - China other (4) Due on demand — % 5,458 — — 5,458 PPP Loan (5) April 17, 2022 1 % 193 — — 193 Auto loans October 26, 2026 7 % 121 — — 121 Total notes payable $ 164,689 $ 29,489 $ ( 27,124 ) $ 167,054 161 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements The Company settled certain notes payable during the year ended December 31, 2022 as follows (dollars in thousands): Year ended December 31, 2022 Note Name Contractual Maturity Date Contractual Interest Rates Net carrying value at 12/31/2021 Balance Fair Value Measurement Adjustments Payment Premium Cash Payment Conversion into Class A Common Stock (As Restated) 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 (as restated) (2) October 31, 2026 — % 38,981 1,019 — — ( 40,000 ) Optional Notes (as restated) (2) October 31, 2026 15 % 34,682 ( 765 ) — — ( 33,917 ) PPP Loan (5) April 17, 2022 1 % 193 — — ( 193 ) — $ 161,475 $ ( 2,365 ) $ 2,065 $ ( 87,258 ) $ ( 73,917 ) (1) On March 1, 2021, the Company amended the NPA to permit the issuance of additional notes payable with principal amounts up to $ 85.0 million. On the same day, the Company entered into notes payable agreements with Ares for an aggregate principal of $ 55.0 million, receiving net proceeds of $ 51.5 million, inclusive of a 4.00 % original issue discount and $ 0.1 million of debt issuance costs paid directly by the lender (“March 1, 2021 Notes”). The notes payable were collateralized by a first lien on virtually all tangible and intangible assets of the Company, bore interest at 14 % per annum and matured on March 1, 2022. On February 25, 2022, the Company repaid the $ 55.0 million principal amount of the March 1, 2021 Notes with accrued interest of $ 7.7 million. In addition, in conjunction with the issuance of the notes payable, the Company committed to issue the Ares Warrants to the lender to purchase the Company’s Class A Common Stock no later than August 11, 2021, or if earlier, 15 days after consummation of the Business Combination. The warrants have a term of six years , be equal to 0.20 % of the fully diluted capitalization of FFIE’s Class A Common Stock and have an exercise price of $ 10.00 per share. The commitment to issue the warrants meets the definition of a derivative, was accounted for as a liability, and will be marked to fair value at the end of each reporting period with changes in fair market value recorded in the Consolidated Statements of Operations and Comprehensive Loss. The Company determined the commitment to issue warrants was a liability as of March 1, 2021, and estimated the fair value of the warrants to be $ 5.0 million using the Black-Scholes option-pricing model (see Note 9, Fair Value of Financial Instruments ). On August 5, 2021, the Company issued Ares warrants to purchase 670,092 shares of Class A Common Stock at an exercise price of $ 10.00 per share. The warrants are exercisable at any time within 6 years of the issuance date. Upon their issuance, the warrants met all requirements for equity classification under the equity scope exception in ASC 815-40 as the number of shares underlying the warrants and their exercise price were fixed. Accordingly, the Company determined the fair value of the Ares Warrants to be $ 2.5 million on August 5, 2021 and recorded the value as a discount to the Notes Payable and an increase in APIC in the Consolidated Balance Sheets as of December 31, 2021. 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 $ 30.0 million which matured on March 1, 2022 (“August 26, 2021 Notes”). As the August 26, 2021 Notes mature in 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”). The notes payable are collateralized by a first lien on virtually all tangible and intangible assets of the Company and bear interest at 14 % per annum and mature on March 1, 2022. The August 26, 2021 Notes matured in less than one year, according to the terms of the amended NPA, and a payment premium of 14 % (“Payment Premium”). The Company has elected the fair value option to value the notes as the notes include features, such as a contingently exercisable put option, which meet the definition of an embedded derivative. 162 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements Upon the Closing of the Business Combination, the cash requirement prescribed in the NPA increased from $ 5.0 million to $ 25.0 million. The Company has classified $ 25.0 million as Restricted Cash on its Consolidated Balance Sheet as of December 31, 2021. In the first quarter of 2022 all restrictions on cash were resolved. On February 25, 2022, the Company repaid the $ 30.0 million principal amount of the August 26, 2021 Notes, with accrued interest of $ 2.1 million and Payment Premium of $ 2.1 million. The settlement of the March 1, 2021 Notes and August 26, 2021 Notes are summarized below (dollars in thousands): March 1, 2021 Notes December 31, 2022 December 31, 2021 Outstanding principal $ — $ 55,000 Accrued interest — 6,455 Interest expense for the year ended December 31, 2022 1,266 — Principal payments 55,000 — Interest payments 7,721 — August 26, 2021 Notes December 31, 2022 December 31, 2021 Outstanding principal $ — $ 30,000 Accrued interest — 1,473 Interest expense for the year ended December 31, 2022 662 — Principal payments 30,000 — Interest payments 2,135 — Payment Premium payments 2,065 — (2) On June 9, 2021, the Company amended the NPA to permit the issuance of two notes payable, each with a principal value of $ 20.0 million (“June 2021 Notes”), to a US-based investment firm. The Company received net proceeds of $ 35.6 million as part of the June 2021 Notes inclusive of $ 4.2 million of original issuance discount and $ 0.2 million of debt issuance costs paid by the lender. The June 2021 Notes are subordinate to the notes payable issued to Ares on March 1, 2021 and August 26, 2021 (see (1) above) and senior in priority to the notes payable issued under the NPA prior to September 9, 2020. The June 2021 Notes mature on December 9, 2022, and do not bear interest unless extended beyond its maturity date by the US-based investment firm, in which case, the June 2021 Notes will bear interest at 10 % per annum starting upon their original maturity. Each of the June 2021 Notes are subject to an original issue discount of 8 % and 13 %, respectively. One of the June 2021 Notes with a principal amount of $ 20.0 million contains a conversion premium that, within a year of a Qualified SPAC Merger, the then outstanding principal and accrued interest of the notes playable plus a 30 % premium may convert into Class A Common Stock of the Company, at the election of the US-based investment firm. In conjunction with the issuance of the June 2021 Notes, the Company issued warrants to the US-based investment firm to purchase up to 1,500,000 shares of the Company’s Class A Common Stock for $ 10.00 per share and an expiration date of June 9, 2028, which were adjusted for down-round provisions in the original warrant agreements. The fair value of the warrants of $ 5.1 million upon issuance was recorded in APIC (see Note 9, Fair Value of Financial Instruments ). As part of the amendment to the NPA from June 9, 2021, on or prior to the 12-month anniversary of the Qualified SPAC Merger, the US-based investment firm has the option to purchase additional notes for up to $ 40.0 million and if drawn, would be subject to similar original issue discounts, warrant provisions, and conversion premiums as the June 2021 Notes. The warrants issued with the June 2021 Notes and the Optional Notes, along with the notes previously issued to the same lender, are provided with anti-dilution protection. On August 10, 2021, in accordance with the NPA, the US-based investment firm exercised its option to purchase optional notes (“Optional Notes”) with principal of $ 33.9 million, whose option was in conjunction with the original September 9, 2020, January 13, 2021 and March 12, 2021 notes payable. The Company received net proceeds of $ 30.4 million, which is the total 163 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements principal amount of $ 33.9 million net of 8 % original issue discount and $ 0.8 million of issuance costs. The Optional Notes bear interest at 15 % beginning December 2021, and had a maturity date of February 10, 2023. The Optional Notes are convertible at the option of the holder with a conversion price of $ 10.00 per share. The Optional Notes contain a conversion premium, effective until August 10, 2022, according to which the outstanding principal and accrued interest of the notes payable at the time of liquidation plus a 30 % premium are convertible into shares of Class A Common Stock. The Company elected the fair value option to measure the Optional Notes (see Note 9, Fair Value of Financial Instruments ). In conjunction with the issuance of the Optional Notes, the Company issued the US-based investment firm warrants to purchase up to 1,187,083 shares of Class A Common Stock with an exercise price of $ 10.00 per share. The warrants are exercisable within seven years of their original issuance dates. The fair value of the warrants of $ 8.0 million upon issuance was recorded in APIC (see Note 9, Fair Value of Financial Instruments ). In January 2022, the Company defaulted on the June 2021 Notes and the Optional Notes. The holders of the Optional Notes waived the default during 2022. June 9, 2021 Note 1 As of and for the Year Ended (dollars in thousands) 2021 Outstanding principal $ 20,000 Original issue discount and debt issuance costs 1,797 Proceeds 18,203 June 9, 2021 Note 2 As of and for the Year Ended (dollars in thousands) 2021 Outstanding principal $ 20,000 Original issue discount and debt issuance costs 2,600 Proceeds 17,400 August 10, 2021 Optional Notes As of and for the Year Ended (dollars in thousands) 2021 Outstanding principal $ 33,917 Accrued interest 183 Interest expense 183 Original issue discount and debt issuance costs 3,542 Proceeds 30,375 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 164 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements 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 $ 35.0 million 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; and (d) the date by which the Investors must exercise their option to purchase additional June 2021 Notes of up to $ 40.0 million from the Company under the terms of the NPA was extended to July 20, 2023. The ATW July Amendment was accounted for as a troubled debt restructuring under ASC 470-60, 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 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 $ 67.2 million of principal at conversion prices ranging from $ 0.84 to $ 2.29 per share into 64,843,850 shares of Class A Common Stock, and during October 2022 the remaining ATW NPA Notes in the aggregate amount of $ 6.7 million were exchanged for 11,496,868 shares of Class A Common Stock of the Company, resulting in a $ 23.5 million Loss on settlement of notes payable being recognized in the Consolidated Statement of Operations and Comprehensive Loss during the year ended December 31, 2022 . The settlement of the June 2021 Notes and Optional Notes are summarized below (dollars in thousands): Optional Notes December 31, 2022 December 31, 2021 Outstanding principal $ — $ 33,917 Accrued interest — 183 Interest expense for the year ended December 31, 2022 2,572 — Principal conversion into Class A Common Stock 33,917 — Interest payments 2,756 — June 2021 Notes December 31, 2022 December 31, 2021 Outstanding principal $ — $ 40,000 Accrued interest — — Interest expense for the year ended December 31, 2022 — — Principal conversion into Class A Common Stock 40,000 — Interest payments — — 165 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements (3) On August 14, 2022, the Company entered into a Securities Purchase Agreement (“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 in principal 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 part of this financing round, the Purchasers funded $ 52.0 million, less total original issuance discounts of $ 5.2 million equating to net proceeds of $ 46.8 million. 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. 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. Total commitments under the SPA shall not exceed $ 300.0 million, 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 (“Tranche B Notes”). 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 aggregate principal amount (the “Third Bridge Notes”) being funded and issued on the same day, and the remaining $ 7.5 million aggregate principal amount (the “Fourth Bridge Notes”) being funded 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. Additionally, the SPA Amendment modified the conversion price of $ 25.0 million 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, 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 Consolidated Statements of Operations and Comprehensive for the year ended December 31, 2022 in the amount of $ 7.7 million, calculated as the cumulative change in fair value from initial recognition through to the date of amendment. On September 25, 2022, the Company entered into a Joinder and Amendment Agreement to the SPA (the “Joinder”) with Senyun International Ltd., an affiliate of Daguan International Limited (“Senyun”), pursuant to which Senyun agreed to purchase incremental notes under the SPA in an aggregate principal amount of up to $ 60.0 million. 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. As of December 31, 2022, Senyun completed funding totaling $ 30.0 million, which after original issue discount resulted in the receipt of $ 27.0 million. 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 Consolidated Statement of Operations and Comprehensive Loss. As part of the SPA, and through the year ended December 31, 2022, the Company issued the Purchasers a total of 16,392,267 warrants (“Bridge Warrants" or “SPA Warrants”). Upon their issuance, the Bridge Warrants had an exercise price of $ 5.0 per share, subject to full ratchet anti-dilution protection and other adjustments, exercisable for seven years 166 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements from the date of issuance (see Note 15, 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 year ended December 31, 2022, the Purchasers exercised 8,559,863 Bridge Warrants. As of December 31, 2022, there were 346,453,115 Bridge Warrants outstanding. As of December 31, 2022, the Company determined that the fair value of the Bridge Notes and Bridge Warrants was $ 26.0 million and $ 92.8 million, respectively, resulting in a respective gain and loss in Changes in fair value measurements in the Consolidated Statement of Operations and Comprehensive Loss of $ 20.9 million and $ 86.0 million for the year ended December 31, 2022. During the year ended December 31, 2022 total Bridge Notes principal which was converted to equity totaled $ 45.4 million , resulting in a $ 41.1 million Loss on settlement of notes payable being recognized in the Consolidated Statement of Operations and Comprehensive Loss during the year ended December 31, 2022 . Total notes payable issuance costs incurred for the year ended December 31, 2022 totaled $ 3.8 million. Conversions of ATW NPA Notes and Bridge Notes, as applicable, to Additional paid in capital for the years ended December 31, 2022 and 2021 totaled $ 99.5 million and $ 98.4 million, respectively. (4) The Company issued notes with various third parties through its operations in China. In 2017 and 2018, the Company borrowed $ 4.4 million through notes payable from various Chinese lenders. As a result of the September 2020 Modification of the notes payable, the Company recorded an immaterial gain on extinguishment and immaterial accretion of the discount in the Consolidated Statements of Operations and Comprehensive Loss during the year ended December 31, 2021. In 2019, the Company entered into a $ 0.7 million note payable with an employee. During the year ended December 31, 2021, the Company reclassified the $ 0.7 million carrying value of this loan from related party notes payable to notes payable when the employee left the employment of the Company. The notes payable are payable on demand by the lenders, do not have a stated interest rate, have no covenants, and are unsecured. As of and for the Year Ended December 31, (dollars in thousands) 2021 Outstanding principal $ 5,458 Foreign exchange (gain) loss on principal 133 Reclassification from related party notes payable 730 167 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements The Company settled select notes payable through the conversion of notes payable into Class A Common Stock just prior to the Business Combination and a combination of cash payments and the commitment to issue Class A Common Stock in settlement of outstanding principal plus accrued interest and conversion premiums pursuant to the Closing of the Business Combination, as follows (dollars in thousands): Year ending December 31, 2021 Note Name Net Carrying Value at 12/31/2020 Borrowings, net of OID Fair Value Measurement Adjustments Accrued Interest at Settlement FX and Other Cash Payment Equity Settlement Net Carrying Value at 12/31/2021 Loss (Gain) at Settlement Interest Expense for the year ended December 31, 2021 Settlement prior to the Business Combination: Note payable $ 57,293 $ — $ — $ 17,177 $ ( 1,293 ) $ — $ ( 73,177 ) $ — $ — $ 3,408 Notes payable 19,100 — — 6,098 — — ( 25,198 ) — — 1,281 Subtotal settlements prior to the Business Combination 76,393 — — 23,275 ( 1,293 ) — ( 98,375 ) — — 4,689 Settlements in the Business Combination: Notes payable – NPA 21,059 — 104 3,614 — ( 17,636 ) ( 7,141 ) — 2,699 976 Notes payable – China 3,659 — — 2,713 56 — ( 6,428 ) — 2,430 374 Notes payable – China 4,807 — — 757 110 — ( 5,674 ) — 2,145 164 Note payable 17,712 — 1,988 — 667 — ( 20,367 ) — 7,698 — January 13 and March 12, 2021 Notes (6) — 16,790 6,935 — — — ( 23,725 ) — 8,968 — Note payable 20,972 — 138 270 667 ( 18,992 ) ( 3,055 ) — 1,155 1,334 January 13 and March 8, 2021 Notes (7) — 8,750 4,901 82 — ( 11,582 ) ( 2,151 ) — 813 632 Subtotal settlements in the Business Combination 68,209 25,540 14,066 7,436 1,500 ( 48,210 ) ( 68,541 ) — 25,908 3,480 PPP Loan (5) 9,168 — — — ( 8,975 ) — — 193 ( 8,975 ) 92 Total $ 153,770 $ 25,540 $ 14,066 $ 30,711 $ ( 8,768 ) $ ( 48,210 ) $ ( 166,916 ) $ 193 $ 16,933 $ 8,261 Conversion of Notes Payable Just prior to the Business Combination, the Company converted notes payable with an aggregate principal balance of $ 75.1 million and accrued interest of $ 23.3 million into 7,688,153 shares of Class A Common Stock. Closing of the Business Combination As described in Note 3, Business Combination , in conjunction with the closing of the Business Combination, the Company paid $ 48.2 million in cash and a commitment to issue 6,854,013 shares of Class A Common Stock to settle notes payable principal amounts of $ 85.2 million, net carrying amount of $ 93.7 million, and accrued interest of $ 7.4 million. Where the Company converted notes payable into Class A Common Stock, the Company recorded a loss at settlement of the notes payable of $ 25.9 million in the Consolidated Statements of Operations and Comprehensive Loss for the year ended December 31, 2021. (5) On April 17, 2020, the Company received loan proceeds from East West Bank of $ 9.2 million under the Paycheck Protection Program (“PPP”). The PPP was established as part of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) and provided for loans to qualifying businesses. The loans and accrued interest are forgivable so long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent, and utilities, as described in the CARES Act. The amount of loan forgiveness will be reduced if the borrower terminates employees or reduces salaries. The unforgiven portion of the PPP loan is payable over two years at an interest rate of 1 %, with a deferral of payments for the later of the first six months or when the amount of the loan forgiveness is determined. The Company used the proceeds for purposes consistent with the PPP requirements. The note matured on April 17, 2022, had no covenants, and was unsecured. 168 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements The Company was notified by East West Bank that a principal amount of $ 9.0 million as well as accrued interest of $ 0.2 million relating to the PPP Loan had been forgiven by the Small Business Administration as of December 31, 2021. The Company recorded the forgiveness of the principal and interest in Loss on Settlement of Related Party Notes Payable, Notes Payable, and Vendor Payables in trust, net in the Consolidated Statements of Operations and Comprehensive Loss for the year ended December 31, 2021. The Company paid the remaining principal and accrued interest in an aggregate amount of $ 0.2 million in April 2022. (6)On January 13, 2021, the Company entered into a notes payable agreement under the NPA, (“January 13 Notes”) with a US-based investment firm for total principal of $ 11.3 million, receiving net proceeds of $ 9.9 million, net of an 8 % original issue discount and $ 0.5 million of debt issuance costs paid directly by the lender. The note payable is collateralized by a first lien on virtually all tangible and intangible assets of the Company and bears interest at 0 % per annum. On March 12, 2021, the Company and the US-based investment firm entered into a notes payable agreement (“March 12 Notes”) for an aggregate principal amount of $ 7.0 million, receiving net proceeds of $ 6.4 million, net of an 8 % original issue discount. The terms of this note payable were the same as the note payable issued on January 13, 2021. The Company elected the fair value option for these note payable because the inclusion of a conversion feature that allowed the lenders to convert the notes payable into Class A Common Stock after the closing of the Business Combination. In conjunction with the issuance of the January 13 Notes and March 12 Notes, the Company issued warrants to purchase 662,083 shares of the Class A Common Stock with an exercise price of $ 10.00 per share, as adjusted for certain down-round provisions. The warrants were issued with a term of seven years . The Company recorded the fair value of the warrants in APIC in accordance with the derivative accounting scope exception in ASC 815 for certain contracts involving an entity’s own stock. The Company estimated the fair value of the warrants to be $ 2.0 million using the Black-Scholes option-pricing model (see Note 9, Fair Value of Financial Instruments ). In conjunction with the Closing of the Business Combination, the Company issued Class A Common Stock to settle the note payable, as follows (dollars in thousands) . January 13 and March 12, 2021 Notes As of and for the Year Ended December 31, 2021 Outstanding principal $ — Original issue discount and debt issuance costs 1,940 Principal and conversion premium settled with equity 23,725 Proceeds 16,310 (7)On January 13, 2021, the Company amended the NPA to permit the issuance of additional secured convertible notes payable and issued $ 3.8 million of notes payable to Birch Lake (“BL Notes”), receiving net proceeds of $ 3.3 million, net of a 6.50 % original issue discount and $ 0.2 million of debt issuance costs paid directly by the lender. The BL Notes accrued interest at 8 % per annum. The BL Notes contained a liquidation premium that ranges from 35 % to 45 % depending on the timing of settlement, with 50 % of this premium convertible into equity. The Company determined that the feature to settle the BL Notes at a premium upon the occurrence of a default, change in control, or a Qualified SPAC Merger was a contingently exercisable put option with a liquidation premium and represents an embedded derivative. The Company elected the fair value option to measure this note payable (see Note 9, Fair Value of Financial Instruments ). On March 8, 2021, the Company entered into a notes payable agreement under the NPA with Birch Lake for total principal of $ 5.6 million, receiving net proceeds of $ 5.2 million, inclusive of a 6.50 % original issue discount and $ 0.3 million of debt issuance costs paid directly by the lender. The notes payable accrued interest at 15.75 % per annum. The notes payable contained a liquidation premium that ranges from 42 % to 52 % depending on timing of settlement, with 50 % of the premium convertible into equity. The Company determined that the feature to settle the notes payable at a premium upon the occurrence of a default, change in control, or a Qualified SPAC Merger was a contingently exercisable put option with a liquidation premium and represents an embedded derivative. The Company elected the fair value option to measure these notes payable (see Note 9, Fair Value of Financial Instruments ). 169 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements In conjunction with the Closing of the Business Combination, the Company paid cash and issued Class A Common Stock to settle the notes payable, as follows (dollars in thousands). January 13 and March 8, 2021 Notes As of and for the Year Ended December 31, 2021 Outstanding principal $ — Original issue discount and debt issuance costs 1,132 Interest expense 632 Principal conversion premium settled with equity 2,069 Interest settled with equity 82 Principal and conversion premium payments in cash 11,582 Interest payments in cash 550 Proceeds 8,218 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. 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 extension of the maturity date following the restructuring results in a reduced effective borrowing rate for the Company. The amendment was accounted for prospectively with no gain or loss recorded in the Consolidated Statements of Operations and Comprehensive Loss. 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 $ 1.5 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 recorded in the Consolidated Statements of Operations and Comprehensive Loss. Senyun Amendment On December 28, 2022 the Company entered into a Letter Agreement and Amendment to the SPA (the “Senyun Amendment”) 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 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 in the Consolidated Balance Sheet for $ 0.9 million, which represents the fair value of the additional shares owed to Senyun. In addition, the $ 0.9 million was recognized as a Loss on settlement of notes payable in the Consolidated Statement of Operations and Comprehensive Loss as the underlying debt instruments were extinguished on the date the Senyun Amendment was entered into. 170 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements 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 and $ 5.4 million as of December 31, 2022 and 2021, respectively. These amounts relate to the Notes Payable - China other and Auto loan balances. Schedule of Principal Maturities of Notes Payable The future scheduled principal maturities of notes payable as of December 31, 2022 are as follows (dollars in thousands): Due on demand $ 4,997 2026 100 2028 36,622 41,719 12. Vendor Payables in Trust On April 29, 2019, Legacy FF established the Faraday Vendor Trust (“Vendor Trust”), with the intention to stabilize its supplier base by providing suppliers with the ability to exchange their unsecured trade receivables for secured trust interests. Repayment of the trust interests was governed by a Trade Receivables Repayment Agreement dated as of April 29, 2019 (“Trade Receivables Repayment Agreement”). All interests in the Vendor Trust were collateralized by a first lien, with third payment priority, in agreement with applicable intercreditor arrangements, on virtually all tangible and intangible assets of Legacy FF. The applicable interest rate for the vendor trust principal balance was 6.00 %, calculated daily from the date of contribution and was non-compounding. Management determined that the economic substance of the obligations under the Vendor Trust was an in-substance financing. On October 30, 2020, the agreement governing the Vendor Trust (the “Vendor Trust Agreement”) was modified to add a conversion feature to allow the secured interests in the Vendor Trust to convert into PSAC shares if a Qualified SPAC Merger (as defined in the Vendor Trust Agreement) occurs. Management accounted for this modification as an extinguishment because the conversion feature was considered substantive, as the conversion feature was considered to be reasonably possible to be exercised. The conversion feature did not require bifurcation because it is clearly and closely related to the host instrument, since the conversion did not involve a substantial premium or discount. As a result, the Company recorded a discount of $ 1.8 million against the carrying value of the Vendor Payables in Trust. The Company recorded accretion of $ 1.4 million in Interest Expense during the year ended December 31, 2021, related to the discount created from the gain on extinguishment in the Consolidated Statements of Operations and Comprehensive Loss. On March 1, 2021, the maturity date of the secured trust interests in the Vendor Trust was extended to the Closing of the Business Combination. Termination of Interests in the Vendor Trust in 2021 On June 4, 2021, the Company entered into an agreement with a vendor with an interest in the Vendor Trust for future services. The Company and the vendor agreed to forgive $ 14.2 million relating to a portion of the total Future Work outstanding instead of converting these interests to equity upon the close of the Business Combination. In addition, it was agreed to terminate and forgive $ 1.9 million of the vendor’s interest for work performed, resulting in a gain of $ 1.7 million. On June 7, 2021, the Company entered into agreements with two vendors and settled in cash part of their interest in the Vendor Trust totaling $ 5.4 million. The vendors’ remaining interests were settled along with the outstanding interests in the Vendor Trust as part of the close of the Business Combination. On July 12, 2021, the Company entered into an agreement with a vendor to cancel the vendor’s interests in the Vendor Trust totaling $ 1.2 million and instead transferring them to accounts payable to be repaid in cash as part of the ordinary course of business. At the Closing Date of the Business Combination, the Company settled the outstanding payables in the Vendor Trust and accrued interest, by paying $ 22.4 million in cash and the commitment to issue 9,618,542 shares of Class A Common Stock. The Company recorded a loss at settlement of the Vendor Trust, and accrued interest thereon, of $ 41.8 million in the Consolidated 171 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements Statements of Operations and Comprehensive Loss for the year ended December 31, 2021 due to the payment of an exit fee of $ 2.3 million, as required by the Vendor Trust Agreement, and converting the beneficial interests in the Vendor Trust at $ 10.00 per share which was below the fair value of the stock on the date of conversion. The Company committed to issue 838,040 shares of Class A Common Stock to settle Future Work, which were recorded as deposits in the amount of $ 8.4 million as of the Closing Date of the Business Combination. Through the payments and issuances of shares for outstanding payables, accrued interest and Future Work, the Company settled the outstanding interests in the Vendor Trust and no amount remains outstanding as of December 31, 2021. 13. 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 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, or bargain purchase options. 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 Consolidated Statements of Operations and Comprehensive Loss. Amortization of ROU assets on finance leases is recorded on a straight-line basis within operating expenses in the Consolidated Statements of Operations. Interest expense incurred on finance lease liabilities is recorded in Interest expense on the Consolidated Statements of Operations and Comprehensive 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 portion and Operating lease liabilities, less current portion in the Company's 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 Consolidated Balance Sheets. The Company’s lease arrangements consist primarily of its ieFactory California production facility, corporate office, store, equipment (which was terminated during December 2022, see Note 7, Property and Equipment, Net ) 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 periods. ASC 842 Disclosures On January 1, 2022, the Company adopted ASC 842. For more information on the adoption, see the “Recently Adopted Accounting Pronouncements” section in Note 1, Nature of Business and Organization, and Summary of Significant Accounting Policies. 172 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements Lease cost includes both the fixed and variable expenses recorded for leases. The components of lease cost for the year ended December 31, 2022 were as follows (dollars in thousands): Finance lease cost Amortization of right-of-use assets $ 1,990 Interest on lease liabilities 664 Total finance lease cost 2,654 Operating lease cost 4,657 Variable lease cost 159 Total lease cost $ 7,470 The following table summarizes future lease payments as of December 31, 2022 (dollars in thousands): Fiscal year Operating Leases Finance Leases 2023 $ 5,517 $ 1,722 2024 5,491 1,757 2025 5,251 1,792 2026 5,210 1,828 2027 2,893 1,864 Thereafter 9,284 — Total 33,646 8,963 Less: Imputed Interest 13,064 1,029 Present value of net lease payments $ 20,582 $ 7,934 Lease liability, current portion $ 2,538 $ 1,364 Lease liability, net of current portion 18,044 6,570 Total lease liability $ 20,582 $ 7,934 Supplemental information and non-cash activities related to operating and finance leases are as follows (dollars in thousands): 2022 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 4,143 Operating cash flows from finance leases 686 Financing cash flows from finance leases 1,888 $ 6,717 Recognition of operating ROU assets and lease liabilities as part of the adoption of ASC 842 and for new leases entered into during the year ended December 31, 2022 Operating leases $ 21,865 173 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements December 31, 2022 Weighted average remaining lease term (in years) Operating leases 6.4 Finance leases 5 Weighted average discount rate Operating leases 15.6 % Finance leases 5.0 % On February 4, 2019, the Company entered into a Purchase and Sale Agreement (“PSA”) for the Company’s headquarters (“HQ”) with Atlas Capital Investors V, LP (“Atlas”) for a sale price of $ 29.0 million. In March 2019, the Company entered into an agreement to lease its headquarters back from Atlas for a term of three years , with an option to repurchase the property at any time prior to the expiration of the lease for a purchase price equal to the greater of $ 44.0 million or the fair market value of the HQ, as determined in accordance with the lease agreement. Due to the inclusion of the purchase option in the lease agreement, the Company was considered to have continuing involvement and, thus, accounted for the transaction as a failed sale leaseback, with the HQ assets subject to the sale leaseback remaining on the balance sheet and the sale proceeds recorded as a liability in accordance with the financing method. The Company recognized a $ 29.0 million financing obligation recorded in Accrued expenses and other current liabilities and Capital leases, less current portion on the Consolidated Balance Sheets as of December 31, 2021. No gain or loss was record on the failed sale-leaseback. The Company continued to capitalize and depreciate the HQ asset. The ongoing lease payments to Atlas were recorded as reductions to the finance obligation and interest expense in the Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2022 and 2021. The Company recorded interest expense of $ 1.4 million and $ 1.5 million during the years ended December 31, 2022 and 2021, respectively. ASC 840 Disclosures Related to Periods Prior to Adoption of ASC 842: Prior to January 1, 2022, the Company analyzed all leases in accordance to ASC 840. The Company’s lease agreements include leasehold improvement incentives as well as escalation clauses. The Company recorded rent expense on a straight-line basis over the lease term. The Company has several noncancelable operating leases, primarily for office space, with various expiration dates through April 2027. These leases generally contain renewal options for periods ranging from three to five years and require the Company to pay all executory costs such as maintenance and insurance. The Company recorded rent expense of $ 2.7 million for the year ended December 31, 2021. The minimum aggregate future obligations under non-cancelable operating leases as of December 31, 2021 were as follows (dollars in thousands): Year ended December 31, 2022 $ 2,384 2023 2,695 2024 2,775 2025 2,859 2026 2,944 Thereafter 991 $ 14,648 174 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements As of December 31, 2021, the Company had three capital leases, one in Hanford, California for its ieFactory California production facility, and two equipment leases. The minimum aggregate future minimum lease payments under capital leases as of December 31, 2021 were as follows (dollars in thousands): Year ended December 31, 2022 $ 2,574 2023 2,166 2024 1,757 2025 1,792 2026 1,840 Thereafter 1,864 $ 11,993 14. Commitments and Contingencies Legal Proceedings 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 and its former Chief Executive Officer and Chief Financial Officer, its current Chief Product and User Ecosystem Officer, as well as the CFO of Legacy FF, 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 defendants filed a motion to dismiss the amended complaint. Following briefing by the parties and a hearing on the motion, on October 20, 2022, the District Court issued its decision, denying in part and granting in part the Company’s motion to dismiss. The court found, among other things, that the 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 the plaintiffs had failed to sufficiently plead a claim with respect to 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. 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 and with the exception of the judicially dismissed claims, the amended complaint that was the subject of the motion to dismiss is the operative complaint to which the Company’s and the other defendants filed answers on February 10, 2023. The Company continues to claim the suit is without merit and has stated its intention to vigorously defend the suit. Given the early stages of the legal proceedings, it is not possible to predict the outcome of the claims. On March 8 and March 21, 2022, 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 were subsequently consolidated. On May 24, 2022, those consolidated derivative actions were stayed pending resolution of the above-referenced motion to dismiss filed in the Putative Class Action. Additionally, on April 11 and 25, 2022, 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. These lawsuits purport to assert claims on behalf of the Company against various current and former officers and directors of the Company. 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 former Global CEO and CFO, and its current Chief Product and User Ecosystem Officer alleging breaches of fiduciary duties (the “Yun Class Action,” discussed further in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”). On September 19, 2022, a verified complaint was filed in the Court of Chancery of the State of Delaware against FFIE seeking to 175 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements compel an annual general meeting of stockholders. On September 21, 2022, a verified stockholder class action complaint was 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, alleging breaches of fiduciary duties, and aiding and abetting those alleged breaches, in connection with disclosures and stockholder voting leading up to the Business Combination (the “Cleveland Class Action”), which lawsuit was subsequently consolidated with the Yun Class Action (the “Consolidated Delaware Class Action”) . Given the early stages of the legal proceedings, it is not possible to predict the outcome of the claims. Additionally, on September 19, 2022, FF Global, an indirect stockholder of FFIE, filed a lawsuit in the Chancery Court of the State of Delaware against FFIE, seeking the removal of Ms. Susan Swenson and Mr. Brian Krolicki from the Board. On September 27, 2022, the case was dismissed without prejudice pursuant to an agreement between FF Global and FF Top (the “Heads 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 through the date hereof, the Company and certain of its directors and officers have 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. Other Legal Matters As of December 31, 2022 and 2021, the Company had accrued legal contingencies of $ 18.9 million and $ 16.9 million, respectively, recorded within Accrued expenses and other current liabilities 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 legal matters involving third party vendors, such as suppliers 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. During the year ended December 31, 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 the Superior Court of the State of California for the County of Santa Clara by Han’s San Jose Hospitality, LLC, which was seeking damages including unpaid rent, future unpaid rent, unpaid expenses, and unpaid taxes related to the lease for a total of $ 6.4 million. Pursuant to the settlement agreement, the Company agreed to pay $ 1.8 million in cash in January 2022 and an additional $ 3.4 million plus 5 % interest in October 2022 and was liable for the remainder of the settlement, in the amount of $ 1.2 million, 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 and was relieved of the liability of $ 1.2 million. The Company failed to make the $ 3.4 million and interest payments in October 2022. 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. On 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 176 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements 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. The Company expects to receive such indemnification payment returned to it upon the release of such seizure. On January 30, 2023, Riverside Management Group, LLC (“Riverside”) filed a verified complaint seeking to enforce its alleged contractual right to the advancement of all reasonable 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 FFIE and Property Solutions Acquisition Sponsor, LLC (the “TSA”), pursuant to which Riverside provided PSAC with advisory services in connection with the PSAC/Legacy FF merger. In addition to seeking the advancement of such costs and expenses, Riverside also seeks an award of its attorneys’ fees and costs incurred in enforcing its alleged advancement rights under the TSA, and has concurrently filed a Motion for Expedited Proceedings, requesting that trial of the action be conducted on a summary basis and commence within 30 days of the motion’s disposition. The Company entered into a Stipulation and Order with Riverside under which it would 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 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. 177 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements ● 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. 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: ● 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. Please see “ Risk Factors–Risks Related to FF’s Business and Industry–Yueting Jia and FF Global, over which Mr. Jia exercises significant influence, have control over the Company’s management, business and operations, and may use this control 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. ” 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; 178 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements ● 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; ● 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 assessing and enhancing FF’s compliance policies and procedures; ● 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 February 27, 2023, 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 remedial 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. Please see “ Risk Factors – Risks Related to FF’s Business and Industry – FF is taking remedial measures in response to the Special Committee findings. There can be no assurance that such remedial measures will be successful. In addition, there can be no assurance that such remedial measures will be fully implemented in light of the recent corporate governance agreements with FF Top and FF Global and the recent assessment by the Board of FF’s management structure, including management roles, responsibilities and reporting lines.” 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 28, 2022, Mr. Brian Krolicki tendered his resignation from the Board 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 179 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements 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. Subsequent to FFIE announcing the completion of the Special Committee investigation on February 1, 2022, FFIE, certain members of the management team and employees of FFIE 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, 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. 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 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. Vendor Trust FF has been involved in litigation with contractors and suppliers when FF failed to make overdue payments due to cash constraints FF faced, certain of which were settled through the Vendor Trust FF established on April 29, 2019. In exchange for contributing accounts receivable to the Vendor Trust, the participating vendors were required to refrain from bringing legal claims regarding any overdue payment and forbear from exercising remedies on any payables tendered to and accepted by the Vendor Trust. FF’s suppliers and contractors holding aggregate past due payables of approximately $ 116.1 million contributed payables to the Vendor Trust in exchange for interests in the Vendor Trust. Certain FF suppliers and contractors also ultimately received interests in the Vendor Trust related to approximately $ 8.4 million of purchase orders for goods and services to be provided in the future. During September and October 2020, FF paid an aggregate of $ 4.5 million to the Vendor Trust, thus reducing the aggregate past due principal payables and purchase orders held by the Vendor Trust to approximately $ 136.6 million. In the fourth quarter of 2020, the Vendor Trust agreed to amend the agreement governing the satisfaction of interests in the Vendor Trust to permit the conversion of the interests in the Vendor Trust to equity interests in PSAC in connection with the Business Combination. In June 2021, FF and the Vendor Trust further agreed to allow the holders of interests in the Vendor Trust to elect to receive up to $ 10.0 million in cash in the aggregate upon closing of the Business Combination, which would reduce on a dollar-for-dollar basis the number of equity interests to be issued to such holders in satisfaction of their interests in the Vendor Trust. Fifty-three ( 53 ) of the holders of interests in the Vendor Trust elected to participate in the $ 10.0 million cash distribution at the closing of the Business Combination, and the remaining interests in the Vendor Trust were settled through the conversion of interests into Class A Common Stock and payment of cash at the closing of the Business Combination. 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 shareholder 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 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 amortizes the 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 December 31, 2022, 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 180 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements $ 383.6 million, which included $ 282.3 million for the year ended December 31, 2023, $ 33.8 million for the two years ended December 31, 2025, $ 21.6 million for the two years ended December 31, 2027 and $ 45.9 million thereafter. The $ 282.3 million unconditional contractual obligations for the year ended December 31, 2023 included $ 243.8 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. 15. Stockholders’ Equity The number of authorized, issued and outstanding stock, were as follows: December 31, 2022 Authorized Shares Issued Shares Preferred Stock 10,000,000 — Class A Common Stock 815,000,000 563,346,216 Class B Common Stock 75,000,000 64,000,588 900,000,000 627,346,804 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 Commitment to Issue Class A and Class B Common Stock Former stockholders and noteholders of Legacy FF were required to submit a signed company share letter of transmittal or converting debt letter of transmittal along with a lock-up 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. As of December 31, 2022 and 2021, the Company’s transfer agent has issued 627,346,804 and 168,693,323 legally outstanding shares, respectively. Until the holder of the right to receive shares of the Company’s Class A Common Stock is issued shares, that holder does not have any of the rights of a stockholder. During the year ended December 31, 2022, the Company issued 89,152,131 shares of Class A Common Stock 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. Amendments to the Company’s Certificate of Incorporation On the Closing Date of the Business Combination, the Company’s shareholders 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 181 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements 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. Voting The holders of Class A Common Stock and Class B Common Stock are entitled to one vote for each share held of record on all matters to be voted on by stockholders until the occurrence of a Qualifying Equity Market Capitalization, following which holders of Class B Common Stock shall be entitled to ten votes per share and shall continue to be entitled to ten votes per share regardless of whether the Qualifying Equity Market Capitalization shall continue to exist or not thereafter. A “Qualifying Equity Market Capitalization” is defined as at the end of any 20 consecutive trading days, the Company has a volume weighted average total equity market capitalization of at least $ 20.0 million as determined by multiplying the average closing sale price per share of Class A Common Stock on the NASDAQ at the time of determination by the then total number of issued shares of Class A Common Stock, Class B Common Stock and other shares of the Company. Pursuant to the Amended Shareholder Agreement, as further described in Note 19, Subsequent Events , FF Top informed the Company that it expects the Company will submit a proposal to the Company stockholders for approval to amend the Amended and Restated Charter to provide that (i) the voting power of the Company’s Class B Common Stock, of which FF Global owns all outstanding shares, will be 10 votes per share and (ii) the voting power of the Company’s Class B Common Stock will increase from 10 votes per share to 20 votes per share following the occurrence of a Qualifying Equity Market Capitalization, as expected to be amended. Pursuant to the Amended Shareholder Agreement, the definition of a Qualifying Equity Market Capitalization is expected to be defined as FFIE, at the end of any 20 consecutive trading days, has a volume weighted average total equity market capitalization of at least $ 3.0 billion (which replaced the previous amount of $ 20.0 billion) as determined by multiplying the average closing sale price per share of Class A Common Stock on the Nasdaq (or such other securities exchange on which PSAC’s securities are then listed for trading) at the time of determination by the then total number of issued shares of Class A Common Stock, Class B Common Stock and other shares of FFIE. Conversion Shares of Class B Common Stock have the right to convert into shares of Class A Common Stock at any time at the rate of one share of Class A Common Stock for each share of Class B Common Stock; however, FF Top has agreed not to convert its shares of Class B Common Stock into shares of Class A Common Stock in connection with the special meeting of stockholders held on February 28, 2023, after which, FF Top may again convert the shares Class B Common Stock it holds at any time. Class A Common Stock does not have the right to convert into Class B Common Stock. Liquidation In the event of any voluntary or involuntary liquidation, dissolution, or winding-up of the Corporation, after payment or provision for payment of the debts and other liabilities of the Corporation, the holders of the shares of the Common Stock shall be entitled to receive all the remaining assets of the Corporation available for distribution to its stockholders, ratably in proportion to the number of shares of the Common Stock held by them. 182 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements Warrants The number of outstanding warrants to purchase the Company’s Class A Common Stock as of December 31, 2022 were as follows: Number of Warrants Exercise Price Expiration Date SPA Warrants (1) 346,453,115 $ 0.23 Various through September 23, 2029 ATW NPA Warrants (2) 76,804,450 $ 0.23 Various through August 10, 2028 Other warrants 29,454,593 $ 0.23 August 5, 2027 Public Warrants (3) 23,540,988 $ 11.50 July 21, 2026 Private Warrants (4) 111,131 $ 11.50 July 21, 2026 Total 476,364,277 (1) The warrants were issued pursuant to the SPA and recorded at fair value at each issuance date and at each reporting date. (2) The ATW NPA Warrants were exercised in full after the balance sheet date (see Note 19, Subsequent Events ). On September 23, 2022, the Company and Purchasers of the ATW NPA Notes entered into an agreement to place a total of 31,118,718 outstanding warrants related to the Optional Notes and the June 2021 Notes (see Note 11, 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 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 Optional Notes and the June 2021 Notes totaling 29,158,364 warrants, are agreed to have their exercise price set at $ 0.50 per warrant. As described in Note 19, Subsequent Events , the holders exercised all ATW NPA Warrants and as a result the Company’s right to force the exercise of such warrants terminated. 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 recognition of expense of $ 1,238 in Change in fair value measurements in the unaudited Consolidated Statements of Operations and Comprehensive Loss for the year ended December 31, 2022. (3) During 2022, PSAC Sponsor transferred 563,420 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. (4) The Private Warrants are recorded in Other liabilities, less current portion in the Consolidated Balance Sheets as of December 31, 2022 and December 31, 2021. The number of outstanding warrants to purchase the Company’s Class A Common Stock as of December 31, 2021 were as 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 28,196,377 183 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements (1) The Private Warrants are recorded in Other liabilities, less current portion in the Consolidated Balance Sheet as of December 31, 2021. Conversion of Related Party Notes Payable and Notes Payable Prior to the Business Combination On May 13, 2021, related party notes payable with aggregate principal amounts of $ 90.9 million and accrued interest of $ 43.5 million were converted into shares of Legacy FF convertible preferred stock and on July 21, 2021, the convertible preferred stock was converted into a commitment to issue 10,888,580 shares of Class A Common Stock upon the Closing of the Business Combination. Prior to the Business Combination, the Company converted: (i) related party notes payable with a principal amount of $ 130,479 and accrued interest of $ 30.0 million into the commitment to issue 11,566,196 shares of Class A Common Stock; and (ii) notes payable with a principal balance of $ 75.1 million and accrued interest of $ 23.3 million into the commitment to issue 7,823,306 shares of Class A Common Stock. Conversion of Liabilities as Part of the Business Combination In conjunction with the closing of the Business Combination, the Company paid $ 140.0 million in cash and committed to issue 24,464,994 shares of Class A Common Stock to settle liabilities of the Company and to compensate active and former employees, as further described in Note 4, Business Combination. Insufficient Authorized Shares From time to time, certain 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. In such case, the Company applies a sequencing policy under ASC 815-40, Contracts in Entity’s Own Equity , whereby, in the event that reclassification of contracts from equity to assets or liabilities is necessary due 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 recognized at fair value with changes in fair value recognized in earnings until such time 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 as a result of the Company having insufficient authorized shares to share-settle the earnout, which was previously determined to be equity classified under ASC 815-40. As a result of the reclassification, the Company reclassified $ 2.25 million out of additional paid-in capital into the earnout liability, which is included in Other current liabilities on the 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. 16. 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 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 184 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements determined by the Board of Directors. As of the date of issuance of the Consolidated Financial Statement, 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 December 31, 2022 and 2021 the Company had 24,252,537 and 49,573,570 shares of Class A Common Stock available for future issuance under the 2021 SI Plan. Option Awards A summary of the Company’s stock option activity under the SI Plan 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, 2021 — $ — Granted 8,633,607 $ 3.04 Exercised — Cancelled/forfeited ( 1,987,155 ) 3.96 Outstanding as of December 31, 2022 6,646,452 $ 2.76 8.97 $ — Exercisable as of December 31, 2022 2,675,027 1.85 8.38 — As of December 31, 2022, the total unrecognized stock-based compensation expense for stock options granted under the SI Plan was $ 2.6 million, which is expected to be recognized over a weighted average period of 2.87 years. The weighted-average assumptions used in the Black-Scholes option pricing model for awards granted during the year ended December 31, 2022 are as follows: 2022 Risk-free interest rate: 2.73 % Expected term (in years): 6.99 Expected volatility: 67.00 % Dividend yield: 0 % Grant date fair value per share $ 3.19 The total grant date fair value of options vested during the year ended December 31, 2022 was $ 2.7 million. Restricted Stock Units A summary of the Company’s RSU activity under the SI Plan is as follows: Shares Weighted Average Fair Value Outstanding as of December 31, 2021 — $ — Granted 29,247,487 $ 0.87 Released ( 10,015,141 ) $ 0.40 Forfeited ( 1,362,683 ) $ 1.30 Outstanding as of December 31, 2022 (1) 17,869,663 $ 1.09 185 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements (1) The Company’s subsidiaries in China have employees who are citizens of People’s Republic of China (PRC). Pursuant to the regulation Circular 78 and Circular 7 issued by the Central State Administration of Foreign Exchange of PRC (“SAFE”), we 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, 1,448,697 RSUs of the Company’s PRC citizens employees vested in 2022 were included in the outstanding RSUs at December 31, 2022 as unreleased RSUs because those employees did not complete the SAFE registration process. As of December 31, 2022, the total unrecognized stock-based compensation expense for RSUs granted under the SI Plan was $ 9.5 million which is expected to be recognized over a weighted average period of 3.18 years. The total fair value of RSUs vested during the year ended December 31, 2022 was $ 6.0 million. As further described in Note 3, Liquidity and Capital Resources and Going Concern , during 2022 management had been undertaking certain cash conservation measures directed toward achieving start of production of the FF 91 with available and secured funds. As part of these measures, in October 2022, management implemented the Crowd Entrepreneurship – 2022 RSU Project (“CEP”), according to which employees were granted 9,094,405 RSUs, fully vested on December 31, 2022 subject to continued employment with the Company. The RSUs were granted in lieu of at least a 25 % reduction in salary from November 1, 2022 to December 31, 2022, subject to certain laws and regulations. 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. On the Closing Date and in connection with the Business Combination, each of the Legacy FF’s outstanding options under the EI Plan immediately prior to the closing of the Business Combination remained outstanding and converted into the right to purchase the Company’s Class A Common Stock based on the Exchange Ratio. A summary of the Company’s stock option activity under the EI Plan 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, 2020 30,402,801 $ 2.45 8.75 $ 885 Granted 5,287,031 4.74 Exercised ( 2,757,671 ) 2.30 7,740 Expired/forfeited ( 969,240 ) 3.65 Outstanding as of December 31, 2021 31,962,921 $ 2.81 7.77 $ 86,075 Granted — — Exercised ( 1,606,795 ) 2.52 3,658 Expired/forfeited ( 6,933,850 ) 2.58 8,784 Outstanding as of December 31, 2022 23,422,276 $ 2.83 6.92 $ 22 Exercisable as of December 31, 2022 16,013,998 $ 2.63 6.62 $ 21 186 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements The weighted-average assumptions used in the Black-Scholes option pricing model for awards granted during the year ended December 31, 2021 are as follows: 2021 Risk-free interest rate: 0.79 % Expected term (in years): 6.05 Expected volatility: 42.10 % Dividend yield: 0.00 % The total grant date fair value of options vested during the years ended December 31, 2022 and 2021 was $ 6.5 million and $ 7.0 million, respectively. As of December 31, 2022, the total unrecognized stock-based compensation expense for stock options granted under the EI Plan was $ 6.1 million which is expected to be recognized over a weighted average period of 2.3 years. STI Plan On May 2, 2019, the Company adopted its Special Talent Incentive Plan (“STI Plan”) under which the Board of Directors may 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. On January 27, 2021, in conjunction with entering into a service agreement with its lessor of the facility located in Hanford, California, the Company issued 399,553 fully-vested options with an exercise price of $ 2.767 per share. In the event that the intrinsic value of the option is less than the accrued outstanding rent payments of $ 0.9 million upon close of the Business Combination, the Company will pay the lessor the difference in a single cash payment, otherwise, the accrued outstanding rent will be deemed paid. Upon close of the Business Combination, the intrinsic value of the option was more than the accrued outstanding rent payments and therefore the accrued outstanding rent was deemed paid. On the Closing Date and in connection with the Business Combination, each of the Company’s outstanding options under the STI Plan immediately prior to the closing of the Business Combination remained outstanding and converted into the right to purchase Class A Common Stock equal to the number of shares subject to such option multiplied by the Exchange Ratio at an exercise price per share equal to the current exercise price per share for such option divided by the Exchange Ratio. 187 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements A summary of the Company’s stock option activity under the STI Plan 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, 2020 6,490,208 $ 2.49 9.26 $ 1,174 Granted 5,516,399 7.82 Exercised ( 1,630,925 ) 2.54 8,807 Expired/forfeited ( 848,955 ) 2.68 Outstanding as of December 31, 2021 9,526,727 $ 5.55 8.01 $ 13,905 Granted — $ — Exercised ( 2,181,335 ) 2.50 1,468 Expired/forfeited ( 1,726,880 ) 7.78 Outstanding as of December 31, 2022 5,618,512 $ 6.34 6.94 $ — Exercisable as of December 31, 2022 1,181,230 $ 3.96 6.20 $ — The Company elected to use the contractual term of non-employee options awarded under the STI Plan as the expected term. The weighted-average assumptions used in the Black-Scholes option pricing model for awards granted during the year ended December 31, 2021 are as follows: 2021 Risk-free interest rate: 1.39 % Expected term (in years): 9.06 Expected volatility: 35.86 % Dividend yield: 0.00 % The total grant date fair value of options vested during the years ended December 31, 2022 and 2021 was $ 0.1 million and $ 3.1 million, respectively. As of December 31, 2022, the total unrecognized stock-based compensation expense for stock options granted under the STI Plan was $ 1.3 million, which is expected to be recognized over a weighted average period of approximately 3.5 years. Stock-based compensation expense The following table presents stock-based compensation expense for all of the Company’s SI Plan, EI Plan, STI Plan and Common Units of FF Global Partners LLC included in each respective expense category in the Consolidated Statements of Operations and Other Comprehensive Loss for the years ended December 31 (dollars in thousands): 2022 (As Restated) 2021 Research and development $ 13,118 $ 4,001 Sales and marketing 1,744 1,185 General and administrative 2,802 6,159 $ 17,664 $ 11,345 188 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements Restricted Stock Awards for Employee Bonus On July 21, 2021, in connection with the closing of the Business Combination, the Company issued 1,404,459 restricted stock awards (“RSAs”) with a grant date fair value of $ 13.78 per share as a bonus to employees and other service providers. The restricted stock awards vest 90 days from the grant date. As of December 31, 2021, 53,489 of these restricted stock awards had been forfeited. The following table presents stock-based compensation expense related to RSAs included in each respective expense category in the Consolidated Statements of Operations and Other Comprehensive Loss for the year ended December 31, 2021 (dollars in thousands): Restricted stock awards for employee bonus, net 2021 Research and development $ 7,613 Sales and marketing 2,310 General and administrative 8,694 $ 18,617 17. Income Taxes The provision for income tax consisted of the following (dollars in thousands): 2022 2021 Current: Federal $ — $ — State 2 3 Foreign 59 237 Total current 61 240 Deferred: Federal ( 79,319 ) ( 48,017 ) State ( 37,128 ) ( 49,894 ) Foreign 11,056 ( 9,956 ) Valuation allowance 105,391 107,867 Total deferred — — Total provision $ 61 $ 240 The components of losses before income taxes, by taxing jurisdiction, were as follows for the years ended December 31 (dollars in thousands): 2022 2021 U.S. $ ( 560,897 ) $ ( 408,520 ) Foreign ( 41,281 ) ( 107,745 ) Total $ ( 602,178 ) $ ( 516,265 ) 189 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements The provision for income taxes for the years ended December 31, differs from the amount computed by applying the statutory federal corporate income tax rate of 21% to losses before income taxes as a result of the following: 2022 2021 Federal income tax expense 21.0 % 21.0 % State income taxes (net of federal benefit) 4.7 % 3.8 % Permanent differences ( 0.9 ) % ( 0.1 ) % Fair value debt adjustments ( 4.8 ) % ( 4.5 ) % Disallowed interest ( 0.5 ) % ( 0.4 ) % Foreign tax rate difference ( 0.1 ) % ( 0.2 ) % Return-to-provision adjustment 0.3 % ( 3.1 ) % Uncertain tax benefit ( 0.6 ) % ( 0.4 ) Expiration of tax attributes ( 1.6 ) % ( 1.7 ) % State tax rate change on deferred taxes — % 6.4 Valuation allowance ( 17.5 ) % ( 20.8 ) % Effective tax rate 0.0 % 0.0 % The main changes in permanent differences related to fair value adjustments on convertible related party notes payable and notes payable and disallowed interest expense due to embedded features. The main changes in foreign tax rate difference and valuation allowance related to higher foreign losses incurred in 2022. The tax effects of temporary differences for the years ended December 31, that give rise to significant portions of the deferred tax assets and deferred tax liabilities are provided below (dollars in thousands): 2022 2021 Deferred Tax Assets: Net operating losses (“NOL”) $ 342,888 $ 225,339 Research and development credits 4,239 4,240 Accrued liabilities 14,762 16,258 Construction in progress — — Excess interest expense under section 163(j) — 5,018 Capital losses 3,420 3,420 Amortization 11,284 12,176 Stock-based compensation 3,385 187 Other 1,278 1,714 Gross deferred tax assets 381,256 268,352 Valuation allowance ( 361,804 ) ( 256,413 ) Deferred tax assets, net of valuation allowance 19,452 11,939 Deferred Tax Liabilities: Depreciation ( 290 ) ( 573 ) State taxes ( 19,162 ) ( 11,366 ) Total deferred tax liabilities ( 19,452 ) ( 11,939 ) Total net deferred tax assets (liabilities) $ — $ — The Company has recognized a full valuation allowance as of December 31, 2022 and 2021 since, in the judgment of management given the Company’s history of losses, the realization of these deferred tax assets was not considered more likely 190 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements than not. The valuation allowance was $ 361.8 million and $ 256.4 million as of December 31, 2022 and 2021, respectively, with increases attributable to the current year’s provision. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which those temporary differences become deductible. Management considers projected future taxable income and tax planning strategies in making this assessment. During 2022 and 2021, the Company evaluated the realizability of its net deferred tax assets based on available positive and negative evidence and concluded that the likelihood of realization of the benefits associated with its net deferred tax assets does not reach the level of more likely than not due to the Company’s history of cumulative pre-tax losses and risks associated with the generation of future income given the current stage of the Company’s business. As of December 31, 2022, the Company has U.S. federal and foreign net operating loss carryforwards of $ 1,142.8 million and $ 67.5 million, respectively, which will begin to expire in 2034 and 2023, respectively. The U.S. federal net operating loss carryforwards of $ 1,062.3 million generated post the Tax Cuts and Jobs Act may be carried forward indefinitely, subject to the 80% taxable income limitation on the utilization of the carryforwards. The U.S. federal net operating loss carryforwards of $ 80.5 million generated prior to December 31, 2017 may be carried forward for twenty years. As of December 31, 2022, the Company has California net operating loss carryforwards of $ 936.9 million, which will begin to expire in 2034. The Company has no U.S. federal R&D tax credit carryforwards and a state R&D tax credit carryforward of $ 4.2 million as of December 31, 2022. The U.S. state tax credits do not expire and can be carried forward indefinitely. In accordance with Internal Revenue Code Section 382 (“Section 382”) and Section 383 (“Section 383”), a corporation that undergoes an “ownership change” (generally defined as a cumulative change (by value) of more than 50% in the equity ownership of certain stockholders over a rolling three-year period) is subject to limitations on its ability to utilize its pre-change NOLs and R&D tax credits to offset post-change taxable income and post-change tax liabilities, respectively. The Company’s existing NOLs and R&D credits may be subject to limitations arising from previous ownership changes, and the ability to utilize NOLs could be further limited by Section 382 and Section 383 of the Code. In addition, future changes in the Company’s stock ownership, some of which may be outside of the Company’s control, could result in an ownership change under Section 382 and Section 383 of the Code. The Company’s intention is to indefinitely reinvest earnings in all jurisdictions outside the United States. As of December 31, 2022 and 2021, there was no material cumulative earnings outside the United States due to net operating losses and the Company has no earnings and profits in any jurisdiction, that if distributed, would give rise to a material unrecorded liability. The Company is subject to taxation and files income tax returns with the U.S. federal government, California and China. As of December 31, 2022, the 2017 through 2022 federal returns and 2017 through 2022 state returns are open to exam. The Company is not under any income tax audits. All of the prior year tax returns, from 2017 through 2022, are open under China tax law. Uncertain Income Tax Position The aggregate change in the balance of unrecognized tax benefits for the years ended December 31, is as follows (dollars in thousands): 2022 2021 Beginning balance $ 4,997 $ 2,666 Increase related to current year tax positions 3,810 2,331 Ending balance $ 8,807 $ 4,997 In accordance with ASC 740-10, Income Taxes — Overall , the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more likely than not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. No interest and penalties related to the Company’s unrecognized tax benefits was accrued as of December 31, 2022 and 2021, as the uncertain tax benefit only reduced the net operating losses. The Company does not expect its uncertain income tax positions to have a material impact on its consolidated financial statements within the next twelve months. As of December 31, 2022 and 191 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements 2021, the realization of uncertain tax positions were not expected to impact the effective rate due to a full valuation allowance on federal and state deferred taxes. The following table summarizes the valuation allowance (dollars in thousands): 2022 2021 Beginning balance $ 256,413 $ 256,413 Increase related to current year tax positions 105,391 — Ending balance $ 361,804 $ 256,413 18. Net Loss per Share Net Loss Per Share Attributable to Common Stockholders Basic net loss 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 loss per share, 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 merger, as such shares are non-contingent and are issuable for no consideration (see Note 4, Business Combination) . The net loss per 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 Consolidated Statements of Operations and Comprehensive Loss. Because the Company 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 calculation of net loss per share. The following table presents the number of anti-dilutive shares excluded from the calculation of diluted net loss per share as of December 31: 2022 2021 Convertible SPA notes 43,942,609 — SPA make-whole provisions 130,180,503 — SPA warrants 346,453,115 — Convertible ATW notes — 9,009,210 ATW NPA warrants 76,804,450 — Other warrants 29,454,593 4,544,258 Stock-based compensation awards – SI Plan - Options 6,646,452 — Stock-based compensation awards – SI Plan - RSUs (1) 17,869,663 Stock-based compensation awards – EI Plan 23,422,276 31,962,921 Stock-based compensation awards – STI Plan 5,618,512 9,526,727 Public warrants 23,540,988 22,977,568 Private warrants 111,131 674,551 Total 704,044,292 78,695,235 (1) The Company’s subsidiaries in China have employees who are citizens of the PRC. Pursuant to the regulation Circular 78 and Circular 7 issued by the Central State Administration of Foreign Exchange of PRC (“SAFE”), we cannot release vested RSUs to its PRC citizen 192 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements 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, 1,448,697 RSUs of the Company’s PRC citizens employees vested in 2022 were included in the outstanding RSUs at December 31, 2022 as unreleased RSUs because those employees did not complete the SAFE registration process. 19. Subsequent Events The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the Consolidated Financial Statements were issued. Other than as described below, the Company did not identify any subsequent events that would have required adjustment or disclosure in the Consolidated Financial Statements. Bridge Notes Conversions Between January 9, 2023 and the date of the filing of this Annual Report on Form 10-K, the Purchasers converted portions of the aggregate principal amount of the outstanding convertible notes of $ 23.5 million of Bridge Notes principal at a conversion price of $ 0.89 to $ 1.05 per share into 78,342,565 shares of Class A Common Stock. Amended and Restated Shareholder Agreement On January 13, 2023, the Company entered into an Amended and Restated Shareholder Agreement (the “Amended Shareholder Agreement”) with FF Top, pursuant to which the Company agreed to submit proposals for approval by the Company’s stockholders regarding the following amendments to the Company’s Amended and Restated Charter: (i) an amendment to provide that (a) the voting power of the Class B Common Stock will be 10 votes per share, and (b) the voting power of the Class B Common Stock will increase from 10 votes per share to 20 votes per share immediately following the Company achieving a $ 3,000,000 equity market capitalization; (ii) an amendment to include in the Amended and Restated Charter FF Top’s right to nominate and propose removal of its designees to the Board pursuant to the Amended Shareholder Agreement; (iii) an amendment to provide stockholders with a written consent right subject to certain conditions, including that FF Top continue to hold a certain number of shares of Common Stock; and (iv) an amendment to require, in the case of amendments to the Amended and Restated Charter or to the Company’s amended and restated bylaws that amend the rights afforded to FF Top pursuant to the Amended Shareholder Agreement, (a) unanimous Board approval, (b) approval by holders of two-thirds of all issued and outstanding shares of Common Stock, voting together as a single class, and (c) approval by holders of a majority of issued and outstanding shares of Class B Common Stock, voting together as a separate class. The Company intends to call a special meeting in March 2023 to obtain stockholder approval of these proposals. Fifth Amendment to the SPA On January 25, 2023, FFIE entered into a Limited Consent and Amendment No. 5 to the SPA (“Fifth Amendment”) with FF Simplicity as administrative and collateral agent and Senyun as purchaser, pursuant to which Senyun agreed to purchase 10.0 million in principal amount of additional SPA Notes no later than January 27, 2023, which 10.0 million amount was funded on January 26, 2023. Pursuant to the Fifth Amendment, FFIE also agreed (a) to use commercially reasonable efforts to file an amendment to the Company’s registration statement (File No. 333-268972) no later than January 29, 2023 and to seek effectiveness of such registration statement on or prior to February 10, 2023, which effectiveness notice was received on February 8, 2023 ; (b) to use commercially reasonable efforts to file an additional registration statement on Form S-1 registering the re-sale by Senyun of all remaining shares of Class A Common Stock underlying Senyun’s SPA Notes and SPA Warrants no later than February 10, 2023 and to seek effectiveness of such additional registration statement as promptly as practicable thereafter (which registration statement was eventually filed on February 13, 2023); (c) to honor the conversion notice submitted by Senyun on January 18, 2023, and to reserve sufficient shares of Class A Common Stock to satisfy the conversion and exercise of all of Senyun’s SPA Notes and SPA Warrants to the extent FFIE has sufficient authorized but unissued or uncommitted shares of Class A Common Stock. The notes subjected to the January 18, 2023 conversion notice were issued in February 2023. Sixth Amendment to the SPA On February 3, 2023, the Company entered into an amendment to the SPA (“Sixth Amendment”) with FF Simplicity as administrative and collateral agent and Senyun, FF Top, FF Simplicity and other purchasers, pursuant to which the Company secured funding commitments of $ 135.0 million in exchange for the issuance of senior secured convertible notes (“Tranche C 193 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements Notes”). The funding of such commitments shall be in stages and contingent upon completing certain conditions, as described in the agreement between the parties. The Tranche C Notes constitute SPA Notes and, among others, are issuable at 10 % original issue discount and have a $ 1.05 base conversion price subject to full ratchet anti-dilution price protection and other adjustments as set forth therein, five year interest make-whole (calculated using the greater of (x) $ 0.21 per share of Common Stock and (y) 90 % of the lowest VWAP for the five consecutive trading days ending on the trading day that is immediately prior to the date on which interest is paid in shares of Common Stock), which entitle the lenders to receive all interest that accrued and would have accrued on their converted notes had they been held to maturity, 10 % per annum interest rate (or 15 % if paid in Common Stock subject to certain conditions). As part of the Sixth Amendment, the Company agreed to issue warrants, which constitute SPA Warrants, to purchase number of shares of Common Stock equal to 33 % of such purchaser’s conversion shares, with an exercise price equal to $ 1.05 per share, subject to full ratchet anti-dilution price protection and other adjustments and a seven year termination date. Each purchaser also has the option to purchase a certain amount of additional notes and warrants from time to time for twelve months from the effective date of the Sixth Amendment (“Tranche D Notes”). The Company received gross proceeds of $ 70.0 million as part of the Sixth Amendment ($ 62.2 million net of original issue discount and transaction costs). Warrant Exchange Agreement Pursuant to the Sixth Amendment and the Exchange Agreements entered into concurrently therewith between FFIE and holders of ATW NPA Warrants and SPA Warrants (“Exchange Agreements”), (i) the provision under the ATW NPA Warrants and SPA Warrants then-issued that allowed investors to receive the right to purchase additional shares in connection with down round financings was removed, (ii) the ATW NPA Warrants and FF Simplicity’s SPA Warrants then issued, exercisable for an aggregate of 198,129,990 shares of Class A Common Stock, were exchanged for a combination of new warrants, exercisable at $ 0.23 per share subject to full ratchet anti-dilution price protection and other adjustments, for an aggregate of 42,489,346 shares of Class A Common Stock and new senior secured convertible notes with aggregate principal amount of $ 25.0 million, and (ii) Senyun’s SPA Warrants then issued, exercisable for an aggregate amount of 276,270,842 shares of Class A Common Stock, were exchanged for a combination of new warrants, each exercisable at $ 0.2275 per share subject to full ratchet anti-dilution price protection and other adjustments, for an aggregate of 48,000,000 shares of Class A Common Stock and new senior secured convertible notes with aggregate principal amount of $ 16.0 million (collectively with the notes issued pursuant to clause (ii), the “exchange Notes”). The Exchange Notes are convertible at a conversion rate calculated at the lesser of (a) 90 % of the VWAP for the trading day that is immediately prior to the date on which interest is paid in shares of Common Stock or (b) the greater of (x) $ 0.21 per share of Common Stock and (y) 90 % of the average VWAP for the five consecutive trading days ending on the trading day that is immediately prior to the date on which interest is paid in shares of Common Stock. The Exchange Notes will constitute SPA Notes, except: (i) the holders thereof do not have the option under the SPA to purchase certain additional SPA Notes within 24 months from the effective date of the Sixth Amendment; (ii) such notes are not subject to any prepayment premium or penalty applicable to other SPA Notes; (iii) such notes are not subject to an original discount of 10 %; and (iv) such notes are not entitled to the most favorable terms granted to other SPA Notes purchased simultaneously or after the purchase of such notes. Such notes are prepayable and redeemable at par at any time by FFIE upon fifteen days ’ prior written notice. Bridge Warrant and ATW NPA Warrant Exercises Between January 13, 2023 and February 7, 2023, Holders of Bridge Warrants exercised 35,314,752 Bridge Warrants using an exercise price of $ 0.23 per share into 31,087,999 shares of Class A Common Stock. Between January 13, 2023 and February 7, 2023, the Investors exercised 25,080,851 NPA ATW Warrants using an exercise price of $ 0.23 per share into 20,040,709 shares of Class A Common Stock. The Company received $ 4.1 million in cash for proceeds of warrants. Tranche B SPA Funding In February 2023, Senyun and a Purchaser affiliated with ATW Partners LLC exercised 20 % of their options to purchase additional senior secured notes and SPA Warrants of the Company under the same terms as the Incremental Notes. The Company received gross proceeds of $ 18.0 million $ 16.2 million net of original issuance discount) in exchange for such issuances. 194 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements Start of Production and Start of Delivery Incentive Plan On February 16, 2023, the Board approved the Company’s Start of Production and Start of Delivery Incentive Plan (“Incentive Plan”) granting cash bonuses and equity incentive awards to all active employees of the Company upon the commencement of the start of production of the Company’s FF 91 Futurist on or prior to March 31, 2023 and the commencement of the start of delivery of the Company’s FF 91 Futurist on or prior to April 30, 2023. The Company determined that the Incentive Plan does not have a material impact on the Consolidated Financial Statements as of and for the year ended December 31, 2022. Reporting Lines Restructuring 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. Authorized Shares On February 28, 2023, the Company’s stockholders approved the proposal adopt an amendment to the Company’s Second Amended and Restated Certificate of Incorporation to increase the number of authorized shares of Class A Common Stock from 815,000,000 to 1,690,000,000 , increasing the total number of authorized shares of Common Stock and Preferred Stock from 900,000,000 to 1,775,000,000 . 195 Table of Contents Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosures None.