What changed in this filing

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

2024-05-28 compared with 2023-03-09 · 1001 added, 1336 removed, 788 unchanged (75% of the section changed)

5 unchanged sentences

Report of Independent Registered Public Accounting Firm (PCAOB Firm ID 339 )

Report of Independent Registered Public Accounting Firm (PCAOB Firm ID 238 )

Consolidated Balance Sheets as of December 31, 2023 and 2022

Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2023 and 2022

Consolidated Statements of Stockholders’ Equity (Deficit) for the years ended December 31, 2022 and 2021

Consolidated Statements of Stockholders’ Equity for the years ended f December 31, 2023 and 2022

Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022

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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.

We have audited the accompanying consolidated balance sheets of Faraday Future Intelligent Electric Inc.

and subsidiaries (the “Company”) as of December 31, 2023 and 2022, and the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2023, 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, 2023 and 2022, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

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 2 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.

As discussed in Note 2, Liquidity and Capital Resources and Going Concern in 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.

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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.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

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.

We conducted our audits 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.

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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.

Our audits 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.

Our audits 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 audits provide a reasonable basis for our opinion.

/s/ Mazars USA LLP

We have served as the Company’s auditor since 2022.

March 9, 2023

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 to the consolidated financial statements, 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.

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.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

We believe that our audit provides a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

Los Angeles, California

We served as the Company's auditor from 2018 to 2022.

Faraday Future Intelligent Electric Inc.

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Restricted cash 2,127 1,546

Accounts receivable, net

Inventory 34,229 4,457

Deposits 31,382 44,066

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Property and equipment, net 417,812 406,320

Finance lease right-of-use assets — 12,362

Operating lease right-of-use assets 16,486 19,588

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Accrued expenses and other current liabilities 62,391 65,709

Bridge warrants 95,130 —

Related party accrued interest — 11,231

Warrant liabilities 285 92,781

Related party warrant liabilities 21 —

Accrued interest 25 189

Operating leases liabilities, current portion 2,538 —

Finance leases liabilities, current portion 1,364 2,574

Related party notes payable 8,406 13,655

Related party accrued interest 753 —

Operating lease liabilities, current portion 3,621 2,538

Finance lease liabilities, current portion — 1,364

Related party notes payable, current portion 9,760 8,964

Notes payable, current portion 91,150 5,097

Total current liabilities 261,176 268,245

Finance leases liabilities, less current portion 6,570 7,570

Operating leases liabilities, less current portion 18,044 —

Financial obligations on a sale and lease back transaction 25,483 —

Finance lease liabilities, less current portion — 6,570

Operating lease liabilities, less current portion 14,306 18,044

Other liabilities 1,338 9,429

Related party notes payable, less current portion — —

Notes payable, less current portion — 26,008

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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

2,187,500 and 312,500 shares authorized;

266,670 shares issued and outstanding as of December 31, 2023 and 2022

Preferred Stock, $ 0.0001 par value, 10,000,000 shares authorized, zero share issued and outstanding as of December 31, 2023 and 2022

Additional paid-in capital 4,180,869 3,724,242

Accumulated other comprehensive income (loss) 3,505 ( 6,945 )

Accumulated other comprehensive gain 5,862 3,505

Accumulated deficit ( 3,958,499 ) ( 3,526,755 )

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(in thousands, except share and per share data)

Auto sales $ 784 $ —

Cost of revenues

Auto sales 42,607 —

Gross loss ( 41,823 ) —

Operating expenses

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Loss on disposal of property and equipment 4,453 2,695

Change in fair value of earnout liability 2,033 —

Total operating expenses 244,231 437,144

Loss from operations ( 286,054 ) ( 437,144 )

Change in fair value measurements ( 69,671 ) ( 22,700 )

Change in fair value of notes payable and warrant liabilities 89,860 ( 70,512 )

Change in fair value of related party notes payable and related party warrant liabilities 7,101 —

Loss on settlement of notes payable ( 217,019 ) ( 73,204 )

Loss on settlement of related party notes payable ( 20,045 ) —

Interest expense ( 2,288 ) ( 5,561 )

1 unchanged sentence

Other expense, net ( 2,437 ) ( 11,878 )

Loss on settlement of related party notes payable, notes payable, and vendor payables in trust, net ( 7,690 ) ( 86,904 )

Loss before income taxes ( 431,635 ) ( 602,178 )

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Per share information (Note 15):

Net loss per Common Stock – Class A and Class B – basic and diluted $ ( 1.50 ) $ ( 2.21 )

Weighted average Common Stock outstanding – Class A and Class B – basic and diluted 367,254,444 233,390,675

Net loss per share of Class A and B Common Stock attributable to common stockholders:

Basic ( 44.81 ) $ ( 393.56 )

Diluted ( 44.81 ) $ ( 393.56 )

Weighted average common shares used in computing net loss per share of Class A and Class B Common Stock:

Basic 9,634,759 1,530,227

Diluted 9,634,759 1,530,227

Total comprehensive loss

Net loss $ ( 431,744 ) $ ( 602,239 )

Change in foreign currency translation adjustment 10,450 ( 971 )

Total comprehensive loss $ ( 541,619 ) $ ( 517,476 )

The accompanying notes are an integral part of these consolidated financial statements.

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

Capital Accumulated

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 9) 22,454,776 2 — — 294,794 — — 294,796

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

Issuance of Class A Common Stock in the Business Combination, net of transaction costs (Note 3) 27,798,411 3 — — 170,111 — — 170,114

Conversion of assumed PSAC convertible and promissory notes payable into Class A Common Stock (Note 9) 80,000 — — — 790 — — 790

Conversion of liabilities into Class A Common Stock in the Business Combination (Note 3) 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 3) — — — — 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 3) ( 87,273,528 ) ( 9 ) ( 64,000,588 ) ( 6 ) 15 — — —

Issuance of Class A Common Stock in the PIPE Financing, net of transaction costs (Note 3) 76,140,000 8 — — 692,397 — — 692,405

Settlement of lawsuit with issuance of vested stock options (Note 13) — — — — 8,459 — — 8,459

Settlement of accrued rent with issuance of vested stock options — — — — 951 — — 951

Vesting of restricted stock award for employee bonus 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 2,357 10,450

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

Total comprehensive loss $ ( 429,387 ) $ ( 591,789 )

The accompanying notes are an integral part of these consolidated financial statements.

Faraday Future Intelligent Electric Inc.

Consolidated Statements of Stockholders’ Equity (Deficit)

Consolidated Statements of Stockholders’ Equity

Years Ended December 31, 2023 and 2022

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Comprehensive

Gain (Loss) Accumulated Deficit Total Stockholders’ Equity (Deficit)

Deficit Total Stockholder’s

Class A Class B

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Receipt of Class A Common Stock in consideration of exercises of options — — ( 1,300 ) — — — ( 669 ) — — ( 669 )

Settlement on restricted stock tax withholding — — — — — — — — — —

Issuance of shares pursuant to the commitment to issue Class A and Class B Common Stock — — 371,468 — 266,670 — — — — —

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Liability for insufficient authorized shares related to earnout — — — — — — ( 2,250 ) — — ( 2,250 )

Issuance of SEPA commitment shares of Class A Common Stock (see Note 13) — — 3,288 — — — 252 — — 252

Balance as of Foreign currency translation adjustment — — — — — — — 10,450 — 10,450

Net loss — — — — — — — — ( 602,239 ) ( 602,239 )

Balance as of December 31, 2022

— $ — 2,347,276 $ — 266,670 $ — $ 3,724,242 $ 3,505 $ ( 3,526,755 ) $ 200,992

The accompanying notes are an integral part of these consolidated financial statements.

Faraday Future Intelligent Electric Inc.

Consolidated Statements of Stockholders’ Equity

Years Ended December 31, 2023 and 2022

(in thousands, except share data)

Common Stock Additional

Capital Accumulated

Comprehensive

Gain (Loss) Accumulated Deficit Total Stockholders’ Equity

Class A Class B

Shares Amount Shares Amount

Balance as of December 31, 2022

2,347,276 $ — 266,670 $ — $ 3,724,242 $ 3,505 $ ( 3,526,755 ) $ 200,992

Conversion of notes payable and accrued interest into Class A Common Stock (Note 7) 25,025,903 3 — — 360,665 — — 360,668

Change in classification of warrants from Additional paid-in capital to liability pursuant to the Warrant Exchange (Note 7) — — — — ( 6,811 ) — — ( 6,811 )

Reclassification of Feb.

28, 2023 earnout shares liability to equity due to authorized share increase (Note 10) — — — — 5,014 — — 5,014

Reclassification of Feb.

28, 2023 stock-based awards liability to equity due to authorized share increase (Note 10) — — — — 8,978 — — 8,978

Reclassification of earnout shares from equity to liability on April 21, 2023 due to insufficient authorized shares (Note 10) — — — — ( 2,112 ) — — ( 2,112 )

Reclassification of stock-based awards from equity to liability on April 21, 2023 due to insufficient authorized shares (Note 10) — — — — ( 2,979 ) — — ( 2,979 )

Reclassification of August 25, 2023 earnout shares liability to equity due to authorized share increase (Note 10) — — — — 1,381 — — 1,381

Reclassification of August 25, 2023 stock-based awards liability to equity due to authorized share increase (Note 10) — — — — 2,043 — — 2,043

Issuance of Common Stock 14,752,057 1 — — 34,491 — — 34,492

Reverse Stock split related round up share issuances 81,560 — — — — — — —

Stock-based compensation — — — — 5,101 — — 5,101

Exercise of warrants 213,037 — — — 51,276 — — 51,276

Exercise of stock options 207 — — — 44 — — 44

Issuance of shares for RSU vesting net of tax withholdings 14,016 — — — ( 464 ) — — ( 464 )

Cancellations ( 1,031 ) — — — — — — —

Foreign Currency translation adjustment — — — — — 2,357 — 2,357

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Stock-based compensation 9,167 17,664

Vesting of restricted stock awards for employee bonus — 18,617

Recognition of lease impairment from sale leaseback arrangement 5,173 —

Loss on disposal of property and equipment 4,453 2,695

Change in fair value measurement of related party notes payable and notes payable ( 25,471 ) 22,700

Change in fair value measurement of warrant liability 95,130 —

Change in fair value measurement of related party notes payable and warrant liability ( 7,101 ) —

Change in fair value measurement of notes payable and warrant liability ( 90,518 ) 70,500

Loss (gain) on foreign exchange ( 2,068 ) 2,484

1 unchanged sentence

Non-cash interest expense — 8,403

Loss on extinguishment of related party notes payable, notes payable and vendor payables in trust, net 7,690 86,904

Gain on forgiveness of vendor payables in trust — ( 1,731 )

Reserve for unrecoverable value added taxes — 6,404

Loss on extinguishment of related party notes payable and notes payable 237,064 73,204

Other 667 1,028

Changes in operating assets and liabilities:

Inventory ( 29,772 ) ( 4,457 )

Deposits 14,337 10,874

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Accrued interest expense 588 ( 12,468 )

Transfers between vendor payables in trust and accounts payable — 1,167

Net cash used in operating activities ( 278,178 ) ( 383,058 )

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Cash flows from financing activities

Proceeds from a sale and lease back transaction 24,897 —

Proceeds from notes payable, net of original issuance discount 210,450 73,800

Proceeds from related party notes payable 21,008 —

Proceeds from exercise of stock options 44 9,535

5 unchanged sentences

Payments of finance lease obligations ( 1,016 ) ( 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 )

Debt Conversion — —

Proceeds from issuance of Class A Common Stock 34,492 —

Net cash (used in) provided by financing activities 291,446 ( 6,721 )

1 unchanged sentence

Net (decrease) increase in cash and restricted cash ( 14,489 ) ( 511,963 )

Cash and restricted cash, beginning of period 18,514 530,477

Cash and restricted cash, end of period $ 4,025 $ 18,514

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:

Faraday Future Intelligent Electric Inc.

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(in thousands)

Cash and restricted cash, beginning of period 530,477 1,827

Cash and restricted cash, end of period $ 18,514 $ 530,477

Cash $ 1,898 $ 16,968

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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

Conversion of convertible note to equity $ 123,460 $ 164,069

Issuance of warrants 9,938 17,596

Additions of property and equipment included in accounts payable and accrued expenses 48,037 12,268

Issuance of SPA warrants, excluding Exchange Agreement (Note 7) 34,269 —

Issuance of Secured SPA Notes pursuant to the Exchange Agreement (Note 7) 16,500 —

Conversion of related party notes payable and related party accrued interest into Class A Common Stock 12,662 —

Reclassification of Feb.

28, 2023 stock-based awards liability to equity due to authorized share increase 8,978 —

Reclassification of warrants from equity to liability 6,811 —

Reclassification of Feb.

28, 2023 earnout shares liability to equity due to authorized share increase 5,014 —

Reclassification of stock-based awards from equity to liability on April 21, 2023 due to insufficient authorized shares 2,979 —

Reclassification of earnout shares from equity to liability on April 21, 2023 due to insufficient authorized shares 2,112 —

Reclassification of August 25, 2023 stock-based awards liability to equity due to authorized share increase 2,043 —

Reclassification of August 25, 2023 earnout shares liability to equity due to authorized share increase 1,381 —

Reduction in Warrants pursuant to the Exchange Agreement (Note 7) 16,506 —

Write off of a finance lease pursuant to a sale and lease back transaction 6,917 —

Issuance pursuant to commitment to issue registered shares — 32,900

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

Troubled debt restructuring accounted for as a capital transaction — 16,841

Issuance of warrants — 9,938

Liability for insufficient authorized shares related to stock options and restricted stock units — 3,976

1 unchanged sentence

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 10) 926 —

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.

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(“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 3, 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 is manufacturing vehicles at the FF ieFactory 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.

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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.

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, 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.

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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”).

The functional currency of the Company’s foreign subsidiaries in China is their local currency, Chinese Yuan (“CNY”).

For foreign subsidiaries where the functional currency is their local currency, assets and liabilities are translated into U.S.

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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.

The preparation of the financial statements in conformity with generally accepted accounting principles 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.

(i) recognition and disclosure of contingent liabilities, including litigation reserves;

(ii) fair value of related party notes payable and notes payable;

(iii) calculations related to the evaluation of possible long term asset impairment;

(iv) the valuation of warrants.

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

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.

Given the global economic climate, estimates are subject to additional volatility.

As of the date the Company’s Consolidated Financial Statements were issued, the Company 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 5, 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.

Faraday Future Intelligent Electric Inc.

Notes to Consolidated Financial Statements

Summary of Significant Accounting Policies

10 unchanged sentences

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.

Faraday Future Intelligent Electric Inc.

Notes to Consolidated Financial Statements

The fair value hierarchy is as follows:

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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.

If the fair value option is elected for an instrument, unrealized gains and losses for that instrument are 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 13, 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.

Faraday Future Intelligent Electric Inc.

Notes to Consolidated Financial Statements

Concentration of Risk

Financial instruments, which subject the Company to concentrations of credit risk, consist primarily of cash, restricted cash, notes receivables, and deposits.

Financial instruments, which subject the Company to concentrations of credit risk, consist primarily of cash, restricted cash, 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).

At times, cash and restricted cash account balances with any one financial institution may exceed Federal Deposit Insurance Corporation 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.

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The inability of a supplier to fulfill the Company’s supply requirements could materially impact future operating results.

Revenue Recognition

Automotive sales and leasing revenue was $ 0.8 million and less than $ 0.1 million, respectively, for the year ended December 31, 2023.

Services and other revenue was immaterial for the year ended December 31, 2023.

There were neither sales and leasing revenue nor services and other revenue recognized for the year ended December 31, 2022.

Automotive Sales Revenue

The Company began the production of its first vehicle the FF 91 Futurist (the “FF 91,” “FF 91 Futurist”, or “FF 91 2.0 Futurist Alliance”) in March 2023 and started making deliveries to customers in August 2023.

Automotive sales revenue includes revenues related to deliveries of new vehicles, and specific other features and services including home charger, charger installation, twenty-four-seven roadside assistance, over-the-air (“OTA”) software updates, internet connectivity and destination fees.

The Company recognizes revenue on automotive sales upon delivery to the customer, which is when control of a vehicle transfers.

Payments are typically received at the point control transfers or in accordance with payment terms customary to the business and as indicated in the sales contract.

OTA software updates are provisioned upon transfer of control of a vehicle and recognized over time on a straight-line basis as the Company has a stand-ready obligation to deliver such services to the customer.

For obligations related to automotive sales, FF estimates standalone selling price by considering costs used to develop and deliver the good or service, third-party pricing of similar options and other information that may be available.

The transaction price is allocated among the performance obligations in proportion to the standalone selling price of our performance obligations.

Vehicle contracts do not contain a significant financing component.

Revenue from immaterial promises will be combined with the vehicle performance obligation and recognized when the product has been transferred.

The Company accrues costs to transfer these immaterial goods and services regardless of whether they have been transferred.

The Company provides its customers with a residual value guarantee which may or may not be exercised in the future.

The impact of such residual value guarantees was immaterial to the Company’s Consolidated Statements of Operations and Comprehensive Loss for the year ended December 31, 2023.

Co-creation Arrangements

As part of the Company’s Futurist Product Officers (“FPO”) Co-Creation Delivery program which began in August 2023, the Company has entered into co-creation agreements with certain customers.

The arrangement leverages some of the Company’s sales and leasing customers to provide valuable driving data, insights, marketing and brand awareness of the FF 91 vehicle.

For the services performed, the Company compensates the respective customers through a monthly consulting fee payment or a discount on their monthly lease payment.

Management examined in detail the services provided by each respective customer in accordance with the co-creation agreement, established various datapoints, and rationally assigned a dollar amount which was deemed representative of the fair value of the services.

Co-creation payments that exceed the fair value of the distinct services

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Notes to Consolidated Financial Statements

performed by the customer are considered consideration paid to the customer and was treated as a reduction in revenue.

For the period ended December 31, 2023, approximately $ 0.4 million was incurred as co-creation fees and was recorded within R&D expenses and sales and marketing expenses in the accompanying Consolidated Financial Statements.

For the period ended December 31, 2023, approximately $ 0.4 million was recorded as a reduction to revenue .

The Company has entered into and may continue to enter into co-creator consulting agreements with its customers under which customers share feedback, driving data, ideas, experiences with its engineers, social media posts and other promotions in exchange for specified fees.

The Company considers these arrangements consideration payable to a customer.

The consideration paid to the customer relates to marketing and R&D services that are distinct and could be purchased by the Company from a separate third-party.

The Company performs an analysis in which it maximizes the use of observable market inputs to ascribe a fair value to these services and record the fair value of these services to sales and marketing expense or R&D expense, as applicable.

Any consideration payable to a customer that is above the fair value of the distinct services being provided is treated as a reduction of revenue.

Automotive Leasing Revenue

Operating Leasing Program

The Company has outstanding leases under its vehicle operating leasing program in the U.S.

Qualifying customers are permitted to lease a vehicle directly from the Company for up to 36 months.

At the end of the lease term, customers are generally required to return the vehicle to the Company.

We account for these leasing transactions as operating leases.

The Company records leasing revenues to automotive leasing revenue on a straight-line basis over the contractual term, and it records the depreciation of these vehicles to cost of automotive leasing revenue.

For the year ended December 31, 2023, the Company recognized less than $ 0.1 million of revenue for this program.

As of December 31, 2023, deferred lease-related upfront payments which will be recognized on a straight-line basis over the contractual terms of the individual leases were immaterial.

The Company’s policy is to exclude taxes collected from a customer from the transaction price of automotive contracts.

Sales-Type Leasing Program

The Company has outstanding leases accounted for as sales-type leases under ASC 842.

Customers have the right to purchase the vehicle at the end of the lease term, which is usually 36 months.

A customer qualifies under this program if the purchase option is reasonably certain to be exercised, and the Company therefore expects the customer to take title to the vehicle at the end of the lease term after making all contractual payments.

The Company recognizes all revenue and costs associated with the sales-type lease as automotive leasing revenue and automotive leasing cost of revenue, respectively, upon delivery of the vehicle to the customer when collectability of lease payments is probable at lease commencement.

If collectability of lease payments is not probable at commencement, the Company recognizes the lease payments as deposit liability and does not derecognize the leased vehicle until such point that collectability of lease payments becomes probable.

For the year ended December 31, 2023, the Company recognized less than $ 0.1 million of revenue under this program.

Customer Deposits and Deferred Revenue

The Company’s customers may reserve a vehicle and preorder certain services by making a customer deposit, which is fully refundable at any time.

Refundable deposits, for vehicle reservations and services, received from customers prior to an executed vehicle purchase agreement are recorded as customer deposits (Accrued expenses and other current liabilities).

Customer deposits were $ 3.2 million and $ 3.4 million as of December 31, 2023 and 2022, respectively.

When vehicle purchase agreements are executed, the consideration for the vehicle and any accompanying products and services must be paid in advance prior to the transfer of products or services by the Company.

Such advance payments are considered non-refundable, and the Company defers revenue related to any products or services that are not yet transferred.

Deferred revenue is equivalent to the total transaction price allocated to the performance obligations that are unsatisfied, or partially unsatisfied, as of the balance sheet date.

Deferred revenue related to products and services w as immaterial a s of December 31, 2023, and 2022.

Faraday Future Intelligent Electric Inc.

Notes to Consolidated Financial Statements

The Company provides a manufacturer’s warranty on all vehicles sold.

The warranty covers the rectification of reported defects via repair, replacement, or adjustment of faulty parts or components.

The warranty does not cover any item where failure is due to normal wear and tear.

This assurance-type warranty does not create a performance obligation separate from the vehicle.

Management tracks warranty claims by vehicle ID, owner, and date.

As the Company continues to manufacture and sell more vehicles it will reassess and evaluate its warranty claims for purposes of its warranty accrual.

(in thousands) 2023 2022

Accrued warranty- beginning of period $ — $ —

Provision for warranty 731 —

Warranty costs incurred ( 47 ) —

Accrued warranty- end of period $ 684 $ —

Cost of Revenue

Automotive Sales Revenue

Cost of automotive sales revenue includes direct and indirect materials, labor costs, manufacturing overhead, including depreciation costs of tooling and machinery, shipping and logistic costs, vehicle connectivity costs, and reserves for estimated warranty expenses.

Cost of automotive sales revenues also includes adjustments to warranty expense.

Cost of services and other revenue includes costs associated with providing non-warranty after-sales services, costs for retail merchandise, and costs to provide vehicle insurance.

Cost of services and other revenue also includes direct parts and material.

Cost of services and other revenue was immaterial for the years ended December 31, 2023 and 2022.

Automotive Leasing Program

Cost of automotive leasing revenue includes the depreciation of operating lease vehicles, cost of goods sold associated with direct sales-type leases and warranty expense related to leased vehicles.

Inventory and Inventory Valuation

Inventory is stated at the lower of cost or net realizable value and consists of raw materials, work in progress, and finished goods.

The Company primarily computes cost using standard cost, which approximates cost on the first-in, first-out basis.

Net realizable value is the estimated selling price of inventory in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.

The Company assesses the valuation of inventory and periodically adjusts its value for estimated excess and obsolete inventory based upon expectations of future demand and market conditions, as well as damaged or otherwise impaired goods.

Property and Equipment, Net

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Tooling, machinery, and equipment 5 to 10

Lease vehicles 7

Computer software 3

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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.

Construction in process (“CIP”) consists of the construction activities related to theFF ieFactory California production facility in 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.

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No impairment charges were recorded during the years ended December 31, 2023 and 2022.

See Note 6, Property and Equipment, Net for a discussion of disposals of Construction in process during the year ended December 31, 2022 and 2021.

See Note 5, Property and Equipment, Net for a discussion of disposals of CIP during the year ended December 31, 2023 and 2022.

Accumulated Other Comprehensive Loss

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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.

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

Advanced payments for items and services related to R&D activities have been classified as Deposits on the Consolidated Balance Sheets and are

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.

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.

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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

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.

Forfeiture rate — Effective January 1, 2023, stock-based compensation expense is reduced for forfeitures only when they occur.

This change of accounting policy resulted in the recognition of a cumulative increase of prior stock-based compensation expenses totaling $ 1.8 million, which was recorded in the Consolidated Statement of Operations and Comprehensive Loss.

Fair value of Common Stock — The closing price of the Company’s Class A Common Stock on Nasdaq is used as the fair value of the Common Stock.

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.

A valuation allowance is provided for deferred tax assets if it is more likely than not that the

Faraday Future Intelligent Electric Inc.

Notes to Consolidated Financial Statements

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.

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There were no material such interest or penalties for the years ended December 31, 2023 and 2022.

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.

Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the CODM in deciding how to allocate resources to an individual segment and in assessing performance.

The Company has determined that both its Global CEO and Chief Product and User Ecosystem Officer are its co-CODMs.

The Company has determined that it operates in one operating segment and one reportable segment, as the co-CODM review 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.

Given the Company has only recently entered the revenue generating operating stage, it currently has no significant concentration exposure to products, services or customers.

Reclassifications

Certain reclassifications have been made to the prior period in the accompanying Consolidated Financial Statements to conform with the current presentation.

Inventory and Finance lease right-of-use assets are now separately presented in the Consolidated Balance Sheets, as they were previously included in Other current assets and Property and equipment, net, respectively (see Note 4, Deposits and Other Current Assets and Note 5, Property and Equipment, Net ).

In addition, the Buildings and Leasehold improvements within Property and equipment, net (see Note 5, Property and Equipment, Net ) have been combined and included in Land, buildings and leasehold improvements, as they were previously presented separately.

On the Consolidated Statement of Cash Flows, changes in Inventory is now separately presented under Changes in operating assets and liabilities instead of being combined with Other current and non-current assets and the change in fair value measurement of notes payable and warrant liability are presented as a single amount as a item to reconcile net income to cash flow from operating activities.

Reverse Stock Splits and Recasting of Per-Share Amounts

On August 22, 2023, the Board approved the implementation of a 1-for-80 reverse stock split (the “Reverse Stock Split”) of the Common Stock and set the number of authorized shares of Common Stock to 154,437,500 (which is 12,355,000,000 divided by 80.

The Reverse Stock Split was effected after market close on August 25, 2023, and shares of the Class A Common Stock and publicly traded warrants (the “Public Warrants”) began trading on a split-adjusted basis as of market open on August 28, 2023.

As approved by the Company’s stockholders at a special meeting held on February 5, 2024, the Company filed an amendment to the Company’s Third Amended and Restated Certificate of Incorporation, as amended, with the office of the Secretary of the State of Delaware to effect an increase in the number of authorized shares of Common Stock from 154,437,500 to 1,389,937,500 .

On February 23, 2024, the Board approved the implementation of a 1-for-3 reverse stock split (the “Second Reverse Stock Split”) of the Common Stock and set the number of authorized shares of Common Stock to 463,312,500 (which is 1,389,937,500 divided by 3).

The Second Reverse Stock Split was effected after market close on February 29, 2024, and shares of the Class A Common Stock par value $ 0.0001 per share and the Public Warrants began trading on a split-adjusted basis as of market open on March 1, 2024.

Faraday Future Intelligent Electric Inc.

Notes to Consolidated Financial Statements

All shares of Common Stock, Public Warrants, stock-based compensation awards, earnout shares and per share amounts contained in the Consolidated Financial Statements and accompanying notes have been retroactively adjusted to reflect the Reverse Stock Split and Second Reverse Stock Split.

In addition, proportionate adjustments were made to the number of shares of Class A Common Stock issuable upon exercise or conversion of the Company’s outstanding convertible debt securities and warrants, as well as the applicable exercise or conversion prices.

See Note 10, Stockholders' Equity , and Note 11, Stock-Based Compensation , for further discussion regarding the Reverse Stock Split and the second Reverse Stock Split.

Recent Accounting Pronouncements

Recently issued accounting pronouncements not yet adopted

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosure (ASU 2023-07).

This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the CODM and included within each reported measure of a segment's profit or loss.

This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources.

The ASU is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Adoption of the ASU should be applied retrospectively to all prior periods presented in the financial statements.

The Company is in the process of evaluating the effect of ASU 2023-07 on the financial statements.

In December 2023, 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

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 10 , 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.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures (ASU 2023-09).

ASU 2023-09 is intended to enhance the decision usefulness of income tax disclosures and requires the disclosure of various disaggregated information, including an entity’s effective tax rate reconciliation as well as additional information on taxes paid.

This ASU is effective on a prospective basis for annual periods beginning after December 15, 2024 with early adoption allowed.

The Company is in the process of evaluating the effect of ASU 2023-09 on the financial statements.

Liquidity and Capital Resources and Going Concern

1 unchanged sentence

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, and has an accumulated deficit of $ 3,476.6 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 9, Related Party Notes Payable and Note 10, Notes Payable ), the sale of Preferred and Common Stock

Faraday Future Intelligent Electric Inc.

Notes to Consolidated Financial Statements

(see Note 14 , Stockholders’ Equity ), and the net proceeds received from the Business Combination and the PIPE Financing (see Note 3 , 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 10, 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 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.

Faraday Future Intelligent Electric Inc.

Notes to Consolidated Financial Statements

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 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 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.

Faraday Future Intelligent Electric Inc.

Notes to Consolidated Financial Statements

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.

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 14 , Stockholders Equity (deficit )).

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.

Earnout Shares

Faraday Future Intelligent Electric Inc.

Notes to Consolidated Financial Statements

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;

• 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.

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

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 15, 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 10, 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 15, Stock-Based Compensation).

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 9, Related Party Notes Payable ), 6,854,013 shares of Class A Common Stock to convert notes payable (see Note 10, Notes Payable ), 9,618,542 shares of Class A Common Stock to convert liabilities in the Vendor Trust (see Note 11, 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 9, 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.

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.

The Company has and will continue to devote substantial effort and, to the extent available, capital resources, to strategic planning, engineering, design, and development of its electric vehicle platform, development of vehicle models, finalizing the build out of the FF ieFactory California manufacturing facility, and capital raising.

The Company incurred cumulative losses from operations, negative cash flows from operating activities, and has an accumulated deficit of $ 3,958.5 million, an unrestricted cash balance of $ 1.9 million and a negative working capital position of $ 169.8 million as of December 31, 2023.

During 2023, the Company delivered its first vehicles but expects to continue to generate significant operating losses for the foreseeable future.

The Company has funded its operations and capital needs primarily through the issuance of related party notes payable and notes payable (see Note 7, Notes Payable and Note 8, Related Party Transactions ), convertible notes, and the sale of common stock.

Pursuant to the the Secured SPA, the Unsecured SPA, the Unsecured Streeterville SPA, the FFVV Joinder, and the Senyun Joinder (collectively the “SPA Commitments”) (see Note 7, Notes Payable and Note 8, Related Party Transactions ),

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 10, 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 17, 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.

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 8, Fair Value of

the Company obtained commitments from several investors.

At December 31, 2023, the SPA Commitments totaled $ 554.5 million, of which $ 343.2 million was funded, $ 211.3 million remained to be funded, and $ 112.9 million in principal was outstanding.

At December 31, 2023, Optional Commitments under the SPA Commitments totaled $ 366.0 million, of which $ 39.0 million was funded, $ 327.0 million remained to be funded, and $ 1.0 million was outstanding.

The remaining amounts to be funded as of December 31, 2023, are subject the achievement of delivery milestones, satisfaction of closing conditions, resolving disputes with investors, and satisfaction or waiver of other conditions, including for a portion of such financing an effective registration statement for the shares underlying the applicable notes.

The Company may be unable to satisfy the closing conditions under the SPA Commitments or obtain additional incremental convertible senior secured note purchasers under the SPA Commitments or other debt or equity financing in a timely manner, on acceptable terms, or at all.

On November 11, 2022, the Company entered into the SEPA.

Under terms of the SEPA, the Company may, at its option, issue and sell from time to time up to $ 200.0 million (which can be increased up to $ 350.0 million in the aggregate under the Company’s option) of common stock to an affiliate of Yorkville Advisors, subject to certain limitations.

As of December 31, 2023, the Company had the right to issue and sell up to an additional $ 192.5 million, or $ 342.5 million if the Company exercises its option under the SEPA.

On June 16, 2023, the Company filed a shelf registration on Form S-3 with the SEC (the “Shelf Registration”), which was declared effective by the SEC on June 28, 2023.

As a result, the Company may from time-to-time issue up to $ 300.0 million of common stock and/or warrants in the aggregate.

(Note 11, Stockholders' Equity ) As of December 31, 2023, FF had the right to sell up to $ 271.9 million under the Shelf Registration.

Under applicable SEC rules and regulations, because FF failed to timely file this Form 10-K it is not S-3 eligible and the Shelf Registration Statement is no longer effective.

In addition, on September 26, 2023, the Company also entered into a sales agreement with Stifel, Nicolaus & Company, Incorporated, B.

Riley Securities, Inc., A.G.P./Alliance Global Partners, Wedbush Securities Inc.

and Maxim Group LLC, as sales agents, to sell shares of Class A Common Stock, from time to time, with aggregate gross sales proceeds of up to $ 90.0 million pursuant to the Registration Statement as an “at-the-market” offering under the Securities Act (the “ATM Program”).

The ATM Program has been the primary source of liquidity for the Company since September 2023.

Under applicable SEC rules and regulations, because FF failed to timely file this Form 10-K, it is not S-3 eligible and cannot access the ATM Program.

The Company’s ability to issue and sell additional shares of common stock or warrants under the SEPA is further constrained by the number of authorized shares.

The Company must consider shares issuable under convertible debt, warrants or other obligations with equity rights.

In addition, equity issuances can potentially trigger provisions under the SPA Commitments that increase the number of shares to be issued upon conversion and reduce the strike price of related warrants.

This could result in FF having inadequate authorized shares to meet its outstanding commitments.

The Company projects that it will require substantial additional funds to continue operations and support production of the FF 91.

If the Company is unable to find additional sources of capital, the Company will not have sufficient resources to fund its outstanding obligations and continue operations and the Company will likely have to file for bankruptcy protection and its assets will likely be liquidated.

The Company’s equity holders would likely not receive any recovery at all in a bankruptcy scenario.

The Company continues to explore various funding and financing alternatives to fund its ongoing operations and to ramp up production.

The particular funding and financing mechanisms, terms, timing, and amounts depend on the Company’s assessment of opportunities available in the marketplace and the circumstances of the business at the relevant time.

However, there have been delays in securing additional funding commitments, which have exacerbated supply chain pressures, among other things.

If the Company’s ongoing capital raising efforts are unsuccessful or significantly delayed, or if the Company experiences prolonged material adverse trends in its business, production will be delayed or decreased, and actual use of cash, production volume and revenue for 2024 will vary from the Company’s previously disclosed forecasts, and such variances may be material .

While the Company is actively engaged in negotiations with potential financing sources, it may be unable to raise additional capital on terms acceptable to it or at all.

In addition to the risk that the Company’s assumptions and analyses may prove incorrect, the projections may underestimate the professional fees and other costs to be incurred related to the pursuit of various financing options currently being considered and ongoing legal risks.

Capital needs to fund development of the

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.

Company’s remaining product portfolio will highly depend 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 would be required to fund operations, research, development, and design efforts for future vehicles.

As of and since December 31, 2023, the Company was and has been in default on the SPA Commitments and the Company is presenting the related notes as current.

Since April 2023, the Company has been in breach of its debt agreement with Chongqing Leshi Small Loan Co., Ltd., a related party, with an outstanding principal balance of $ 4.5 million.

As a result of the default, the interest rate on the outstanding principal balance has increased to a rate of 18 % per annum until the event of default is no longer applicable.

(in thousands) 2023 2022

Raw materials (net of reserves) $ 33,345 $ 4,457

Work in progress 572 —

Finished goods 312 —

Total inventory $ 34,229 $ 4,457

The increase in inventory is due to the start of production on March 29, 2023.

The inventory reserve was $ 2.8 million and zero as of December 31, 2023 and 2022, respectively.

Deposits and Other Current Assets

Deposits and other current assets consists of the following as of December 31 (dollars in thousands):

Deposits for research and development, prototype parts and other $ 23,617 $ 54,990

Deposits for Future Work 3,187 8,380

(in thousands) 2023 2022

Deposits for research and development, prototype and production parts, and other $ 28,609 $ 40,879

Deposits for goods and services yet to be received (“Future Work”) 2,773 3,187

Total deposits $ 31,382 $ 44,066

3 unchanged sentences

Total other current assets $ 21,721 $ 17,489

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 11, 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

Deposits for R&D, prototype and production parts, and other are recognized and reported as R&D expenses in the Consolidated Statement of Operations and Comprehensive Loss when services are provided or as prototype parts are received.

In addition, during the years ended December 31, 2023 and 2022, the Company made deposits for inventory and property and equipment items which are classified out of Deposits upon receipt of title.

Prepaid expenses primarily consist of software subscriptions and insurance, and Other current assets includes certain deferred expenses.

As of December 31, 2023 and 2022, Other current assets also includes an insurance receivable relating to a legal settlement with a corresponding liability recognized in Accrued expenses and other current liabilities.

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.

Property and Equipment, Net

Property and equipment, net, consists of the following as of December 31 (dollars in thousands):

Buildings $ 19,395 $ 14,180

Land, buildings and leasehold improvements $ 103,522 $ 5,598

Computer hardware 2,195 3,112

1 unchanged sentence

Vehicles 669 337

Lease vehicles 1,873 —

Computer software 4,301 4,212

Leasehold improvements 383 297

Construction in process 36,491 393,814

1 unchanged sentence

Total property and equipment, net $ 417,812 $ 406,320

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.

The Company’s CIP is primarily related to the construction of tooling, machinery and equipment for the FF ieFactory California.

Tooling, machinery, and equipment are either held at Company facilities, primarily FF ieFactory California, or at the vendor’s location until the tooling, machinery and equipment is completed.

Of the $ 36.5 million and $ 393.8 million of CIP, $ 4.8 million and $ 195.7 million is held at Company facilities and $ 31.7 million and $ 198.1 million is held at vendor locations as of December 31, 2023 and 2022, respectively.

Depreciation and amortization expense totaled $ 42.5 million and $ 3.0 million for the years ended December 31, 2023 and 2022, 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.

Due to the build out of the FF ieFactory California, the Company has an asset retirement obligation (“ARO”) totaling $ 0.7 million and $ 9.4 million for the years ended December 31, 2023 and 2022, respectively.

The ARO is recorded to Other liability, less current portion with a corresponding ARO asset within Land, buildings and leasehold improvements 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

Faraday Future Intelligent Electric Inc.

Notes to Consolidated Financial Statements

components and implementation of the Company’s cost reduction program.

During 2023 and 2022, the Company disposed of $ 4.6 million and $ 9.6 million, respectively, 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 components and implementation of the Company’s cost reduction program.

Disposals of CIP of $ 4.6 million and $ 3.7 million were charged to operating expenses in the Consolidated Statements of Operations and Comprehensive Loss during the year ended December 31, 2023 and 2022, 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 .

In addition, there were disposals of CIP of $ 5.9 million for the year ended December 31, 2022, which reduced Accounts payable in the Consolidated Balance Sheet a s of December 31, 2022.

Accrued Expenses and Other Current Liabilities

2 unchanged sentences

Accrued legal contingencies 21,590 18,940

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 12,764 26,267

Total accrued expenses and other current liabilities $ 62,391 $ 65,709

Fair Value of Financial Instruments

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 10, 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.

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 10, 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 10, 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 10, 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 10, 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.

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.

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

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 3, 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.

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

Level 1 Level 2 Level 3

Notes Payable

Private warrants — — 52

Bridge warrants — — 95,130

December 31, 2021

Level 1 Level 2 Level 3

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 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 85,192 ( 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 )

Balance as of December 31, 2022 $ 95,130 $ — $ 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 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.

Faraday Future Intelligent Electric Inc.

Notes to Consolidated Financial Statements

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

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.

Related Party Notes

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

Date Contractual

Rates Balance

as of December 31, 2022 Interest Expense for the Year Ended December 31, 2022 Interest Expense for the Year Ended December 31, 2021

Related party notes - China (1)

December 31, 2023 12.0 % $ 4,651 $ 3,879 $ 3,369

Related party notes – China various other Due on Demand — % 3,755 — —

$ 8,406 $ 3,879 $ 3,369

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 $ 17.4 million with a corresponding decrease in related party notes payable and related party accrued interest of $ 3.4 million and $ 14.0 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

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):

Faraday Future Intelligent Electric Inc.

Notes to Consolidated Financial Statements

December 31, 2021

Note Name Contractual

Maturity Date Contractual

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 3, 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

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.

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.

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.

Notes Payable

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):

The Company has entered into notes payable agreements with third parties, which consist of the following as of December 31, 2023 and 2022:

December 31, 2023

Note Name Contractual

(in thousands) Contractual

Maturity Date Contractual

2 unchanged sentences

Adjustments Original Issue Discount and Proceeds Allocated to Warrants Net

Value Interest Expense for the Twelve Months Ended December 31, 2022

Bridge Notes (3)

October 27, 2028 10 % $ 36,622 $ 264 $ ( 10,878 ) $ 26,008 $ 1,676

Secured SPA Notes Various 10 %- 15 %

$ 100,052 $ ( 15,501 ) $ ( 10,319 ) $ 74,232

Unsecured SPA Notes *

Various dates in 2029 10 %- 15 %

13,885 1,208 ( 2,613 ) 12,480

Notes payable – China other

2 unchanged sentences

$ 118,917 $ ( 14,293 ) $ ( 12,932 ) 91,692

Related party notes payable $ ( 542 )

Notes payable, current portion ( 91,150 )

Notes payable, less current portion $ —

* includes amounts attributed to the Unsecured Streeterville SPA

December 31, 2022

Note Name Contractual

(in thousands) Contractual

Maturity Date Contractual

Interest Rates Unpaid

Rates Unpaid Principal

Balance Fair Value

Adjustments Original Issue Discount and Proceeds Allocated to Warrants Net

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

Secured SPA Notes October 27, 2028 10 % $ 36,622 $ 264 $ ( 10,878 ) $ 26,008

Notes payable – China other

Due on Demand — % 4,997 — — 4,997

April 17, 2022 1 % 193 — — 193

Auto loans October 2026 7 % 100 — — 100

Total notes payable $ 164,689 $ 29,489 $ ( 27,124 ) $ 167,054

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

Adjustments Payment Premium Cash Payment Conversion into Class A Common Stock

March 1, 2021 Notes (1)

March 1, 2022 14 % $ 56,695 $ ( 1,695 ) $ — $ ( 55,000 ) $ —

August 26, 2021 Notes (1)

March 1, 2022 14 % 30,924 ( 924 ) 2,065 ( 32,065 ) —

June 2021 Notes (2)

October 31, 2026 — % 38,981 1,019 — — ( 40,000 )

Optional Notes (2)

October 31, 2026 15 % 34,682 ( 765 ) — — ( 33,917 )

April 17, 2022 1 % 193 — — ( 193 ) —

$ 41,719 $ 264 $ ( 10,878 ) 31,105

(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 8, 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.

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.

Notes payable, current portion ( 5,097 )

Notes payable, less current portion $ 26,008

Faraday Future Intelligent Electric Inc.

Notes to Consolidated Financial Statements

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,

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,

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 8, 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 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,

Secured and Unsecured SPA Notes

On August 14, 2022, the Company entered into a securities purchase agreement (as amended from time to time, the “Secured SPA”) with FF Simplicity Ventures LLC (“FFSV”) as administrative agent, collateral agent and purchaser, and certain additional purchasers (collectively the “Secured SPA Purchasers”) to issue and sell the Company’s senior secured convertible notes (the “Secured SPA Notes”.

The Secured SPA Notes were to originally be issued in three tranches aggregating to $ 52.0 million in principal with a four year maturity.

The Secured SPA Notes were subsequently amended multiple times, as further described below.

On May 8, 2023, as further described below, the Company entered into a securities purchase agreement (as amended from time to time, the “Unsecured SPA”) with MHL and VW Investments (together wiuth the other purchasers, the “Unsecured SPA Purchasers”) to issue and sell $ 100.0 million aggregate principal of the Company’s senior unsecured convertible notes (the “Unsecured SPA Notes” and, together with the Secured SPA Notes, the “SPA Notes”).

In August 2023, as further described below, the Company entered into the Unsecured Streeterville SPA (collectively included with the Unsecured SPA, Unsecured SPA Notes and SPA Warrants in future references), as part of its issuance of the Unsecured SPA Notes.

The terms of the Secured SPA Notes and Unsecured SPA Notes are generally the same, however, the Secured SPA 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.

The SPA Notes are generally subject to an original issue discount of 10 %, and are convertible, along with any interest accrued, into shares of Class A Common Stock at the Conversion Price (as defined in each SPA Note), subject to full ratchet anti-dilution price protection.

The conversion price for the SPA Notes is $ 0.73 as of December 31, 2023, which represents an amended and reduced conversion price due to the full ratchet price protections, as described below.

The SPA Notes bear interest at 10 % per annum (or 15 % if interest or settlement is paid in shares).

Generally the SPA Notes require interest to be paid on each conversion date and on the maturity date in cash or in shares of Class A Common Stock.

Certain SPA Notes require the payment of interest in cash or shares of Class A Common Stock on a quarterly basis.

Unless earlier paid, the SPA 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.

The conversion price for the Make-Whole Amount is the greater of (a) the floor price, which is $ 10.90 as of December 31, 2023 or (b) 90 % of the lowest volume-weighted average price (“VWAP”) for the five consecutive trading days.

When calculating the shares issuable upon conversion, the Make-Whole Amount shall be decreased by 50 % of the original issue discount pertaining to such amount.

Each original Secured SPA Purchaser has the option within 12 months from November 12, 2022 to purchase additional Secured SPA Notes under similar terms (the “Tranche B Notes”) (see Note 2, Liquidity and Capital Resources , for detailed discussion on commitments to fund additional Secured SPA Notes).

In connection with the issuance of the SPA Notes, the Company also granted to each Secured SPA Purchaser and Unsecured SPA Purchaser a warrant (the “SPA Warrants”) to purchase shares of Class A Common Stock equal to 33 % of the shares issuable upon conversion of the aggregate principal amount under the SPA Notes funded.

The Company elected the fair value option afforded by ASC 825, Financial Instruments , with respect to the SPA Notes because the notes include features, such as a contingently exercisable put option, which meet the definition of an embedded derivative.

The Company expenses transaction costs to Changes in fair value of notes payable and warrant liabilities or Changes in fair value of related party notes payable and warrant liabilities, as applicable, in the Consolidated Statement of Operations and Comprehensive Loss.

First Secured SPA Amendment

On September 23, 2022, the Secured SPA was amended (the “First Secured SPA Amendment”), pursuant to which the existing Secured SPA Purchasers agreed to accelerate their funding obligations.

The First Secured SPA Amendment modified the conversion price from $ 645.40 to $ 252.00 per share.

All of the other terms and conditions of the Secured SPA Notes were unchanged.

Faraday Future Intelligent Electric Inc.

Notes to Consolidated Financial Statements

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 8, 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 8, 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 Set Price, and (ii) 92 % of the lowest of the VWAP during the seven ( 7 ) trading days immediately prior to the applicable conversion date;

The Company evaluated the First Secured SPA Amendment in accordance with ASC 470-50, Debt–Modifications and Extinguishments , and determined that it constitutes an extinguishment because the change in the fair value of the conversion feature is substantial.

Accordingly, the Company recognized a loss on extinguishment in Loss on settlement of notes payable in the Consolidated Statements of Operations and Comprehensive Loss in the amount of $ 7.7 million, calculated as the difference between the reacquisition price of the debt and the net carrying amount of the Secured SPA Notes.

Joinder and Amendment Agreement with Senyun.

On September 25, 2022, the Company entered into a Joinder and Amendment Agreement (the “Joinder”) with Senyun, the Agent, as administrative agent, collateral agent, and purchaser, and RAAJJ), pursuant to which Senyun agreed to purchase Secured SPA Notes in an aggregate principal amount of up to $ 60.0 million in installments.

Third and Fourth Secured SPA Amendments

On October 24, 2022, the Company entered into a Limited Consent and Third Amendment to the Secured SPA (the “Third Secured SPA Amendment”) with the existing Secured SPA Purchasers, pursuant to which the maturity date for the Secured SPA Notes was extended from August 14, 2026 to October 27, 2028.

In addition, pursuant to the Third Secured SPA Amendment, each Secured SPA Purchaser and the Agent (as defined in the First Secured SPA Amendment) waived certain defaults and events of default under the Secured SPA, any notes issued pursuant to the Secured SPA, and other related documents.

The Third Secured SPA 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 Third Secured SPA Amendment was accounted for prospectively with no gain or loss recorded in the Consolidated Statements of Operations and Comprehensive Loss for the year ended December 31, 2022.

On November 8, 2022, the Company entered into a Limited Consent and Amendment to the Secured SPA (the “Fourth Secured SPA 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 be lower than $ 50.40 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 $ 50.40 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 Fourth Secured SPA 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 Fourth Secured SPA Amendment was accounted for prospectively with no gain or loss recorded in the Consolidated Statements of Operations and Comprehensive Loss for the year ended December 31, 2022.

Senyun Amendment

On December 28, 2022, the Company entered into a Letter Agreement and Amendment to the Secured SPA (the “Senyun Amendment”) with Senyun pursuant to which the conversion rate of notes totaling $ 19.0 million was lowered from $$ 252.00 to $ 214.20 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.

The Company remitted the shares to Senyun in March 2023.

Sixth Secured SPA Amendment

On February 3, 2023, the Company entered into a sixth amendment to the Secured SPA (the “Sixth Secured SPA Amendment”) with certain Secured SPA Purchasers, in which the Company agreed to sell up to $ 135.0 million in aggregate

Faraday Future Intelligent Electric Inc.

Notes to Consolidated Financial Statements

(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;

(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.

On October 10, 2022 and on October 19, 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.

The settlement of the June 2021 Notes and Optional Notes are summarized below (dollars in thousands):

Optional Notes December 31,

2022 December 31,

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,

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 — —

principal (the “Tranche C Notes”) with terms largely congruent to prior issuances and a $ 252.00 base conversion price subject to full ratchet anti-dilution price protection.

Each applicable Secured SPA Purchaser has the option to purchase additional Secured SPA Notes on the same terms as the Tranche C Notes in an amount not to exceed 50 % of the initial principal amount of the Tranche C Notes issued to each applicable Secured SPA Purchaser (the “Tranche D Notes”).

Pursuant to the Sixth Secured SPA Amendment, certain outstanding Secured SPA Notes issued by the Company to Secured SPA Purchasers with an aggregate outstanding principal amount of $ 31.0 million were replaced by the same principal amount of new notes with a $ 214.20 base conversion price.

In accordance with ASC 470-50, Debt— Modifications and Extinguishments , the change in conversion price qualifies as an extinguishment because the change in the fair value of the conversion feature was substantial.

Accordingly, the Company recognized a Loss on settlement of notes payable in the Consolidated Statements of Operations and Comprehensive Loss in the amount of $ 3.0 million, calculated as the difference between the reacquisition price of the debt and the net carrying amount of the Secured SPA Notes.

Pursuant to the Sixth Secured SPA Amendment, the Company entered into an agreement with certain Secured SPA Purchasers (the “Exchange Agreement”) holding a total of 825,542 warrants to exchange them for an aggregate 377,039 warrants and convertible notes (the “Exchange Notes”) with a principal balance totaling $ 41.0 million.

The issued warrants have terms that limit down-round ratchet clauses to price adjustments only.

The Exchange Notes mature on February 3, 2025, bear interest at 11 % per annum, have no original issuance discount, do not have a fixed price conversion, and convert using a VWAP calculation as described in the Exchange Agreement.

The remainder of the terms of the Exchange Notes are largely congruent to the existing Secured SPA Notes, including most-favored nation rights.

In connection with the Exchange Agreement, equity-classified warrants were exchanged for warrants which qualify for liability classification per ASC 480, Distinguishing Liabilities from Equity , and were reclassified from equity to Warrant liabilities during the period in an amount totaling $ 6.8 million (the “Warrant Exchange”).

As a result of the transaction the Company did not recognize a gain or loss in the Consolidated Statements of Operations and Comprehensive Loss, as the fair value of the instruments exchanged and received were approximately the same.

Seventh Secured SPA Amendment

On March 23, 2023, the Company entered into a seventh amendment to the Secured SPA (the “Seventh Secured SPA Amendment”) with FFSV, as administrative agent, collateral agent and purchaser, Senyun, and FF Prosperity Ventures LLC (“FF Prosperity”), pursuant to which the parties agreed to accelerate the funding timeline of Tranche C Notes in the amount of $ 40.0 million, and FFSV agreed to purchase additional Tranche B Notes in the amount of $ 5.0 million, in each case, subject to meeting certain conditions, in exchange for an agreement to increase the original issuance discount associated with such funding.

As part of the agreement, the Company agreed that the original issuance discount related to $ 25.0 million in principal amount of Tranche C Notes and Tranche B Notes was 14 % and 16 %, respectively.

Eighth Amendment to the Secured SPA

On May 8 and 9, 2023, the Company entered into an amendments to the Secured SPA (collectively, the “Eighth Secured SPA Amendment”) with certain Secured SPA Purchasers.

Pursuant to the Eighth Secured SPA Amendments the parties agreed to amend the floor price of all outstanding Secured SPA Notes, including the Exchange Notes, from $ 50.40 to $ 24.00 and to change the exercise price of the remaining Secured SPA Notes and SPA Warrants from $ 252.00 to $ 214.20 .

Accordingly, the Company recognized a Loss on settlement of notes payable in the Consolidated Statements of Operations and Comprehensive Loss in the

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.

amount of $ 11.4 million, calculated as the difference between the reacquisition price of the debt and the net carrying amount of the notes.

Unsecured SPA

On May 8, 2023, the Company entered into the Unsecured SPA.

The Unsecured SPA 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 an original conversion price equal to $ 214.20 , subject to anti-dilution protection.

Interest on Unsecured SPA Notes is payable at conversion or at maturity.

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

Unless earlier paid, the Unsecured SPA Notes entitle the Unsecured SPA Purchasers, at each conversion date, to a 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 greater of (a) the floor price, $ 24.00 at inception (as adjusted for stock splits, stock dividends, stock combinations, recapitalizations or other similar transactions occurring after the date hereof) and (b) 90 % of the lowest VWAP for the five consecutive trading days ending immediately prior to the conversion date.

Each Unsecured SPA Purchaser has the option within 12 months from the closing date to purchase additional Unsecured SPA Notes under similar terms for a total potential commitment of up to $ 50.0 million or with the consent of the Company a total of $ 100.0 million.

The Company elected the fair value option afforded by ASC 825, Financial Instruments , with respect to the Unsecured SPA Notes because the notes include features, such as a contingently exercisable put option, which meets the definition of an embedded derivative.

The Company expenses the transaction costs to Changes in fair value of notes payable and warrant liabilities in the Consolidated Statement of Operations and Comprehensive Loss.

As part of the Unsecured SPA the Unsecured SPA Purchasers also received warrants consistent with the rights, terms and privileges of the warrants afforded to the holders of the Secured SPA Notes.

First Amendment to the Unsecured SPA

On June 26, 2023, the Company entered into an amendment to the Unsecured SPA (the “First Unsecured SPA Amendment”).

The First Unsecured SPA Amendment enabled the Unsecured SPA Purchasers to postpone or cancel any closing of their commitment to purchase the Unsecured SPA Notes if the Company has not issued a press release or other public announcement confirming that the second phase of the Company’s delivery plan has begun on or prior to August 31, 2023, within 15 calendar days of such date.

The First Unsecured SPA Amendment did not change the cash flows of the Unsecured SPA and is accounted for prospectively with no gain or loss recognized.

On August 9, 2023, the Company announced that it had completed the relevant processes and steps that are needed for the second phase of delivery to begin.

Joinder Agreements

On June 26, 2023, the Company entered into a Joinder and Amendment Agreement (the “FFVV Joinder”) with FF Vitality Ventures LLC (“ FFVV”), pursuant to which FFSV agreed to exercise its option to purchase $ 20.0 million of Secured SPA Tranche B Notes, subject to certain closing conditions, including the delivery of a warrant to purchase shares of Class A Common Stock equal to 33 % of FFSV’s conversion shares with an exercise price equal to $ 214.20 .

In addition, If FFSV exercises its option to invest another $ 10.0 million of Tranche B Notes in accordance with the terms of the Secured SPA on or prior to the later of (x) August 1, 2023 or (y) four business days after the meeting of the Company’s stockholders for the required stockholder approval under the Unsecured SPA to increase the Company’s authorized shares of Common Stock, then the Company agrees to subsequently amend the Unsecured SPA whereby FFVV would invest another $ 20.0 million in new unsecured notes subject to terms substantially identical to those provided in the Unsecured SPA.

Pursuant to the FFVV Joinder, FFVV agreed to purchase, Unsecured SPA Notes up to $ 40.0 million in eight installments.

The floor price of the FFVV Unsecured SPA Notes and for each of the notes issued to FFSV (or its affiliates) under the Secured SPA, shall be $ 12.00 (as adjusted for stock splits, stock dividends, stock combinations, recapitalizations or

Faraday Future Intelligent Electric Inc.

Notes to Consolidated Financial Statements

from the date of issuance (see Note 14, 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 $ 95.1 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 $ 24.7 million and $ 95.1 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.

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

(dollars in thousands) 2021

Outstanding principal $ 5,458

Foreign exchange (gain) loss on principal 133

Reclassification from related party notes payable 730

other similar transactions occurring thereafter).

The funding at each closing is subject to various closing conditions, including:

(a) an effective registration statement with respect to the shares of Common Stock issuable upon exercise of the warrants issuable under the Unsecured SPA and the shares of Common Stock issuable pursuant to the FFVV Unsecured SPA Notes and (b) the Company shall have reserved the Required Reserve Amount (as defined in the FFVV Joinder) in full.

In addition, FFVV has the option, for 12 months from June 25, 2023, to purchase Unsecured SPA Notes.

FFVV agreed, on behalf of its affiliates, that FFSV may exchange any Tranche B Notes for either (x) Tranche D Notes, and/or (y) any Unsecured SPA Notes.

The Company agreed to pay FFVV a one-time $ 0.3 million working fee and legal fees not to exceed $ 0.4 million, which shall be paid by netting the purchase price for any new notes with the amount of such fees.

On June 26, 2023, Senyun executed a Second Joinder and Amendment Agreement (the “Senyun Joinder”), pursuant to which, Senyun agreed to exercise its option to purchase $ 15.0 million of Secured SPA Notes in accordance with the terms of the Secured SPA Notes.

If Senyun exercises its option to invest another $ 10.0 million of Secured SPA Notes in accordance with the terms of the Secured SPA Notes on or prior to the later of (x) August 1, 2023 or (y) four business days after the meeting of the Company’s stockholders for the Stockholder Approval (as defined below), then the Company agrees to subsequently amend the Unsecured SPA Notes whereby Senyun would invest another $ 20.0 million.

Senyun did not exercise this option.

Pursuant to the Senyun Joinder, Senyun agreed to purchase, under the Unsecured SPA Notes, unsecured notes in an aggregate principal amount of up to $ 30.0 million in eight installments.

The floor price, for each note issued to Senyun (or its affiliates) under the SPA Notes, is $ 10.90 (as adjusted for stock splits, stock dividends, stock combinations, recapitalizations or other similar transactions occurring thereafter).

The Company agreed to pay Senyun a one-time $ 0.2 million working fee and legal fees not to exceed $ 0.3 million, which shall be paid by netting the purchase price for any new notes with the amount of such fees.

The FFVV and Senyun Joinders do not trigger any adjustment to the conversion or exercise price of the notes and warrants under the SPA Notes, and Senyun and FFSV waived any such rights to any adjustment to the conversion or exercise price in each of the Secured SPA and/or the Unsecured SPA, as applicable, and the related warrants.

Amendment to Joinder and Amendment Agreement

On August 4, 2023, the Company entered into a Waiver and Amendment Agreement to the FFVV Joinder, pursuant to which FFVV agreed to waive any and all requirements of the Company to reserve shares of Common Stock for issuance pursuant to the SPA Notes or SPA Warrants and defers any obligations of the Company to deliver any shares of Common Stock for issuance pursuant to the SPA Notes or SPA Warrants until the earlier of (x) September 30, 2023 and (y) the earlier of (I) the trading day immediately following the date of consummation of a reverse stock split of the Common Stock and (II) the 15th business day after the Company’s receipt of stockholder approval to increase the authorized shares of Common Stock.

Further, if FFVV exercised its option to invest another $ 10.0 million of Tranche B Notes in accordance with the terms of the Secured SPA on or prior to the latest of (x) August 1, 2023, (y) four business days after the meeting of the Company’s stockholders for the required stockholder approval under the Unsecured SPA to increase the Company’s authorized shares of Common Stock and for purposes of Nasdaq Listing Rule 5635 (to the extent needed) (the “Stockholder Approval”), and (z) six business days after the Company had filed its Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, then FFVV had the right, at any time prior to the 30 th day after the date of consummation of such funding, to invest another $ 20.0 million in Unsecured SPA Notes, subject to terms substantially identical to those provided for in the Unsecured SPA.

FFVV did not exercise this option.

Ninth and Tenth Secured SPA Amendments

On August 4, 2023, the Company entered into a ninth amendment to the Secured SPA (the “Ninth Secured SPA Amendment”) with FFVV, as purchaser, and a tenth amendment to Secured SPA (the “Tenth Secured SPA Amendment”) with Senyun, as purchaser, pursuant to which, the Company, FFVV, and Senyun agreed to amend the definition of Required Minimum to mean (a) until the earlier of (x) September 30, 2023 and (y) the earlier of (I) the trading day immediately following the date of consummation of a reverse stock split of the Common Stock and (II) the 15th business day after the Company shall have obtained stockholder approval to increase the authorized shares of Common Stock (as applicable, the “Waiver Expiration Date”), zero shares of Common Stock, and (b) immediately after the Waiver Expiration Date, the maximum aggregate number of shares of Common Stock then issued or potentially issuable in the future pursuant to the Transaction Documents (as defined

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

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:

$ 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

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 —

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

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.

in the Secured SPA), including any Underlying Shares (as defined in the Secured SPA) issuable upon exercise in full of all Warrants (as defined in the Secured SPA) or conversion in full of all Secured SPA Notes (including Underlying Shares issuable as payment of interest on the Secured SPA Notes), ignoring any conversion or exercise limits set forth therein.

Unsecured Securities Purchase Agreement – Streeterville

On August 4, 2023, the Company entered into a securities purchase agreement with Streeterville (the “Unsecured Streeterville SPA”), for $ 16.5 million aggregate principal amount of the Company’s senior unsecured promissory notes (the “Streeterville Note”) and a common stock purchase warrant (the “Streeterville Warrant”) to purchase up to 25,421 shares of Common Stock with an exercise price equal to $ 214.20 per share, subject to full ratchet anti-dilution protection and other adjustments, and are exercisable for seven years on a cash or cashless basis.

The Streeterville Note is subject to an original issue discount of $ 1.5 million.

In addition, the Company will pay Streeterville $ 0.2 million to cover Streeterville’s legal fees and other transaction costs incurred in connection with the purchase and sale of the Streeterville Note.

The Streeterville Note is convertible into shares of Class A Common Stock, at a conversion price equal to $ 214.20 , plus an interest make-whole amount as described above for the Unsecured SPA, subject to certain adjustments including full ratchet anti-dilution price protection.

The Streeterville Note matures on August 4, 2029 and is subject to the same repayment conversion, and most-favored nation terms and conditions as described above for the Unsecured SPA.

Streeterville has the option, from time to time for 12 months after the date of the Unsecured Streeterville SPA, to purchase up to $ 7.5 million in aggregate (or $ 15.0 million in aggregate with Company’s consent) in additional convertible senior unsecured notes and warrants on the same terms as the Streeterville Note and Streeterville Warrant.

Additionally, from the date of the Unsecured Streeterville SPA until the date that is the five-year anniversary of the date of the Unsecured Streeterville SPA, upon any issuance by the Company or any of its subsidiaries of Class A Common Stock or Class A Common Stock equivalents for cash consideration, indebtedness or a combination of units thereof (subject to certain exceptions set forth in the Unsecured Streeterville SPA) (each, a “Subsequent Financing”), if Streeterville that then owns at least $ 7.5 million principal amount of Streeterville Notes (when aggregated with any affiliates of Streeterville) shall have the right to participate in up to an amount of the Subsequent Financing such that Streeterville’s ownership of the Company remains the same immediately following such Subsequent Financing as its ownership immediately prior to such Subsequent Financing, pursuant to the procedures outlined in the Unsecured Streeterville SPA.

Pursuant to the Streeterville Note, the Company obtained stockholder approval, as required by the Nasdaq listing rules, with respect to the issuance of any shares of Class A Common Stock in excess of 19.99 % of the issued and outstanding shares of Class A Common Stock (the “Issuance Cap”), of the Conversion Shares (as defined in the Streeterville Note), the Warrant Shares (as defined in the Unsecured Streeterville SPA), and subject to any applicable Nasdaq rules, any shares Common Stock issuable pursuant to the note and warrant issuable in connection with the reinvestment right set forth in the Unsecured Streeterville SPA in excess of the Issuance Cap at a special meeting of the Company’s stockholders held on February 5, 2024.

Amendment to Joinder and Amendment Agreement

On September 21, 2023, in accordance with the FFVV Joinder, the Company entered into an amendment agreement with FFVV to the Unsecured SPA, pursuant to which FFVV agreed to purchase Unsecured SPA Notes in an aggregate principal amount of up to $ 20.0 million, subject to terms substantially identical to those provided in the FFVV Joinder, in installments.

The funding of each installment is subject to various closing conditions.

Anti-dilution adjustments

During the period ended December 31, 2023 the Company entered into multiple dilutive stock sale and purchase transactions, as discussed in Note 2, Liquidity and Capital Resources and Going Concern above that triggered the full ratchet anti-dilution price protections embedded in the SPA Notes and SPA Warrants.

As a result, the fixed-price conversion price of the SPA Notes and exercise price of the SPA Warrants outstanding prior to such financings was reduced to a price equal to the price per share paid in the dilutive financings.

As of December 31, 2023 the SPA Note conversion and SPA Warrant exercise price equals $ 0.73 .

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 8, 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

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 8, 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 8, Fair Value of Financial Instruments ).

End of Period Secured and Unsecured SPA Information

The Company received cash proceeds, net of original issue discount s, of $ 231.1 million and $ 73.8 million in ex change for the issuance of the SPA Notes and incurred approximately $ 2.5 million and $ 3.8 million in t ransaction costs during the twelve months ended December 31, 2023 and 2022 respectively.

During the twelve months ended December 31, 2023, the Company issued to the Secured SPA Purchasers and Unsecured SPA Purchasers warrants pursuant to both the Secured SPA and Unsecured SPA arrangements and in connection with the Warrant Exchange.

As of December 31, 2023, there were 556,205 SPA Warrants outstanding and the warrants had an exercise price of $ 0.73 per share, subject to anti-dilution ratchet price protection, exercisable for seven years from the date of issuance (see Note 10, Stockholders' Equity ).

The Company may repurchase certain warrants for $ 0.01 per share if and to the extent the VWAP of the Class A Common Stock during 20 out of 30 trading days prior to the repurchase is greater than $ 45.00 per share, subject to certain additional conditions.

During the twelve months ended December 31, 2023, the Secured SPA Purchasers exercised warrants to purchase 251,649 shares of Class A Common Stock issued pursuant to the SPA Notes, via both cash and cashless exercise.

On December 31, 2023 the Company determined that the fair value of the SPA Notes and warrants was $ 86.71 million and $ 0.25 million, respectively.

The Company recorded a gain in Change in fair value of notes payable and warrant liabilities in the Consolidated Statement of Operations and Comprehensive Loss for the twelve month ended December 31, 2023, in the amount of $ 97.0 million for the SPA Notes and warrants.

During the year ended December 31, 2023, total SPA Notes principal of $ 222.9 million with a fair value of $ 136.1 million was converted to Additional paid-in capital.

In connection with the conversions of the SPA Notes the Company recognized a Loss on settlement of notes payable for the twelve months ended December 31, 2023 and 2022 in the amount of $ 222.7 million and $ 41.1 million, respectively.

2022 Note Purchase Agreement (“NPA”)

From 2019 to 2022 the Company issued notes with various related and unrelated parties through the NPA.

The Company settled the following NPAs 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

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 )

$ 161,282 $ ( 2,365 ) $ 2,065 $ ( 87,065 ) $ ( 73,917 )

In July 2022, certain NPAs were modified and it was accounted for as a troubled debt restructuring under ASC 470-60, because the Company was experiencing financial difficulty and the conversion mechanism resulted in the effective borrowing rate decreasing after the restructuring which was determined to be a concession.

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

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 the terms of this modification were determined to not be substantially different, the new debt is accounted for as a continuation of the original debt at fair value using the now lower conversion rate.

As a result of the new conversion rate the Company was obligated for the year then ended to issue additional shares to Senyun based on the lower conversion rate.

The Company accounted for this obligation by crediting Other current liabilities and debiting Additional paid in capital for an amount of $ 0.9 million.

During the year ended December 31, 2022 the NPA notes were fully settled for either cash or equity.

The Company paid $ 87.1 million cash to settle various NPA notes.

Total NPA principal which was converted to equity totaled $ 73.9 million, 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.

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.

The estimated fair value of the Company’s notes payable not carried at fair value approximated their carrying value as of December 31, 2023 and 2022, respectively.

These amounts relate to the Notes Payable - China other and Auto loan balances.

Faraday Future Intelligent Electric Inc.

Notes to Consolidated Financial Statements

Schedule of Principal Maturities of Notes Payable

1 unchanged sentence

Due on demand 4,898

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 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.

Thereafter 72,543

Related Party Notes

Related Party Notes Payable

The Company receives funding via notes payable from various parties, including related parties.

Related party notes payable consists of the following as of December 31, 2023:

(in thousands) Contractual

Date Contractual

Related party notes – China December 31, 2023 18.0 % $ 5,103

Related party notes – Unsecured SPA August 2029 10 % - 15 %

Related party notes – China various other Due on Demand — % 3,789

Related Party Notes- Other February, 2024 5.27 % $ 326

Related party notes payable, current ( 9,760 )

Related party notes payable, less current $ —

Faraday Future Intelligent Electric Inc.

Notes to Consolidated Financial Statements

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.

Related party notes payable consists of the following as of December 31, 2022:

(in thousands) Contractual

Date Contractual

Rates Net Carrying Value

Related party notes – China December 31, 2023 12.0 % $ 5,209

Related party notes – China various other Due on Demand — % 3,755

Related party notes payable, current ( 8,964 )

Related party notes payable, less current $ —

Unsecured SPA

MHL is the anchor investor in the Unsecured SPA and has committed $ 80.0 million of such funding.

MHL is a related party of the Company as MHL’s investors include a subsidiary of FF Global.

FF Global has control over the Company’s management, business and operations.

See Note 7, Notes Payable , for details on the Unsecured SPA.

The Company expensed the original issue discount and transaction costs to Changes in fair value of related party notes payable and warrant liabilities in the Consolidated Statement of Operations and Comprehensive Loss.

Subsequent to the issuance of the Unsecured SPA, MHL funded, net of original issue discounts, $ 20.7 million in exchange for the issuance of the Unsecured SPA Notes and related warrants.

In connection with the Unsecured SPA, the Company issued MHL warrants to purchase 35,405 shares of the Class A Common Stock at an exercise price of $ 214.20 per share, subject to anti-dilution ratchet price protection, exercisable for seven years from the date of issuance (see Note 11, Stockholders' Equity and Note 7, Notes Payable ).

During the year ended December 31, 2023 MHL converted $ 22.3 million of gross principal balances in exchange for 5,010,651 shares of the Class A Common Stock.

In connection with the conversion of Unsecured SPA Notes, the Company recognized a $ 20.0 million Loss on settlement of related party notes payable, during the year ended December 31, 2023, for the difference between the fair value of the shares issued and the fair value of the debt instrument.

Related party notes payable issued pursuant to the Unsecured SPA consist of the following as of December 31, 2023:

(in thousands) Contractual

Maturity Date Contractual

Rates Unpaid Principal

Balance Fair Value

Adjustments Original Issue Discount and Proceeds Allocated to Warrants Net

MHL - Unsecured SPA Note August 2029 10 % - 15 %

$ 666 $ ( 54 ) $ ( 70 ) $ 542

Related Party Notes - China

As of April 1, 2023, the Company has been in breach of its debt agreement with, and contractual obligation to make interest payments to, Chongqing Leshi Small Loan Co., Ltd., a related party, with an outstanding principal balance of $ 4.5 million.

As a result of the default, the interest rate on the outstanding principal balance has increased to a rate of 18 % per annum until the event of default is no longer applicable.

The Company recorded $ 0.1 million in interest expense in related party interest expense during the year ended December 31, 2023.

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 approximated their carrying value as of December 31, 2023 and 2022, respectively.

Faraday Future Intelligent Electric Inc.

Notes to Consolidated Financial Statements

Schedule of Principal Maturities of Related Party Notes Payable

The future scheduled principal maturities of related party notes payable as of December 31, 2023 were as follows:

(in thousands)

Due on demand $ 8,892

X-Butler previously known as Warm Time Inc.

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

(“Ocean View”) Transactions

The Company leased two real properties, located in Rancho Palos Verdes, California (the “Rancho Palos Verdes Properties”), from X-Butler from January 1, 2018 through March 31, 2022.

X-Butler in turn leased the Rancho Palos Verdes Properties from Yueting Jia, the Company’s founder and Chief Product and User Ecosystem Officer.

The Rancho Palos Verdes Properties were used by the Company to provide long-term or temporary housing to employees of the Company (including a former Global CEO).

According to the agreement between the parties, the Company paid X-Butler for rent and certain services, including catering, room services and organization of meetings, external gatherings and events, for the Rancho Palos Verdes Properties.

For the year ended December 31, 2023, the Company paid to X-Butler Less than $ 0.1 million, for rent and business development services rendered to the Company and its executives.

The Company has recorded approximately $ 0.1 million recorded in Accounts Payable as of December 31.

As part of its relationship with the Company, X-Butler also served as the conduit for certain loans from Ocean View, an entity formerly controlled by Mr.

Jia and now wholly owned by the spouse of Mr.

Ruokun Jia, who is the former Assistant Treasurer of the Company and Mr.

Jia’s nephew.

The loan principal was repaid to the Company in prior years and accrued interest on such loans remains outstanding as of December 31, 2023 and 2022 in the amount of zero and $ 0.2 million, respectively.

In prior years, the Company advanced funding to Ocean View for various real estate purchases, including the Rancho Palos Verdes Properties, and related expenses.

As of December 31, 2023 and 2022, the Company had no receivable from Ocean View on the Consolidated Balance Sheets.

On February 9, 2023, the Company made a payment of approximately $ 0.2 million on behalf of Ocean View, an indemnified co-defendant, in connection with a seizure of funds related to the outstanding judgment in ongoing litigation, also involving Han’s San Jose Hospitality, LLC.

Ocean View fulfilled its payment obligation under the settlement arrangement of such litigation, but the Company did not make its payment on the outstanding judgment which caused such seizure of funds of Ocean View.

See Note 10, Commitments and Contingencies , for more information.

Following such seizure, the Company paid the outstanding judgment and all accrued interest.

The Company received the return of such indemnification payment in April 2023.

FF Global Expense Reimbursements and Consulting Fees

On July 30, 2022, the Company entered into a preliminary term sheet (the “Preliminary Term Sheet”) with FF Top, a subsidiary of FF Global, 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.

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 a preliminary term sheet (the “Term Sheet” and with such supplemental agreement, the “Supplemental Agreement”) with FF Global, pursuant to which the parties agreed, due to the high amount of FF Global’s out-of-pocket legal fees and expenses incurred in connection with its financing efforts, to

Faraday Future Intelligent Electric Inc.

Notes to Consolidated Financial Statements

amend the Term Sheet to increase the cap for legal fees and expenses from $ 0.3 million to $ 0.7 million.

The Company agreed to pay the remaining $ 0.4 million of the fees owed to FF Global as follows:

Pursuant to the Term Sheet, as amended by the Supplemental Agreement, the Company paid FF Global $ 0.2 million on each of February 1, 2023 and February 6, 2023.

On April 8, 2023, the Company reimbursed FF Global for $ 0.2 million related to legal expenses incurred by FF Global in connection with the Sixth Secured SPA Amendment.

In addition, on April 10, 2023 and May 31, 2023, the Company reimbursed FF Global for $ 0.1 million and $ 0.3 million related to legal expenses incurred by FF Global in connection with the Unsecured Financing.

In early February 2023, FF Global 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 Global 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 an effective date of February 1, 2023 with FF Global (the “Consulting Services Agreement”), according to which the Company agreed to pay a monthly consulting fee of $ 0.2 million to FF Global for the following services:

• Assistance in developing its funding strategy.

• Assistance in developing its value return and management strategy.

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

• Supporting communications regarding stockholders meetings.

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

• Assistance in risk management strategy.

• Assistance in capability build up and operation strategy.

The Consulting Services Agreement has an initial term of 12 months and automatically renews for successive 12 months periods unless earlier terminated in accordance with the terms thereof.

Effective March 6, 2024, the Consulting Agreement renewed automatically.

Either party may terminate the Consulting Services Agreement upon one month prior written notice to the other party.

Upon any termination of the Consulting Services Agreement, the Company shall promptly pay FF Global any accrued but unpaid fees hereunder and shall reimburse FF Global for any unreimbursed expenses that are reimbursable thereunder.

In addition, FF Global is entitled to reimbursement for all reasonable and documented out-of-pocket travel, legal, and other out-of-pocket expenses incurred in connection with their services, which expenses shall not exceed $ 0.1 million without the prior written consent of the Company.

The Company paid $ 1.8 million to FF Global during the year ended December 31, 2023, pursuant to the Consulting Services Agreement.

The Company has $ 0.6 million of amounts payable to FF Global recorded in Accounts Payable and Accrued Liabilities in the Consolidated Balance Sheets at December 31, 2023.

Common Units of FF Global

During 2022, certain executives and employees of the Company were granted the opportunity to subscribe to 24,000,000 common units of FF Global.

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 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 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, 2023 and 2022.

Advertising Services Payable to Leshi Information Technology Co., Ltd.

The Company has recorded a payable to LeTV within Accrued expenses and other current liabilities in the amount of $ 7.5 million and $ 7.0 million as of December 31, 2023 and December 31, 2022, respectively, in connection with advertising services provided to the Company in prior years.

LeTV is a Shanghai Stock Exchange-listed public company founded and controlled by Mr.

Yueting Jia, the Company’s founder and Chief Product and User Ecosystem Officer.

Faraday Future Intelligent Electric Inc.

Notes to Consolidated Financial Statements

Other Related Party Transactions

The Company pays for a vehicle lease totaling less than $ 0.1 million annually on behalf of Mr.

The Company owes a total of $ 0.2 million and $ 0.1 million to various related parties as of December 31, 2023 and 2022, respectively, which is included in Accounts Payable within the Consolidated Balance Sheets.

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.

14 unchanged sentences

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 6, Property and Equipment, Net ) and vehicle lease agreements.

The Company’s lease arrangements consist primarily of its ieFactory California production facility, corporate office, store and equipment (which was terminated during December 2022, see Note 5, Property and Equipment, Net 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.

2 unchanged sentences

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.

Faraday Future Intelligent Electric Inc.

Notes to Consolidated Financial Statements

Lease cost includes both the fixed and variable expenses recorded for leases.

1 unchanged sentence

Finance lease cost

Amortization of right-of-use assets $ 1,990

Amortization of ROU assets $ 273 $ 1,990

Interest on lease liabilities 275 664

3 unchanged sentences

Total lease cost $ 6,720 $ 7,470

Faraday Future Intelligent Electric Inc.

Notes to Consolidated Financial Statements

The following table summarizes future lease payments as of December 31, 2023 (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

Fiscal year Operating Leases

Thereafter 7,602

Total 33,646 8,963

Imputed Interest 9,935

8 unchanged sentences

Financing cash flows from finance leases 1,016 1,888

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

December 31, 2022

$ 7,000 $ 6,717

Lease assets obtained in exchange for financing lease liabilities $ — $ 21,865

Lease assets obtained in exchange for operating lease liabilities $ — $ —

Faraday Future Intelligent Electric Inc.

Notes to Consolidated Financial Statements

December 31, 2023 December 31, 2022

Weighted average remaining lease term (in years)

4 unchanged sentences

Finance leases 9.2 % 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

Faraday Future Intelligent Electric Inc.

Notes to Consolidated Financial Statements

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,

Thereafter 991

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,

Thereafter 1,864

Sale and Lease Back transaction of the FF isFactory California

On October 19, 2023, the Company entered into a sale leaseback transaction whereby it has exercised its option to purchase its Hanford manufacturing facility (the “Property”) and simultaneously completed a sale leaseback to Ocean West Capital Partners (“Landlord”) pursuant to that certain Lease Agreement, dated as of October 19, 2023, by and between the Tenant and 10701 Idaho Owner, LLC (the “Lease Agreement”).

This Lease Agreement also allows the Tenant to access to up to $ 12.0 million of tenant improvement allowance for the Property.

The new lease will be for a term of five years , with a monthly lease rate of $ 355,197 , with a five-year extension option, and the Tenant has an option to purchase the fee interest in the Property at any time after the second year of the lease term.

Furthermore, the Tenant has a right of first offer to purchase the Property in the event Landlord desires to sell the Property.

The obligations of the Tenant under the lease are guaranteed by the Company pursuant to that certain Guaranty of Lease made by the Company to 10701 Idaho Owner, LLC

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 lease back, 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 $ 24.9 million financing obligation at the completion of the transaction, which was recorded to the Financial obligations on a sale and lease back transaction on our Consolidated Balance Sheet.

No gain or loss was record on the failed sale and lease back.

The future scheduled payments of the financing obligations on our Hanford manufacturing facility sale and lease back transaction as of December 31, 2023 are as follows (dollars in thousands):

Twelve months ended December 31,

Less implied interest

Less expected tenant improvement allowance

Present value of payments

Under the terms of the sale and leaseback transaction, we expect to receive $ 12.0 million in tenant improvement allowance, the repayment of which is included into the financing obligation payments above.

Faraday Future Intelligent Electric Inc.

4 unchanged sentences

In the opinion of management, the outcome of any such claims and disputes cannot be predicted with certainty.

As of December 31, 2023 and 2022, the Company had accrued legal contingencies of $ 21.6 million and $ 18.9 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.

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 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.

Faraday Future Intelligent Electric Inc.

f/k/a Property Solutions Acquisition Corp.

2:21-cv-009914 (U.S.

District Court – Central District of California).

On December 23, 2021, a putative class action lawsuit alleging violations of the Exchange Act 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, and its current Chief Product and User Ecosystem Officer, as well as the Co-CEOs of Property Solutions Acquisition Corp.

On May 6, 2022, the appointed lead plaintiffs in the Zhou putative class action filed an amended complaint alleging violations of Sections 10(b), 14(a) and 20(a) of the Exchange Act, Sections 11 and 15 of the Securities Act , and related “control” person claims for secondary liability under those statutes, seeking unspecified damages.

On or about July 7, 2022, defendants filed a motion to dismiss the amended complaint, which the court granted in part and denied in part, finding, among other things, that the plaintiffs had failed to sufficiently plead a claim with respect to the alleged statements made as to the expected schedule for the production and delivery of the FF 91 vehicle, but had sufficiently pled a claim for violation of Sections 10(b), 14(a) and 20(a) of the Exchange Act with respect to certain statements made in 2021 concerning Legacy FF receipt of 14,000 reservations for the FF 91 vehicle.

On January 6, 2023, the plaintiffs declined to again amend their complaint to attempt to reallege the claims dismissed by the court, thereby making the operative complaint the one that was at issue in the motion to dismiss absent the judicially dismissed claims.

The Company and the other defendants filed answers to that compliant on February 10, 2023, following which the parties engaged in discovery.

On April 27, 2023, the court granted the parties’ joint motion for a temporary stay pending mediation.

The parties thereafter participated in a private mediation on June 29, 2023.

After further discussions and negotiations, the parties reached an agreement-in-principle to settle the Zhou putative class action.

Although denying all allegations, the Company nevertheless agreed to settle the Zhou putative class action for a non-reversionary cash payment of $ 7.5 million for the benefit of the settlement class and to be funded entirely by the Company’s insurers, in exchange for the release of all claims asserted against the Company.

The court granted preliminary approval of the settlement on November 7, 2023, and scheduled a hearing for final approval of the settlement that took place on March 18, 2024.

On January 23, 2024, the ostensible lead plaintiff in the Consolidated Delaware Class Action discussed below, filed an Objection to final approval of the settlement (the “Objection”) to which the Company and the other defendants responded on March 11, 2024.

On March 18, 2024, the court overruled the Objection in its entirety and entered an Order finally approving the Zhou putative class action settlement.

Breitfeld et al.

2:22-cv-01570 (U.S.

District Court – Central District of California).

Zhou v Breitfeld et al.

2:22-cv-01852 (U.S.

District Court – Central District of California).

Breitfeld et al.

1:22-cv-00467 (U.S.

District Court – District of Delaware).

Breitfeld et al.

1:22-cv-00525 (U.S.

District Court – District of Delaware).

Breitfeld et al.

2023-0639-KSJM (Delaware Court of Chancery).

Ashkan Farazmand and Wangjun Zhou v.

Breitfeld, et al.

2023-1283 (Delaware Court of Chancery).

On March 8 ( Farazmand ) and March 21 ( Zhou ), 2022, putative stockholder derivative lawsuits were respectively filed in the United States District Court, Central District of California and were subsequently consolidated in an action now entitled In re Faraday Future Intelligent Electric Inc.

2:22-cv-1570 (the “California Federal Derivative Action”).

The California Federal Derivative Action was stayed pending resolution of certain proceedings in the Zhou putative class action, which stay expired in February 2023.

Plaintiffs thereafter filed a verified consolidated amended complaint on June 2, 2023, in response to which the Company and the other defendants filed a motion to dismiss.

On January 22, 2024, the court granted in

Faraday Future Intelligent Electric Inc.

Notes to Consolidated Financial Statements

part, and denied in part, the motion to dismiss with leave to amend.

On February 6, 2024, the parties filed a stipulation to stay the California Federal Derivative Action pending mediation that was entered by the court on February 12, 2024, and that will stay the case until 30 days after the date of mediation.

On April 11 ( Moubarak ) and April 25 ( Wang ), 2022, putative stockholder derivative lawsuits were respectively filed in the United States Delaware District Court (collectively, the “Delaware Federal Derivative Actions”).

On February 6, 2023, the Delaware Derivative Actions were and remain stayed pending resolution of the pending proceedings in the Zhou putative class action.

On June 21 ( Wallace ) and December 22 ( Farazmand ), 2023, putative derivative lawsuits were respectively filed in the Delaware Court of Chancery (collectively, the “Delaware State Derivative Actions”).

The parties stipulated to a stay of the Wallace action which was entered by the court on December 29, 2023.

In the Farazmand action, the Company and the other defendants plan to file various motions to dismiss in response to the Farazmand complaint pursuant to a yet to be determined briefing schedule.

Each of the foregoing derivative lawsuits purport to assert claims on behalf of the Company against certain of the Company’s current and former officers and directors for alleged violations of the Exchange Act or for various common law claims based upon those officers’ and directors’ alleged breaches of their purported fiduciary duties owed to the Company and/or for their alleged aiding and abetting of those purported breaches, resulting in unspecified damages to the Company.

Although the complaints filed in the foregoing lawsuits vary in detail, they are generally premised upon many of the same underlying allegations made in the Zhou putative class action.

The Company maintains that each of the derivative lawsuits is without merit and has stated its intention to vigorously defend those actions.

The Company has not concluded that an adverse outcome in these matters is either “probable” or “remote” within the meaning of the ABA Statement of Policy and, accordingly, decline to express any view as to the possible outcome of these matters.

The Consolidated Delaware Class Action

On June 14, 2022, a verified stockholder class action complaint was filed in the Delaware Court of Chancery 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”).

On September 21, 2022, a second verified stockholder class action complaint was filed in the Delaware Court of Chancery 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 alleged breaches, in connection with disclosures and stockholder voting leading up to the PSAC/Legacy FF merger (the “Cleveland Class Action”), which action subsequently was consolidated with the Yun Class Action with the complaint in the Cleveland Class Action being designated as the operative pleading (collectively, the “Consolidated Delaware Class Action”).

In April, 2023, the defendants respectively filed motions to dismiss the complaint.

The Company maintains that the Consolidated Delaware Class Action is without merit and has stated its intention to vigorously defend that action.

Additionally, on September 19, 2022, FF Global, filed a lawsuit in the Chancery Court of the State of Delaware against FFIE, seeking the removal of Ms.

Susan Swenson and Mr.

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Swenson and Mr.

Scott Vogel, a member of the

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

Faraday Future Intelligent Electric Inc.

Notes to Consolidated Financial Statements

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.

effective on October 5, 2022 upon his receipt of a supplemental release pursuant to the Mutual Release.

On October 28, 2022, Mr.

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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.

Following the completion of the Special Committee (as defined below) 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.

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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.

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.

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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

On May 30, 2023, the Company filed a Motion to Compel Arbitration.

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.

On January 31, 2023, Raymond Handling Solutions, Inc.

(“Raymond”), an equipment supplier, filed an action alleging that the Company breached its contract with Raymond and refused to pay for warehouse racking equipment.

Raymond requested a judgement in its favor in the amount of $ 1.14 million.

The Company defaulted on the payment plan and a trial had been set for July 2024 to resolve the matter.

On April 15, 2024, the Company and Raymond executed a Settlement Agreement in order to release all claims in exchange for the return of racks.

In July 2021, the Company and Palantir entered into a Master Subscription Agreement (“MSA”) that sets froth the terms of the Palantir’s platform hosting arrangement which was expected to be used as a central operating system for data and analytics.

On April 26, 2023, the Company received a letter from Palantir Technologies Inc.

(“Palantir”) providing a notice of dispute regarding the Company’s alleged material breach of the MSA with Palantir.

The letter asserts that the Company has not paid invoices totaling $ 12.3 million of past due fees.

On July 7, 2023, Palantir filed a Demand for Arbitration against the

Faraday Future Intelligent Electric Inc.

Notes to Consolidated Financial Statements

proceedings, the Company is unable to evaluate the likelihood of an unfavorable outcome and/or the amount or range of potential loss.

Company with Judicial Arbitration and Mediations Services, Inc., regarding a dispute between Palantir and the Company over the MSA.

Palantir alleges that the Company has refused to make payments under the MSA.

Palantir asserts claims for:

(i) breach of contract;

(ii) breach of the covenant of good faith and fair dealing;

and (iii) unjust enrichment.

Palantir alleged that the amount in controversy was $ 41.5 million.

On August 4, 2023, the Company submitted its response to Palantir’s arbitration demand.

The Company’s response included both affirmative defenses and a general denial of all allegations in Palantir’s arbitration demand.

On March 11, 2024, the Company and Palantir executed a Settlement and Release Agreement in order to terminate the MSA and resolve the disputes.

The Company agreed to pay Palantir $ 5.0 million, with a liquidated damages clause of $ 0.25 million for late payments.

This settlement includes mutual waivers and releases of claims to avoid future disputes.

On May 2, 2023, the Company received a notice of Commencement of Arbitration by Envisage Group Developments Inc.

USA (“Envisage”) for unpaid invoices relating to professional engineering services and for design and manufacture of a Master Buck cube with a total claimed damages of $ 1,104,770.72 .

At the hearings, the Company disputes the adequacy of Envisage’s documentation for professional services and contends that no contract exists for Master Buck due to unfulfilled payment conditions.

The Company further challenges Envisage’s unilateral alteration of payment terms.

A post-arbitration briefing was held on May 21, 2024, with an anticipated ruling from the arbitrator shortly thereafter.

The Company maintains that the dispute is without merit and has stated its intention to vigorously defend the action.

The Company has not concluded that an adverse outcome in this matter is either “probable” or “remote” within the meaning of the ABA Statement of Policy and, accordingly, decline to express any view as to the possible outcome of this matter.

On June 12, 2023, the Company received a letter demanding access to the Company’s books and records in connection with (a) the Company entering into the amended and restated shareholder agreement with FF Top Holding LLC n/k/a FF Global and (b) certain other related matters.

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.

On June 13, 2023, L & W LLC (“Autokiniton”), a provider of tooling for use in the automotive industry, filed an action in State of Michigan 3rd Judicial Circuit County of Wayne Court alleging the Company breached its contract with Autokiniton and refused to fulfill its obligations under the applicable Purchase Order.

Autokiniton requested a judgment in the amount of at least $ 8.1 million.

In discovery, the Company has conceded that $ 4.6 million is due and owing under the Purchase Order, and it is anticipated that the court will likely grant Autokintion’s prospective motion for summary disposition and enter judgment for the undisputed amount owed.

The Company disputes that the remaining $ 3.5 million alleged balance is owed and has stated its intention to vigorously defend the action as to that alleged balance.

On October 11, 2023, Joseph Hof and Scott McPherson filed a class action lawsuit in Supreme Court of the State of New York, County of New York against Benchmark 237 LLC, Benchmark Real Estate Trust, SLLC, Canvas Investment Partners, LLC, Canvas Property Group, LLC, Juliet Technologies, LLC, and the Company, alleging that the defendants engaged in various scheming practices that discriminatorily impacted the plaintiffs and other class members The court granted the Company’s Motion to Dismiss on January 12, 2024, and dismissed the case on January 18, 2024.

The plaintiffs filed an appeal on February 12, 2024, against the dismissal orders.

Given the early stages of the assertion, the Company is unable to evaluate the likelihood of an unfavorable outcome and/or the amount or range of potential loss.

On December 8, 2023, 10701 Idaho Owner, LLC (“Landlord”) notified the Company of rental defaults amounting to $ 645,819.37 for the months of October to December 2023, demanding a 5 % late fee and 18 % annual interest on overdue amounts.

Following this, the parties reached a First Amendment to the Lease Agreement dated October 19, 2023 to address the Company’s total rent default of $ 1.1 million, including a $ 125,000 partial payment made on January 26, 2024, and additional late fees and charges of $ 158,771 .

The amendment established a repayment plan requiring the Company to pay $ 1.2 million from February 26 to March 31, 2024, and to either replenish or provide a new $ 0.6 million Letter of Credit.

On March 26, 2024, the Landlord served the Company with a Notice to Pay or Quit, demanding payment of $ 1.0 million within five business days.

On April 10, 2024, the Company made a $ 150,000 payment to Landlord in exchange for Landlord deferring further action in this matter.

On February 14, 2024, Rexford Industrial - 18455 Figueroa, LLC (“Rexford”) filed a Complaint for Unlawful Detainer against Faraday SPE, LLC in Superior Court of California, County of Los Angeles.

The complaint asserts that the Company has failed to pay outstanding rent in the amount of $ 917,887.26 .

Furthermore, Rexford seeks recovery of reasonable attorney’s fees and damages calculated at a rate of $ 10,187.23 per day commencing from March 1, 2024.

This action is based on a breach of a Lease Agreement dated March 8, 2019, for premises at 18455 S.

Figueroa Street, Gardena, Los Angeles, with Rexford

Faraday Future Intelligent Electric Inc.

Notes to Consolidated Financial Statements

requesting forfeiture of the lease.

On April 10, 2024, the court issued a Notice of Dismissal, dismissing the Complaint without prejudice.

On March 25, 2024, Cooper Standard GmbH filed a lawsuit against Faraday&Future Inc.

in Superior Court of California, County of Los Angeles, alleging non-payment of the estimated sum of $ 1.5 million, which constitutes a breach of contractual obligations set forth in purchase orders, a Letter of Tool Acceptance, and invoices to facilitate the supply of automotive products and services for the FF 91 vehicle from August 2021 to December 2022.

Given the early stages of the legal proceedings, the Company is unable to evaluate the likelihood of an unfavorable outcome and/or the amount or range of potential loss.

On March 27 and March 29, 2024, Jose Guerrero and Victoria Xie, former Senior Director of Sales and Aftersales, and Go-to-Market Project Manager and Launch Manager, respectively, filed wrongful termination lawsuits against Faraday&Future Inc.

and certain of its officers in Superior Court of California, County of Los Angeles.

Each plaintiff is demanding compensatory, general, and special damages, each not less than $ 1.0 million.

On April 19, 2024, an additional formal employee submitted a request for arbitration against the same group of defendants without quantifying alleged damages.

Given the early stages of these 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.

Dispute with Noteholders

In August 2023, and September 2023, the Company received correspondence from each of Senyun, MHL and V W Investment alleging that the Company had entered into oral agreements to compensate those investors for any losses in connection with converting their notes into shares of the Company in order to support the Company’s proposals at the August 2023 special stockholders meeting.

The Company is unaware of any such oral agreements and is contesting these claims on multiple grounds.

Special Committee Investigation

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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.

Yueting Jia, 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.

Faraday Future Intelligent Electric Inc.

Notes to Consolidated Financial Statements

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

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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.

Faraday Future Intelligent Electric Inc.

Notes to Consolidated Financial Statements

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.

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:

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Swenson and receiving a 25 % annual base salary reduction;

Faraday Future Intelligent Electric Inc.

Notes to Consolidated Financial Statements

● the removal of Mr.

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● 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;

Faraday Future Intelligent Electric Inc.

Notes to Consolidated Financial Statements

● 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;

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

Faraday Future Intelligent Electric Inc.

Notes to Consolidated Financial Statements

● 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.

As of May 17, 2024, 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.

Please see “ Risk Factors – Risks Related to FF’s Business and Industry – FF has taken 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.

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 and changes to the Board.” 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.

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Qing Ye tendered his resignation from the Board, which resignation was effective immediately.

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.

Ye remained a consultant of the Company as an independent contractor until November 18, 2023.

On January 25, 2023, Mr.

Chui Tin Mok was appointed to the Board, effective immediately, following the resignation of Mr.

See “ Management – Governance Agreement with FF Top and FF Global ” for more information.

Ke Sun and Mr.

Xuefeng Chen have subsequently resigned from the Board.See “ Management – Governance Agreement with FF Top and FF Global ” for more information.

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.

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FF has responded to that request and intends to fully cooperate with any future requests from the DOJ.

Faraday Future Intelligent Electric Inc.

Notes to Consolidated Financial Statements

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

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;

An unconditional contractual obligation is defined as an agreement to purchase goods or services that is enforceable and legally binding (non-cancelable, or cancellable only in certain circumstances).

As of December 31, 2023, we estimate FFIE’s total unconditional contractual commitments, including purchases of inventory, tooling, machinery and equipment as well as items to be used in R&D activities;

lease minimum payments and other contractual commitments, totaling $ 210.2 million, which included $ 56.8 million for the year ended December 31, 2024, $ 37.8 million for the two years ended December 31, 2026, $ 108.1 million for the two years ended December 31, 2028 and $ 7.6 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.

Faraday Future Intelligent Electric Inc.

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December 31, 2022

Shares Issued Shares Shares to be Issued Total Issued and to be Issued Shares

Shares Issued Shares

Preferred Stock 10,000,000 —

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13,708,334 2,613,946

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.

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;

The amendment set forth the rights, privileges, and preferences of the 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 Board.

The Board is empowered, without stockholder approval, to issue the Preferred Stock with dividend, liquidation, conversion, voting or other rights which could adversely affect the voting power or other rights of the holders of Common Stock;

provided that any issuance of preferred stock with more than one vote per share will require the prior approval of the holders of a majority of the outstanding shares of Class B Common Stock.

1 unchanged sentence

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

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 3,395,834 to 7,041,667 , increasing the Company’s total number of authorized shares of Common Stock and preferred stock from 13,708,334 to 17,354,167 .

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.

Additionally, at a special meeting of the Company’s stockholders held on August 16, 2023, the Company’s stockholders approved a proposal authorizing the Board to effect a reverse stock split of the outstanding Common Stock at a range between 1-for-2 and 1-for-90 shares of outstanding Common Stock, and a proposal stating that a reverse stock split is implemented at a ratio of 1-for-8 or greater.

On August 22, 2023, the Board approved the Reverse Stock Split ratio (1-for-80).

Accordingly, on August 24, 2023, the Company filed the Third Amended and Restated Certificate of Incorporation of the Company to effect the Reverse Stock Split and to set the number of authorized shares of Common Stock to 51,479,167 .

As a result, effective August 25, 2023, every 80 shares of the issued and outstanding Common Stock were converted into one share of Common Stock, without any change in par value per share, and the authorized shares of Common Stock were reduced to 51,479,167 , composed of (i) 49,291,667 shares of Class A Common Stock and (ii) 2,187,500 shares of Class B Common Stock.

No fractional shares of

Faraday Future Intelligent Electric Inc.

Notes to Consolidated Financial Statements

Certificate of Incorporation with the Secretary of State of the State of Delaware to reflect such amendment.

Common Stock were issued as a result of the Reverse Stock Split.

Stockholders who would otherwise have received a fractional share were instead issued a full share in lieu of such fractional share.

The Class A Common Stock began trading on The Nasdaq Capital Market on a split-adjusted basis at the opening of trading on August 28, 2023 under the symbol “FFIE” with a new CUSIP number (307359 505).

The Company’s Public Warrants continue to be traded on The Nasdaq Capital Market under the symbol “FFIEW” and the CUSIP number for the warrants remains unchanged.

On February 5, 2024, the Company filed an amendment to the Company’s Third Amended and Restated Certificate of Incorporation, as amended, with the office of the Secretary of the State of Delaware to effect an increase in the authorized shares of Common Stock from 154,437,500 to 1,389,937,500 .

At a special meeting of the Company’s stockholders held on February 5, 2024, the Company’s stockholders approved an amendment to the Company’s Third Amended and Restated Certificate of Incorporation, as amended, to effect a reverse stock split of the Common Stock by a ratio of 1-for-3, with such action to be effected at such time and date, if at all, as determined by the Board within one year after the conclusion of the Special Meeting and a corresponding reduction in the total number of shares of Common Stock the Company is authorized to issue.

On February 23, 2024, the Company filed a second amendment to the Company’s Third Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to effect this reverse stock split and to set the number of authorized shares of Common Stock to 463,312,500 (which is 1,389,937,500 divided by 3).

Pursuant to the Certificate of Amendment, effective as of 5:00 p.m., Eastern Time, on February 29, 2024 (, every three shares of the issued and outstanding Common Stock was automatically converted into one share of Common Stock, without any change in par value per share and the number of authorized shares of Common Stock was reduced to 463,312,500 .

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 18, S ubsequent 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.

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

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.

Class A Common Stock does not have the right to convert into Class B Common Stock.

2 unchanged sentences

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

Ares Warrants

9,139,280 $ 0.73 August 5, 2027

556,205 $ 0.73 Various through November 28, 2030

Public Warrants 98,088 $ 2,760.00 July 21, 2026

Private Warrants 464 $ 2,760.00 July 21, 2026

Total 9,794,037

Faraday Future Intelligent Electric Inc.

Notes to Consolidated Financial Statements

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 18, 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 10, Notes Payable ) into a warrant reserve with an exercise price now set to $ 0.6427 per warrant (“Warrant Reserve”).

Upon the completion of certain milestones and conditions, the Company may elect a forced conversion clause settleable in cash through January 23, 2023 on the warrants, requiring the warrant holders to exercise their warrants on a cash basis in exchange for newly issued shares of the Company’s 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 18, 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.

During the year ended December 31, 2023, 251,649 warrants were exercised to purchase 213,037 shares of Class A Common Stock for cash proceeds of $ 4.1 million.

Certain of the warrants were exercised pursuant to a cashless exercise feature whereby 38,612 warrant shares were surrendered as the purchase price.

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 1,443,555 $ 55.20 Various through September 23, 2029

ATW NPA Warrants (1)

320,019 $ 55.20 Various through August 10, 2028

Other warrants 122,728 $ 55.20 August 5, 2027

Public Warrants 98,088 $ 2,760.00 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

Private Warrants 464 $ 2,760.00 July 21, 2026

Total 1,984,854

(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

Faraday Future Intelligent Electric Inc.

Notes to Consolidated Financial Statements

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 3, Business Combination.

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

Insufficient Authorized Shares

3 unchanged sentences

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.

As a result of the reclassification, the Company reclassified $ 2.3 million out of Additional paid-in capital into the Earnout liability, which is included in Other current liabilities in the Consolidated Balance Sheet as of December 31, 2022.

As of December 31, 2022, the Company reclassified 224,253 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 are 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 in the Consolidated Balance Sheet as of December 31, 2022.

On February 28, 2023, upon shareholder approval to increase the Company’s authorized shares, the Company had sufficient authorized shares to fully settle all outstanding equity-linked financial instruments.

As of April 21, 2023, the Company had insufficient authorized shares to fully settle its equity-linked financial instruments in shares primarily due to the issuance of additional convertible notes and warrants between February 28, 2023 and April 21, 2023.

As a result of the Reverse Stock Split and the related increase in the number of available authorized shares of Class A Common Stock, effective August 25, 2023 the Company had sufficient authorized shares of Class A Common Stock to fully settle its equity-linked financial instruments in shares.

Accordingly, on August 25, 2023, the Company reclassified the fair value of the Earnout liability of $ 1.4 million and the fair value of the Share-based payment liability of $ 2.0 million into Additional paid-in capital.

Faraday Future Intelligent Electric Inc.

Notes to Consolidated Financial Statements

Refer to the table summarizing the activity of Level 3 fair value measurements in Note 13, Fair Value of Financial Instruments for the changes in fair value of the Earnout liability and the Share-based payment liability recognized in periods when they were thus classified.

Salary Deduction and Stock Purchase Agreement

On September 21, 2023, certain executive officers of the Company entered into Salary Deduction and Stock Purchase Agreements (collectively, the “SD SPA”) with the Company.

Under the SD SPA, on each payroll date after the receipt of stockholder approval of the SD SPA, the officer has agreed to authorize the Company to deduct 50 % of the officer’s after-tax base salary.

This deducted amount will be used to purchase a number of shares of Class A Common Stock determined using the VWAP (as defined in the SD SPA) of Class A Common Stock per share on the applicable payroll date.

Pursuant to the SD SPA, the officer may decrease the amount of the deduction upon notice to the Board.

No shares have been purchased under the SD SPA as of December 31, 2023.

Stock-based Compensation

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 2021 SI Plan allows the Board of Directors to grant up to 206,557 incentive and nonqualified stock options, restricted shares, unrestricted shares, restricted share units, and other stock-based awards for the Class A Common Stock to employees, directors, and non-employees.

The number of shares of Class A Common Stock available under the 2021 SI Plan will increase annually on the first day of each calendar year, beginning with the calendar year ending December 31, 2022, and continuing until (and including) the calendar year ending December 31, 2031.

Annual increases are equal to the lesser of (i) 5 percent of the number of shares of Class A Common Stock issued and outstanding on December 31 of the immediately preceding fiscal year and (ii) an amount determined by the Board of Directors.

As of the date of issuance of the Consolidated Financial Statement, the Board of Directors is evaluating the timing and extent of such increases.

As of the date of issuance of the Consolidated Financial Statement, the Board 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, 2023 and 2022 the Company had 1,067,189 and 101,053 shares of Class A Common Stock available for future issuance under the 2021 SI Plan.

Faraday Future Intelligent Electric Inc.

Notes to Consolidated Financial Statements

Option Awards

4 unchanged sentences

Outstanding as of December 31, 2022

27,694 $ 662.40 8.97 $ —

Granted 12,500 259.20

Cancelled/forfeited ( 1,987,155 ) 3.96

Exercised ( 207 ) 213.60

Expired/forfeited

( 8,090 ) 700.50

Outstanding as of December 31, 2023

2 unchanged sentences

10,119 535.83 8.63 $ 2,352

Faraday Future Intelligent Electric Inc.

Notes to Consolidated Financial Statements

As of December 31, 2023, the total unrecognized stock-based compensation expense for stock options granted under the SI Plan was $ 0.4 million, which is expected to be recognized over a weighted average period of 3.9 years.

5 unchanged sentences

Grant date fair value per share $ 259.20

The total grant date fair value of options vested during the year ended December 31, 2022 was $ 2.7 million.

The total grant date fair value of options vested during the years ended December 31, 2023 and 2022 was $ 2.5 million and $ 2.7 million, respectively.

Restricted Stock Units

3 unchanged sentences

74,457 $ 261.60

102,012 67.56

Released ( 25,970 ) 258.24

2 unchanged sentences

115,361 $ 94.62

(1) The Company’s subsidiaries in China have employees who are citizens of People’s Republic of China (PRC).

(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 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.

1 unchanged sentence

As of December 31, 2023, the total unrecognized stock-based compensation expense for RSUs granted under the SI Plan was $ 1.4 million which is expected to be recognized over a weighted average period of 3.76 years.

Faraday Future Intelligent Electric Inc.

Notes to Consolidated Financial Statements

The total fair value of RSUs vested during the year ended December 31, 2022 was $ 6.0 million.

The total fair value of RSUs vested during the years ended December 31, 2023 and 2022 was $ 4.4 million and $ 6.0 million, respectively.

As further described in Note 2, 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.

1 unchanged sentence

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.

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.

On February 1, 2018, the Board adopted the Equity Incentive Plan (“EI Plan”), under which the Board authorized the grant of up to 176,625 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

Faraday Future Intelligent Electric Inc.

Notes to Consolidated Financial Statements

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):

4 unchanged sentences

97,592 $ 679.20 6.92 $ 22

Granted 5,287,031 4.74

Exercised — — —

2 unchanged sentences

81,203 $ 660.21 5.92 $ 31,743

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, 2023

67,592 $ 632.67 5.75 $ 26,679

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:

5 unchanged sentences

As of December 31, 2023, the total unrecognized stock-based compensation expense for stock options granted under the EI Plan was $ 0.2 million which is expected to be recognized over a weighted average period of 2.39 years.

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.

On May 2, 2019, the Company adopted its Special Talent Incentive Plan (“STI Plan”) under which the Board may grant up to 58,875 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.

Faraday Future Intelligent Electric Inc.

6 unchanged sentences

23,410 $ 1,521.60 6.94 $ —

Granted 5,516,399 7.82

Exercised — — —

2 unchanged sentences

22,551 $ 1,504.23 6.64 $ 16,318

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, 2023

9 unchanged sentences

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):

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 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):

Research and development $ 6,812 $ 13,118

2 unchanged sentences

$ 9,167 $ 17,664

Included in stock-based compensation expense for the year ended December 31, 2023 is $ 4.1 million related to when the Company’s share-based payment awards were classified as liabilities from time to time during the year ended December 31, 2023.

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

Fair Value of Financial Instruments

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, 2023 and 2022.

Notes Payable

The Company has elected to measure certain notes payable and related party notes payable at fair value.

Specifically, the SPA Notes as they contain embedded liquidation premiums with conversion rights that represent embedded derivatives (see Note 7, Notes Payable and Note 8, Related Party Transactions).

The Company used a binomial lattice model and discounted cash flow methodology to value the SPA Notes.

The significant assumptions used in the models include the volatility of the Class A Common Stock, the Company’s expectations around the full ratchet trigger, the Company’s debt discount rate based on a CCC rating, annual dividend yield, and the expected life of the instrument.

Fair value measurements associated with the notes payable represent Level 3 valuations under the fair value hierarchy.

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.

The Company is required to measure the SPA Warrants at fair value.

The Company uses a Monte Carlo simulation model to measure the fair value of the SPA Warrants, where the significant assumptions used include the volatility of the Company’s Class A Common Stock, the Company’s expectations around the full ratchet anti-dilution trigger, the contractual term of the SPA Warrants, the risk-free rate and annual dividend yield.

Fair value measurements associated with the liability-classified warrants represent Level 3 valuations under the fair value hierarchy.

On November 23, 2022, the Company issued 3,288 Commitment Shares in satisfaction of the commitment fee agreed upon in the SEPA.

The financial instrument was classified as a derivative asset with a fair value of zero as of December 31, 2023 and 2022.

Commitment to Issue Class A Common Stock

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 9,948 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.

The Company used the probability-weighted expected return method (“PWERM”) to determine the fair value of the obligation to issue registered shares.

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.

Faraday Future Intelligent Electric Inc.

Notes to Consolidated Financial Statements

On July 21, 2022, the Company amended its agreement with the service provider and delivered 9,948 unregistered shares of Class A Common Stock in satisfaction of its obligation.

Public and Private Warrants

Upon the closing of the Business Combination, the Company assumed 95,740 Public Warrants and 2,478 Private Warrants from PSAC.

The Company also issued 334 Private Warrants to settle related party notes of PSAC.

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 Warrant Liabilities 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 $ 0.1 million as of December 31, 2023 and 2022.

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

During the year ended December 31, 2022 PSAC Sponsor transferred a total 2,348 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 additional-paid-in-capital (“APIC”) at their fair value of $ 0.6 million the year ending December 31, 2022.

There were no transfers during the year ending December 31, 2023.

Faraday Future Intelligent Electric Inc.

Notes to Consolidated Financial Statements

Liabilities due to 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.

See Note 11, Stockholders' Equity .

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, 2023

Level 1 Level 2 Level 3

Warrant liabilities 1

$ — $ — $ 306

Notes payable 1

1 Includes both related party and non-related party balances for the Company’s notes payable and warrant liabilities.

December 31, 2022

(in thousands) Level 1 Level 2 Level 3

Warrant liabilities $ — $ — $ 92,833

Notes payable — — 26,008

Earnout shares liability — — 2,250

Share-based payment liabilities — — 3,977

There were not any transfers of assets and liabilities between Level 1, Level 2 and Level 3 of the fair value measurement hierarchy during the year ended December 31, 2023.

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

Faraday Future Intelligent Electric Inc.

Notes to Consolidated Financial Statements

The following table summarizes the activity of Level 3 fair value measurements:

(in thousands) Warrant Liabilities 1

Notes Payable 1

Earnout Shares Liability Liability for Insufficient Authorized Shares Related to Stock Options and RSUs

Balance as of December 31, 2022

$ 92,833 $ 26,008 $ 2,250 $ 3,977

Additions 41,080 213,776 — —

Net disposal pursuant to Warrant Exchange ( 16,506 ) — — —

Exercises ( 47,202 ) — — —

Debt extinguishments 1,317 13,078 — —

Change in fair value measurements ( 71,216 ) ( 28,934 ) 2,033 —

Payments of notes payable, including periodic interest ( 1,167 ) — —

Stock-based compensation expense — 4,065

Reclassification from liability to equity on February 28, 2023 — — ( 5,014 ) ( 8,978 )

Reclassification from equity to liability on April 21, 2023 — — 2,112 2,979

Reclassification from liability to equity on August 25, 2023 — — ( 1,381 ) ( 2,043 )

Conversions of notes to Class A Common Stock ( 136,049 ) — —

Balance as of December 31, 2023

$ 306 $ 86,712 $ — $ —

1 Includes both related party and non-related party balances for the Company’s notes payable and warrant liabilities.

The provision for income tax consisted of the following (dollars in thousands):

14 unchanged sentences

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:

The provision for income taxes for the years ended December 31, 2023 and 2022 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:

Federal income tax expense 21.0 % 21.0 %

4 unchanged sentences

Foreign tax rate difference 0.2 % ( 0.1 ) %

Prior year true-up on deferred taxes ( 0.1 ) % — %

Return-to-provision adjustment — % 0.3 %

1 unchanged sentence

Expiration of tax attributes ( 1.8 ) % ( 1.6 ) %

State tax rate change on deferred taxes — % 6.4

Valuation allowance ( 14.7 ) % ( 17.5 ) %

2 unchanged sentences

The main changes in foreign tax rate difference and valuation allowance related to higher foreign losses incurred in 2023.

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):

The tax effects of temporary differences for the years ended December 31, 2023 and 2022 that give rise to significant portions of the deferred tax assets and deferred tax liabilities are provided below (dollars in thousands):

Deferred Tax Assets:

2 unchanged sentences

Accrued liabilities 16,646 14,762

Construction in progress — —

Excess interest expense under section 163(j) — 5,018

Capital losses 3,420 3,420

Capital loss 3,420 3,420

Amortization 9,921 11,284

Capitalized R&D expense 74,835 —

Stock-based compensation 418 3,385

Transaction costs 45 —

Other 594 1,278

21 unchanged sentences

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.

federal R&D tax credit carryforwards and a state R&D tax credit carryforward of $ 4.2 million as of December 31, 2023 which will begin to expire in 2035.

state tax credits do not expire and can be carried forward indefinitely.

6 unchanged sentences

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.

As of December 31, 2023, the 2020 through 2023 federal income tax returns and 2019 through 2023 state income tax 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.

All of the prior year income tax returns, from 2017 through 2023, 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):

The aggregate change in the balance of unrecognized tax benefits for the years ended December 31, 2023 and 2022 is as follows (dollars in thousands):

Beginning balance $ 8,807 $ 4,997

4 unchanged sentences

No interest and penalties related to the Company’s unrecognized tax benefits was accrued as of December 31, 2023 and 2022, 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

The Company does not expect its uncertain income tax positions

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.

to have a material impact on its consolidated financial statements within the next twelve months.

As of December 31, 2023 and 2022, 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):

6 unchanged sentences

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 3, 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.

The net loss per common share was the same for the Class A Common Stock 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:

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 —

The following table presents the potentially dilutive shares that were excluded from the computation of diluted net loss per share of Common Stock attributable to Common Stock stockholders because their effect was anti-dilutive as of December 31:

Shares issuable upon conversion of SPA Notes and settlement of make-whole provisions 42,768,078 725,514

Shares issuable upon exercise of SPA Warrants 556,205 1,443,555

Other warrants 9,139,280 442,747

Stock-based compensation awards – SI Plan - Options 6,646,452 —

Stock-based compensation awards – SI Plan - RSUs (1)

Stock-based compensation awards – EI Plan 23,422,276 31,962,921

Stock-based compensation awards – STI Plan 5,618,512 9,526,727

Stock-based compensation awards – Options 31,897 148,698

Stock-based compensation awards – RSUs 115,361 74,457

Public warrants 98,088 98,088

1 unchanged sentence

Total 52,709,373 2,933,523

(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

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.

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

Insurance Coverage

Faraday Future Intelligent Electric Inc.

Notes to Consolidated Financial Statements

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.

The Company is generally required to maintain certain insurance coverage that, subsequent to December 31, 2023, lapsed due to lack of payment.

On May 17, 2024, FF Adventures SPV XVIII LLC (“the Buyer”), a third-party investment firm affiliated with ATW Partners, LLC, purchased $ 11.9 million of Unsecured Convertible Senior Promissory Note principal from Streeterville.

In connection with the purchase and sale, Streeterville assigned and transferred all rights, title and interest to the Buyer clear of any lien, claim, or encumbrance.

Subsequent Unsecured Notes

On January 2, 2024, the Company issued an unsecured note of $ 1.3 million to a related party with a due date of April 1, 2024 at 4.27 % interest.

This note is in default as of the date of these financial statements.

On January 9, 2024, the Company issued an unsecured convertible note of $ 1.5 million to a related party with a due date of April 8, 2024 at 4.27 % interest.

This note is in default as of the date of these financial statements.

Principal and accrued interest are convertible at the option of the related party into either a) Common Stock of the Company at a conversion price per share equal to the closing stock price at the closing of trading day immediately prior to the day on which lender provides conversion notice or b) unsecured convertible notes of the Company pursuant to the terms contained in the Unsecured SPA.

On February 14, 2024, the Company issued a convertible unsecured note of $ 0.3 million to a related party with a due date of May 10, 2024 at 4.27 % interest.

This note is in default as of the date of these financial statements.

The note is convertible, in whole or in part, at the latest closing price of FFIE (“Conversion Price”), into shares of Common Stock of the Company at the option of the related party, at any time and from time to time.

The number of Common Stock issuable upon a conversion shall be determined by the quotient obtained by dividing the total amount of interest and principal accrued to be converted by the Conversion Price.

Subsequent to December 31, 2023, the Company issued unsecured convertible notes to a third party totaling $ 12.1 million with due dates ranging from April 25, 2024 through August 19, 2024 at 4.27 % interest.

Of this amount, $ 2.5 million is in default as of the date of these financial statements.

Subsequent SPA Activity

Subsequent to December 31, 2023, the Company received additional funding through the optional SPA loans totaling $ 8.2 million.

In addition, $ 34.4 million of principal and $ 19.5 million of interest was converted into 398.6 million shares of FF's Class A Common Stock.

Included in this amount is $ 0.7 million of principal and $ 0.6 million of interest to a related party activity.

These related party conversions were converted into 1.3 million shares of Class A Common Stock.

Increase in Authorized Shares

On February 5, 2024, the Company filed an amendment to the Company’s Third Amended and Restated Certificate of Incorporation with the office of the Secretary of the State of Delaware to effect an increase in the authorized shares of Common

Stock from 154,437,500 to 1,389,937,500 .

Reverse Stock Split

At a special meeting of the Company’s stockholders held on February 5, 2024, the Company’s stockholders approved an amendment to the Company’s Third Amended and Restated Certificate of Incorporation, as amended, to effect a reverse stock split of the Common Stock by a ratio of 1-for-3, with such action to be effected at such time and date, if at all, as determined by the Board within one year after the conclusion of the special meeting and a corresponding reduction in the total number of shares of Common Stock the Company is authorized to issue.

On February 23, 2024, the Company filed a second amendment to the Company’s Third Amended and Restated Certificate of Incorporation, as amended, with the Secretary of State of the State of Delaware to effect this reverse stock split and to set the number of authorized shares of Common Stock to 463,312,500

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.

The Board also approved FF’s user ecosystem, capital markets, human resources and administration, corporate strategy and China departments reporting to both 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 .

(which is 1,389,937,500 divided by 3).

Pursuant to the Certificate of Amendment, effective as of 5:00 p.m., Eastern Time, on February 29, 2024, every three shares of the issued and outstanding Common Stock was automatically converted into one share of Common Stock, without any change in par value per share and the number of authorized shares of Common Stock was reduced to 463,312,500 .

The Company’s Class A Common Stock began trading on The Nasdaq Capital Market on a split-adjusted basis at the opening of trading on March 1, 2024.

The Class A Common Stock continues trading on the Nasdaq Capital Market under the symbol “FFIE” with a new CUSIP number (307359 703).

The Class B Common Stock also has a new CUSIP number (307359802).

The Company’s publicly traded warrants continue to be traded on the Nasdaq Capital Market under the symbol “FFIEW” and the CUSIP number for the warrants remains unchanged.

However, under the terms of the applicable warrant agreement, the number of shares of Class A Common Stock issuable on exercise of each warrant has been proportionately decreased.

Specifically, following the effectiveness of the reverse sock split, every three shares of Class A Common Stock that may be purchased pursuant to the exercise of public warrants now represents one share of Class A Common Stock that may be purchased pursuant to such warrants.

Accordingly, for the Company’s warrants trading under the symbol “FFIEW”, every three warrants became exercisable for one share of Class A Common Stock at an exercise price of $ 2,760.00 per share of Class A Common Stock.

Other than what has been disclosed in other footnotes or above, the Company did not identify any subsequent events that would have required adjustment to or disclosure in the Consolidated Financial Statements.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosures

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk