FARADAY FUTURE INTELLIGENT ELECTRIC INC. 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk Pursuant to Item 305(e) of Regulation S-K , FF is not required to provide the information required by this Item as it is a “smaller reporting company.”. 107 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Audited Consolidated Financial Statements Report of Independent Registered Public Accounting Firm (PCAOB Firm ID 339 ) 109 Consolidated Balance Sheets as of December 31, 2023 and 2022 110 Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2023 and 2022 111 Consolidated Statements of Stockholders’ Equity for the years ended f December 31, 2023 and 2022 112 Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022 114 Notes to Consolidated Financial Statements 116 108 Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of Faraday Future Intelligent Electric Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance 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, 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. Management’s plans regarding those matters also are described in Note 2. 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 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 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. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our 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 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. New York, NY May 28, 2024 109 Table of Contents Faraday Future Intelligent Electric Inc. Consolidated Balance Sheets Years Ended December 31, 2023 and 2022 (in thousands, except share and per share data) 2023 2022 Assets Current assets Cash $ 1,898 $ 16,968 Restricted cash 2,127 1,546 Accounts receivable, net 7 — Inventory 34,229 4,457 Deposits 31,382 44,066 Other current assets 21,721 17,489 Total current assets 91,364 84,526 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 Other non-current assets 4,877 6,492 Total assets $ 530,539 $ 529,288 Liabilities and stockholders’ equity Current liabilities Accounts payable $ 93,170 $ 91,603 Accrued expenses and other current liabilities 62,391 65,709 Warrant liabilities 285 92,781 Related party warrant liabilities 21 — Accrued interest 25 189 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 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 Total liabilities 302,303 328,296 Commitments and contingencies (Note 10) Stockholders’ equity Class A Common Stock, $ 0.0001 par value; 49,291,667 and 23,770,834 shares authorized; 42,433,025 and 2,347,276 shares issued and outstanding as of December 31, 2023 and 2022, respectively 4 — Class B Common Stock, $ 0.0001 par value; 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 gain 5,862 3,505 Accumulated deficit ( 3,958,499 ) ( 3,526,755 ) Total stockholders’ equity 228,236 200,992 Total liabilities and stockholders’ equity $ 530,539 $ 529,288 The accompanying notes are an integral part of these consolidated financial statements. 110 Table of Contents Faraday Future Intelligent Electric Inc. Consolidated Statements of Operations and Comprehensive Loss Years Ended December 31, 2023 and 2022 (in thousands, except share and per share data) 2023 2022 Revenues Auto sales $ 784 $ — Cost of revenues Auto sales 42,607 — Gross loss ( 41,823 ) — Operating expenses Research and development 132,021 299,989 Sales and marketing 22,836 21,689 General and administrative 82,888 112,771 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 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 ) Related party interest expense ( 753 ) ( 3,879 ) Other expense, net ( 2,437 ) ( 11,878 ) Loss before income taxes ( 431,635 ) ( 602,178 ) Income tax provision ( 109 ) ( 61 ) Net loss $ ( 431,744 ) $ ( 602,239 ) Per share information (Note 15): 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 ) Foreign currency translation adjustment 2,357 10,450 Total comprehensive loss $ ( 429,387 ) $ ( 591,789 ) The accompanying notes are an integral part of these consolidated financial statements. 111 Table of Contents Faraday Future Intelligent Electric Inc. Consolidated Statements of Stockholders’ Equity Years Ended December 31, 2023 and 2022 (in thousands, except share data) Commitment to Issue Class A Common Stock Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Gain (Loss) Accumulated Deficit Total Stockholder’s Equity Class A Class B Shares Amount Shares Amount Shares Amount Balance as of December 31, 2021 — — 702,887 $ — — $ — $ 3,482,244 $ ( 6,945 ) $ ( 2,907,644 ) $ 567,655 Reclassification of obligation to issue registered shares of Class A Common Stock upon adoption of ASU 2020-06 — 32,900 — — — — — — ( 20,265 ) ( 20,265 ) Reclassification of deferred gain upon adoption of ASC 842 — — — — — — — — 3,393 3,393 Conversion of notes payable into Class A Common Stock (Note 7) — — 1,071,008 — — — 164,068 — — 164,068 Class A Common Stock to be delivered for conversion of notes payable (Note 7) — — — — — — — — — — Issuance pursuant to commitment to issue registered shares — ( 32,900 ) 9,948 — — — 32,900 — — 32,900 Stock-based compensation — — — — — — 17,664 — — 17,664 Chongqing related party note payable restructuring (Note 8) — — — — — — 16,841 — — 16,841 Exercise of stock options and settlement on restricted stock tax withholding — — 17,084 — — — 9,015 — — 9,015 Exercise of warrants — — 121,261 — — — 7,419 — — 7,419 Amended exercise price of ATW NPA warrants (Note 11) — — — — — — 1,238 — — 1,238 Transfer of private warrants to unaffiliated parties — — — — — — 264 — — 264 Repurchase and retirement of Class A Common Stock — — ( 404 ) — — — ( 767 ) — — ( 767 ) 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 — — — — — Issuance of shares for restricted stock vesting — — 52,036 — — — — — — — Liability for insufficient authorized shares related to stock options and RSUs — — — — — — ( 3,977 ) — — ( 3,977 ) Liability for insufficient authorized shares related to earnout — — — — — — ( 2,250 ) — — ( 2,250 ) Issuance of SEPA commitment shares of Class A Common Stock (see Note 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. 112 Table of Contents 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 Paid-in Capital Accumulated Other Comprehensive Gain (Loss) Accumulated Deficit Total Stockholders’ Equity Class A Class B Shares Amount Shares Amount Balance as of December 31, 2022 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 Net loss — — — — — — ( 431,744 ) ( 431,744 ) Balance as of December 31, 2023 42,433,025 $ 4 266,670 $ — $ 4,180,869 $ 5,862 $ ( 3,958,499 ) $ 228,236 The accompanying notes are an integral part of these consolidated financial statements. 113 Table of Contents Faraday Future Intelligent Electric Inc. Consolidated Statements of Cash Flows Years Ended December 31, 2023 and 2022 (in thousands) 2023 2022 Cash flows from operating activities Net loss $ ( 431,744 ) $ ( 602,239 ) Adjustments to reconcile net loss to net cash used in operating activities Depreciation and amortization expense 42,473 2,975 Amortization of operating lease right-of-use assets and intangible assets 2,992 2,520 Stock-based compensation 9,167 17,664 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 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 Loss (gain) on forgiveness of accounts payable and deposits, net (see Note 4) 408 5,200 Non-cash interest expense — 8,403 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 Other current and non-current assets ( 2,884 ) ( 5,243 ) Accounts payable 13,785 60,369 Accrued expenses and other current and non-current liabilities ( 42,481 ) ( 14,947 ) Operating lease liabilities ( 2,717 ) ( 1,620 ) Accrued interest expense 588 ( 12,468 ) Net cash used in operating activities ( 278,178 ) ( 383,058 ) Cash flows from investing activities Payments for property and equipment ( 31,109 ) ( 123,222 ) Net cash used in investing activities ( 31,109 ) ( 123,222 ) 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 Payments of notes payable issuance costs ( 2,503 ) ( 3,834 ) Payments of notes payable, including liquidation premium — ( 87,279 ) Payments of related party notes payable — ( 517 ) Proceeds from exercise of warrants 4,074 4,229 Repurchase and retirement of Common Stock — ( 767 ) Payments of finance lease obligations ( 1,016 ) ( 1,888 ) Debt Conversion — — Proceeds from issuance of Class A Common Stock 34,492 — Net cash (used in) provided by financing activities 291,446 ( 6,721 ) Effect of exchange rate changes on cash and restricted cash 3,352 1,038 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: 114 Table of Contents Faraday Future Intelligent Electric Inc. Consolidated Statements of Cash Flows — (Continued) Years Ended December 31, 2023 and 2022 (in thousands) 2023 2022 Cash $ 1,898 $ 16,968 Restricted cash 2,127 1,546 Total cash and restricted cash, end of period $ 4,025 $ 18,514 Supplemental disclosure of cash flow information Cash paid for interest $ 465 $ 13,577 Supplemental disclosure of noncash investing and financing activities Conversion of convertible note to equity $ 123,460 $ 164,069 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 Liability for insufficient authorized shares related to earnout — 2,250 Settlement of finance leases with prepaid deposit — 709 Receipt of class A Common Stock in consideration of exercises of options — 669 Transfer of private warrants to unaffiliated parties — 264 The accompanying notes are an integral part of these consolidated financial statements. 115 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements 1. Nature of Business and Organization, Basis of Presentation and Summary of Significant Accounting Policies Nature of Business and Organization Faraday Future Intelligent Electric Inc. (“Company” or “FF”), a holding company incorporated in the State of Delaware on February 11, 2020, conducts its operations through the subsidiaries of FF Intelligent Mobility Global Holdings Ltd. (“Legacy FF”), founded in 2014 and headquartered in Los Angeles, California. The Company operates in a single operating segment and designs and engineers next-generation, intelligent, electric vehicles. 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. Principles of Consolidation and Basis of Presentation The Consolidated Financial Statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) and include the accounts of the Company, its wholly-owned subsidiaries and all other entities in which the Company has a controlling financial interest, including the accounts of any variable interest entity, in which the Company has a controlling financial interest and for which it is the primary beneficiary. All intercompany transactions and balances have been eliminated upon consolidation. Foreign Currency The Company determines the functional and reporting currency of each of its international subsidiaries based on the primary currency in which they operate. The functional currency of the Company’s foreign subsidiaries in China is their local currency, Chinese Yuan (“CNY”). For foreign subsidiaries where the functional currency is their local currency, assets and liabilities are translated into U.S. Dollars at exchange rates in effect at the balance sheet date, stockholders’ equity (deficit) is translated at the applicable historical exchange rate, and expenses are translated using the average exchange rates during the period. The effect of exchange rate changes resulting from the translation of the foreign subsidiary financial statements is accounted for as a component of accumulated other comprehensive loss on the Consolidated Balance Sheets. Use of Estimates The preparation of the financial statements in conformity with 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) 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, 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. Actual results could differ from those estimates and any such differences may have a material impact on the Company’s Consolidated Financial Statements. 116 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements Summary of Significant Accounting Policies Cash and Cash Equivalents The Company considers all highly liquid instruments with an original maturity of 90 days or less from the date of purchase to be cash equivalents. Fair Value Measurements The Company applies the provisions of ASC 820, Fair Value Measurement , which defines a single authoritative definition of fair value, sets out a framework for measuring fair value, and expands on required disclosures about fair value measurements. The provisions of ASC 820 relate to financial assets and liabilities as well as other assets and liabilities carried at fair value on a recurring and nonrecurring basis. The standard clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. When determining the fair value measurements for assets and liabilities required or permitted to be either recorded or disclosed at fair value, the Company considers the principal or most advantageous market in which the Company would transact and assumptions that market participants would use when pricing the asset or liability. The accounting guidance for fair value measurement requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is as follows: Level 1 Valuations for assets and liabilities traded in active exchange markets, or interest in open-end mutual funds that allow a company to sell its ownership interest back at net asset value on a daily basis. Valuations are obtained from readily available pricing sources for market transactions involving identical assets, liabilities or funds. Level 2 Valuations for assets and liabilities traded in less active dealer, or broker markets, such as quoted prices for similar assets or liabilities or quoted prices in markets that are not active. Level 2 instruments typically include U.S. government and agency debt securities, and corporate obligations. Valuations are usually obtained through market data of the investment itself as well as market transactions involving comparable assets, liabilities or funds. Level 3 Valuations for assets and liabilities that are derived from other valuation methodologies, such as option pricing models, discounted cash flow models and similar techniques, and not based on market exchange, dealer, or broker-traded transactions. Level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities. Fair value estimates are made at a specific point in time based on relevant market information and information about the financial or nonfinancial asset or liability. ASC 825-10, Financial Instruments , allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (“fair value option”). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument 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. 117 Table of Contents 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, 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 insurance limits ($ 250 per depositor per institution) and China Deposit Insurance Regulations limits (CNY 500 per depositor per institution). Management believes the financial institutions that hold the Company’s cash and restricted cash are financially sound and, accordingly, minimal credit risk exists with respect to cash and restricted cash. Cash and restricted cash held by the Company’s non-U.S. subsidiaries is subject to foreign currency fluctuations against the U.S. Dollar. If, however, the U.S. Dollar is devalued significantly against the Chinese Yuan, the Company’s cost to develop its business in China could exceed original estimates. The Company receives certain components from sole suppliers. The inability of a supplier to fulfill the Company’s supply requirements could materially impact future operating results. 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 118 Table of Contents Faraday Future Intelligent Electric Inc. 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. 119 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements Warranties 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 Property and equipment are stated at cost less accumulated depreciation and amortization. Expenditures for major renewals and betterments are capitalized, while minor replacements, maintenance and repairs, which do not extend the assets lives, are charged to operating expense as incurred. Upon sale or disposition, the cost and related accumulated depreciation or 120 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements amortization are removed from the Consolidated Balance Sheets and any gain or loss is included in the Consolidated Statements of Operations and Comprehensive Loss. Depreciation and amortization on property and equipment is calculated using the straight-line method over the estimated useful lives of the assets and for leasehold improvements, over the term of the lease, if shorter. Useful Life (in years) Buildings 39 Building improvements 15 Computer hardware 5 Tooling, machinery, and equipment 5 to 10 Vehicles 5 Lease vehicles 7 Computer software 3 Leasehold improvements Shorter of 15 years or term of the lease 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. The amounts capitalized in CIP that are held at vendor sites relate to the completed portion of work-in-progress of tooling, machinery and equipment built based on the Company’s specific needs. The Company may incur storage fees or interest fees related to CIP which are expensed as incurred. CIP is presented within Property and Equipment, net on the Consolidated Balance Sheets. Impairment of Long-Lived Assets The Company reviews its long-lived assets, consisting primarily of property and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amount of an assets (or asset groups) may not be recoverable. The Company performs impairment testing at the asset group level that represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Recoverability of these assets is determined by comparing the forecasted undiscounted cash flows attributable to such assets, including any cash flows upon their eventual disposition, to the assets carrying values. If the carrying value of the assets exceeds the forecasted undiscounted cash flows, then the assets are written down to their fair value. Assets classified as held for sale are also assessed for impairment and such amounts are determined at the lower of the carrying amount or fair value, less costs to sell the asset. No impairment charges were recorded during the years ended December 31, 2023 and 2022. 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 Accumulated other comprehensive loss encompasses all changes in equity other than those arising from transactions with stockholders. Elements of the Company’s accumulated other comprehensive loss are reported in the Consolidated Statements of Stockholders’ Equity (deficit) and consists of equity-related foreign currency translation adjustments, which are presented in the Consolidated Statements of Operations and Comprehensive Loss. Research and Development 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 Consolidated Balance Sheets and are 121 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements included in operating activities on the Company’s Consolidated Statements of Cash Flows. The Company expenses deposits as the services are provided and prototype parts are received. Sales and Marketing Sales and marketing expenses consist primarily of personnel-related costs (including salaries, bonuses, benefits, and stock-based compensation) for employees focused on sales and marketing, and direct costs associated with sales and marketing activities. Marketing activities include expenses to introduce the brand and the FF 91 to the market. Advertising costs were immaterial for the years ended December 31, 2023 and 2022. Stock-Based Compensation The Company’s stock-based compensation awards consist of stock options and restricted stock units (“RSUs”) granted to employees, directors and non-employees for the purchase of Common Stock. The Company recognizes stock-based compensation expense in accordance with the provisions of ASC 718, Compensation — Stock Compensation (“ASC 718”) . ASC 718 requires the measurement and recognition of compensation expense for all stock-based compensation awards based on the grant date fair values of the awards. The Company estimates the fair value of stock options using the Black-Scholes option pricing model. For options with service conditions, the value of the award is recognized as expense over the requisite service period on a straight-line basis. For performance-based awards, stock-based compensation expense is recognized over the expected performance achievement period of individual performance milestones when the achievement of each individual performance milestone becomes probable. Determining the grant date fair value of the awards using the Black-Scholes option pricing model requires management to make assumptions and judgments, including, but not limited to the following: Expected term — The estimate of the expected term of awards was determined in accordance with the simplified method, which estimates the term based on an averaging of the vesting period and contractual term of the option grant for employee awards. The Company uses the contractual term for non-employee awards. Expected volatility — The Company determines the expected volatility by weighing the historical average volatilities of publicly traded industry peers and its own trading history. FF intends to continue to consistently apply this methodology using the same or similar public companies until a sufficient amount of historical information regarding the volatility of the Company’s own Class A Common Stock price becomes available, unless circumstances change such that the identified companies are no longer similar to FF, in which case more suitable companies whose stock prices are publicly available would be utilized in the calculation. Risk-free interest rate — The risk-free interest rate used to value awards is based on the United States Treasury yield in effect at the time of grant for a period consistent with the expected term of the award. Dividend yield — The Company has never declared or paid any cash dividends and does not presently plan to pay cash dividends for the foreseeable future. Forfeiture rate — 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. Income Taxes The Company accounts for its income taxes using the asset and liability method whereby deferred tax assets and liabilities are determined based on temporary differences between the basis used for financial reporting and income tax reporting purposes. Deferred income taxes are provided based on the enacted tax rates in effect at the time such temporary differences are expected to reverse. A valuation allowance is provided for deferred tax assets if it is more likely than not that the 122 Table of Contents 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. As of December 31, 2023 and 2022, the Company had recorded a full valuation allowance on net deferred tax assets because the Company expects it is more likely than not that the net deferred tax assets will not be realized. The Company utilizes the guidance in ASC 740-10, Income Taxes , to account for uncertain tax positions. ASC 740-10 contains a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the positions will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount which is more likely than not of being realized and effectively settled. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments and may not accurately forecast actual outcomes. The Company recognizes interest and penalties on unrecognized tax benefits as a component of income tax expense. There were no material such interest or penalties for the years ended December 31, 2023 and 2022. Segments 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 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. 123 Table of Contents 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. 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. 2. Liquidity and Capital Resources and Going Concern The Company has evaluated whether there are certain conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the Consolidated Financial Statements are issued. Based on its recurring losses from operations since inception and continued cash outflows from operating activities (all as described below), the Company has concluded that there is substantial doubt about its ability to continue as a going concern for a period of one year from the date that these Consolidated Financial Statements were issued. 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. 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 ), 124 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements 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 125 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements 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. 3. Inventory (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. 4. Deposits and Other Current Assets Deposits and other current assets consists of the following as of December 31 (dollars in thousands): (in thousands) 2023 2022 Deposits 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 Other current assets 2023 2022 Prepaid expenses $ 13,309 $ 14,437 Other current assets 8,412 $ 3,052 Total other current assets $ 21,721 $ 17,489 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. 126 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements 5. Property and Equipment, Net Property and equipment, net, consists of the following as of December 31 (dollars in thousands): 2023 2022 Land, buildings and leasehold improvements $ 103,522 $ 5,598 Computer hardware 2,195 3,112 Tooling, machinery and equipment 318,301 9,542 Vehicles 669 337 Lease vehicles 1,873 — Computer software 4,301 4,212 Construction in process 36,491 393,814 Less: Accumulated depreciation ( 49,540 ) ( 10,295 ) Total property and equipment, net $ 417,812 $ 406,320 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. 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 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 for the year ended December 31, 2022, which reduced Accounts payable in the Consolidated Balance Sheet a s of December 31, 2022. 6. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consist of the following as of December 31 (dollars in thousands): 2023 2022 Accrued payroll and benefits $ 28,037 $ 20,502 Accrued legal contingencies 21,590 18,940 Other current liabilities 12,764 26,267 Total accrued expenses and other current liabilities $ 62,391 $ 65,709 127 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements 7. Notes Payable 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 (in thousands) Contractual Maturity Date Contractual Interest Rates Unpaid Principal Balance Fair Value Measurement Adjustments Original Issue Discount and Proceeds Allocated to Warrants Net Carrying Value 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 Due on Demand — % 4,898 — 4,898 Auto loans October 2026 7 % 82 — 82 $ 118,917 $ ( 14,293 ) $ ( 12,932 ) 91,692 Less: Related party notes payable $ ( 542 ) Less: Notes payable, current portion ( 91,150 ) Total: Notes payable, less current portion $ — * includes amounts attributed to the Unsecured Streeterville SPA December 31, 2022 (in thousands) Contractual Maturity Date Contractual Interest Rates Unpaid Principal Balance Fair Value Measurement Adjustments Original Issue Discount and Proceeds Allocated to Warrants Net Carrying Value 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 Auto loans October 2026 7 % 100 — — 100 $ 41,719 $ 264 $ ( 10,878 ) 31,105 Less: Notes payable, current portion ( 5,097 ) Total: Notes payable, less current portion $ 26,008 128 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements 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. 129 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements 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 130 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements 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 . 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 131 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements 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. 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 132 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements 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 133 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements 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 . 134 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements 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 Measurement Adjustments Payment Premium Cash Payment Conversion into Class A Common Stock (As Restated) March 1, 2021 Notes (1) March 1, 2022 14 % $ 56,695 $ ( 1,695 ) $ — $ ( 55,000 ) $ — August 26, 2021 Notes (1) March 1, 2022 14 % 30,924 ( 924 ) 2,065 ( 32,065 ) — June 2021 Notes (as restated) (2) October 31, 2026 — % 38,981 1,019 — — ( 40,000 ) Optional Notes (as restated) (2) October 31, 2026 15 % 34,682 ( 765 ) — — ( 33,917 ) $ 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. 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 135 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements 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 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. Schedule of Principal Maturities of Notes Payable The future scheduled principal maturities of notes payable as of December 31, 2023 are as follows (dollars in thousands): Due on demand 4,898 2023 — 2024 — 2025 40,728 2026 82 2027 — Thereafter 72,543 118,251 8. Related Party Notes Related Party Notes Payable The Company receives funding via notes payable from various parties, including 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, 2023: (in thousands) Contractual Maturity Date Contractual Interest Rates Net Carrying Value Related party notes – China December 31, 2023 18.0 % $ 5,103 Related party notes – Unsecured SPA August 2029 10 % - 15 % 542 Related party notes – China various other Due on Demand — % 3,789 Related Party Notes- Other February, 2024 5.27 % $ 326 $ 9,760 Less: Related party notes payable, current ( 9,760 ) Total: Related party notes payable, less current $ — 136 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements Related party notes payable consists of the following as of December 31, 2022: (in thousands) Contractual Maturity Date Contractual Interest 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 $ 8,964 Less: Related party notes payable, current ( 8,964 ) Total: 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 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 meet the definition of an embedded derivative. 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 Interest Rates Unpaid Principal Balance Fair Value Measurement Adjustments Original Issue Discount and Proceeds Allocated to Warrants Net Carrying Value 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. 137 Table of Contents 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 2024 326 2029 666 $ 9,884 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. 2023. 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. 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 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 138 Table of Contents 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: (i) $ 0.2 million within one business day of execution of the Supplemental Agreement, and (ii) $ 0.2 million within one business day of consummation of new financing by the Company in an amount not less than $ 5.0 million or an earlier date approved by the Board. Pursuant to the Term Sheet, as amended by the Supplemental Agreement, the Company paid FF 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. (“LeTV”) 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. 139 Table of Contents 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. Jia. 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. 9. Leases The Company determines if an arrangement is a lease at its commencement if the Company is both able to identify an asset and conclude the Company has the right to control the identified asset. Leases are classified as finance or operating based on the principle of whether or not the lease is effectively a financed purchase by the lessee. An ROU asset represents the Company’s right to use an underlying asset for the lease term and a lease liability represents the Company’s obligation to make lease payments related to the lease. The Company recognizes operating and finance lease ROU assets and liabilities at the commencement date based on the present value of lease payments over the lease term. The lease term includes renewal options when it is reasonably certain that the option will be exercised, and excludes termination options. The Company’s leases do not provide an implicit rate therefore, the Company uses its incremental borrowing rate based on information available at the commencement date to determine the present value of lease payments. The incremental borrowing rate used is estimated based on what the Company would be required to pay for a collateralized loan for a similar asset over a similar term. The Company’s leases do not include any material residual value guarantees, or bargain purchase options. To the extent that the Company’s agreements have variable lease payments, the Company includes variable lease payments that depend on an index or a rate in the measurement and classification of a lease and excludes those that depend on facts or circumstances occurring after the commencement date, other than the passage of time. Lease expense for operating leases is recognized on a straight-line basis over the lease term and is recorded in operating expenses on the Consolidated Statements of Operations and Comprehensive Loss. Amortization of ROU assets on finance leases is recorded on a straight-line basis within operating expenses in the Consolidated Statements of Operations. Interest expense incurred on finance lease liabilities is recorded in Interest expense on the Consolidated Statements of Operations and Comprehensive Loss. The Company has elected not to recognize ROU assets and lease liabilities that arise from short-term (12 months or less) leases for any class of underlying asset. Additionally, the Company does not separate lease and non-lease components. Operating leases are included in ROU assets, Operating leases liabilities, current portion and Operating lease liabilities, less current portion in the Company's Consolidated Balance Sheets. Finance leases are included in Property and equipment, net, Finance lease liabilities, current portion, and Finance lease liabilities, less current portion in the Company's Consolidated Balance Sheets. The Company’s lease arrangements consist primarily of its ieFactory California production facility, corporate office, store 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. ASC 842 Disclosures On January 1, 2022, the Company adopted ASC 842. For more information on the adoption, see the “Recently Adopted Accounting Pronouncements” section in Note 1, Nature of Business and Organization, and Summary of Significant Accounting Policies. 140 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements Lease cost includes both the fixed and variable expenses recorded for leases. The components of lease cost for the year ended December 31 were as follows (dollars in thousands): 2023 2022 Finance lease cost Amortization of ROU assets $ 273 $ 1,990 Interest on lease liabilities 275 664 Total finance lease cost 548 2,654 Operating lease cost 5,915 4,657 Variable lease cost 257 159 Total lease cost $ 6,720 $ 7,470 The following table summarizes future lease payments as of December 31, 2023 (dollars in thousands): Fiscal year Operating Leases 2024 $ 5,617 2025 4,997 2026 5,019 2027 2,814 2028 1,813 Thereafter 7,602 Total 27,862 Less: Imputed Interest 9,935 Present value of net lease payments $ 17,927 Lease liability, current portion $ 3,621 Lease liability, net of current portion 14,306 Total lease liability $ 17,927 Supplemental information and non-cash activities related to operating and finance leases are as follows (dollars in thousands): 2023 2022 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 5,709 $ 4,143 Operating cash flows from finance leases 275 686 Financing cash flows from finance leases 1,016 1,888 $ 7,000 $ 6,717 Lease assets obtained in exchange for financing lease liabilities $ — $ 21,865 Lease assets obtained in exchange for operating lease liabilities $ — $ — 141 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements December 31, 2023 December 31, 2022 Weighted average remaining lease term (in years) Operating leases 5.70 6.4 Finance leases 5.00 5 Weighted average discount rate Operating leases 15.6 % 15.6 % Finance leases 9.2 % 5.0 % 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, 2024 $ 4,284 2025 4,035 2026 4,156 2027 4,681 2028 62,180 Total 79,336 Less implied interest ( 41,853 ) Less expected tenant improvement allowance ( 12,000 ) Present value of payments $ 25,483 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. 142 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements 10. Commitments and Contingencies Legal Proceedings The Company is, from time to time, subject to claims and disputes arising in the normal course of business. In the opinion of management, the outcome of any such claims and disputes cannot be predicted with certainty. 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 Zhou v. Faraday Future Intelligent Electric Inc. f/k/a Property Solutions Acquisition Corp. et al. , Case No. 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. (“PSAC”). 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. Farazmand v. Breitfeld et al. , Case No. 2:22-cv-01570 (U.S. District Court – Central District of California). Zhou v Breitfeld et al. , Case No. 2:22-cv-01852 (U.S. District Court – Central District of California). Moubarak v. Breitfeld et al. , Case No. 1:22-cv-00467 (U.S. District Court – District of Delaware). Wang v. Breitfeld et al. , Case No. 1:22-cv-00525 (U.S. District Court – District of Delaware). Wallace v. Breitfeld et al. , Case No. 2023-0639-KSJM (Delaware Court of Chancery). Ashkan Farazmand and Wangjun Zhou v. Breitfeld, et al. , Case No. 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. Case No. 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 143 Table of Contents 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. 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. 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. Brian Krolicki from the Board. On September 27, 2022, the case was dismissed without prejudice pursuant to an agreement between FF Global and FF Top (the “Heads of Agreement”). Shortly following the execution of the Heads of Agreement, FF Global began making additional demands of the Company which were beyond the scope of the terms contemplated by the Heads of Agreement and pertained to, among other things, the Company’s management reporting lines and certain governance matters. On September 30, 2022, FF Global alleged that the Company was in material breach of the spirit of the Heads of Agreement. The Company believes it has complied with the applicable terms of the Heads of Agreement, and disputes any characterization to the contrary. Such disputes divert management and Board resources and are costly. There can be no assurance that this or any other dispute between the Company and FF Global will not result in litigation. On October 3, 2022, Ms. Swenson and Mr. Scott Vogel, a member of the Board, tendered their resignation from the Board effective immediately. On October 3, 2022, Mr. Jordan Vogel also tendered his resignation from the Board 144 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements effective on October 5, 2022 upon his receipt of a supplemental release pursuant to the Mutual Release. On October 28, 2022, Mr. Brian Krolicki tendered his resignation from the Board effective immediately. Governance Matters Following the completion of the Special Committee (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. The Company engaged an independent law firm to conduct a thorough independent external investigation with respect to these allegations. The independent investigation found that all such allegations have been without merit. Other Legal Matters During the year ended December 31, 2022, the Company settled a legal dispute for breach of lease under which the Company was named a co-defendant, in a civil action case filed in the Superior Court of the State of California for the County of Santa Clara by Han’s San Jose Hospitality, LLC, which was seeking damages including unpaid rent, future unpaid rent, unpaid expenses, and unpaid taxes related to the lease for a total of $ 6.4 million. Pursuant to the settlement agreement, the Company agreed to pay $ 1.8 million in cash in January 2022 and an additional $ 3.4 million plus 5 % interest in October 2022 and was liable for the remainder of the settlement, in the amount of $ 1.2 million, in the event the co-defendants failed to make the payment in January 2022. In January 2022, the Company made the initial settlement payment of $ 1.8 million and was relieved of the liability of $ 1.2 million. The Company failed to make the $ 3.4 million and interest payments in October 2022. On October 26, 2022, the plaintiff filed a motion to enforce the settlement agreement in the Superior Court of the State of California for the County of Santa Clara, seeking no material additional damages. On December 22, 2022, the court granted the plaintiff’s motion to enforce the settlement. As of December 31, 2022, the balance of $ 3.4 million was included in Accrued expense and other current liabilities on the Consolidated Balance Sheet. On January 3, 2023, the plaintiff served the parties notice of entry of the order. On January 19, 2023, the court issued judgment in the amount of approximately $ 3.5 million and a writ of execution. On February 9, 2023, the Company paid $ 3.6 million consisting of payment in full for the outstanding judgment and accrued interest. Additionally, the Company made a payment of approximately $ 0.2 million on behalf of an indemnified co-defendant in connection with money seized from such indemnified co-defendant’s bank account. The Company expects to receive such indemnification payment returned to it upon the release of such seizure. On January 30, 2023, Riverside Management Group, LLC (“Riverside”) filed a verified complaint seeking to enforce its alleged contractual right to the advancement of all reasonable costs and expenses, including attorneys’ fees, it has and will incur as a named defendant in the Consolidated Delaware Class Action under its October 13, 2020 Transaction Services Agreement with FFIE and Property Solutions Acquisition Sponsor, LLC (the “TSA”), pursuant to which Riverside provided PSAC with advisory services in connection with the PSAC/Legacy FF merger. In addition to seeking the advancement of such costs and expenses, Riverside also seeks an award of its attorneys’ fees and costs incurred in enforcing its alleged advancement rights under the TSA, and has concurrently filed a Motion for Expedited Proceedings, requesting that trial of the action be conducted on a summary basis and commence within 30 days of the motion’s disposition. The Company entered into a Stipulation and Order with Riverside under which it would conditionally advance Riverside the reasonable attorneys’ fees and costs it incurs in defense of the Consolidated Delaware Action, subject to, and in express reservation of, the Company’s right to recover all such fees and expenses following disposition of the Consolidated Delaware Class Action. 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 145 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements 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. 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 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 146 Table of Contents 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 As previously disclosed on November 15, 2021, the Board established a special committee of independent directors (“Special Committee”) to investigate allegations of inaccurate Company disclosures, including those made in an October 2021 short seller report and whistleblower allegations, which resulted in FFIE being unable to timely file its third quarter 2021 Quarterly Report on Form 10-Q, Annual Report on Form 10-K for the year ended December 31, 2021, first quarter 2022 Quarterly Report on Form 10-Q and amended Registration Statement on Form S-1 (File No. 333-258993). The Special Committee engaged outside independent legal counsel and a forensic accounting firm to assist with its review. On February 1, 2022, FFIE announced that the Special Committee completed its review. On April 14, 2022, FFIE announced the completion of additional investigative work based on the Special Committee’s findings which were performed under the direction of the Executive Chairperson, reporting to the Audit Committee. In connection with the Special Committee’s review and subsequent investigative work, the following findings were made: In connection with the Business Combination, statements made by certain Company employees to certain investors describing the role of Mr. Yueting Jia, 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. 147 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements ● The Company’s corporate culture failed to sufficiently prioritize compliance. ● Mr. Jia’s role as an intermediary in leasing certain properties which were subsequently leased to the Company was not disclosed in FFIE’s corporate housing disclosures. ● In preparing FFIE’s related party transaction disclosures, the Company failed to investigate and identify the sources of loans received from individuals and entities associated with Company employees. In addition, the investigation found that certain individuals failed to fully disclose to individuals involved in the preparation of FFIE’s SEC filings their relationships with certain related parties and affiliated entities in connection with, and following, the Business Combination, and failed to fully disclose relevant information, including but not limited to, information in connection with related parties and corporate governance to FFIE’s former independent registered public accounting firm PricewaterhouseCoopers LLP. The investigation also found that certain individuals failed to cooperate and withheld potentially relevant information in connection with the Special Committee investigation. Among such individuals were non-executive officers or members of the management team of FF, and remedial action was taken with respect to such individuals based on the extent of non-cooperation and/or withholding of information. The failure to cooperate with the investigation was taken into consideration in connection with the remedial actions outlined below with respect to Jerry Wang, and withholding of information also affected the remedial action taken with respect to Matthias Aydt. Based on the results of the investigation, the Special Committee concluded that, except as described above, other substantive allegations of inaccurate FF disclosures that it evaluated, were not supported by the evidence reviewed. Although the investigation did not change any of the above findings with respect to the substantive allegations of inaccurate FF disclosures, the investigation did confirm the need for remedial actions to help ensure enhanced focus on compliance and disclosure within FF. Based on the results of the Special Committee investigation and subsequent investigative work described above, the Board approved the following remedial actions designed to enhance oversight and corporate governance of the Company: ● the appointment of Susan Swenson, a former member of the Board, to the then newly created position of Executive Chairperson of FF. ● Dr. Carsten Breitfeld, FF’s former Global CEO, reporting directly to Ms. Swenson and receiving a 25 % annual base salary reduction; 148 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements ● the removal of Mr. Jia as an executive officer, although continuing in his position as Chief Product & User Ecosystem Officer of FFIE. Certain dual-reporting arrangements were eliminated with respect to Mr. Jia, and he is required to report directly to Ms. Swenson, a non-independent director nominated by FF Top. Please see “ Risk Factors–Risks Related to FF’s Business and Industry–Yueting Jia and FF Global, over which Mr. Jia exercises significant influence, have control over the Company’s management, business and operations, and may use this control in ways that are not aligned with the Company’s business or financial objectives or strategies or that are otherwise inconsistent with the Company’s interests. Such significant influence may increase if and to the extent the current members of the Board and management are removed and replaced with individuals who are aligned with Mr. Jia and/or FF Global. ” Mr. Jia also received a 25 % annual base salary reduction, and his role was limited from a policy-making position to focusing on (a) Product and Mobility Ecosystem and (b) Internet, Artificial Intelligence, and Advanced R&D technology. On February 26, 2023, after an assessment by the Board of the Company’s management structure, the Board approved Mr. Yueting Jia (alongside Mr. Xuefeng Chen) reporting directly to the Board, as well as FF’s product, mobility ecosystem, I.A.I., and advanced R&D technology departments reporting directly to Mr. Jia. The Board also approved FF’s user ecosystem, capital markets, human resources and administration, corporate strategy and China departments reporting to both Mr. Jia and Mr. Xuefeng processes and controls to be determined by the Board after consultation with the Company’s management. The Company’s remaining departments continue to report to Mr. Xuefeng. On February 26, 2023, after an assessment by the Board of the Company’s management structure, the Board the Board approved Mr. Yueting Jia (alongside Mr. Xuefeng Chen) reporting directly to the Board, as well as FF’s product, mobility ecosystem, I.A.I., and advanced R&D technology departments reporting directly to Mr. Jia. The Board also approved FF’s user ecosystem, capital markets, human resources and administration, corporate strategy and China departments reporting to both Mr. Jia and Mr. Xuefeng Chen, subject to processes and controls to be determined by the Board after consultation with the Company’s management. The Company’s remaining departments continue to report to Mr. Xuefeng Chen. Based on the changes to his responsibilities within the Company, the Board determined that Mr. Jia is an “officer” of the Company within the meaning of Section 16 of the Exchange Act and an “executive officer” of the Company under Rule 3b-7 under the Exchange Act; ● Matthias Aydt, then Senior Vice President, Business Development and Product Definition and a director of FFIE, and currently Senior Vice President, Product Execution and a director of FFIE, being placed on probation as an executive officer for a six -month period, during which period he remained a non-independent member of the Board, which probationary period has since ended; ● the appointment of Jordan Vogel as Lead Independent Director; certain changes to the composition of Board committees, including Brian Krolicki stepping down from his role as Chairman of the Board and Chair of the Nominating and Corporate Governance Committee and becoming a member of the Audit and Compensation Committees of the Board; Jordan Vogel stepping down from the Nominating and Corporate Governance Committee; and Scott Vogel becoming the Chair of the Audit Committee and the Nominating and Corporate Governance Committee of the Board; ● the suspension without pay of Jiawei (“Jerry”) Wang, FFIE’s former Vice President, Global Capital Markets, who subsequently notified the Board of his decision to resign from FF on April 10, 2022; ● the assessment and enhancement of FF’s policies and procedures regarding financial accounting and reporting and the upgrading of FF’s internal control over financial accounting and reporting, including by hiring additional financial reporting and accounting support, in each case at the direction of the Audit Committee; ● the implementation of enhanced controls around FF’s contracting and related party transactions, including regular attestations by FF’s employees with authority to bind FF to contracts and related party transactions, for purposes of enabling FF to make complete and accurate disclosures regarding related party transactions; ● hiring of a Compliance Officer with the title of Deputy General Counsel (hired in March 2023), who will report on a dotted line to the Chair of the Audit committee, and a Director of Risks and Internal Controls; and assessing and enhancing FF’s compliance policies and procedures; ● the implementation of a comprehensive training program for all directors and officers regarding, among other things, internal FF policies; ● the separation of Jarret Johnson, FF’s Vice President, General Counsel and Secretary; and 149 Table of Contents 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 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 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 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. Swenson tendered her resignation from her role as both Executive Chairperson and member of the Board effective immediately. In addition, on October 3, 2022, Mr. Scott Vogel resigned from the Board effective immediately and Mr. Jordan Vogel resigned effective on October 5, 2022 upon his receipt of a supplemental release pursuant to the Mutual Release. On October 28, 2022, Mr. Brian Krolicki tendered his resignation from the Board effective immediately. On December 15, 2022, Mr. Lee Liu tendered his resignation from the Board, which resignation was effective on December 18, 2022. On December 18, 2022, Mr. Jie Sheng was appointed to the Board, effective immediately, following the resignation of Mr. Liu. On December 25, 2022, Mr. Edwin Goh tendered his resignation from the Board, which resignation was effective on December 26, 2022. On December 27, 2022, Ms. Ke Sun was appointed to the Board, effective immediately, following the resignation of Mr. Goh. Mr. Sheng and Ms. Sun are designees of FF Top pursuant to the Amended Shareholder Agreement. On December 26, 2022, Dr. Carsten Breitfeld tendered his resignation from the Board, which resignation was effective immediately. On December 27, 2022, Mr. Xuefeng Chen was appointed to the Board, effective immediately, following the resignation of Dr. Breitfeld. On January 20, 2023, Mr. Qing Ye tendered his resignation from the Board, which resignation was effective immediately. Mr. 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. Ye. Each of Ms. 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. FFIE, which had previously voluntarily contacted the SEC in connection with the Special Committee investigation in October 2021, is cooperating fully with the SEC’s investigation. The outcome of such an investigation is difficult to predict. FF has incurred, and may continue to incur, significant expenses related to legal and other professional services in connection with the SEC investigation. At this stage, FF is unable to assess whether any material loss or adverse effect is reasonably possible as a result of the SEC’s investigation or estimate the range of any potential loss. In addition, in June 2022, FF received a preliminary request for information from the DOJ in connection with the matters that were the subject of the Special Committee investigation. FF has responded to that request and intends to fully cooperate with any future requests from the DOJ. 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 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. 150 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements 11. Stockholders’ Equity The number of authorized, issued and outstanding stock, were as follows: December 31, 2023 Authorized Shares Issued Shares Preferred Stock 10,000,000 — Class A Common Stock 49,291,667 42,433,025 Class B Common Stock 2,187,500 266,670 61,479,167 42,699,695 December 31, 2022 Authorized Shares Issued Shares Preferred Stock 10,000,000 — Class A Common Stock 3,395,834 2,347,276 Class B Common Stock 312,500 266,670 13,708,334 2,613,946 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 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. At a special meeting of the Company’s stockholders held on November 3, 2022, stockholders approved, among other things, an increase to the number of the Company’s authorized shares from 3,437,500 to 3,750,000 . On November 22, 2022, the Company filed an amendment to its Second Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to effect the increase. A special meeting of the Company’s stockholders held on February 28, 2023, the Company’s stockholders approved a further increase to the number of the Company’s authorized shares of Class A Common Stock from 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 151 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements 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 . Voting The holders of Class A Common Stock and Class B Common Stock are entitled to one vote for each share held of record on all matters to be voted on by stockholders until the occurrence of a Qualifying Equity Market Capitalization, following which holders of Class B Common Stock shall be entitled to ten votes per share and shall continue to be entitled to ten votes per share regardless of whether the Qualifying Equity Market Capitalization shall continue to exist or not thereafter. Conversion Shares of Class B Common Stock have the right to convert into shares of Class A Common Stock at any time at the rate of one share of Class A Common Stock for each share of Class B Common Stock. Class A Common Stock does not have the right to convert into Class B Common Stock. Liquidation In the event of any voluntary or involuntary liquidation, dissolution, or winding-up of the Corporation, after payment or provision for payment of the debts and other liabilities of the Corporation, the holders of the shares of the Common Stock shall be entitled to receive all the remaining assets of the Corporation available for distribution to its stockholders, ratably in proportion to the number of shares of the Common Stock held by them. The number of outstanding warrants to purchase the Company’s Class A Common Stock as of December 31, 2023 were as follows: Number of Warrants Exercise Price Expiration Date Ares Warrants 9,139,280 $ 0.73 August 5, 2027 SPA Warrants 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 9,794,037 152 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements 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 464 $ 2,760.00 July 21, 2026 Total 1,984,854 (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 From time to time, certain of the Company’s equity-linked financial instruments may be classified as derivative liabilities under ASC 815, Derivatives and Hedging , due to the Company having insufficient authorized shares to fully settle the equity-linked financial instruments in shares. In such case, the Company applies a sequencing policy under ASC 815-40, Contracts in Entity’s Own Equity , whereby, in the event that reclassification of contracts from equity to assets or liabilities is necessary due to the Company’s inability to demonstrate it has sufficient authorized shares to settle the equity-linked financial instrument in shares, the Company will reclassify contracts that have overlapping settlement dates with the latest inception date as derivative instruments. The contracts reclassified as derivative instruments are recognized at fair value with changes in fair value recognized in earnings until such time as the conditions giving rise to such derivative liability classification were settled or the Company has sufficient authorized, unissued shares to settle such contracts with shares. The Company has elected to apply the same sequencing policy for share-based compensation arrangements if the Company granted share-based payment arrangements where the Company may have insufficient shares to settle the contract. As of December 31, 2022, the Company reclassified the earnout shares from equity classification to liability classification as a result of the Company having insufficient authorized shares to share-settle the earnout, which was previously determined to be equity classified under ASC 815-40, Derivatives and Hedging — Contracts in Entity’s Own Equity . 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. 153 Table of Contents 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. 12. Stock-based Compensation 2021 SI Plan In July 2021, the Company adopted the 2021 Stock Incentive Plan (“2021 SI Plan”). The 2021 SI Plan allows the Board of Directors to grant up to 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. 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. Option Awards A summary of the Company’s stock option activity under the SI Plan is as follows (dollars in thousands except weighted average exercise price): Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years) Aggregate Intrinsic Value Outstanding as of December 31, 2022 27,694 $ 662.40 8.97 $ — Granted 12,500 259.20 Exercised ( 207 ) 213.60 Expired/forfeited ( 8,090 ) 700.50 Outstanding as of December 31, 2023 31,897 $ 497.13 8.74 $ 5,351 Exercisable as of December 31, 2023 10,119 535.83 8.63 $ 2,352 154 Table of Contents 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. The weighted-average assumptions used in the Black-Scholes option pricing model for awards granted during the year ended December 31, 2023 are as follows: 2023 Risk-free interest rate: 3.53 % Expected term (in years): 8.71 Expected volatility: 89.62 % Dividend yield: 0 % Grant date fair value per share $ 259.20 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 A summary of the Company’s RSU activity under the SI Plan is as follows: Shares Weighted Average Fair Value Outstanding as of December 31, 2022 (1) 74,457 $ 261.60 Granted 102,012 67.56 Released ( 25,970 ) 258.24 Forfeited ( 35,138 ) 245.43 Outstanding as of December 31, 2023 115,361 $ 94.62 (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. As a result, 6,037 RSUs of the Company’s PRC citizens employees vested in 2022 were included in the outstanding RSUs at December 31, 2022 as unreleased RSUs because those employees did not complete the SAFE registration process. As of December 31, 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. 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. As part of these measures, in October 2022, management implemented the Crowd Entrepreneurship – 2022 RSU Project (“CEP”), according to which employees were granted 37,894 RSUs, fully vested on December 31, 2022 subject to continued employment with the Company. The RSUs were granted in lieu of at least a 25 % reduction in salary from November 1, 2022 to December 31, 2022, subject to certain laws and regulations. EI Plan On February 1, 2018, the Board 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 155 Table of Contents 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): Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years) Aggregate Intrinsic Value Outstanding as of December 31, 2022 97,592 $ 679.20 6.92 $ 22 Granted — — Exercised — — — Expired/forfeited ( 16,389 ) 772.77 Outstanding as of December 31, 2023 81,203 $ 660.21 5.92 $ 31,743 Exercisable as of December 31, 2023 67,592 $ 632.67 5.75 $ 26,679 The weighted-average assumptions used in the Black-Scholes option pricing model for awards granted during the year ended December 31, 2021 are as follows: 2021 Risk-free interest rate: 0.79 % Expected term (in years): 6.05 Expected volatility: 42.10 % Dividend yield: 0.00 % The total grant date fair value of options vested during the years ended December 31, 2023 and 2022 was $ 9.3 million and $ 6.5 million, respectively. 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. STI Plan 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. 156 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements A summary of the Company’s stock option activity under the STI Plan is as follows (dollars in thousands except weighted average exercise price): Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years) Aggregate Intrinsic Value Outstanding as of December 31, 2022 23,410 $ 1,521.60 6.94 $ — Granted — — Exercised — — — Expired/forfeited ( 859 ) 1,968.06 Outstanding as of December 31, 2023 22,551 $ 1,504.23 6.64 $ 16,318 Exercisable as of December 31, 2023 12,106 $ 901.53 5.99 $ 4,613 The Company elected to use the contractual term of non-employee options awarded under the STI Plan as the expected term. The weighted-average assumptions used in the Black-Scholes option pricing model for awards granted during the year ended December 31, 2021 are as follows: 2021 Risk-free interest rate: 1.39 % Expected term (in years): 9.06 Expected volatility: 35.86 % Dividend yield: 0.00 % The total grant date fair value of options vested during the years ended December 31, 2023 and 2022 was $ 1.7 million and $ 0.1 million, respectively. As of December 31, 2023, the total unrecognized stock-based compensation expense for stock options granted under the STI Plan was $ 0.1 million, which is expected to be recognized over a weighted average period of approximately 2.6 years. Stock-based compensation expense The following table presents stock-based compensation expense for all of the Company’s SI Plan, EI Plan, STI Plan and Common Units of FF Global 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): 2023 2022 Research and development $ 6,812 $ 13,118 Sales and marketing 807 1,744 General and administrative 1,548 2,802 $ 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. 157 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements 13. 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. SPA Warrants 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. SEPA On November 23, 2022, the Company issued 3,288 Commitment Shares in satisfaction of the commitment fee agreed upon in the SEPA. 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 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. 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. 158 Table of Contents 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. 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 additional paid-in capital (“APIC’) in the amount of $ 32.9 million. 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. 159 Table of Contents 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 Liabilities: Warrant liabilities 1 $ — $ — $ 306 Notes payable 1 — — 86,712 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 Liabilities: 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. 160 Table of Contents 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. 14. Income Taxes The provision for income tax consisted of the following (dollars in thousands): 2023 2022 Current: Federal $ — $ — State 2 2 Foreign 107 59 Total current 109 61 Deferred: Federal ( 48,499 ) ( 79,319 ) State ( 22,277 ) ( 37,128 ) Foreign 6,577 11,056 Valuation allowance 64,199 105,391 Total deferred — — Total provision $ 109 $ 61 The components of losses before income taxes, by taxing jurisdiction, were as follows for the years ended December 31 (dollars in thousands): 2023 2022 U.S. $ ( 411,790 ) $ ( 560,897 ) Foreign ( 19,845 ) ( 41,281 ) Total $ ( 431,635 ) $ ( 602,178 ) 161 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements 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: 2023 2022 Federal income tax expense 21.0 % 21.0 % State income taxes (net of federal benefit) 4.1 % 4.7 % Permanent differences ( 0.7 ) % ( 0.9 ) % Fair value debt adjustments ( 5.8 ) % ( 4.8 ) % Disallowed interest ( 1.2 ) % ( 0.5 ) % Foreign tax rate difference 0.2 % ( 0.1 ) % Prior year true-up on deferred taxes ( 0.1 ) % — % Return-to-provision adjustment — % 0.3 % Uncertain tax benefit ( 1.0 ) % ( 0.6 ) % Expiration of tax attributes ( 1.8 ) % ( 1.6 ) % Valuation allowance ( 14.7 ) % ( 17.5 ) % Effective tax rate 0.0 % 0.0 % The main changes in permanent differences related to fair value adjustments on convertible related party notes payable and notes payable and disallowed interest expense due to embedded features. The main changes in foreign tax rate difference and valuation allowance related to higher foreign losses incurred in 2023. 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): 2023 2022 Deferred Tax Assets: Net operating losses (“NOL”) $ 353,839 $ 342,888 Research and development credits 4,239 4,239 Accrued liabilities 16,646 14,762 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 Gross deferred tax assets 463,957 381,256 Valuation allowance ( 426,003 ) ( 361,804 ) Deferred tax assets, net of valuation allowance 37,954 19,452 Deferred Tax Liabilities: Depreciation ( 14,113 ) ( 290 ) State taxes ( 23,841 ) ( 19,162 ) Total deferred tax liabilities ( 37,954 ) ( 19,452 ) Total net deferred tax assets (liabilities) $ — $ — The Company has recognized a full valuation allowance as of December 31, 2023 and 2022 since, in the judgment of management given the Company’s history of losses, the realization of these deferred tax assets was not considered more likely 162 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements than not. The valuation allowance was $ 426.0 million and $ 361.8 million as of December 31, 2023 and 2022, respectively, with increases attributable to the current year’s provision. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which those temporary differences become deductible. Management considers projected future taxable income and tax planning strategies in making this assessment. During 2023 and 2022, the Company evaluated the realizability of its net deferred tax assets based on available positive and negative evidence and concluded that the likelihood of realization of the benefits associated with its net deferred tax assets does not reach the level of more likely than not due to the Company’s history of cumulative pre-tax losses and risks associated with the generation of future income given the current stage of the Company’s business. As of December 31, 2023, the Company has U.S. federal and foreign net operating loss carryforwards of $ 1,094.4 million and $ 43.4 million, respectively, which will begin to expire in 2034 and 2024, respectively. The U.S. federal net operating loss carryforwards of $ 1,013.9 million generated post the Tax Cuts and Jobs Act may be carried forward indefinitely, subject to the 80% taxable income limitation on the utilization of the carryforwards. The U.S. federal net operating loss carryforwards of $ 80.5 million generated prior to December 31, 2017 may be carried forward for twenty years. As of December 31, 2023, the Company has California net operating loss carryforwards of $ 1,243.7 million, which will begin to expire in 2034. The Company has no U.S. federal R&D tax credit carryforwards and a state R&D tax credit carryforward of $ 4.2 million as of December 31, 2023 which will begin to expire in 2035. The U.S. state tax credits do not expire and can be carried forward indefinitely. In accordance with Internal Revenue Code Section 382 (“Section 382”) and Section 383 (“Section 383”), a corporation that undergoes an “ownership change” (generally defined as a cumulative change (by value) of more than 50% in the equity ownership of certain stockholders over a rolling three-year period) is subject to limitations on its ability to utilize its pre-change NOLs and R&D tax credits to offset post-change taxable income and post-change tax liabilities, respectively. The Company’s existing NOLs and R&D credits may be subject to limitations arising from previous ownership changes, and the ability to utilize NOLs could be further limited by Section 382 and Section 383 of the Code. In addition, future changes in the Company’s stock ownership, some of which may be outside of the Company’s control, could result in an ownership change under Section 382 and Section 383 of the Code. The Company’s intention is to indefinitely reinvest earnings in all jurisdictions outside the United States. As of December 31, 2023 and 2022, there was no material cumulative earnings outside the United States due to net operating losses and the Company has no earnings and profits in any jurisdiction, that if distributed, would give rise to a material unrecorded liability. The Company is subject to taxation and files income tax returns with the U.S. federal government, California and China. As of December 31, 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 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, 2023 and 2022 is as follows (dollars in thousands): 2023 2022 Beginning balance $ 8,807 $ 4,997 Increase related to current year tax positions 4,165 3,810 Ending balance $ 12,972 $ 8,807 In accordance with ASC 740-10, Income Taxes — Overall , the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more likely than not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. No interest and penalties related to the Company’s unrecognized tax benefits was accrued as of December 31, 2023 and 2022, as the uncertain tax benefit only reduced the net operating losses. The Company does not expect its uncertain income tax positions 163 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements 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): 2023 2022 Beginning balance $ 361,804 $ 256,413 Increase related to current year tax positions 64,199 105,391 Ending balance $ 426,003 $ 361,804 15. Net Loss per Share Net Loss Per Share Attributable to Common Stockholders Basic net loss per share attributable to common stockholders is calculated by dividing net loss attributable to common stockholders by the weighted-average number of shares issued and shares to be issued under the commitment to issue shares, as these shares are issuable for no consideration. Diluted net loss per share attributable to common stockholders adjusts the basic net loss per share attributable to common stockholders and the weighted-average number of shares issued and shares to be issued under the commitment to issue shares for potentially dilutive instruments. 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 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: 2023 2022 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 – Options 31,897 148,698 Stock-based compensation awards – RSUs 115,361 74,457 Public warrants 98,088 98,088 Private warrants 464 464 Total 52,709,373 2,933,523 16. 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. Insurance Coverage 164 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements 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. 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. 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 463,312,500 165 Table of Contents Faraday Future Intelligent Electric Inc. Notes to Consolidated Financial Statements (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. 166 Table of Contents Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosures None.