What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-08-19 compared with 2025-05-09 · 447 added, 152 removed, 387 unchanged (61% of the section changed)

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Since inception, we have developed a portfolio of intellectual property, established its supply chain, and assembled a global team of automotive and technology experts.

As of March 31, 2025, FF has been granted approxima tely 660 patents global ly.

Product & Launches

• FF 91 Launch:

As of June 30, 2025, FF has been granted approxima tely 660 patents global ly.

Product & Pipeline

We believe that the FF 91 Futurist (the "FF 91," "FF 91 Futurist," or "FF 91 2.0 Futurist Alliance") is the first ultra-luxury electric vehicle to offer a highly-personalized, fully-connected user experience for driver and passengers.

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Strategic Operations and Product Development

• In January 2025, we unveiled the FX Super One concept, an AI-powered MPV, expanding our FX lineup, which also includes th e FX 5 and FX 6 targeting $20,000–$50,000 segments.

We targeted initial production by year-end 2025, contingent on funding.

• In March 2025, we plan to launch our first FX vehicle by year-end 2025 with refundable orders starting in Q2.

We benchmarked our second FX vehicle against the Toyota RAV4 and shipped two FX 6 prototypes to the U.S.

• In March 2025, we hosted FF Open AI Day and unveiled our Personalized AI and Bespoke AI systems.

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This subsidiary focuses on the design and development of AI hybrid extended-range electric powertrain systems.

• In April 2025, we initiated a comprehensive company-wide organizational and governance overhaul aimed at enhancing execution efficiency and value creation.

The initiative, publicly launched through a company-wide town hall, was designed to eliminate historical inefficiencies, increase strategic clarity, and improve performance across operations, amid ongoing external uncertainty and market pressure.

• In April 2025, our FX CEO and team drove the FF 91 to Washington, D.C., for policy meetings with White House officials and showcased the FX Super One.

• In April 2025, the Company signed its first binding B2B pre-order agreement with JC Auto, a New York City–based dealership operating as 129 Auto Sales Corp., for 1,000 FX Super One vehicles, including a $100,000 non-refundable deposit and priority delivery of up to 300 vehicles intended for use in a premium fleet serving the New York area.

• In April 2025, the Company reaffirmed its goal of selling tens of thousands of FX vehicles within two years and continued development of two additional FX models priced between $20,000 and $40,000 to target underserved segments of the U.S.

AI Electric Vehicle (“AIEV’) market.

• In May 2025, the Company entered into a second B2B pre-order agreement with Sky Horse Auto LLC—a California-based premium mobility provider—for 300 FX Super One vehicles, supported by a $30,000 non-refundable deposit and priority delivery.

• In May 2025, the Company announced it had secured non-binding fleet pre-orders totaling 1,300 FX Super One vehicles, including prior agreements with JC Auto and Sky Horse Auto, reflecting growing demand from U.S.

mobility operators.

• In May 2025, the Company began public road testing for FX prototype mules, including the FX Super One and FX6, with testing focused on performance and Advanced Driver Assistance Systems (“ADAS”) validation.

• In May 2025, the Company confirmed the FX Super One will be unveiled at two launch events—a private debut on June 29 and a public global launch on July 17—with initial market entry planned for CA, NY, FL, TX, WA, NJ, and NV.

• In May 2025, the Company initiated preparations for a flexible production line as part of its longer-term strategy for FX models and future variants.

• In May 2025, the Company confirmed that the FX6 model is scheduled as a pipeline vehicle, expanding the FX product line beyond the Super One.

• In May 2025, the Company highlighted the FF 91’s AI Hypercar differentiation, citing 12 cameras, 3 light detection and ranging ("LiDAR") sensors, tri-motor AWD, and in-cabin generative AI features as key performance advantages over competing ultra-luxury EVs.

• In May 2025, the Company disclosed that its FF 91 model met all Federal Motor Vehicle Safety Standards ("FMVSS") and completed U.S.

homologation, with deliveries made to celebrity and industry Co-Creation Officers.

• In May 2025, the Company secured 600 additional B2B deposits from U.S.-based multi-channel network ("MCN") agencies CreatoRev and Good Deal, bringing total FX Super One B2B deposits to over 2,500 units.

• In May 2025, the Company began deploying FF 91 AI and software technologies, including a voice interaction system based on large language models, into the FX product line.

• In May 2025, the Company expanded its U.S.

and Middle East operations, with its Ras Al Khaimah (RAKEZ) facility in the UAE ready for occupancy and targeted FX Super One production in the region contingent on funding.

The strategy supports regulatory streamlining, market training, and regional investor interest.

• In May 2025, the Company hosted its first Annual Stockholders' Day event, featuring executive presentations, prototype ride-and-drives, and live Q&A sessions to promote transparency and stockholder engagement.

• In June 2025, the Company announced that global music icon Mariah Carey will become the next FF 91 2.0 Futurist Alliance owner and featured the FF 91 and FFZERO1 concept car in her new music video, “Type Dangerous,” which also includes influencer MrBeast and has trended globally, further elevating brand visibility and cultural relevance.

• In July 2025, the Company reaffirmed its commitment to the FX Super One launch and to accelerating development and distribution efforts for both FF and FX brands, including the integration of advanced AI technologies.

This update highlights management’s intent to leverage the recently secured financing to support production readiness, scale operations for broader market access, and enhance technological differentiation in its intelligent electric vehicle lineup.

• In July 2025, the Company submitted a purchase requisition for promotional merchandise, totaling approximately $0.3 million, to Grow Fandor, a related party.

The related purchase order remained in process as of the date of this filing.

Capital Raising & Financing Agreements

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On January 28, 2025, we entered into a letter agreement with certain of the 2024 Unsecured SPA Investors.

Pursuant to the letter agreement, prior to our receipt of stockholders’ approval, for the issuance of the Unsecured 2024 SPA Notes, 2024 Unsecured SPA Warrants and 2024 Unsecured Incremental Warrants, such investors agreed not to convert any outstanding 2024 Unsecured SPA Notes at a conversion price less than $1.16, the initial conversion price of the 2024 Unsecured SPA Notes, and we agreed to issue, following receipt of such stockholders’ approval, to such investors who convert any U2024 Unsecured SPA Notes at the $1.16 conversion price prior to our receipt of stockholders’ approval, additional shares of Class A Common Stock as a true-up.

receipt of such stockholders’ approval, to such investors who convert any U2024 Unsecured SPA Notes at the $1.16 conversion price prior to our receipt of stockholders’ approval, additional shares of Class A Common Stock as a true-up.

• In January 2025, we received $30 million in previously committed financing to support FF 91 deliveries and FX program development.

• In March 2025, we disclosed that our total capital raised since September 2024 exceeded $100 million, with positive net cash flow reported for Q3 and Q4 2024.

• In March 2025, we secured approximately $41 million in cash financing commitments (the “March Financing”) for the purchase of unsecured convertible notes (the “March Unsecured SPA Notes”), and associated common warrants to purchase additional Class A Common Stock of the Company (the “March Warrants”).

Each investor (the “March Unsecured SPA Investors”) also received a March unsecured incremental warrant to fund, at the March Unsecured SPA Investor’s sole discretion, additional notes up to the original principal balance the of March Unsecured SPA Notes purchased by such March Unsecured SPA Investor.

The March Financing will be completed in four closings.

In May 2025, the Company amended its March 2025 Securities Purchase Agreement through a Waiver and Amendment Agreement, permitting phased registration of underlying securities and extending the timing of subsequent closings by 20 business days, subject to updated stock price and volume thresholds.

The first closing (the “First Closing”) occurred on April 4, 2025, the tenth (10th) business day after March 21, 2025, the signing date and the second closing (the “Second Closing”) occurred on May 28, 2025.

The third closing (the “Third Closing”) occurred on July 11, 2025, and fourth closing will occur upon satisfaction of certain conditions.

These funds are intended to support our core business operations and the ongoing ramp-up of the FX strategy.

• In April 2025, we initiated a company-wide organizational and governance overhaul, publicly launched through a town hall, to increase strategic clarity and improve execution amid ongoing external uncertainty.

• In May 2025, the Company’s senior executive team announced plans to initiate a stock purchase program post-earnings, subject to regulatory compliance.

• In May 2025, the Company filed a Seventh Certificate of Amendment to its Certificate of Incorporation to increase the number of authorized shares of Class A Common Stock to 162,815,625, authorize 4,429,688 shares of Class B Common Stock, and raise the authorized Preferred Stock to 12,900,000 shares.

The amendment, approved by stockholders at the May 24, 2025 special meeting, also eliminated the Series A Preferred Stock designation and supports existing and future preferred equity issuances.

• In July 2025, the Company secured approximately $105 million in new cash financing, consisting of $82 million in new financing commitments—primarily in the form of unsecured convertible notes and warrants—and $22 million from previous investors through the exercise of prior securities.

Existing institutional investors and new investors, including a Middle East strategic partner, participated in the financing, which remains subject to customary closing conditions.

The participation of the Middle East partner is expected to support the Company’s planned expansion in the region and strengthen its global investor base.

The financing terms include a lower conversion price based on recent market prices and a reduction in warrant issuance to limit dilution.

The Company continued to utilize Univest Securities as its placement agent for this transaction.

• In July 2025, the Company publicly unveiled the FX Super One at a global launch event in Los Angeles.

The event, which followed a private preview and broad media coverage, showcased the new F.A.C.E.

(Futuristic Aesthetic Connected Exterior) LED grille and the FF Super EAI (Extended AI) ecosystem.

The Company reported has secured over 1 0,000 binding deposit commitments to date, reinforcing brand visibility and building momentum as it prepares to transition into production.

• In July and August 2025 the Company raised gross proceeds of $45.6 million and $0.1 million from third parties and related parties, respectively, in connection with SPA Portfolio Notes.

During the same period, $18.3 million of principal and $0.9 million of interest were converted into 16,583,826 shares of Class A Common Stock.

• In August 2025, the Company issued one share of Series A Preferred Stock to Matthias Aydt for $100.00.

Stock Exchange Compliance & Stockholder and Corporate Actions

• In January 2025, we filed a filed a Certificate of Designation of Preferences, Rights and Limitations of Series A Preferred Stock (the “Series A Certificate of Designation”) with the Secretary of State of the State of Delaware.

• In January 2025, we filed a Certificate of Designation of Preferences, Rights and Limitations of Series A Preferred Stock (the “Series A Certificate of Designation”) with the Secretary of State of the State of Delaware.

The Series A Certificate of Designation designated one share of our Preferred Stock as Series A Preferred Stock, and established and designated the preferences, rights and limitations thereof.

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• In January 2025, we issued one share of Series A Preferred Stock to our Global Co-CEO, Matthias Aydt for the purchase price of $100.00.

• In January 2025, the Company filed a registration statement on Form S‑1 to register for resale shares of Class A Common Stock issuable upon conversion of previously issued convertible notes and exercise of warrants.

This filing was made to enable certain investors to resell shares obtained through earlier financing agreements.

• In March 2025, we formally changed our Nasdaq ticker symbol to 'FFAI' to reflect our company’s rebranding around AI mobility.

This symbol change reinforced our strategic emphasis on integrating artificial intelligence into

our product and business ecosystem.

This symbol change reinforced our strategic emphasis on integrating artificial intelligence into our product and business ecosystem.

• In March 2025, we disclosed that our total capital raised since September 2024 exceeded $100 million.

• In April 2025, we confirmed that we will not pursue a reverse stock split unless required to maintain Nasdaq compliance.

• In May 2025, the Company issued a formal statement addressing suspected illegal short selling and online misinformation campaigns, asserting a zero-tolerance policy for knowingly false and misleading public content.

• In May 2025, the Company amended its charter to increase authorized common shares by 38 million and preferred shares by 2.9 million, expanding total authorized shares to 180.1 million to support growth initiatives including the FX Super One launch and strategic transactions.

• In May 2025, at the Annual Meeting, stockholders approved the issuance of up to 61.9 million shares of Class A Common Stock under the March 2025 Securities Purchase Agreement, as required by Nasdaq Listing Rule 5635(d), and reelected all five directors with over 95% support.

• In May 2025, the Company filed a certificate of elimination with the Delaware Secretary of State to formally cancel the Series A Preferred Stock from its charter, following the full redemption of the single outstanding share originally issued in January 2025.

• In May 2025, the Company filed two amendments to its Form S‑1 registration statement to update and expand the number of registered shares registered thereunder.

These shares relate to Class A Common Stock issuable from convertible notes, warrants, and settlement of vendor obligations under financing agreements completed in December 2024 and March 2025.

The purpose of these filings was to provide resale registration for existing investors and vendors holding conversion and settlement rights.

• In August 2025, the Company regained eligibility to access its At-The-Market (“ATM”) offering program and file new registration statements on Form S-3, following the timely filing of its Q2 2025 Form 10-Q.

This development provides greater flexibility in capital raising, enabling the Company to access the public equity markets more efficiently without relying solely on convertible debt financing or the more burdensome Form S-1.

The reinstatement of Form S-3 eligibility also streamlines the registration process for future equity issuances, reduces regulatory filing complexity, and supports the Company’s strategic capital planning initiatives.

Corporate Governance

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• In April 2025, we confirmed that we will not pursue a reverse stock split unless required to maintain Nasdaq compliance.

• In May 2025, the Company formalized YT Jia’s appointment as Global Co-CEO under a new “Stockholders First” equity incentive plan, which ties his long-term compensation to improvements in market capitalization and share price performance.

• In May 2025, the Company announced that Global Co-CEO YT Jia and President Jerry Wang each adopted SEC Rule 10b5-1 stock purchase plans, with trades expected to begin in August 2025;

Jia plans to purchase $560,000 and Mr.

Wang plans to purchase $50,000 of Class A Common Stock, with both executives committing not to amend or terminate their plans once effective.

• In June 2025, Mr.

Koti Meka, Chief Financial Officer, adopted a Rule 10b5‑1 trading plan on June 12, 2025,

providing for the purchase of up to $20,000 of the Company’s Class A common stock.

• In July 2025, the Company and certain executives, including Global Co-CEO Yueting Jia and President Jerry Wang, received Wells Notices from the SEC.

A Wells Notice is a notification from SEC staff that they are considering recommending enforcement action for alleged violations of securities laws;

it is not a formal charge or a final determination.

The SEC’s preliminary findings relate to alleged false or misleading statements during the Company’s 2021 PIPE (Private Investment in Public Equity) and SPAC (Special Purpose Acquisition Company) transactions.

The Company and executives plan to engage with the SEC to explain why enforcement action is not warranted.

• In August 2025, the Board approved compensation adjustments for Chief Financial Officer Koti Meka:

his base salary increased from $350,000 to $380,000 effective August 16, 2025;

he was granted additional restricted stock units valued at $400,000 based on the August 16, 2025 closing price;

and he will receive a $30,000 cash bonus payable on August 31, 2025.

• In August 2025, the Board approved temporary governance adjustments during the SEC investigation, excluding Global Co-CEO Yueting Jia from oversight of finance, legal, accounting, and public reporting functions.

These responsibilities were consolidated under Global Co-CEO Matthias Aydt until the investigation concludes.

Supply Chain Exposure and Tariff Risk

As of March 31, 2025, a significant portion of the Company’s direct material purchases were sourced from suppliers based in China.

As of June 30, 2025, a significant portion of the Company’s direct material purchases were sourced from suppliers based in China.

This concentration presents an ongoing risk given elevated U.S.

import tariffs on electric vehicle components.

While the Company’s cost of goods sold was not materially affected for the three months ended March 31, 2025, due to limited production volume and the use of existing inventory, continued reliance on China-based sourcing may result in higher input costs and materially impact the Company’s cost structure as production scales.

While the Company’s cost of goods sold was not materially affected for the three and six months ended June 30, 2025, due to limited production volume and the use of existing inventory, continued reliance on China-based sourcing may result in higher input costs and materially impact the Company’s cost structure as production scales.

Segment Information

We operate in one operating segment and one reportable segment.

Our Global Co-CEOs, acting jointly serving as co-Chief Operating Decision Makers (“CODMs”), regularly evaluate our financial performance using consolidated financial information at the total-company level.

The CODMs receive regular financial and operational reporting that focuses primarily on our consolidated loss from operations, overall cash flows, liquidity, and strategic initiatives.

We operate in a single operating and reportable segment.

Through August 12, 2025, our two Global Co-Chief Executive Officers (“Global Co-CEOs”) acted jointly as Co-Chief Operating Decision Makers (“CODMs”) and regularly evaluated the our financial performance using consolidated information at the total-company level, including consolidated loss from operations, cash flows, liquidity, and strategic initiatives.

Effective August 13, 2025, in connection with temporary governance adjustments approved by the Board, Mr.

Matthias Aydt serves as our sole CODM for purposes of ASC 280 (see Note 16).

Management has identified Loss from operations, as presented in the Company's Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss, as the primary measure used by the CODMs to evaluate the performance of the business and allocate resources.

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Our ability to become profitable in the future will depend on our ability to successfully market our vehicles and control our costs.

Through March 31, 2025 , we have sold six and leased eleven vehicles.

Through June 30, 2025 , we have sold seven and leased eleven vehicles.

As a result, we will require substantial additional capital to develop products and fund operations for the foreseeable future.

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Automotive Sales Revenue

We began the production of our FF 91 Futurist in March 2023 and started making deliveries to customers in August 2023 and have leased one vehicle during the three months ended March 31, 2025.

We began the production of our FF 91 Futurist in March 2023 and started making deliveries to customers in August 2023 and have sold one vehicle during the six months ended June 30, 2025.

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, OTA software updates, internet connectivity and destination fees.

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For obligations related to automotive sales, we estimate the 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.

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.

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In certain circumstances, we provide 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 our Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2025 .

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

We consider these arrangements to be 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 us from a separate third-party.

We perform an analysis in which we maximize 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.

The impact of such residual value guarantees was immaterial to our Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2025 .

We have entered into, and may continue to enter into, co-creator consulting agreements with our customers under which customers share feedback, driving data, ideas, experiences with our engineers, social media posts, and other promotional activities in exchange for specified fees.

We evaluate the economic substance of these co-creation agreements to determine whether they should be combined with customer sales contracts under the contract combination guidance in ASC 606.

When the contracts are economically linked, we account for them as a single arrangement.

Under this approach, the cash inflows from the customer and the cash outflows from us are netted and treated as a single transaction.

The resulting net amount is recorded as marketing expense.

In situations where the net amount is less than the vehicle’s sale price or the contractual lease payment, the difference between the net amount and the sale price or lease payment is recognized as revenue.

Automotive Leasing Revenue

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We account for these leasing transactions as operating leases.

We evaluate whether a lease contract should be combined with other agreements — such as co-creation arrangements when leasing contracts are negotiated together and are economically interdependent.

We record leasing revenues as automotive leasing revenue on a straight-line basis over the contractual term, and we record the depreciation of these vehicles as cost of automotive leasing revenue.

As of March 31, 2025, deferred lease-related upfront payments which will be recognized on a straight-line basis over the contractual terms of the individual leases were immaterial.

As of June 30, 2025, deferred lease-related upfront payments which will be recognized on a straight-line basis over the contractual terms of the individual leases were immaterial.

Our policy is to exclude taxes collected from a customer from the transaction price of automotive contracts.

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

Customer Deposits and Deferred Revenue

We evaluate whether a lease contract should be combined with other agreements — such as co-creation arrangements when leasing contracts are negotiated together and are economically interdependent.

Customer Deposits

Our 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 $3.0 million and $3.0 million as of March 31, 2025 and December 31, 2024, respectively.

Customer deposits were $3.2 million and $3.0 million as of June 30, 2025 and December 31, 2024, 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 our transfer of the products or services.

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

As of June 30, 2025, the Company had received approximately 4,000 non-binding, non-refundable B2B pre-orders and 292 B2C non-binding refundable reservations, totaling 4,292 reserved vehicles.

By comparison, as of December 31, 2024, the Company had received 299 B2C reservations.

The increase in total reservations was primarily driven by the launch of the FX SuperOne vehicle and the expansion of co-creator and reservation programs designed to drive early engagement and demand.

The co-creator program leverages early supporters, channel partners, and social media influencers to generate awareness, promote product visibility, and build community participation around the brand and its new product offerings with a particular focus on driving B2C orders.

The Company enters into co-creation collaborations of varying value and service scope with B2B pre-order customers.

Fees paid to non-influencer participants are recorded as co-creation expenses, while fees paid to influencer marketing agencies are classified either as contra-revenue or as marketing-related general and administrative expenses, depending on the nature of the arrangement.

Co-creator costs are recorded as marketing expenses when the fair value of services provided under the co-creation agreement substantiates the payment;

however, any portion of the payment that exceeds the fair value of those services is treated as a reduction of revenue in accordance with ASC 606.

Deferred Revenue

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 March 31, 2025 and December 31, 2024.

Deferred revenue related to products and services w as $0.3 million a s of June 30, 2025 and December 31, 2024.

Cost of Automotive Sales Revenue

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Sales and marketing expenses consist primarily of personnel-related costs (including salaries, bonuses, benefits, and stock-based compensation) for our employees focused on sales and marketing, costs associated with sales and marketing activities, marketing services provided by co-creators, and an allocation of overhead.

Marketing activities are those related to

introducing our brand, our electric vehicles, and our electric vehicle prototypes to the market.

Marketing activities are those related to introducing our brand, our electric vehicles, and our electric vehicle prototypes to the market.

We expect Sales and marketing expenses to continue to increase as we bring our electric vehicles to market and seek to generate additional sales.

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Loss from Disposal of Property, Plant and Equipment

Loss (gain) on disposal on property, plant, and equipment relates to the abandonment of certain FF 91 Futurist program construction in progress assets, primarily vendor tooling, machinery, and equipment, due to the redesign of the related FF 91 components and implementation of our cost reduction program.

Loss (gain) on disposal of property, plant, and equipment relates to the abandonment of certain FF 91 Futurist program construction in progress assets, primarily vendor tooling, machinery, and equipment, due to the redesign of the related FF 91 components and implementation of our cost reduction program.

Charges associated with disposals are recognized within operating expenses in the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss.

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Other Expense, net

Other income, net consists of foreign currency transaction gains and losses and other expenses such as bank fees and late charges.

Other income (loss), net consists of foreign currency transaction gains and losses and other expenses such as bank fees and late charges.

Foreign currency transaction gains and losses are generated by revaluation of debt and the settlements of invoices denominated in currencies other than the functional currency.

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Consolidated Statements of Operations

Three Months Ended March 31,

Three Months Ended June 30,

(in thousands) 2025 2024

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General and administrative 14,097 17,201

Loss (gain) on disposal on property, plant, and equipment 44 (87)

Lease impairment, net — 7,616

Loss (gain) on disposal of property, plant, and equipment 276 16

Total operating expenses 21,250 29,932

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Related party interest expense — (1,506)

Other income, net 1,784 530

Other income (loss), net (210) (292)

Loss before income taxes (124,676) (108,681)

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Net loss $ (124,676) $ (108,685)

Three Months Ended March 31,

Consolidated Statements of Operations

Six Months Ended June 30,

(in thousands) 2025 2024

Revenue $ 370 $ 295

Cost of revenue 48,293 41,657

Gross profit (47,923) (41,362)

Operating expenses

Research and development 11,423 10,005

Sales and marketing 4,502 4,256

General and administrative 27,771 31,049

Lease impairment, net — 7,616

Loss (gain) on disposal of property, plant, and equipment 320 (71)

Total operating expenses 44,016 52,855

Loss from operations (91,939) (94,217)

Change in fair value of notes payable, warrant liabilities, and derivative call options 5,380 20,640

Change in fair value of related party notes payable, warrant liabilities, and derivative call options (5,427) (339)

Loss on settlement of notes payable (38,378) (58,381)

Loss on settlement of related party notes payable (3,040) (14,295)

Interest expense (3,114) (3,944)

Related party interest expense — (6,600)

Other income (loss), net 1,574 238

Loss before income taxes (134,944) (156,898)

Income tax expense (10) (4)

Net loss $ (134,954) $ (156,902)

Revenue (3-Month Overview)

Three Months Ended June 30,

(in thousands) 2025 2024 Amount %

Revenue $ 54 $ 293 $ (239) (81.6) %

Revenue increased by $0.3 million for the three months ended March 31, 2025, compared to the same period in 2024.

There was no automotive sales revenue for the three months ended March 31, 2025 and 2024.

Automotive leasing revenue was $0.3 for the three months ended March 31, 2025 compared to an immaterial amount for the same period in 2024.

Additionally, one vehicle was delivered during the three months ended March 31, 2025, compared to none for the same period in 2024.

Revenue decreased by $0.2 million for the three months ended June 30, 2025, compared to the same period in 2024.

Automotive sales revenue was zero million for the three months ended June 30, 2025 compared to $0.3 million for the same period in 2024.

Automotive leasing revenue was $0.1 million for the three months ended June 30, 2025 compared to an insignificant amount for the same period in 2024.

Additionally, one vehicle was delivered during the three months ended June 30, 2025, compared to three for the same period in 2024.

The vehicle delivered in the current period was sold under an arrangement that was combined with a co-creation agreement and accounted for as a single arrangement.

As a result, no automotive sales revenue was recognized for this delivery, and the related consideration was presented net of co-creation fees in marketing expense.

Revenue (6-Month Overview)

Six Months Ended June 30, Change

(in thousands) 2025 2024 Amount %

Revenue $ 370 $ 295 $ 75 25.4 %

Revenue increase d by $0.1 million for the six months ended June 30, 2025, compared to the same period in 2024.

Automotive sales revenue was $0.0 million for the six months ended June 30, 2025 compared to $0.3 million for the same period in 2024.

Automotive leasing revenue was $0.4 million for the six months ended June 30, 2025 compared to an insignificant amount for the same period in 2024.

Additionally, two vehicle was delivered during the six months ended June 30, 2025, compared to three for the same period in 2024.

Additionally, two vehicles were delivered during the six months ended June 30, 2025, compared to three in the same period in 2024.

One of the vehicles delivered in the current period was sold under

an arrangement that was combined with a co-creation agreement and accounted for as a single arrangement.

As a result, no automotive sales revenue was recognized for this delivery, and the related consideration was presented net of co-creation fees in marketing expense.

Cost of Revenue (3-Month Overview)

Three Months Ended June 30,

(in thousands) 2025 2024 Amount %

Cost of revenue $ 26,912 $ 20,970 $ 5,942 28.3 %

Three Months Ended March 31,

Cost of revenue increased by $5.9 million for the three months ended June 30, 2025, compared to the same period in 2024.

This increase was primarily driven by higher depreciation expenses as equipment, an increase in inventory reserves, and expenses related to FF ieFactory California lease agreement, which commenced in late 2023, and the collateralized loan financing, initiated in 2024.

During the three months ended June 30, 2025, we continued expanding our production capabilities to include both luxury and more affordable electric vehicles.

This strategic shift, aligned with broader market demand, is expected to increase fixed cost allocations to cost of revenues as new equipment is placed into service.

We remain focused on optimizing production efficiencies and preparing the FF ieFactory California facility for planned new product lines.

For the three months ended June 30, 2025, U.S.

tariffs on electric vehicle components imported from China did not have a material impact on the Company’s cost of goods sold.

This was primarily due to the Company’s low production volume and the utilization of existing inventory that was procured prior to recent tariff adjustments.

However, as production scales and the Company sources a greater volume of materials subject to current tariff rates, these duties may increase per-unit build costs in future periods.

Management continues to monitor trade developments and assess sourcing strategies to mitigate potential cost escalation.

Cost of Revenue (6-Month Overview)

Six Months Ended June 30, Change

(in thousands) 2025 2024 Amount %

Cost of revenue $ 48,293 $ 41,657 $ 6,636 15.9 %

Cost of revenue increased by $0.7 million for the three months ended March 31, 2025, compared to the same period in 2024.

This increase was primarily driven by higher depreciation expenses as equipment and expenses related to FF ieFactory California lease agreement, which commenced in late 2023, and the Collateralized Loan financing, initiated in 2024.

During the three months ended March 31, 2025, we continued expanding our production capabilities to include both luxury and more affordable electric vehicles.

Cost of revenue increased by $6.6 million for the six months ended June 30, 2025, compared to the same period in 2024.

During the six months ended June 30, 2025, we continued expanding our production capabilities to include both luxury and more affordable electric vehicles.

This strategic shift, aligned with broader market demand, is expected to increase fixed cost allocations to cost of revenues as new equipment is placed into service.

We remain focused on optimizing production efficiencies and preparing the FF ieFactory California facility for planned new product lines.

For the three months ended March 31, 2025, U.S.

For the six months ended June 30, 2025, U.S.

tariffs on electric vehicle components imported from China did not have a material impact on the Company’s cost of goods sold.

2 unchanged sentences

Management continues to monitor trade developments and assess sourcing strategies to mitigate potential cost escalation.

Research and Development (3-Month Overview)

Three Months Ended June 30, Change

(in thousands) 2025 2024 Amount %

Research and development $ 5,004 $ 3,317 $ 1,687 50.9 %

Three Months Ended March 31, Change

R&D expense increased by $1.7 million for the three months ended June 30, 2025, compared to the same period in 2024.

The increase was primarily driven by a $2.8 million increase in salary and headcount costs, as well as a $0.4 million increase in technology infrastructure to support product development and collaboration tools.

These increases were partially offset by a $1.9 million reduction in other R&D-related IT costs as part of cost management initiatives.

Current R&D efforts are primarily focused on supporting the development and production readiness of the SuperOne vehicle.

As the Company transitions from an R&D-intensive phase to one focused on commercialization, resources are being strategically reallocated from R&D to manufacturing.

This includes coordination with the flexible production line at our Hanford facility, which is being configured to support scalable manufacturing across multiple vehicle variants.

While internal R&D activity has begun to normalize, we continue to advance key initiatives through a combination of targeted internal development and expanded collaboration with external technology partners.

In addition, we are broadening our EV technology roadmap to include more affordable platforms, enabling us to address both luxury and accessible segments in line with industry trends.

Research and Development (6-Month Overview)

Six Months Ended June 30, Change

(in thousands) 2025 2024 Amount %

Research and development $ 11,423 $ 10,005 $ 1,418 14.2 %

R&D expense decreased by $0.3 million for the three months ended March 31, 2025, compared to the same period in 2024.

The decrease was primarily driven by a $2.3 million reduction in salary and headcount costs, including the reassignment of R&D personnel to production roles, and a $1.6 million decrease in information technology expenses.

These reductions were partially offset by a $2.4 million increase in R&D expense due to less allocations to cost of revenue in 2025, resulting in more expenses remaining in the R&D category this year.

As we transition from an R&D-intensive focus to a greater emphasis on full-scale production resources are being reallocated from R&D to manufacturing to enhance operational efficiency.

This shift prioritizes the commercialization of past R&D advancements while enabling continued but more targeted innovation.

To sustain progress with lower internal costs, we have also established strategic partnerships with technology providers and industry experts.

Additionally, we are refocusing our R&D efforts on developing more affordable electric vehicle platforms, expanding our technology portfolio to meet broader market demands.

This strategic shift ensures continued innovation across both luxury and more accessible segments, aligning with evolving industry trends.

R&D expense increased by $1.4 million for the six months ended June 30, 2025, compared to the same period in 2024.

The increase was primarily driven by a $2.5 million increase in salaries and headcount costs and a $2.4 million increase resulting from lower allocations to cost of revenue in 2025.

These increases were partially offset by a $3.5 million decrease in information technology expenses.

Overall, these shifts resulted in more expenses remaining in the R&D category this year.

Our current R&D activities are heavily focused on supporting the engineering, design, and production readiness of the SuperOne vehicle.

As the Company transitions from a development phase to production, R&D resources are being strategically directed toward finalizing the SuperOne platform and preparing for scalable manufacturing.

This includes coordination with the flexible production line at the Hanford facility, which is designed to accommodate multiple vehicle variants.

While overall R&D spending is beginning to moderate, we continue to leverage a combination of internal capabilities and external partnerships to sustain innovation efficiently.

We are also broadening our technology portfolio to include more accessible EV platforms, allowing us to serve both luxury and broader market segments in alignment with evolving industry demand.

Sales and Marketing (3-Month Overview)

Three Months Ended June 30, Change

(in thousands) 2025 2024 Amount %

Sales and marketing $ 1,873 $ 1,782 $ 91 5.1 %

Three Months Ended March 31, Change

Sales and marketing expense increased by $0.1 million for the three months ended June 30, 2025, compared to the same period in 2024.

The increase was primarily driven by a $1.0 million rise in marketing expenses related to the promotion of the new FX line and a $0.1 million increase in professional service costs.

These increases were partially offset by a $0.8 million reduction in rent and a $0.3 million decrease in compensation costs.

Although headcount in the sales and marketing function has been reduced, the Company continues to scale its outreach through a Co-Creation strategy that engages high-profile influencers, industry pioneers, and social media personalities.

This model allows us to extend brand awareness efficiently by integrating key stakeholders into the vehicle launch process and public-facing campaigns.

We also held VIP experiences and participated in high-impact industry events to generate media coverage and drive customer engagement.

These efforts helped increase brand visibility and contributed to a rise in customer reservations.

This lean, targeted approach has allowed us to maintain a strong marketing presence while optimizing internal cost structure.

Sales and Marketing (6-Month Overview)

Six Months Ended June 30, Change

(in thousands) 2025 2024 Amount %

Sales and marketing $ 4,502 $ 4,256 $ 246 5.8 %

Sales and marketing expense increased by $0.2 million for the three months ended March 31, 2025, compared to the same period in 2024 .

The increase was primarily driven by a $0.7 million rise in marketing expenses—largely related to the launch of the new FX line—and a $0.4 million increase in compensation costs, despite a reduction in sales and marketing personnel.

These increases were partially offset by a $0.5 million reduction in rent, a $0.2 million decrease in professional services, and a $0.1 million decline in sales and marketing consumables.

Despite a reduction in sales and marketing personnel, we continue to market effectively by leveraging our Co-Creation strategy, which engages industry pioneers and influential personalities.

Through this approach, we expand our brand by collaborating with high-profile figures and integrating users in our product development and marketing processes.

Additionally, we host VIP events and participate in major industry showcases to offer customers and stakeholders immersive experiences of our flagship vehicles and prototypes, further enhancing customer engagement and brand visibility.

These efforts enable us to optimize our marketing reach and increase brand awareness while maintaining lower internal costs.

Sales and marketing expense increased by $0.2 million for the six months ended June 30, 2025, compared to the same period in 2024.

The increase was primarily driven by a $1.7 million rise in marketing expenses related to the promotion of the new FX line and a $0.2 million increase in compensation costs, despite a reduction in sales and marketing personnel.

These increases were partially offset by a $1.3 million reduction in rent.

The Company continues to execute an efficient marketing strategy by leveraging its Co-Creation model, which engages industry pioneers, high-profile influencers, and social media personalities to promote the brand.

This collaborative approach enables us to extend our marketing reach and generate visibility across key customer segments with lower internal resources.

In addition, we hosted targeted launch events, VIP showcases, and participated in major automotive industry exhibitions.

These immersive experiences contributed to growing customer interest and increased vehicle reservations, particularly for the FX line.

The combination of external partnerships and digital engagement has allowed us to maintain brand momentum while controlling costs

General and Administrative (3-Month Overview)

Three Months Ended June 30, Change

(in thousands) 2025 2024 Amount %

General and administrative $ 14,097 $ 17,201 $ (3,104) (18.0) %

Three Months Ended March 31, Change

General and administrative expense decreased by $3.1 million for the three months ended June 30, 2025, compared to the same period in 2024.

The decrease was primarily driven by a $2.9 million reduction in insurance costs—mainly due to lower directors and officers’ insurance premiums—a $3.5 million increase in allocation to cost of goods sold, and a $2.5 million decrease in operating consumables.

These reductions were partially offset by a$2.1 million increase in compensation and a $1.7 million increase in general expenses.

This net decrease reflects the impact of our ongoing cost-optimization initiatives aimed at increasing administrative efficiency.

Key measures included renegotiating vendor contracts, consolidating office space to reduce occupancy expenses, and restructuring elements of our workforce.

These actions have allowed us to lower baseline overhead while maintaining necessary investments in personnel, advisors, and infrastructure critical to executing on our operational and strategic priorities.

General and Administrative (6-Month Overview)

Six Months Ended June 30, Change

(in thousands) 2025 2024 Amount %

General and administrative $ 27,771 $ 31,049 $ (3,278) (10.6) %

General and administrative expense decreased by $0.2 million for the three months ended March 31, 2025, compared to the same period in 2024.

General and administrative expense decreased by $3.3 million for the six months ended June 30, 2025, compared to the same period in2024.

The decrease was primarily driven by a $5.8 million reduction in insurance costs—mainly due to lower directors and officers’ insurance premiums—a $4.3 million reduction in allocation to cost of goods sold, and a $0.8 million decrease in information technology expenses.

These reductions were partially offset by a $4.8 million increase in compensation and a $1.3 million increase in professional service fees.

This net decrease reflects our ongoing cost-optimization initiatives aimed at improving the efficiency of general and administrative operations.

Key actions include renegotiating vendor agreements, consolidating office space to lower occupancy costs, and restructuring portions of our workforce.

These efforts have enabled us to reduce certain overhead costs, such as insurance and IT, while still supporting strategic investments in personnel and advisory services needed to execute on core business priorities.

Loss (gain) from disposal of property, plant and equipment

Three Months Ended March 31, Change

This net decrease reflects the continued impact of our cost-optimization initiatives aimed at improving the efficiency of general and administrative operations.

Key actions during the period included renegotiating vendor agreements, consolidating office space to lower occupancy costs, and restructuring portions of our workforce.

These measures have allowed us to reduce overhead in areas such as insurance and IT, while preserving investment capacity for critical personnel and external advisors supporting the Company’s core business objectives.

Lease Impairment, net (3-Month Overview)

Three Months Ended June 30, Change

(in thousands) 2025 2024 Amount %

Loss (gain) on disposal on property, plant, and equipment $ 44 $ (87) $ 131 (150.6) %

Loss (gain) on disposal on property, plant, and equipment changed by $0.1 million for the three months ended March 31, 2025, compared to the same period in 2024.

Lease impairment, net $ — $ 7,616 $ (7,616) NM*

NM = not meaningful

During the three months ended June 30, 2024, we recorded a $7.6 million impairment loss related to lease right-of-use (“ROU”) assets.

This loss was associated with our decision to exit a leased store facility, a research facility, and an administrative office in China.

These actions were part of broader efforts to negotiate early lease terminations with landlords and streamline our global footprint.

Lease Impairment, net (6-Month Overview)

Six Months Ended June 30, Change

(in thousands) 2025 2024 Amount %

Lease impairment, net $ — $ 7,616 $ (7,616) NM*

NM = not meaningful

During the six months ended June 30, 2024, we recorded a $7.6 million impairment loss related to lease right-of-use (“ROU”) assets.

This loss resulted from moving out of a leased store facility, a leased research facility, and an administrative facility in China, as we worked with landlords to negotiate the related lease terminations.

Loss (gain) from disposal of property, plant and equipment (3-Month Overview)

Three Months Ended June 30, Change

(in thousands) 2025 2024 Amount %

Loss (gain) on disposal of property, plant, and equipment $ 276 $ 16 $ 260 1625.0 %

Loss (gain) on disposal of property, plant, and equipment increased by approximately $0.3 million for the three months ended June 30, 2025, compared to the same period in 2024.

We dispose of equipment when the assets become obsolete, costly to maintain, or are replaced by more efficient technologies.

Loss (gain) from disposal of property, plant and equipment (6-Month Overview)

Six Months Ended June 30, Change

(in thousands) 2025 2024 Amount %

Loss (gain) on disposal of property, plant, and equipment $ 320 $ (71) $ 391 (550.7) %

Loss (gain) on disposal of property, plant, and equipment increased by approximately $0.3 million for the six months ended June 30, 2025, compared to the same period in 2024.

We dispose of equipment when the assets become obsolete, costly to maintain, or are replaced by more efficient technologies.

Change in Fair Value of Notes Payable, Warrant Liabilities, and Derivative Call Options (3-Month Overview)

Three Months Ended June 30, Change

(in thousands) 2025 2024 Amount %

Change in fair value of notes payable, warrant liabilities, and derivative call options $ (46,078) $ (7,245) $ (38,833) 536.0 %

Three Months Ended March 31, Change

During the three months ended June 30, 2025 we recognized an aggregate day-one loss of $12.5 million related to the initial measurement of SPA Portfolio Notes, Warrants and Incremental Warrants.

By contrast, during the same period in 2024,

these instruments were calibrated to the cash proceeds received and did not result in a day-one loss.

The 2025 loss was further impacted by $31.8 million loss from subsequent fair value remeasurement.

The re-measurement was primarily driven by increases in the Company’s stock price during the period compared to preceding three month.

However, the increase in the total monetary impact was attributable to the following factors.

During the three months ended June 30, 2025 we recognized a $8.7 million loss from the change in fair value of the Incremental Warrants.

There was no comparable instrument outstanding during the three months ended June 30, 2024.

During the three months ended June 30, 2025 we recognized a $14.3 million loss from the change in fair value of the SPA Portfolio warrants compared to a $0.2 million gain during the same period in 2024.

This increase was largely driven by the year-over-year growth in the number of SPA Portfolio warrants outstanding.

Beginning in the second half of 2024, we began issuing SPA Portfolio warrants equal to 100% of the shares issuable upon conversion of the aggregate principal amount of the applicable SPA Portfolio Note, significantly increasing the number of warrants outstanding year over year.

As of June 30, 2025 there were 52,596,811 SPA Portfolio third party warrants outstanding compared to 13,355 outstanding as of June 30, 2024.

During the three months ended June 30, 2024, the fair value of our outstanding notes and warrants were revalued at higher values than in the preceding three month period due to pricing inputs that use the market price of our Common Stock and debt discount rate, which experienced a relative increase.

Change in Fair Value of Notes Payable, Warrant Liabilities, and Derivative Call Options (6-Month Overview)

Six Months Ended June 30, Change

(in thousands) 2025 2024 Amount %

Change in fair value of notes payable, warrant liabilities, and derivative call options $ 5,380 $ 20,640 $ (15,260) (73.9) %

The Change in fair value of notes payable, warrant liabilities, and derivative call options increased by $23.6 million for the three months ended March 31, 2025, compared to the same period in 2024.

Significant driving factor increasing the gain on the change in fair value year over year are (1) the SPA Portfolio Note warrants and (2) the issuance of the Incremental Warrants.

During the three months ended March 31, 2025 we recognized a $13.6 million gain from the change in fair value of the Incremental Warrants.

There was no comparable instrument outstanding during the three months ended March 31, 2024.

During the three months ended March 31, 2025 we recognized a $6.4 million gain from the change in fair value of the SPA Portfolio Note warrants compared to a $0.2 million gain during the same period in 2024.

During the six months ended June 30, 2025 we recognized an aggregate day-one loss of $36.1 million related to the initial measurement of SPA Portfolio Notes, Warrants and Incremental Warrants.

By contrast, during the same period in 2024, these instruments were calibrated to the cash proceeds received and did not result in a day-one loss.

This loss was offset by a $43.7 million net gain from subsequent remeasurement.

Our outstanding notes and warrants were remeasured at predominantly lower fair values due to pricing inputs that use the market price of our Common Stock, which experienced a decline during the period.

The fair value of the SPA Portfolio Notes and associated warrants is influenced by the relationship between the Company’s stock price and the applicable conversion or exercise prices.

As of June 30, 2025, the stock price was $1.68, compared to a weighted average conversion price of $1.225 for the SPA Portfolio Notes and warrant exercise prices ranging from $1.16 to $1.464.

While these instruments remained in-the-money, the narrowing spread relative to December 31, 2024—when the stock price was $2.43 — reduced their intrinsic value.

This decline in intrinsic value contributed to the decrease in fair value and the resulting net gains recognized during the period.

Specifically, during the six months ended June 30, 2025 we recognized a $23.6 million net gain from the change in fair value of the Incremental Warrants.

There was no comparable instrument outstanding during the six months ended June 30, 2024.

During the six months ended June 30, 2025 we recognized a $7.1 million net gain from the change in fair value of the SPA Portfolio Note warrants compared to a zero net gain during the same period in 2024.

This increase was largely driven by the year-over-year growth in the number of SPA Portfolio Note warrants outstanding.

Beginning in the second half of 2024, we began issuing SPA Portfolio Note warrants equal to 100% of the shares issuable upon conversion of the aggregate principal amount of the applicable SPA Portfolio Note, significantly increasing the number of warrants outstanding year over year.

As of March 31, 2025 there were 35,260,186 SPA Portfolio Note warrants outstanding compared to 13,968 outstanding as of March 31, 2024.

These increases are offset by a reduction in gain from the change in fair value recognized on our SPA Portfolio Notes and the recognition of losses upon the issuance of new SPA Portfolio Notes during the three months ended March 31, 2025.

The principal balance of SPA Portfolio Notes outstanding decreased from $96.6 million as of March 31, 2024, to $48.0 million as of March 31, 2025, contributing to the reduced gain from the change in fair value.

Change in Fair Value of Related Party Notes Payable and Related Party Warrant Liabilities

Three Months Ended March 31, Change

As of June 30, 2025 there were 52,596,811 SPA Portfolio third party warrants outstanding compared to 13,355 outstanding as of June 30, 2024.

During the six months ended June 30, 2024, the fair value of our outstanding notes and warrants were revalued at lower values than in the preceding six month periods.

Our outstanding notes and warrants were remeasured at predominantly lower fair values due to pricing inputs that use the market price of our Common Stock and debt discount rate, which have experienced a decline.

Change in Fair Value of Related Party Notes Payable and Related Party Warrant Liabilities (3-Month Overview)

Three Months Ended June 30, Change

(in thousands) 2025 2024 Amount %

Change in fair value of related party notes payable, warrant liabilities, and derivative call options $ (5,150) $ (332) $ (4,818) 1451.2 %

The Change in fair value of related party notes payable, warrant liabilities, and derivative call options increased by $0.3 million for the three months ended March 31, 2025, when compared with the same period in 2024.

Significant driving factors include (1) The issuance of the related party 2025 March Unsecured SPA Notes, warrants, and Incremental Warrants and (2) the recognition of day-one losses upon the issuance of related party 2025 March Unsecured SPA Notes and associated instruments during the three months ended March 31, 2025.

We issued $1.9 million of related party SPA Portfolio Notes in March 2025.

Upon issuance the Company recognized a loss of $1.1 million, as the combined fair value of the SPA Portfolio Note, SPA Portfolio Note Warrant, and Incremental Warrant exceeded the cash proceeds received.

These issuance-date losses were offset by gains from the remeasurement of related party notes payable, related party warrant liabilities, and related party Incremental Warrants as of March 31, 2025.

The fair value of our related party instruments declined during the period ended March 31, 2025, primarily due to a 53% drop in our Class A Common Stock price over the quarter, including a 13% decline during the three months ended March 31, 2025 when related party debt activity occurred.

There was not significant related party debt activity during the three months ended March 31, 2024.

The Change in fair value of related party notes payable, warrant liabilities, and derivative call options increased by $4.8 million for the three months ended June 30, 2025, when compared with the same period in 2024.

Significant driving factors include (1) an increase in related party activity, such as issuance and conversion of the related party 2025 March Unsecured SPA Notes, warrants, and Incremental Warrants and (2) the recognition of day-one losses upon the issuance of related party 2025 March Unsecured SPA Notes and associated instruments.

During the three months ended June 30, 2025 we issued $3.0 million of related party SPA Portfolio Notes.

Upon issuance the Company recognized a day-one loss of $2.3 million, as the combined fair value of the SPA Portfolio Note, SPA Portfolio Note Warrant, and Incremental Warrant exceeded the cash proceeds received.

These issuance-date losses were further increased by a $2.7 million loss from the remeasurement of related party notes payable, related party warrant liabilities, and related party Incremental Warrants as of June 30, 2025.

The fair value of our related party instruments increased during the period ended June 30, 2025, primarily due to a 48.7% increase in our Class A Common Stock price over the quarter.

There was not significant related party debt outstanding or activity during the three months ended June 30, 2024.

Change in Fair Value of Related Party Notes Payable and Related Party Warrant Liabilities (6-Month Overview)

Six Months Ended June 30, Change

(in thousands) 2025 2024 Amount %

Change in fair value of related party notes payable, warrant liabilities, and derivative call options $ (5,427) $ (339) $ (5,088) 1500.9 %

The Change in fair value of related party notes payable, warrant liabilities, and derivative call options increased by $5.1 million for the six months ended June 30, 2025, when compared with the same period in 2024.

Significant driving factors include (1) an increase in related party activity, such as issuance and conversion of the related party 2025 March Unsecured SPA Notes, warrants, and Incremental Warrants and (2) the recognition of day-one losses upon issuance of related party 2025 March Unsecured SPA Notes and associated instruments.

We issued $4.6 million of rel ated party SPA Portfolio Notes during the six months ended June 30, 2025.

Upon issuance the Company recognized a day-one loss of $3.4 million, as the combined fair valu e of the SPA Portfolio Note, SPA Portfolio Note Warrant, and Incremental Warrant exceeded the cash proceeds received.

These issuance-date losses were further increased by $1.8 million loss from the remeasurement of related party notes payable, related party warrant liabilities, and related party Incremental Warrants as of June 30, 2025.

The fair value of our related party instruments increased during the period ended June 30, 2025, primarily due to a 33% in our Class A Common Stock price over the period since the first issuance of 2025 March Unsecured SPA Notes to related parties in March 2025.

There was not significant related party debt activity during the six months ended June 30, 2024.

Loss on Settlement of Notes Payable (3-Month Overview)

Three Months Ended June 30, Change

(in thousands) 2025 2024 Amount %

Loss on settlement of notes payable $ (22,458) $ (46,978) $ 24,520 (52.2) %

Three Months Ended March 31, Change

The $24.5 million decrease in Loss on settlement of notes payable for the three months ended June 30, 2025, as compared to the same period in 2024, was primarily driven by a lower effective conversion ratio.

The notes converted during the three months ended June 30, 2025 predominantly carried a 10% interest rate and did not include an interest make-whole provision.

In contrast, the notes converted during the same period in 2024 bore a 15% interest rate and included an interest make-whole through maturity.

The interest make-whole provision, which was eliminated pursuant to the Waiver Agreements entered into on August 2, 2024, and higher interest rate resulted in a greater number of shares being issued per dollar of principal converted during the three months ended June 30, 2024.

As a result, the 2024 conversions generated a higher loss on settlement compared to 2025.

Loss on Settlement of Notes Payable (6-Month Overview)

Six Months Ended June 30, Change

(in thousands) 2025 2024 Amount %

Loss on settlement of notes payable $ (38,378) $ (58,381) $ 20,003 (34.3) %

The $4.5 million increase in Loss on settlement of notes payable for the three months ended March 31, 2025, was driven by higher conversion activity compared to the same period in 2024, as well as a greater loss per dollar of principal converted.

During the three months ended March 31, 2025, noteholders converted $20.4 million of principal, compared to $18.3 million during the same period in 2024.

The $20.0 million decrease in Loss on settlement of notes payable for the six months ended June 30, 2025, as compared to the same period in 2024, was primarily driven by a lower effective conversion ratio.

The notes converted during the six months ended June 30, 2025 predominantly carried a 10% interest rate and did not include an interest make-whole provision.

In contrast, the notes converted during the same period in 2024 bore a 15% interest rate and included an interest make-whole through maturity.

As a result, the 2024 conversions generated a higher loss on settlement compared to 2025.

Loss on Settlement of Related Party Notes Payable (3-Month Overview)

Three Months Ended June 30, Change

(in thousands) 2025 2024 Amount %

Loss on settlement of related party notes payable $ (1,860) $ — $ (1,860) — %

Three Months Ended March 31, Change

During the three months ended June 30, 2025 a related party converted a $2.1 million note in exchange for 2,017,794 shares of our Class A Common Stock.

We recognized a $1.9 million Loss on settlement of related party notes payable for the difference between the fair value of the shares issued and the fair value of the debt instrument.

There were no related party debt conversions during the three months ended June 30, 2024.

Loss on Settlement of Related Party Notes Payable (6-Month Overview)

Six Months Ended June 30, Change

(in thousands) 2025 2024 Amount %

Loss on settlement of related party notes payable $ (3,040) $ (14,295) $ 11,255 (78.7) %

During the three months ended March 31, 2025 a related party converted a $1.5 million note in exchange for 1,352,767 shares of our Class A Common Stock.

We recognized a $1.2 million Loss on settlement of related party notes payable for the difference between the fair value of the shares issued and the fair value of the debt instrument During the three months ended March 31, 2024 a related party converted notes payable, with an aggregate principal balance of $0.7 million in exchange for 33,107 shares of our Class A Common Stock.

We recognized a $0.2 million Loss on settlement of related party notes payable.

In addition, as discussed in Note 8, Related Party Transactions in the notes to the Unaudited Condensed Consolidated Financial Statements, we also recognized a $14.1 million loss on related party notes related to interest, penalties, and principal increases resulting from our breach of the agreement with Chongqing Leshi Small Loan Co., Ltd.

(“Chongqing”).

During the six months ended June 30, 2025 a related party converted various notes with an aggregate principal of $3.6 million in exchange for 3,370,561.00 shares of our Class A Common Stock.

We recognized a $3.0 million Loss on settlement of related party notes payable for the difference between the fair value of the shares issued and the fair value of the debt.

During the six months ended June 30, 2024 we recognized a $14.1 million loss on related party notes related to interest, penalties, and principal increases resulting from our breach of the agreement with Chongqing Leshi Small Loan Co., Ltd.

(“Chongqing”), as discussed in Note 8, Related Party Transactions in the notes to the Unaudited Condensed Consolidated Financial Statements.

There was no breach of our agreement with Chongqing during the six months ended June 30, 2025 and 2024.

Interest Expense (3-Month Overview)

Three Months Ended June 30, Change

(in thousands) 2025 2024 Amount %

Interest expense $ (812) $ (1,719) $ 907 (52.8) %

Three Months Ended March 31, Change

Interest expense decreased by approximately $0.9 million for the three months ended June 30, 2025, compared to the same period in 2024.

This decrease primarily reflects the allocation of interest expense between reporting quarters, partially offset by higher interest costs associated with our financial obligations related to the FF ieFactory California manufacturing facility in Hanford, California.

The interest expense on this financing obligation increases over time under the effective interest method, as the principal balance remains outstanding until maturity, with capitalized tenant improvement costs funded by a third party also increasing the carrying amount of the liability.

Interest Expense (6-Month Overview)

Six Months Ended June 30, Change

(in thousands) 2025 2024 Amount %

Interest expense $ (3,114) $ (3,944) $ 830 (21.0) %

Interest expense increased by $0.1 million for the three months ended March 31, 2025, compared to the same period in 2024.

This increase was primarily due to financial obligations associated with the FF ieFactory California manufacturing facility in Hanford, California.

Interest expense decreased by approximately $0.9 million for the six months ended June 30, 2025, compared to the same period in 2024.

This decrease was primarily due to interest expense allocated to construction in progress, partially offset by higher interest costs associated with our financial obligations related to the FF ieFactory California manufacturing facility in Hanford, California.

Related Party Interest Expense (3-Month Overview)

Three Months Ended June 30, Change

(in thousands) 2025 2024 Amount %

Related party interest expense $ — $ (1,506) $ 1,506 (100.0 %)

Three Months Ended March 31, Change

Related party interest expense decreased by $1.5 million for the three months ended June 30, 2025, compared to the same period in 2024.

The decrease was primarily driven by our default in the first quarter of 2024 on the loan with our related party lender, Chongqing, which triggered retroactive interest charges and penalties under the prior agreement.

Under the revised loan agreement, no interest is incurred unless the Company defaults.

Related Party Interest Expense (6-Month Overview)

Six Months Ended June 30, Change

(in thousands) 2025 2024 Amount %

Related party interest expense $ — $ (6,600) $ 6,600 (100.0 %)

Related party interest expense decreased by $5.1 million for the three months ended March 31, 2025, compared to the same period in 2024.

Related party interest expense decreased by $6.6 million for the six months ended June 30, 2025, compared to the same period in 2024.

Under the revised loan agreement, no interest is incurred unless the Company defaults.

Other Expense, net

Three Months Ended March 31, Change

Other Expense, net (3-Month Overview)

Three Months Ended June 30, Change

(in thousands) 2025 2024 Amount %

Other income, net $ 1,784 $ 530 $ 1,254 236.6 %

Other income, net increased by $1.3 million for the three months ended March 31, 2025, compared to the same period in 2024.

Other income (loss), net $ (210) $ (292) $ 82 (28.1 %)

Other loss, net decreased by approximately $0.1 million for the three months ended June 30, 2025, compared to the same period in 2024.

During 2025, the U.S.

dollar’s continued strengthening against the Chinese yuan (CNY) resulted in a foreign currency transaction loss within Other income, net.

dollar’s continued strengthening against the Chinese yuan (CNY) resulted in a foreign currency transaction loss within Other income (loss), net.

However, the extent of the dollar's appreciation was less than in 2024, leading to a smaller foreign currency transaction loss and contributing to the overall reduction in Other income (loss), net.

Other Expense, net (6-Month Overview)

Six Months Ended June 30, Change

(in thousands) 2025 2024 Amount %

Other income (loss), net $ 1,574 $ 238 $ 1,336 561.3 %

Other income, net increased by $1,336 for the six months ended June 30, 2025, compared to the same period in 2024.

During 2025, the U.S.

dollar’s continued strengthening against the Chinese yuan (CNY) resulted in a foreign currency

transaction loss within Other income, net.

However, the extent of the dollar's appreciation was less than in 2024, leading to a smaller foreign currency transaction loss and contributing to the overall reduction in Other income, net.

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

We have incurred cumulative losses from operations, negative cash flows from operating activities, and we have an accumulated deficit of $4,324.6 million, an unrestricted cash balance of $9.5 million and a negative working capital position of $112.3 million as of March 31, 2025.

During 2025 , we funded our operations and capital needs primarily through the issuance of notes payable and related party notes payable convertible notes (see Note 7, Notes Payable and Note 8, Related Party Transactions ), and the sale of Class A Common Stock.

We have incurred cumulative losses from operations, negative cash flows from operating activities, and we have an accumulated deficit of $4,449.3 million, an unrestricted cash balance of $13.2 million and a negative working capital position of $146.0 million as of June 30, 2025.

During 2023, we commenced deliveries of the FF Series, specifically the FF 91 model, to customers.

We are currently manufacturing the FF 91 with plans to manufacture FF 92 models within the FF Series.

We have launched the FX Series, beginning with the SuperOne model, and is accepting pre-orders.

We are preparing to initiate full-scale, series production of the FX Series, including the SuperOne, for commercial sale, as distinct from prototype builds or validation units.

We expect to continue to incur significant operating losses for the foreseeable future.

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

Substantial doubt exists about the Company’s ability to continue as a going concern;

however, management plans to continue funding operations through these means.

Debt Commitments under SPA Portfolio Notes and Other Notes

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(iii) Junior Secured SPA Notes;

(iv) and 2024 Unsecured SPA Notes.

As of March 31, 2025, the SPA Portfolio Notes were in good standing.

(iv) 2024 Unsecured SPA Notes (v) and 2025 March Unsecured SPA Notes .

As of June 30, 2025, the SPA Portfolio Notes were in good standing.

Pursuant to the SPA Portfolio Notes commitments (collectively the “SPA Commitments”) (see Note 7, Notes Payable and Note 8, Related Party Transactions ), we obtained commitments from several investors.

On March 31, 2025, the SPA Commitments totaled $655.5 million, of which $427.7 million was funded, $227.8 million remained to be funded, and $45.8 million in principal was outstanding.

On March 31, 2025, optional commitments under the SPA Commitments totaled $467.0 million, of which $50.9 million was funded, $386.1 million remained to be funded, and $2.5 million was outstanding.

The remaining amounts to be funded as of March 31, 2025 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.

As of June 30, 2025, the SPA Commitments totaled $655.5 million, of which $449.3 million was funded, $206.2 million remained to be funded, and $33.3 million in principal was outstanding.

As of June 30, 2025, Optional Commitments (including incremental warrants) under the SPA Commitments totaled $467.0 million, of which $60.9 million was funded, $406.1 million remained to be funded, and $10.0 million was outstanding.

Of these amounts, $189.2 million of SPA Commitments and $305.1 million of Optional Commitments expired unfunded after June 30, 2025, but prior to issuance of these financial statements.

The remaining amounts to be funded as of June 30, 2025 are subject to 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.

We 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.

Subsequent to June 30, 2025, we entered into an $82.0 million financing agreement and raised approximately $45.7 million in gross proceeds from SPA Portfolio Notes financings and $1.4 million from warrant exercises (see Note 16 Subsequent Events) for details.

While these transactions partially address our short-term liquidity needs, substantial doubt continues to exist regarding our ability to continue as a going concern.

Other Financing Arrangements and Related Party Notes:

Additional financing is provided via convertible debt instruments, equipment financing arrangements, and related party notes that support our operations and capital expenditures.

As of March 31, 2025, all notes were in good standing.

As of June 30, 2025, all notes were in good standing.

Standby Equity Purchase Agreement, At-The-Market Offerin g , and Equity Issuance Constraints

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Under the terms of the SEPA, we may, at our 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 at our option) of Class A Common Stock to Yorkville, subject to certain limitations.

As of March 31, 2025, we had the right to issue and sell up to an additional $192.5 million, or $342.5 million if we exercise our option under the SEPA.

As of June 30, 2025, we had the right to issue and sell up to an additional $192.5 million, or $342.5 million if we exercise our option under the SEPA.

At-The-Market Offerin g

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

On September 26, 2023, we 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”).

Under applicable SEC rules and regulations, because we failed to timely file our Form 10-K for the year ended December 31, 2023, as well as our Form 10-Q for the quarter ended March 31, 2024, we will not be eligible to access the ATM Program until August 1, 2025, at the earliest.

Under applicable SEC rules and regulations, because the Company failed to timely file its Form 10-K for the year ended December 31, 2023, as well as its Form 10-Qs for the quarters ended March 31, 2024 and June 30, 2024, the Company was previously ineligible to access the ATM Program.

However, as of August 1, 2025, the Company regained eligibility to access the ATM Program.

Equity Issuance Constraints

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Capital Needs, FX Series Production, and Bankruptcy Risk

We project that we will require substantial additional funds to continue operations and support production of the FF 91, and we also plan to initiate production of our FX Series of vehicles.

We project that we will require substantial additional funds to continue operations and support production of the FF 91, and our FX Series of vehicles.

If additional capital is not secured, we will not have sufficient resources to meet our obligations and continue operations, which could result in bankruptcy protection and asset liquidation, with equity holders receiving little to no recovery.

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Capital needs to fund development of our remaining product portfolio will highly depend on the market success and profitability of the FF 91 and the launch of the FX series, and our ability to accurately estimate and control costs.

Apart from the FF 91 series and FX series, substantial additional capital will be required to fund operations, research, development, and design efforts for future vehicles.

the FF 91 series and FX series, substantial additional capital will be required to fund operations, research, development, and design efforts for future vehicles.

In addition, elevated U.S.

import tariffs on electric vehicle components sourced from China could increase our future manufacturing costs as production of the FX Series and other future vehicle models are introduced.

While tariffs did not materially impact cost of goods sold for the three months ended March 31, 2025, due to limited production volume, continued reliance on China-based suppliers may contribute to higher input costs, pressure gross margins, and increase the Company's future funding needs.

While tariffs did not materially impact cost of goods sold for the six months ended June 30, 2025, due to limited production volume, continued reliance on China-based suppliers may contribute to higher input costs, pressure gross margins, and increase the Company's future funding needs.

Going Concern and Future Capital Strat egy

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Sources of Liquidity

As of March 31, 2025, our principal source of liquidity was cash on hand totaling $9.5 million, which was held for working capital and general corporate purposes.

As of June 30, 2025, our principal source of liquidity was cash on hand totaling $13.2 million, which was held for working capital and general corporate purposes.

We also have access to various sources of additional capital, including the SEPA and the SPA Commitments.

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We have been significantly funded by notes payable from related parties and third parties.

The related parties include employees as well as affiliates of employees and affiliates and other companies controlled or previously controlled by our founder and Chief Product and User Ecosystem Officer (who, as of April 2025, became Global Co-CEO).

Effective August 13, 2025, during the pendency of the SEC investigation, Mr.

Jia was temporarily excluded from oversight of the finance, legal, accounting, and public reporting functions (see Note 16).

For more information on the outstanding related party notes payable and notes payable as well as the related schedules of maturities, see Note 7, Notes Payable , and Note 8, Related Party Transactions , of the notes to the Consolidated Financial Statements included in this Form 10-Q.

We have entered into notes payable agreements with third parties, which consist of the following as of March 31, 2025:

Notes payable with third parties and related parties are summarized in the following tables as of June 30, 2025, including contractual maturities, stated interest rates, unpaid principal balances, fair value adjustments, original issue discounts (including amounts allocated to warrants), and net carrying values.

Most of our notes payable are measured under the fair value option, with changes in fair value recorded in the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss.

Because these instruments are carried at fair value, no effective interest rate is presented.

While the SPA Portfolio Notes bear stated interest rates of 10% or 15%, our effective cost of capital is substantially higher.

Each SPA Portfolio Note permits settlement in shares at a value exceeding the stated principal and accrued interest.

In addition, each holder receives an SPA Portfolio Warrant, and certain holders receive an Incremental Warrant.

These features significantly increase the effective cost of capital beyond the stated rates.

The financial impact of the SPA Portfolio Notes is reflected in changes in fair value and losses on extinguishment, as presented in our Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss.

Third-Party Notes Payable (June 30, 2025)

(in thousands) Contractual

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Adjustments Original Issue Discount and Proceeds Allocated to Warrants Net

Secured SPA Notes Various 10% - 15% $ 2,500 $ 139 $ (250) $ 2,389

Junior Secured SPA Notes September 2029 10% 13,431 55 (7,426) 6,060

2023 Unsecured SPA Notes June 2032 10% - 15% 5,000 39 (500) 4,539

2024 Unsecured SPA Notes Various through January 2030 10% 18,299 8,683 (16,973) 10,009

March 2025 Unsecured SPA Notes April 2030 10% 2,000 (44) (1,193) 763

March 2025 Unsecured SPA Notes Various dates in 2030 10% 17,320 2,870 (10,893) 9,297

Notes payable – China other

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Notes payable, long-term portion $ 23,845

Related party notes payable consists of the following as of March 31, 2025:

Related Party Notes Payable (June 30, 2025)

(in thousands) Contractual

Date Contractual

Unsecured Convertible Note June 2025 (3) 4.27% $ 451

2025 March Unsecured SPA Notes April 2030 10.0% $ 143

2025 March Unsecured SPA Notes Various dates in 2030 10.0% $ 1,463

Notes Payable — China April 2027 18.0% 4,271

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Cash Flow Analysis

Three Months Ended

Six Months Ended June 30,

(in thousands) 2025 2024

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Our operating cash flows are significantly affected by fluctuations in working capital components, including changes in personnel expenses, accounts payable, accrued interest, other current liabilities, deposits, and current assets.

For the three months ended March 31, 2025, net cash used in operating activities was $20.3 million, compared to $14.7 million for the same period in 2024, reflecting a $5.6 million increase in cash outflows .

For the six months ended June 30, 2025, net cash used in operating activities was $43.6 million, compared to $29.1 million for the same period in 2024, reflecting a $14.5 million increase in cash outflows .

The reduction of $21.9 million in Net loss is an improvement in 2025 compared to the same period in 2024 ;

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Non-cash adjustments:

Non-cash adjustments decreased by $29.3 million for the three months ended March 31, 2025 compared to the same period in 2024 .

This decrease was comprised of a $23.6 million decrease in fair value adjustments on Change in fair value of notes payable, warrant liabilities, and derivative call options, and a $13.1 million decrease in Loss from settlement of related party notes payable.

These adjustments were partially offset by a $4.5 million increase in Loss from settlement of notes payable.

Non-cash adjustments decreased by $12.0 million for the six months ended June 30, 2025 compared to the same period in 2024 .

This decrease was comprised of a $20.0 million increase in Loss from settlement of notes payable, a $15.3 million decrease in fair value adjustments on Change in fair value of notes payable, warrant liabilities, and derivative call options, decrease in Loss from settlement of related party notes payable, and a $7.6 million decrease in Loss from settlement of related party notes payable.

These adjustments were partially offset by a $15.3 million decrease in fair value adjustments on Change in fair value of notes payable, warrant liabilities, and derivative call options, a $5.1 million increase in Change in fair value of related party notes payable and related party warrant liabilities and a $3.8 million inventory reserve adjustment.

As these adjustments do not represent actual cash changes, they are disclosed for reconciliation purposes consistent with the cash flow statement.

Changes in working capital:

Changes in working capital decreased by $13.6 million for the three months ended March 31, 2025 compared to the same period in 2024.

For the three months ended March 31, 2025, changes in working capital included unfavorable shifts in our operating assets and liabilities.

Notable contributors to the change were a $4.4 million change in Inventory balances, a $8.8 million change in Deposits, and a $5.1 million change in Accrued interest expense.

Changes in working capital decreased by $23.8 million for the six months ended June 30, 2025 compared to the same period in 2024.

For the six months ended June 30, 2025, changes in working capital included unfavorable shifts in our operating assets and liabilities.

Notable contributors to the change were a $4.9 million change in Inventory balances, a $5.9 million change in Deposits, a $5.2 million change in Accrued related party interest expense, and a $8.1 million change in Accounts payable.

These were partially offset by a $3.6 million change in Accrued expenses and other current and non-current liabilities.

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Investing Activities

Net cash used in investing activities was $1.6 million and $0 for the three months ended March 31, 2025 and 2024, respectively.

This change was driven by a increase in the acquisition of fixed assets due to the reduction of liquidity.

Net cash used in investing activities was $5.0 million and $0.3 million for the six months ended June 30, 2025 and 2024, respectively.

The increase was primarily driven by capitalized Hanford facility improvements funded by a third party, which were accounted for as both additions to property and equipment and a corresponding financing obligation.

Although the Company continues to manage through liquidity constraints, these improvements contributed to the higher level of investing activity reported for the period.

Financing Activities

Amid a challenging financing environment, we are actively seeking strategic opportunities to boost our cash reserves and support growth using a mix of convertible loans and non-convertible funding.

For the three months ended March 31, 2025, financing activities provided a net cash inflow of $24.6 million, compared to a net cash inflow of $12.0 million in 2024—an increase of $12.6 million.

For the six months ended June 30, 2025, financing activities provided a net cash inflow of $55.1 million, compared to a net cash inflow of $26.7 million for the same period in 2024—an increase of $28.3 million.

The improvement reflects the Company’s continued ability to secure financing despite a challenging capital markets environment.

In 2025, proceeds from notes payable were $48.6 million, up by $24.7 million from $23.9 million in 2024.

Our proceeds from related party notes payable decreased to $1.9 million in 2025 from $3.0 million in 2024, a decrease of $1.1 million.

Moreover, financing proceeds from other financial obligations transactions totaled $1.1 million for the three months ended March 31, 2025 , compared to no similar proceeds for the three months ended March 31, 2024 .

Our proceeds from related party notes payable increased to $4.6 million in 2025 from $3.0

million in 2024, an increase of $1.6 million.

Moreover, financing proceeds from other financial obligations transactions totaled $4.4 million for the six months ended June 30, 2025, compared to no similar proceeds for the six months ended June 30, 2024.

In addition to cash-based financing activities, during the six months ended June 30, 2024 , we reduced debt through the conversion of notes payable with fair value of approximately $35.6 million into equity.

We also issued Common Stock warrants with fair value of approximately $33.4 million in connection with financing transactions.

While these transactions did not involve cash inflows or outflows, they form part of our overall financing strategy by reducing outstanding debt in the case of conversions and providing potential future equity proceeds through warrant exercises.

Effect of Exchange Rate Changes on Cash and Restricted Cash

The exchange rates effect on cash and restricted cash was $0.4 million and $0 for the three months ended March 31, 2025 and 2024, respectively.

The effects of exchange rate changes on cash and restricted cash result from fluctuations on the

translation of assets and liabilities denominated in foreign currencies, primarily Chinese Yuan.

The exchange rates effect on cash and restricted cash was $0.4 million and zero for the six months ended June 30, 2025 and 2024, respectively.

The effects of exchange rate changes on cash and restricted cash result from fluctuations on the translation of assets and liabilities denominated in foreign currencies, primarily Chinese Yuan.

Fluctuations in exchange rates against the U.S.

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We did not have any material relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Thus, we did not have any off-balance sheet arrangements as of March 31, 2025 and 2024.

Thus, we did not have any off-balance sheet arrangements as of June 30, 2025 and 2024.

Critical Accounting Estimates

The preparation of our Unaudited Condensed Consolidated Financial Statements for the three months ended March 31, 2025, in accordance GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities, and the reported amounts of expenses during the reporting period.

The preparation of our Unaudited Condensed Consolidated Financial Statements for the three and six months ended June 30, 2025 and 2024, in accordance GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities, and the reported amounts of expenses during the reporting period.

Management bases these estimates on historical experience and on various other assumptions believed to be reasonable under the circumstances, the results of which form the basis for making judgments that are not readily apparent from other sources.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis