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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2023
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to ________________

Commission File Number: 001-39395
Faraday Future Intelligent Electric Inc.
(Exact name of registrant as specified in its charter)
Delaware84-4720320
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
18455 S. Figueroa Street,
Gardena, CA

90248
(Address of Principal Executive Offices)
(Zip Code)
(424) 276-7616
Registrant’s telephone number, including area code

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

Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A common stock, par value $0.0001 per shareFFIEThe Nasdaq Stock Market LLC
Redeemable warrants, exercisable for shares of Class A common stock at an exercise price of $920.00 per share
FFIEWThe Nasdaq Stock Market LLC

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

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

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

Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes        No  

The registrant had outstanding 56,616,338 shares of Class A common stock and 800,008 shares of Class B common stock as of November 9, 2023.


Faraday Future Intelligent Electric Inc.
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2023
INDEX

Page
Item 1A.
Risk Factors

2

PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Faraday Future Intelligent Electric Inc.
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands, except share and per share data)
September 30, 2023December 31, 2022
Assets
Current assets
Cash$6,714 $16,968 
Restricted cash1,853 1,546 
Inventory35,215 4,457 
Deposits62,556 44,066 
Other current assets20,963 17,489 
Total current assets127,301 84,526 
Property and equipment, net416,514 406,320 
Finance lease right-of-use assets12,090 12,362 
Operating lease right-of-use assets17,370 19,588 
Other non-current assets6,252 6,492 
Total assets$579,527 $529,288 
Liabilities and stockholders’ equity
Current liabilities
Accounts payable$101,857 $91,603 
Accrued expenses and other current liabilities68,446 65,709 
Warrant liabilities1,613 92,781 
Related party warrant liabilities117  
Accrued interest25 189 
Related party accrued interest139  
Operating lease liabilities, current portion3,755 2,538 
Finance lease liabilities, current portion1,442 1,364 
Related party notes payable, current portion8,830 8,964 
Notes payable, current portion4,929 5,097 
Total current liabilities191,153 268,245 
Finance lease liabilities, less current portion5,475 6,570 
Operating lease liabilities, less current portion14,868 18,044 
Other liabilities10,783 9,429 
Related party notes payable, less current portion2,945  
Notes payable, less current portion92,500 26,008 
Total liabilities317,724 328,296 
Commitments and contingencies (Note 9)
Stockholders’ equity
Class A Common Stock, $0.0001 par value; 147,875,000 and 71,312,500 shares authorized; 31,764,093 and 7,041,828 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively
3 1 
Class B Common Stock, $0.0001 par value; 6,562,500 shares authorized; 800,008 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively
  
Additional paid-in capital4,128,990 3,724,241 
Accumulated other comprehensive income7,512 3,505 
Accumulated deficit(3,874,702)(3,526,755)
Total stockholders’ equity261,803 200,992 
Total liabilities and stockholders’ equity$579,527 $529,288 
    See accompanying notes to unaudited Condensed Consolidated Financial Statements.
3

Faraday Future Intelligent Electric Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)
(in thousands, except share and per share data)

Three Months Ended
September 30,
Nine Months Ended
September 30,
2023202220232022
Revenues
Auto sales $551 $ $551 $ 
Cost of revenues
Auto sales 16,131  22,744  
Gross loss(15,580) (22,193) 
Operating expenses
Research and development21,593 47,582 104,670 259,741 
Sales and marketing5,318 3,823 18,082 16,207 
General and administrative24,023 28,551 67,598 89,069 
Loss on disposal of property and equipment  3,698 1,407 
Change in fair value of earnout liability(67) 2,033  
Total operating expenses50,867 79,956 196,081 366,424 
Loss from operations(66,447)(79,956)(218,274)(366,424)
Change in fair value of notes payable and warrant liabilities17,571 (1,764)90,030 4,580 
Change in fair value of related party notes payable and related party warrant liabilities4,726  5,110  
Loss on settlement of notes payable(21,357)(30,454)(204,885)(30,454)
Loss on settlement of related party notes payable(10,756) (17,248) 
Interest expense(90)(245)(591)(5,119)
Related party interest expense(69)(996)(139)(2,931)
Other expense, net (1,624)(6,457)(1,922)(14,307)
Loss before income taxes(78,046)(119,872)(347,919)(414,655)
Income tax provision  (28)(9)
Net loss$(78,046)$(119,872)$(347,947)$(414,664)
Net loss per share of Class A and B Common Stock attributable to common stockholders:
Basic $(3.78)$(27.67)$(23.28)$(100.26)
Diluted (3.78)(27.67)(23.28)(100.26)
Weighted average shares used in computing net loss per share of Class A and B Common Stock:
Basic20,647,430 4,332,194 14,944,452 4,135,984 
Diluted20,647,430 4,332,194 14,944,452 4,135,984 
Total comprehensive loss
Net loss$(78,046)$(119,872)$(347,947)$(414,664)
Foreign currency translation adjustment(1,560)9,864 4,007 13,548 
Total comprehensive loss$(79,606)$(110,008)$(343,940)$(401,116)
See accompanying notes to unaudited Condensed Consolidated Financial Statements.
4

Faraday Future Intelligent Electric Inc.
Condensed Consolidated Statement of Stockholders’ Equity (Unaudited)
(in thousands, except share data)

Common StockAdditional
Paid-in
Capital
Accumulated
Other
Comprehensive
Income
Accumulated DeficitTotal Stockholders’ Equity
Class AClass B
SharesAmountSharesAmount
Balance as of June 30, 2023
17,796,893 $2 800,008 $ $4,065,282 $9,072 $(3,796,656)$277,700 
Conversion of notes payable and accrued interest into Class A Common Stock (Note 7)12,182,048 1 — — 51,906 — — 51,907 
Reclassification of August 25, 2023 earnout shares liability to equity due to authorized share increase— — — — 1,381 — — 1,381 
Reclassification of August 25, 2023 stock-based awards liability to equity due to authorized share increase— — — — 2,043 — — 2,043 
Issuance of Common Stock1,617,500 — — — 8,520 — — 8,520 
Reverse Stock split related round up share issuances 163,885 — — — — — — 
Stock-based compensation— — — — 216 — — 216 
Issuance of shares for RSU vesting net of tax withholdings 3,767 — — — (358)— — (358)
Foreign currency translation adjustment— — — — — (1,560)— (1,560)
Net loss— — — — — — (78,046)(78,046)
Balance as of September 30, 2023
31,764,093 $3 800,008 $ $4,128,990 $7,512 $(3,874,702)$261,803 
See accompanying notes to unaudited Condensed Consolidated Financial Statements.




5

Faraday Future Intelligent Electric Inc.
Condensed Consolidated Statement of Stockholders’ Equity (Unaudited)
(in thousands, except share data)
Common StockAdditional
Paid-in
Capital
Accumulated
Other
Comprehensive Income
Accumulated DeficitTotal Stockholders’ Equity
Class AClass B
SharesAmountSharesAmount
Balance as of December 31, 2022
7,041,828 $1 800,008 $ $3,724,241 $3,505 $(3,526,755)$200,992 
Conversion of notes payable and accrued interest into Class A Common Stock (Note 7) 22,271,914 2 — — 335,013 — — 335,015 
Change in classification of warrants from Additional paid-in capital to liability pursuant to the Warrant Exchange (Note 7)— — — — (6,811)— — (6,811)
Reclassification of February 28, 2023 earnout shares liability to equity due to authorized share increase (Note 10)— — — — 5,014 — — 5,014 
 Reclassification of February 28, 2023 stock-based awards liability to equity due to authorized share increase (Note 10)— — — — 8,978 — — 8,978 
Reclassification of earnout shares from equity to liability on April 21, 2023 due to insufficient authorized shares (Note 10)— — — — (2,112)— — (2,112)
Reclassification of stock-based awards from equity to liability on April 21, 2023 due to insufficient authorized shares (Note 10)— — — — (2,979)— — (2,979)
Reclassification of August 25, 2023 earnout shares liability to equity due to authorized share increase— — — — 1,381 — — 1,381 
Reclassification of August 25, 2023 stock-based awards liability to equity due to authorized share increase— — — — 2,043 — — 2,043 
Issuance of Common Stock1,617,500 — — — 8,520 — — 8,520 
 Reverse Stock split related round up share issuances 163,885 — — — — — — — 
 Stock-based compensation — — — — 4,840 — — 4,840 
 Exercise of warrants 639,109 — — — 51,276 — — 51,276 
 Exercise of stock options 619 — — — 44 — — 44 
 Issuance of shares for RSU vesting net of tax withholdings32,330 — — — (458)— — (458)
 Cancellations(3,092)— — — — — — — 
 Foreign currency translation adjustment — — — — 4,007 — 4,007 
 Net loss— — — — — (347,947)(347,947)
Balance as of September 30, 2023
31,764,093 $3 800,008 $ $4,128,990 $7,512 $(3,874,702)$261,803 
See accompanying notes to unaudited Condensed Consolidated Financial Statements.
6

Faraday Future Intelligent Electric Inc.
Condensed Consolidated Statement of Commitment to Issue Class A Common Stock and Stockholders’ Equity (Unaudited)
(in thousands, except share data)


Commitment to Issue Class A Common StockCommon StockAdditional
Paid-in
Capital
Accumulated
Other
Comprehensive Gain
(Loss)
Accumulated Deficit Total Stockholders’ Equity (Deficit)
Class AClass B
SharesAmountSharesAmountSharesAmount
Balance as of June 30, 2022 $32,900 2,981,794 $ 800,008 $ $3,491,071 $(3,261)$(3,219,308)$268,502 
Issuance of shares pursuant to the commitment to issue Class A and Class B Common Stock— — 253,309 — — — — — — — 
Transfer of private warrants to unaffiliated parties— — — — — — 186 — — 186 
Amendment of ATW NPA Warrants (Note 13)— — — — — — 1,238 — — 1,238 
Issuance pursuant to commitment to issue registered shares— (32,900)29,844 — — — 32,900 — — 32,900 
Conversion of notes payable into Class A Common Stock— — 810,549 — — — 84,780 — — 84,780 
Stock-based compensation— — — — — — 2,670 — — 2,670 
Exercise of stock options— — 39,217 — — — 7,181 — — 7,181 
Repurchase of Common Stock— — (1,210)— — — (767)— — (767)
Receipt of Class A Common Stock in consideration of exercises of options— — (3,899)— — — (669)— — (669)
Exercise of warrants— — 212,828 — — — 1,728 — — 1,728 
Foreign currency translation adjustment— — — — — — — 9,864 — 9,864 
Net loss— — — — — — — — (119,872)(119,872)
Balance as of September 30, 2022
 $ 4,322,432 $ 800,008 $ $3,620,318 $6,603 $(3,339,180)$287,741 
See accompanying notes to unaudited Condensed Consolidated Financial Statements.

7

Faraday Future Intelligent Electric Inc.
Condensed Consolidated Statement of Commitment to Issue Class A Common Stock and Stockholders’ Equity (Unaudited)
(in thousands, except share data)

Commitment to Issue Class A Common StockCommon StockAdditional
Paid-in
Capital
Accumulated
Other
Comprehensive Gain
(Loss)
Accumulated Deficit Total Stockholders’ Equity (Deficit)
Class AClass B
SharesAmountSharesAmountSharesAmount
Balance as of December 31, 2021
 $ 2,108,667 $  $ $3,482,243 $(6,945)$(2,907,644)$567,654 
Reclassification of obligation to issue registered shares of Class A Common Stock upon adoption of ASU 2020-06— 32,900 — — — — — — (20,265)(20,265)
Transfer of private warrants to unaffiliated parties— — — — — — 186 — — 186 
Amended Exercise price of ATW NPA warrants (Note 13)— — — — — — 1,238 — — 1,238 
Reclassification of deferred gain upon adoption of ASC 842— — — — — — — — 3,393 3,393 
Issuance of shares pursuant to the commitment to issue Class A and Class B Common Stock— — 1,114,402 — 800,008 — — — —  
Issuance pursuant to commitment to issue registered shares— (32,900)29,844 — — — 32,900 — — 32,900 
Conversion of notes payable into Class A Common Stock — — 810,549 — — — 84,780 — — 84,780 
Stock-based compensation — — — — — — 9,144 — — 9,144 
Exercise of stock options— — 51,251 — — — 9,535 — — 9,535 
Repurchase of Common Stock— — (1,210)— — — (767)— — (767)
Receipt of Class A Common Stock in consideration of exercises of options— — (3,899)— — — (669)— — (669)
Exercise of warrants— — 212,828 — — — 1,728 — — 1,728 
Foreign currency translation adjustment— — — — — — — 13,548 — 13,548 
Net loss — — — — — — — — (414,664)(414,664)
Balance as of September 30, 2022
 $ 4,322,432 $ 800,008 $ $3,620,318 $6,603 $(3,339,180)$287,741 
See accompanying notes to unaudited Condensed Consolidated Financial Statements.
8

Faraday Future Intelligent Electric Inc.
Condensed Consolidated Statement of Cash Flows (Unaudited)
(in thousands)

Nine Months Ended September 30,
20232022
Cash flows from operating activities
Net loss$(347,947)$(414,664)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense27,673 2,532 
Stock-based compensation8,906 9,144 
Loss on disposal of property and equipment3,698 1,407 
Non-cash change in fair value of related party notes payable and related party warrant liabilities(5,110) 
Non-cash change in fair value of notes payable and warrant liabilities(90,461)(4,580)
Change in fair value of earnout liability1,381  
Change in operating lease right-of-use assets    2,491 2,265 
Loss on foreign exchange218 2,484 
Loss on write-off of vendor deposits, net 408 2,992 
Non-cash interest expense 8,050 
Loss on settlement of notes payable204,885 30,454 
Loss on settlement of related party notes payable17,248  
Other1,008 324 
Changes in operating assets and liabilities:
Deposits(19,237)13,364 
Inventory(30,758) 
Other current and non-current assets(3,415)(10,656)
Accounts payable13,838 27,467 
Accrued payroll and benefits 9,372 
Accrued expenses and other current liabilities(23,332)(21,117)
Operating lease liabilities(1,838)(1,226)
Accrued interest expense(26)(12,721)
Net cash used in operating activities(240,370)(355,109)
Cash flows from investing activities
Payments for property and equipment(10,846)(112,099)
Net cash used in investing activities(10,846)(112,099)
Cash flows from financing activities
Proceeds from related party notes payable, net of original issuance discount19,782  
Proceeds from notes payable, net of original issuance discount208,650 40,050 
Proceeds from the sale of Common Stock, net of issuance costs8,520  
Proceeds from exercise of warrants4,074 1,728 
Payments of notes payable (87,258)
Payment of notes payable issuance costs(2,489)(2,813)
Payments of finance lease obligations(1,016)(1,410)
Repurchase of Common Stock (767)
Proceeds from exercise of stock options44 9,535 
Net cash provided by (used in) financing activities237,565 (40,935)
Effect of exchange rate changes on cash and restricted cash3,704 11,594 
Net decrease in cash and restricted cash(9,947)(496,549)
Cash and restricted cash, beginning of period18,514 530,477 
Cash and restricted cash, end of period$8,567 $33,928 
9

Faraday Future Intelligent Electric Inc.
Condensed Consolidated Statement of Cash Flows (Unaudited)
(in thousands)

The following table provides a reconciliation of cash and restricted cash reported within the Condensed Consolidated Balance Sheets that aggregate to the total of the same such amounts shown in the Condensed Consolidated Statements of Cash Flows:
September 30, 2023December 31, 2022
Cash and restricted cash
Cash$6,714 $16,968 
Restricted cash1,853 1,546 
Total cash and restricted cash$8,567 $18,514 
Nine Months Ended
September 30,
20232022
Supplemental disclosure of noncash investing and financing activities
Reclassification of February 28, 2023 stock-based awards liability to equity due to authorized share increase$8,978 $ 
Reclassification of February 28, 2023 earnout shares liability to equity due to authorized share increase5,014  
Reclassification of earnout shares from equity to liability on April 21, 2023 due to insufficient authorized shares2,112  
Reclassification of stock-based awards from equity to liability on April 21, 2023 due to insufficient authorized shares2,979  
Reclassification of August 25, 2023 earnout shares liability to equity due to authorized share increase1,381  
Reclassification of August 25, 2023 stock-based awards liability to equity due to authorized share increase2,043  
Conversion of related party notes payable and related party accrued interest into Class A Common Stock11,254  
Conversion of notes payable and accrued interest into Class A Common Stock114,073  
Recognition of operating right of use assets and lease liabilities upon adoption of ASC 842 and for new leases entered into in 2022 11,906 
Additions of property and equipment included in accounts payable and accrued expenses 12,056 
Issuance of Secured SPA Warrants34,257  
Issuance pursuant to commitment to issue registered shares 32,900 
Receipt of class A common stock in consideration of exercises of options 669 
Transfer of private warrants to unaffiliated parties 186 
Conversion of convertible note to equity 84,780 
Acquisitions of property and equipment included in accounts payable34,124  
Issuance of Secured SPA Notes pursuant to the Exchange Agreement (Note 7)16,500  
Change in classification of warrants from Additional paid-in capital to liability pursuant to the Warrant Exchange (Note 7)6,811  
Reduction in outstanding warrants pursuant to the Exchange Agreement (Note 7)(16,506) 
Supplemental disclosure of cash flow information
Cash paid for interest465 12,721 
See accompanying notes to unaudited Condensed Consolidated Financial Statements.
10


Faraday Future Intelligent Electric Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
1.    Nature of Business and Organization and Basis of Presentation
Nature of Business and Organization
Faraday Future Intelligent Electric Inc. (“FFIE”), a holding company incorporated in the State of Delaware on February 11, 2020, conducts its operations through the subsidiaries of FF Intelligent Mobility Global Holdings Ltd. (“Legacy FF”), founded in 2014 and headquartered in Los Angeles, California. References to the “Company” or “FF” refer to FFIE and its consolidated subsidiaries. FF is a global shared intelligent electric mobility ecosystem company with a vision to reformat the automotive industry.
On July 21, 2021 (the “Closing Date”), the Company consummated a business combination pursuant to an agreement and plan of merger dated January 27, 2021 (as amended, the “Merger Agreement”), by and among the Company, PSAC Merger Sub Ltd. (“Merger Sub”), an exempted company with limited liability incorporated under the laws of the Cayman Islands and wholly-owned subsidiary of Property Solutions Acquisition Corp. (“PSAC”), a Delaware corporation our predecessor company, and Legacy FF. Pursuant to the terms of the Merger Agreement, Merger Sub merged with and into Legacy FF, with Legacy FF surviving the merger as a wholly-owned subsidiary of the Company (the “Business Combination”). Upon the consummation of the Business Combination (the “Closing”), PSAC changed its name from “Property Solutions Acquisition Corp.” to “Faraday Future Intelligent Electric Inc.”
Concurrently with the execution of the Merger Agreement, the Company entered into separate subscription agreements with a number of investors (“PIPE Investors”) pursuant to which, on the Closing Date, the PIPE Investors purchased, and the Company issued, an aggregate of 951,750 shares of Class A Common Stock (as defined below in this Note), for a purchase price of $800.00 per share with an aggregate purchase price of $761.4 million (“PIPE Financing”). Shares sold and issued in the PIPE Financing included registration rights. The closing of the private placement occurred immediately prior to the Closing Date.
The Company operates in a single operating segment and designs and engineers next-generation, intelligent, electric vehicles. The Company manufactures vehicles at its production facility in Hanford, California (“FF ieFactory California”) and has additional engineering, sales, and operations capabilities in China. The Company has created innovations in technology, products, and a user-centered business model that are being incorporated into its planned electric vehicle platform.
Principles of Consolidation and Basis of Presentation
The Condensed Consolidated Financial Statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”) applicable to interim reports. They include the accounts of the Company, its wholly-owned subsidiaries and all other entities in which the Company has a controlling financial interest, including the accounts of any Variable Interest Entity (“VIE”) in which the Company has a controlling financial interest and for which it is the primary beneficiary. All intercompany transactions and balances have been eliminated upon consolidation.
These Condensed Consolidated Financial Statements do not include all disclosures that are normally included in annual audited financial statements prepared in accordance with GAAP and should be read in conjunction with the Company’s audited Consolidated Financial Statements for the year ended December 31, 2022, included in the Company’s Form 10-K/A filed with the SEC on August 21, 2023 (“Form 10-K/A”). Accordingly, the Condensed Consolidated Balance Sheet as of December 31, 2022, has been derived from the Company’s annual audited Consolidated Financial Statements but does not contain all of the footnote disclosures from the annual financial statements. The Company believes that the disclosures included in this Form 10-Q are adequate to make the information presented not misleading.
In the opinion of management, the Condensed Consolidated Financial Statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of its financial position, its results of operations, and cash flows for the periods presented. The accounting policies used in the preparation of these Condensed Consolidated Financial Statements are the same as those disclosed in the audited Consolidated Financial Statements for the year ended December 31, 2022, included in the Form 10-K/A, except as described below.
Our annual reporting period is the calendar year. The results of operations for the nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for the full year.
11


Faraday Future Intelligent Electric Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
Use of Estimates
The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions, which affect the reported amounts in the financial statements.
Estimates are based on historical experience, where applicable, and other assumptions which management believes are reasonable under the circumstances. On an ongoing basis management evaluates its estimates, including those related to the: (i) valuation of equity securities including warrants; (ii) recognition and disclosure of contingent liabilities, including litigation reserves; and (iii) fair value of related party notes payable and notes payable. Such estimates often require the selection of appropriate valuation methodologies and financial models and may involve significant judgment in evaluating ranges of assumptions and financial inputs. Actual results may differ from those estimates under different assumptions, financial inputs, or circumstances.
Given the global economic climate, estimates are subject to additional volatility. As of the date the Company’s Condensed Consolidated Financial Statements were issued, the Company is not aware of any specific event or circumstance that would require it to update its estimates or judgments or to revise the carrying value of its assets or liabilities. However, these estimates and judgments may change as new events occur and additional information is obtained. Actual results could differ from these estimates and any such differences may have a material impact on the Company’s Condensed Consolidated Financial Statements.
Revenue Recognition

Automotive sales revenue was $0.6 million for the three and nine months ended September 30, 2023. Services and other revenue was immaterial for the three and nine months ended September 30, 2023.

Automotive Sales Revenue

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

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

We recognize revenue on automotive sales upon delivery to the customer, which is when control of a vehicle transfers. Payments are typically received at the point control transfers or in accordance with payment terms customary to the business and as indicated in the sales contract. OTA software updates are provisioned upon transfer of control of a vehicle and recognized over time on a straight-line basis as we have a stand-ready obligation to deliver such services to the customer. For our obligations related to automotive sales, we estimate 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. Our vehicle contracts do not contain a significant financing component.

Revenue from immaterial promises will be combined with the vehicle performance obligation and recognized when the product has been transferred. We accrue costs to transfer these immaterial goods and services regardless of whether they have been transferred.

The Company provides its customers with a residual value guarantee which may or may not be exercised in the future. The impact of such residual value guarantees was immaterial to the Company’s Condensed Consolidated Financial Statements for the three and nine months ended September 30, 2023.

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 promotions in exchange for specified fees. We consider these arrangements consideration payable to a customer. The consideration paid to the customer relates to marketing and research and development services that are distinct and could be purchased by the Company from a separate third-party. We perform an analysis in which we maximize the use of observable market inputs to
12


Faraday Future Intelligent Electric Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
ascribe a fair value to these services and record the fair value of these services to sales and marketing expense or research and development 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.

Customer Deposits and Deferred Revenue
The Company’s customers may reserve a vehicle and preorder certain services by making a customer deposit, which is fully refundable at any time. Refundable deposits, for vehicle reservations and services, received from customers prior to an executed vehicle purchase agreement are recorded as customer deposits (Accrued expenses and other current liabilities).
Customer deposits were $3.3 million and $3.4 million as of September 30, 2023 and December 31, 2022, respectively. When vehicle purchase agreements are executed, the consideration for the vehicle and any accompanying products and services must be paid in advance prior to the transfer of products or services by the Company. Such advance payments are considered non-refundable, and the Company defers revenue related to any products or services that are not yet transferred.
Deferred revenue is equivalent to the total transaction price allocated to the performance obligations that are unsatisfied, or partially unsatisfied, as of the balance sheet date. Deferred revenue related to products and services was immaterial as of September 30, 2023, and December 31, 2022.

Warranties
We provide a manufacturer’s warranty on all vehicles sold. The warranty covers the rectification of reported defects via repair, replacement, or adjustment of faulty parts or components. The warranty does not cover any item where failure is due to normal wear and tear. This assurance-type warranty does not create a performance obligation separate from the vehicle. Management tracks warranty claims by vehicle ID, owner, and date. As we continue to manufacture and sell more vehicles we will reassess and evaluate our warranty claims for purposes of our warranty accrual.

(in thousands)Three Months Ended September 30, 2023Nine Months Ended September 30, 2023
Accrued warranty- beginning of period$ $ 
Provision for warranty262 262 
Warranty costs incurred(12)(12)
Accrued warranty- end of period$250 $250 
Cost of Revenue
Cost of automotive sales revenue includes direct and indirect materials, labor costs, manufacturing overhead, including depreciation costs of tooling and machinery, shipping and logistic costs, vehicle connectivity costs, and reserves for estimated warranty expenses. Cost of automotive sales revenues also includes adjustments to warranty expense.
Cost of services and other revenue includes costs associated with providing non-warranty after-sales services, costs for retail merchandise, and costs to provide vehicle insurance. Cost of services and other revenue also includes direct parts and material. Cost of services and other revenue was immaterial for the three and nine months ended September 30, 2023.
Inventory and Inventory Valuation
Inventory is stated at the lower of cost or net realizable value and consists of raw materials, work in progress, and finished goods. The Company primarily computes cost using standard cost, which approximates cost on the first-in, first-out basis. Net realizable value is the estimated selling price of inventory in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The Company assesses the valuation of inventory and periodically adjusts its value for estimated excess and obsolete inventory based upon expectations of future demand and market conditions, as well as damaged or otherwise impaired goods.
Property and Equipment, Net
Property and equipment are stated at cost less accumulated depreciation and amortization. Expenditures for major renewals and betterments are capitalized, while minor replacements, maintenance and repairs, which do not extend the assets
13


Faraday Future Intelligent Electric Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
lives, are charged to operating expense as incurred. Upon sale or disposition, the cost and related accumulated depreciation or amortization are removed from the Condensed Consolidated Balance Sheets and any gain or loss is included in the Condensed Consolidated Statements of Operations and Comprehensive Loss.
Depreciation and amortization on property and equipment is calculated using the straight-line method over the estimated useful lives of the assets and for leasehold improvements, over the term of the lease, if shorter.
Useful Life
(in years)
Buildings39
Building improvements15
Computer hardware5
Tooling, machinery, and equipment
5 to 10
Vehicles5
Computer software3
Leasehold improvements
Shorter of 15 years or
term of the lease
Construction in progress (“CIP”) consists of the construction activities related to the FF ieFactory California plant and tooling, machinery and equipment being built to serve the manufacturing of production vehicles. These assets are capitalized and depreciated once put into service.
The amounts capitalized in CIP that are held at vendor sites relate to the completed portion of work-in-progress of tooling, machinery and equipment built based on the Company’s specific needs. The Company may incur storage fees or interest fees related to CIP which are expensed as incurred. CIP is presented within Property and Equipment, net on the Condensed Consolidated Balance Sheets.
Impairment of Long-Lived Assets
The Company reviews its long-lived assets, consisting primarily of property and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset (or asset groups) may not be recoverable. The Company performs impairment testing at the asset group level that represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Recoverability of these assets is determined by comparing the forecasted undiscounted cash flows attributable to such assets, including any cash flows upon their eventual disposition, to the assets carrying values. If the carrying value of the assets exceeds the forecasted undiscounted cash flows, then the assets are written down to their fair value. Assets classified as held for sale are also assessed for impairment and such amounts are determined at the lower of the carrying amount or fair value, less costs to sell the asset. No impairment charges were recorded during the three and nine months ended September 30, 2023 and 2022.
Stock-Based Compensation
Effective January 1, 2023, stock-based compensation expense is reduced for forfeitures only when they occur. This change of accounting policy resulted in the recognition of a cumulative increase of prior stock-based compensation expenses totaling $1.8 million, which was recorded in the Condensed Consolidated Statement of Operations and Comprehensive Loss for the three months ended March 31, 2023.
Income Tax
The income tax provision (benefit) recognized in the Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2023 and 2022 was immaterial. The difference in the Company’s effective tax rate from the federal statutory rate of 21% is primarily due to full domestic and international valuation allowances. The Company records a full valuation allowance to reflect limited benefits for income taxes in jurisdictions that historically reported losses and a provision for income taxes in jurisdictions that are profitable. The income tax provision for each period was the combined calculated tax expenses/benefits for various jurisdictions.
14


Faraday Future Intelligent Electric Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
The Company is subject to taxation and files income tax returns with the U.S. federal government, the state of California and China. The Company’s income tax returns are open to examination by the relevant tax authorities until the expiration of the applicable statute of limitations, which is generally three years after the filing of the tax return. As of September 30, 2023, the Company is not under any tax audits on its income tax returns. All of the Company’s prior year tax returns, from 2016 through 2021, are open under Chinese tax law.
The Company did not accrue any interest or penalties related to the Company's unrecognized tax benefits as of September 30, 2023 and 2022, as the uncertain tax benefits only reduced the net operating losses. The Company does not expect the uncertain tax benefits to have a material impact on its Condensed Consolidated Financial Statements within the next twelve months.
Reclassifications
Certain reclassifications have been made to the prior period in the accompanying Condensed Consolidated Financial Statements to conform with the current presentation. Inventory and Finance lease right-of-use assets are now separately presented in the Condensed Consolidated Balance Sheets, as they were previously included in Other current assets and Property and equipment, net, respectively (see Note 4, Deposits and Other Current Assets and Note 5, Property and Equipment, Net). In addition, the Buildings and Leasehold improvements within Property and equipment, net (see Note 5, Property and Equipment, Net) have been combined, as they were previously presented separately. On the Condensed Consolidated Statement of Cash Flows, amortization of prepaid software costs is now presented in Changes in operating assets and liabilities instead of Depreciation and amortization expense, and Change in operating lease right-of-use assets is now separately presented instead of being combined with Depreciation and amortization expense.
Reverse Stock Split and Recasting of Per-Share Amounts
On August 22, 2023, the Company’s board of directors (the “Board”) approved the implementation of a 1-for-80 reverse stock split (the “Reverse Stock Split”) of the Company’s common stock, par value $0.0001 per share (“Common Stock”) and set the number of authorized shares of Common Stock to 154,437,500 (which is 12,355,000,000 divided by 80, the Reverse Stock Split ratio). The Reverse Stock Split was effected after market close on August 25, 2023, and shares of the Company’s Class A common stock par value $0.0001 per share (“Class A Common Stock”) and publicly traded warrants (the “Public Warrants”) began trading on a split-adjusted basis as of market open on August 28, 2023.
All shares of Common Stock, Public Warrants, stock-based compensation awards, earnout shares and per share amounts contained in the Condensed Consolidated Financial Statements and accompanying notes have been retroactively adjusted to reflect the Reverse Stock Split. In addition, proportionate adjustments were made to the number of shares of Class A Common Stock issuable upon exercise or conversion of the Company’s outstanding convertible debt securities and warrants, as well as the applicable exercise or conversion prices. See Note 10, Stockholders' Equity , and Note 11, Stock-Based Compensation, for further discussion regarding the Reverse Stock Split.
2.    Liquidity and Capital Resources
The Company has evaluated whether there are certain conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the Condensed Consolidated Financial Statements are issued. Based on its recurring losses from operations since inception and continued cash outflows from operating activities (all as described below), the Company has concluded that there is substantial doubt about its ability to continue as a going concern for a period of one year from the date that these Condensed Consolidated Financial Statements were issued.
Since its formation, the Company has devoted substantial effort and capital resources to strategic planning, engineering, design, and development of its electric vehicle platform, development of initial electric vehicle models, the build out of the FF ieFactory California, and capital raising. Since inception, the Company has incurred cumulative losses from operations and negative cash flows from operating activities, and has an accumulated deficit of $3.9 billion and a cash balance of $6.7 million as of September 30, 2023. The Company expects to continue to generate significant operating losses for the foreseeable future. The Company has funded its operations and capital needs primarily through the net proceeds received from capital contributions, the issuance of related party notes payable and notes payable (see Note 8, Related Party Transactions, and Note
15


Faraday Future Intelligent Electric Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
7, Notes Payable), the sale of Common Stock, and the net proceeds received from the Business Combination and the PIPE Financing (see Note 1, Nature of Business and Organization and Basis of Presentation).
FF announced the start of production of its first electric vehicle, the FF 91 Futurist, on March 29, 2023 and announced the delivery of its first electric vehicle, the Ultimate AI TechLuxury FF 91 2.0 Futurist Alliance, on August 14, 2023. However, FF has recognized an insignificant amount of revenue as of the date hereof. FF’s future business depends in large part on its ability to execute its plans to develop, manufacture, market, and deliver electric vehicles, including the FF 91, FF 81, FF 71 series, and Smart Last Mile Delivery electric vehicle models that appeal to customers. As a result of certain management assumptions, including timely completion of certain testing and suppliers meeting our supply chain requirement, FF originally expected deliveries of the FF 91 Futurist to users to begin before the end of April 2023. However, certain of FF’s suppliers were unable to meet FF’s timing requirements and, therefore, FF updated the timing for the start of deliveries for its FF 91 vehicle. FF has developed a three-phase delivery plan for the FF 91 (the “Delivery Plan”). The first phase is the “Industry Expert Futurist Product Officer (“FPO”) Co-Creation Delivery.” In this first phase, the Industry Expert FPO(s) are expected to pay in full for an FF 91 vehicle in order to reserve the vehicle and be trained in the use of the vehicle. The Company began delivery of the reserved FF 91 vehicles to the FPO during the second phase, which is the “FPO Co-Creation Delivery.” In the second phase, FPO(s) are taking possession of the FF 91 vehicle and are entering into consulting, branding, marketing, and other arrangements with FF in exchange for fees to be paid by the Company to the FPO(s). The third phase is the “Full Co-Creation Delivery,” in which, FF will deliver FF 91 vehicles to all spire users that are expected to have paid in full for an FF 91 vehicle at time of delivery.
FF needs substantial additional financing to start the third phase of the Delivery Plan and is in discussions with additional potential investors to obtain such financing. As FF executes the Delivery Plan, it plans to continue to move vehicles into production and off-the-line with high quality and high product power. There is no assurance FF will be able to timely receive sufficient funding under existing or new financing commitments to produce and deliver the FF 91 on that timeline or at all. If FF is unable to receive sufficient funding, FF will be required to obtain new financing commitments, which may not be available to it under reasonable commercial terms if at all. Further, there cannot be any assurance that FF will develop the manufacturing capabilities and processes, secure reliable sources of component supply to meet quality, engineering, design or production standards, or to meet the required production volumes to successfully grow into a viable, cash flow positive, business.
The Company has continued financing discussions with multiple parties, but has experienced delays in securing additional funding commitments, which have exacerbated the supply chain and liquidity pressures on FF’s business. Since August 14, 2022, pursuant to the Securities Purchase Agreement (the “Secured SPA”), Unsecured Securities Purchase Agreement (the “Unsecured SPA”), and the Streeterville Securities Purchase Agreement (the “Unsecured Streeterville SPA” and collectively the “SPA Commitments”), the Company has obtained commitments from several investors totaling $513.5 million in convertible note financing. A total of $300.2 million under these convertible note financing commitments has been funded ($263.2 million net of original discount and transaction costs) as of September 30, 2023. The remaining balance of $213.3 million is subject to various conditions, including achievement of delivery milestones, satisfaction of closing conditions, resolving disputes with investors, and satisfaction or waiver of certain conditions, including for a portion of such financing an effective registration statement for the shares underlying the applicable notes. In addition to the amounts received pursuant to the above commitments, the Company received additional optional funding - an aggregated gross proceeds of $38.0 million ($32.9 million net of original issuance discount) under the Secured SPA. Additionally, the Company has received commitments totaling $20.0 million through forced warrant exercise proceeds, subject to certain conditions.
There can be no assurance that FF will be able to satisfy the closing conditions under the Secured SPA, Unsecured SPA and Unsecured Streeterville SPA or that FF will be able further to successfully obtain additional incremental convertible senior secured note purchasers under the Secured SPA, Unsecured SPA, Unsecured Streeterville SPA or other debt or equity financing in a timely manner or on acceptable terms, if at all. These factors, in addition to the continued rise in inflation and other challenging macroeconomic conditions, have led FF to take steps to preserve its current cash position, including reducing spending, extending payment cycles and implementing other similar measures. If FF’s ongoing capital raising efforts are unsuccessful or significantly delayed, or if FF experiences prolonged material adverse trends in its business, FF’s production will be delayed or decreased, and actual use of cash, production volume and revenue for 2023 will vary from the Company’s previously disclosed forecasts, and such variances may be material. In addition to the risk that FF’s assumptions and analyses may prove incorrect, the projections may underestimate the professional fees and other costs to be incurred related to the pursuit of various financing options currently being considered and the ongoing legal risks. Incremental capital needs beyond 2023 to
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Faraday Future Intelligent Electric Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
fund operations and the development of the Company’s remaining product portfolio and to ramp up production will be highly dependent on the market success and profitability of the FF 91 series and the Company’s ability to accurately estimate and control costs. Apart from the FF 91 series, substantial additional capital will be required to fund operations, research, development, design, and manufacturing efforts for future vehicles.
On November 11, 2022, FF entered into a Standby Equity Purchase Agreement (the “SEPA”) with YA II PN, Ltd. (“Yorkville”), which is an affiliate of Yorkville Advisors. Under the terms of the SEPA, FF has the right, but not the obligation, to sell up to $200.0 million (which can be increased up to $350.0 million at FF’s option) of Class A Common Stock to Yorkville, subject to certain limitations, at the time of the Company’s choosing during the three-year term of the SEPA. During the three and nine months ended September 30, 2023, FF sold 837,500 shares of Class A Common Stock at a price equal to 97% of the average daily volume weighted average price of the Class A Common Stock to Yorkville under the SEPA for $7.3 million.
On June 16, 2023, the Company filed a shelf registration on Form S-3 with the SEC (the “Shelf Registration”), which was declared effective by the SEC on June 28, 2023. As a result, the Company may from time-to-time issue Class A Common Stock and/or warrants, up to an aggregate amount of $300.0 million in one or more offerings. The Shelf Registration allows the Company to raise additional capital through Class A Common Stock and/or warrant issuances to both institutional and retail investors as it looks to raise additional financing to support production ramp-up. On September 27, 2023, the Company filed a prospectus supplement to the Shelf Registration regarding an at-the-market equity offering sales agreement (the “Sales Agreement”) the Company entered into on September 26, 2023 with Stifel, Nicolaus & Company, Incorporated, B. Riley Securities, Inc., A.G.P./Alliance Global Partners, Wedbush Securities Inc. and Maxim Group LLC (the “Sales Agents”) to offer and sell up to $90.0 million of Class A Common Stock. In accordance with the terms of the Sales Agreement, the Company may offer and sell shares of the Class A Common Stock from time to time through or to the Sales Agents as sales agent or principal by any method that is deemed to be an “at the market offering” as defined in Rule 415 under the Securities Act of 1933, as amended. The aggregate compensation payable to the Sales Agents is up to 3.5% of the gross sales price of the shares sold through the Sales Agents. During the three and nine months ended September 30, 2023, the Company issued 780,000 shares of Class A Common Stock under the Sales Agreement for gross cash proceeds of $1.3 million less placement agent fees of $0.05 million.
Despite the potential access to liquidity resulting from the SEPA, the Shelf Registration (including pursuant to the Sales Agreement) and the unfunded commitments from the Secured SPA, the Unsecured SPA and the Unsecured Streeterville SPA, the Company projects that it will require additional funds in order to continue operations and support the ramp-up of production of the FF 91 Futurist to generate revenues to put the Company on a path to cash flow break-even. Incremental capital needs beyond 2023 to fund operations and the development of the Company’s remaining product portfolio and to ramp up production will be highly dependent on the market success and profitability of the FF 91 Futurist and the Company’s ability to accurately estimate and control costs.
The Company is exploring various funding and financing alternatives to fund its ongoing operations and to ramp up production, including equipment leasing, construction financing of the FF ieFactory California, secured syndicated debt financing, convertible notes, working capital loans, and equity offerings, among other options. The particular funding mechanisms, terms, timing, and amounts are dependent on the Company’s assessment of opportunities available in the marketplace and the circumstances of the business at the relevant time.
The timely achievement of the Company’s operating plan as well as its ability to maintain an adequate level of liquidity are subject to various risks associated with the Company’s ability to continue to successfully close additional sources of funding, control and effectively manage its costs, as well as factors outside of the Company’s control, including those related to global supply chain disruptions, the rising prices of materials, and general macroeconomic conditions.
There can be no assurance that the Company will be successful in achieving its strategic plans, that the Company’s future funding raises will be sufficient to support its ongoing operations, or that any additional financing will be available in a timely manner or on acceptable terms, if at all. If events or circumstances occur such that the Company does not meet its strategic plans, the Company will be required to reduce discretionary spending, alter or scale back vehicle development programs, be unable to develop new or enhanced production methods, or be unable to fund capital expenditures. Any such events would have a material adverse effect on the Company’s financial position, results of operations, cash flows, and ability to achieve its intended business objectives, and the Company will likely not be able to continue as a going concern.
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Faraday Future Intelligent Electric Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
The Condensed Consolidated Financial Statements do not include any adjustments that might result from the outcome of this uncertainty. Accordingly, the Condensed Consolidated Financial Statements have been prepared on a basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business.
As of and since December 31, 2022, the Company was and has been in default on the Secured SPA Notes. However, for the periods ended March 31, 2023, June 30, 2023 and September 30, 2023, the holders of such notes subsequently waived the default. Since April 2023, the Company has been in breach of its debt agreement with Chongqing Leshi Small Loan Co., Ltd., a related party, with an outstanding principal balance of $4.5 million. As a result of the default, the interest rate on the outstanding principal balance has increased to a rate of 18% per annum until the event of default is no longer applicable.
There can be no assurance that the Company will be able to maintain sufficient authorized shares to fully settle all outstanding equity-linked financial instruments in shares.
3.    Inventory
(in thousands)September 30, 2023December 31, 2022
Raw materials (net of reserves)$33,839 $4,457 
Work in progress1,063  
Finished goods313  
Total inventory$35,215 $4,457 
The increase in inventory is due to the start of production on March 29, 2023. The inventory reserve was $1.0 million and zero as of September 30, 2023 and December 31, 2022, respectively.
4.    Deposits and Other Current Assets
(in thousands)
Deposits:September 30, 2023December 31, 2022
Deposits for research and development, prototype and production parts, and other$59,783 $40,879 
Deposits for goods and services yet to be received (“Future Work”)
2,773 3,187 
Total deposits$62,556 $44,066 
Other current assets:
Prepaid expenses$11,260 $