FARADAY FUTURE INTELLIGENT ELECTRIC INC.

Faraday Future Intelligent Electric Inc.

PSAC

US3073597037

Auto & Truck Manufacturers

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FARADAY FUTURE INTELLIGENT ELECTRIC INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-K)

March 09, 2023 at 05:15 pm EST

The following discussion and analysis is intended to help the reader understand
FF's results of operations and financial condition. This discussion and analysis
is provided as a supplement to, and should be read in conjunction with FF's
Consolidated Financial Statements and Notes thereto included elsewhere in this
Annual Report on Form 10-K (this "Report"). Some of the information contained in
this discussion and analysis or set forth elsewhere in this Report, including
information with respect to FF's plans and strategy for FF's business, includes
forward-looking statements that involve risks and uncertainties. FF's actual
results may differ materially from management's expectations as a result of
various factors, including but not limited to those discussed in the section
entitled "Risk Factors" above and "Cautionary Note Regarding Forward Looking
Statements" below. The objective of this section is to provide investors an
understanding of the financial drivers and levers in FF's business and describe
the financial performance of the business.

Unless context otherwise requires, all references in this section to the
"Company," "FF," "we," "us," "our" and similar terms refer to Faraday Future
Intelligent Electric Inc., a Delaware corporation, and its consolidated
subsidiaries. References to "PSAC" refer to Property Solutions Acquisition
Corp., a Delaware corporation, our predecessor company prior to the consummation
of the Business Combination (as defined herein), and "Legacy FF" refers to FF
Intelligent Mobility Global Holdings Ltd., an exempted company with limited
liability incorporated under the laws of the Cayman Islands, together with its
consolidated subsidiaries, prior to the Business Combination.

Cautionary Note Regarding Forward-Looking Statements



This Report includes forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended (the "Securities Act"), and
Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). These forward-looking statements can be identified by the use of
forward-looking terminology, including the words "believes," "estimates,"
"anticipates," "expects," "intends," "plans," "may," "will," "potential,"
"projects," "predicts," "continue," or "should," or, in each case, their
negative or other variations or comparable terminology. There can be no
assurance that actual results will not materially differ from expectations. Such
statements include, but are not limited to, any statements relating to our
financial and business performance, market acceptance and success of our
business model, our ability to expand the scope of our offerings, and our
ability to comply with the extensive, complex, and evolving regulatory
requirements. These statements are based on management's current expectations,
but actual results may differ materially due to various factors.

The forward-looking statements contained in this Report are based on our current
expectations and beliefs concerning future developments and their potential
effects on us. Future developments affecting us may not be those that we have
anticipated. These forward-looking statements involve a number of risks,
uncertainties (some of which are beyond our control), and other assumptions that
may cause actual results or performance to be materially different from those
expressed or implied by these forward-looking statements. These risks and
uncertainties include, but are not limited to, those factors described under the
section titled "Risk Factors" in Item 1A above. Should one or more of these
risks or uncertainties materialize, or should any of our assumptions prove
incorrect, actual results may vary in material respects from those projected in
these forward-looking statements. We undertake no obligation (and expressly
disclaim any obligation) to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise, except as
may be required under applicable securities laws. These risks and others
described under the section titled "Risk Factors" in Item 1A above may not be
exhaustive.

By their nature, forward-looking statements involve risks and uncertainties
because they relate to events and depend on circumstances that may or may not
occur in the future. We caution you that forward-looking statements are not
guarantees of future performance and that our actual results of operations,
financial condition and liquidity, and developments in the industry in which we
operate may differ materially from those made in or suggested by the
forward-looking statements contained in this Report. In addition, even if our
results or operations, financial condition and liquidity, and developments in
the industry in which we operate are consistent with the forward-looking
statements contained in this Report, those results or developments may not be
indicative of results or developments in subsequent periods.

Overview

Faraday Future Intelligent Electric, Inc. (together with its consolidated
subsidiaries, "FF," "the Company," "we," "us" or "our") is a California-based,
global, shared, intelligent, mobility ecosystem company founded in 2014 with a
vision to disrupt the automotive industry.

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On July 21, 2021, Faraday Future Intelligent Electric Inc. (f/k/a Property
Solutions Acquisition Corp. ("PSAC")), a Delaware corporation, consummated the
previously announced business combination pursuant to that certain Agreement and
Plan of Merger, dated as of January 27, 2021 (as amended, the "Merger
Agreement"), by and among PSAC, PSAC Merger Sub Ltd., an exempted company with
limited liability incorporated under the laws of the Cayman Islands and
wholly-owned subsidiary of PSAC ("Merger Sub"), and Legacy FF. Pursuant to the
terms of the Merger Agreement, Merger Sub merged with and into Legacy FF, with
Legacy FF surviving the merger as a wholly-owned subsidiary of the Company (the
"Business Combination").

Upon the consummation of the Business Combination, PSAC changed its name from
Property Solutions Acquisition Corp. to Faraday Future Intelligent Electric
Inc., and FF's Class A Common Stock and Public Warrants began trading on The
Nasdaq Global Select Market ("Nasdaq") under the ticker symbols "FFIE" and
"FFIEW," respectively.

With headquarters in Los Angeles, California, FF designs and engineers
next-generation, intelligent, connected, electric vehicles. FF intends to
manufacture vehicles at its ieFactory California production facility in Hanford,
California, with additional future production capacity needs addressed through a
contract manufacturing agreement with Myoung Shin Co., Ltd. ("Myoung Shin"), an
automotive manufacturer headquartered in South Korea. FF has additional
engineering, sales, and operational capabilities in China and is exploring
opportunities for potential manufacturing capabilities in China through a joint
venture or other arrangement.

Since its founding, FF has created major innovations in technology, products,
and a user-centered business model. FF believes these innovations will enable FF
to set new standards in luxury and performance that will redefine the future of
intelligent mobility.

FF's innovations in technology include its proprietary Variable Platform
Architecture ("VPA"), propulsion system, and Internet Artificial Intelligence
("I.A.I.") system. We believe the following combination of capabilities of FF's
products, technology, the recent upgrade to PT Gen 2.0, team, and business model
distinguish FF from its competitors:

? FF has designed and developed a breakthrough mobility platform - its proprietary

VPA.

? FF's propulsion system provides a competitive edge in acceleration and range, enabled

by an expected industry-leading inverter design, and propulsion system.

? FF's advanced I.A.I. technology offers high-performance computing, high speed internet

connectivity, Over the Air ("OTA") updating, an open ecosystem for third-party

application integration, and a Level 3 autonomous driving-ready system, in addition to

several other proprietary innovations that enable FF to build an advanced,

highly-personalized user experience.

? Since inception, FF has developed a portfolio of intellectual property, established

its proposed supply chain, and assembled a global team of automotive and technology

experts and innovators to achieve its goal of redefining the future of the automotive

industry. As of February 27, 2023, FF has been granted approximately 660 patents

globally.

? FF's B2C (business-to-customer) passenger vehicle pipeline over the next five years

includes the FF 91 series, the FF 81 series, and the FF 71 series.

? FF believes that the FF 91 will be the first ultra-luxury EV to offer a

highly-personalized, fully-connected user experience for driver and passengers. Based on

certain management assumptions, including the timely receipt of $38.4 million to $58.4

million of additional funding, which commitments have been secured as part of the Sixth

Amendment, and approval by stockholders of the proposal to increase FFIE's authorized

shares of Class A Common Stock from 815,000,000 to 1,690,000,000, increasing the total

authorized shares from 900,000,000 to 1,775,000,000, which approval was obtained during

the special meeting of stockholders held on February 28, 2023, timely completion of key

equipment installation and commissioning work at the ieFactory California in Hanford,

California, suppliers meeting our supply chain requirements, the implementation and

effectiveness of certain expense reduction and payment delay measures, and timely and

successful testing and certification, FF expects start of production of the FF 91

Futurist at the end of March 2023, coming off the line in early April, and deliveries to

users anticipated to begin before the end of April 2023.


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? Subject to future financing, FF plans to produce and deliver its second passenger

vehicle, the FF 81, which will be a premium, mass-market electric vehicle

positioned to compete against the Tesla Model S, Tesla Model X, the BMW 5-series,

and the Nio ES8.

? Subject to future financing, FF plans to develop a mass-market passenger vehicle,

the FF 71. FF expects to start production and deliveries of the FF 71 subsequent to

production and deliveries of the FF 81. The FF 71 will integrate full connectivity

and advanced technology into a smaller vehicle size and is positioned to compete

against the Tesla Model 3, Tesla Model Y, and the BMW 3-series.

? Subject to future financing, FF plans to develop a Smart Last Mile Delivery

("SLMD") vehicle to address the high-growth, last-mile delivery opportunity,

particularly in Europe, China and the U.S. FF's modular VPA facilitates entry into

the last-mile delivery segment, allowing FF to expand its total addressable market

and avenues of growth.




FF has adopted a hybrid manufacturing strategy consisting of its refurbished
manufacturing facility in Hanford, California and a collaboration with Myoung
Shin in South Korea. FF is also exploring other potential contract manufacturing
options in addition to the contract manufacturing agreement in South Korea along
with the possibility of manufacturing capacity in China through a joint venture
or other arrangements. All passenger vehicles as well as the SLMD vehicle are
expected to be available for sale in the U.S. and China, with potential
expansion to European markets.

Emerging Growth Company Status



Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being
required to comply with new or revised financial accounting standards until
private companies are required to comply with the new or revised financial
accounting standards. The JOBS Act provides that a company can choose not to
take advantage of the extended transition period and comply with the
requirements that apply to non-emerging growth companies. Any such election to
not take advantage of the extended transition period is irrevocable.

FF is an "emerging growth company" as defined in Section 2(a) of the Securities
Act of 1933, as amended, and has elected to take advantage of the benefits of
the extended transition period for new or revised financial accounting
standards. FF expects to continue to take advantage of the benefits of the
extended transition period, although it may decide to early adopt such new or
revised accounting standards to the extent permitted by such standards. This may
make it difficult or impossible to compare our financial results with the
financial results of another public company that is either not an emerging
growth company or is an emerging growth company that has chosen not to take
advantage of the extended transition period exemptions because of the potential
differences in accounting standards used.

Segment Information

FF has determined that FF operates as one reportable segment, which is the design, development, manufacture, engineering, sale, and distribution of electric vehicles and related products in the global market.

Impact of COVID-19 on FF's Business



The residual effects of the COVID-19 pandemic continue to impact global and
domestic economic conditions, which have affected our operations, our suppliers
and other business partners. The impact of COVID-19 includes changes in consumer
and business behavior, pandemic fears, market downturns, restrictions on
business, and individual activities have created significant volatility in the
global economy and have led to reduced economic activity. Consequently, we have
experienced increased levels of overall cost inflation and challenges within our
supply chain. Such residual impact also continue to create a disruption in the
manufacture, delivery, and overall supply chain of vehicle manufacturers and
suppliers and has led to a global decrease in vehicle sales in markets around
the world.

The pandemic has resulted in government authorities implementing numerous
measures to try to contain the virus, such as travel bans, restrictions,
quarantines, stay-at-home or shelter-in-place orders, and business shutdowns.
For example, FF's employees based in California have been subject to
stay-at-home orders from state and local governments. The extent of the
continuing impact of the COVID-19 pandemic on FF's operational and financial
performance is uncertain and will depend on many factors outside FF's control,
including, without limitation, the timing, extent, trajectory and duration of
the pandemic; the availability, distribution and effectiveness of vaccines; the
imposition of protective public safety measures; and the impact of
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the pandemic on the global economy, including FF's supply chain, and on the demand for consumer products. Future measures taken by government authorities in response the COVID-19 pandemic could adversely affect FF's construction and manufacturing plans, sales and marketing activities, and business operations.



In response to the pandemic, Congress passed the Coronavirus Aid, Relief, and
Economic Security Act (the "CARES Act") administered by the United States Small
Business Administration ("SBA"). In 2020, Legacy FF received a Paycheck
Protection Program ("PPP") loan in the amount of $9.2 million. The Company was
notified by East West Bank that a principal amount of $9.0 million as well as
accrued interest of $0.2 million relating to the PPP loan had been forgiven as
of December 31, 2021. The Company paid an amount of $0.2 million in April 2022
to settle the PPP loan.

The extent of the residual impact of the COVID-19 pandemic on FF's operational
and financial performance is uncertain and will depend on many factors outside
FF's control, including, emergence of new variants and mitigation measures
imposed to control outbreaks as a result of such new variants; the availability,
distribution and effectiveness of vaccines; and the impact of the outbreak of
new variants and any mitigation measures imposed as a result of such variants on
the global economy, including FF's supply chain, FF's construction and
manufacturing plans, sales and marketing activities, and business operations and
on the demand for consumer products. Such residual impact may further slowdown
FF's ability to ramp-up FF's production program on time to satisfy investors and
potential customers. Any further delay to production will delay FF's ability to
produce and deliver the FF 91 and begin generating revenue. FF does not
currently anticipate any material impairments as a result of COVID-19; however,
FF will continue to evaluate conditions on an ongoing basis. Even after the
COVID-19 pandemic has subsided, FF may continue to experience an adverse impact
to its business as a result of the global economic impact and any lasting
effects on the global economy, including any recession that has occurred or may
occur in the future. Refer to the section titled "Risk Factors" in Item 1A of
this Annual Report on Form 10-K for a full discussion of the risks associated
with the COVID-19 pandemic.

Business Combination

On June 24, 2021, the registration statement on Form S-4 (File No. 333-255027),
initially filed with the U.S. Securities and Exchange Commission ("SEC") on
April 5, 2021 (as amended, the "Registration Statement"), relating to the
Business Combination was declared effective by the SEC, and (ii) PSAC
established a record date of June 24, 2021 and a meeting date of July 21, 2021
for its special meeting of stockholders, where the Business Combination was
approved. For purposes of the discussions in this section related to conversion
on the closing of the Business Combination of all issued and outstanding Legacy
FF Ordinary Stock into shares of Common Stock of FFIE in accordance with the
terms and conditions of the Merger Agreement and the settlement of liabilities
in conjunction with the closing of the Business Combination, we refer to that
parties' right to receive Class A and Class B Common Stock.

Recent Developments

The following major milestones and events took place during the year ended December 31, 2022:

? Announced that Mathias Hofmann, Head of Global Supply Chain, would assume the

additional position of Head of Manufacturing Operations, on an interim basis.

? Announced its sponsorship and attendance at the 2022 Pebble Beach Concours

d'Elegance taking place from August 18-21, 2022. FF's flagship FF 91 EV was

available for demo rides and made a special appearance on the Concept Lawn on

August 21, 2022.

? Announced the FF 91 Futurist, the Ultimate Intelligent TechLuxury EV, was officially


        certified to have a robust rating of 381 miles of EV range from the U.S.
        Environmental Protection Agency ("EPA").

? Announced that PricewaterhouseCoopers LLP ("PwC") notified Faraday Future Intelligent

Electric Inc. (the "Company") that it would not stand for re-election as the Company's

independent registered public accounting firm for the year ending December 31, 2022 and,

effective August 23, 2022, was no longer the Company's independent registered public

accounting firm.

? Announced that a thorough independent external investigation found that allegations

that certain directors were conspiring to pursue an unnecessary bankruptcy of the

Company were without merit.


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? Announced an agreement relating to its governance dispute with FF Top. See

"Management's Discussion and Analysis of Financial Condition and Results of

Operations - Recent Developments -Recent Governance Developments" for more

information.

? Announced the resignation of Becky Roof, the Company's former Interim Chief

Financial Officer, effective October 12, 2022. Ms. Roof's departure from the

Company followed the successful completion of key milestones in the Company's SEC

reporting and fundraising activities, and was not a result of any disagreement with

the Company's former independent auditors or any member of Company management on

any matter of accounting principles or practices, financial statement disclosure,

or internal controls.

? Appointed Yun Han as Chief Accounting Officer and Interim Chief Financial Officer,

effective October 25, 2022. Ms. Yun Han was most recently Senior Vice President and

Chief Accounting Officer of Romeo Power, Inc., and spent over 13 years with PwC.

Ms. Yun Han is a Certified Public Accountant licensed in the State of California.

? Appointed Mazars USA LLP as the Company's independent registered public accounting

firm as of and for the year ending December 31, 2022, effective as of October 28,

2022.

? Announced the achievement of Production Milestone #6, completion of construction and

equipment installation in final vehicle manufacturing areas at FF's Hanford,

California manufacturing facility ("ieFactory California").

? Announced the California Air Resources Board (CARB) has certified the FF 91 Futurist

as a zero-emissions vehicle (ZEV). The ZEV program is part of CARB's Advanced Clean

Cars package of coordinated standards that control smog-causing pollutants and

greenhouse gas emissions of passenger vehicles in California.

? Announced senior management changes as it continues to bolster its leadership team

and ready the FF 91 Futurist for full-scale production: Matthias Aydt named Global

Senior Vice President, Product Execution. Xiaoyang Ning to assume acting head of

Business Development. Xiao Ma becomes acting head of Product and Mobility

Ecosystem.

? Hosted a Global Investor Business Update meeting on December 15, 2022 announcing

plans to start production of FF 91 Futurist in March 2023 (subject to various

management assumptions disclosed elsewhere in), financing progress and completion

of product upgrades.

? Announced that the FFIE Board of Directors has appointed FF China CEO Xuefeng ("XF")

Chen as Global CEO of Faraday Future. Mr. Chen replaced Carsten Breitfeld, who was

removed as Global CEO by the FFIE Board of Directors following a comprehensive

evaluation of the Company's performance since it went public in July 2021.

? Announced the selection of Innovusion's Falcon LiDAR to power the FF 91's

autonomous driving system.

Subsequent to December 31, 2022, these additional milestones and events took place:

? Announced 356 non-binding, fully refundable pre-orders as of February 27,

2023. Pre-orders are fully refundable, non-binding, paid deposits for the

FF 91 Futurist vehicles available initially for sale to customers in the

U.S. and China. FF 91 Futurist pre-orders require a $5,000 or $1,500

deposit, depending on the edition selected, for customers in the U.S. and


       up to CNY 50,000 or CNY 20,000 deposit, depending on the edition
       selected, for customers in China.

? Announced Faraday Future's return to the Consumer Electronics Show, CES 2023, in

Las Vegas, NV.

? Announced that the Company and the China Huanggang Government ("City of Huanggang")

have also reached the non-binding Cooperation Framework Agreement for promoting its

U.S.-China dual-home market strategy.

? Announced the shipment of one of the latest production-intent FF 91 Futurist testing

vehicles to China for market testing and validation, including charging and

infrastructure compatibility along with other hardware and software applications.


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? Announced that FF is targeting a start of production date for its flagship FF 91

Futurist of March 30, 2023, assuming timely receipt of funds from the Company's

investors, at the Company's Hanford California manufacturing facility, "FF ieFactory

California."

Recent Governance Developments

? As previously disclosed, from June to September 2022, FF and FF Global were party to a

dispute over various terms of the Shareholder Agreement as then in effect, including

relating to FF Global's right to remove its designees from the Board of Directors. On

September 23, 2022, the Company, FF Global and FF Top entered into a governance

settlement with FF Top, the largest holder of the Company's Common Stock, including

with respect to the composition of the Board, resignation of Ms. Susan Swenson and Mr.

Brian Krolicki, and the appointment of Adam (Xin) He to the Board. In connection with

the Heads of Agreement, on September 23, 2022, the Company and FF Global entered into a

mutual release agreement (the "Mutual Release"), pursuant to which, the Company and FF

agreed to a mutual general release of claims and to settle fully and finally all

differences between them, including any differences that arose out of the Company

directors' service as a director, employee, officer or manager of the Company up

through and including the date of the Mutual Release subject to customary exceptions.

See "Management - Governance Agreement with FF Top and FF Global" for more information.

Pursuant to the Heads of Agreement, FF Top and FF Global caused all actions in the

Court of Chancery of the State of Delaware, and any other forum, filed by FF Top, FF

Global and/or any of their respective controlled affiliates as of the effective date of

the Heads of Agreement, naming the Company or any of its directors or officers to be

dismissed without prejudice as of September 27, 2022.

Shortly following the execution of the Heads of Agreement, FF Global began making

additional demands of the Company which were beyond the scope of the terms contemplated

by the Heads of Agreement and pertained to, among other things, the Company's

management reporting lines and certain governance matters. On September 30, 2022, FF

Global alleged that the Company was in material breach of the spirit of the Heads of

Agreement. The Company believes it has complied with the applicable terms of the Heads

of Agreement, and disputes any characterization to the contrary. Such disputes divert

management and Board resources and are costly. There can be no assurance that this or

any other dispute between the Company and FF Global will not result in litigation. See

"Risk Factors - Risks Related to FF's Business and Industry - Disputes with our

stockholders are costly and distracting."

On October 3, 2022, Ms. Swenson and Mr. Scott Vogel, a member of the Board, tendered

their resignation from the Board effective immediately. On October 3, 2022, Mr. Jordan

Vogel also tendered his resignation from the Board effective on October 5, 2022 upon

his receipt of a supplemental release pursuant to the Mutual Release.

? On October 14, 2022, FF Top delivered to the Company a "Notice of Nomination of

Replacement FF Top Designees" stating, among other things, that FF Top was nominating

Ms. Li Han to fill the vacancy on the Board left by Ms. Swenson's resignation. FF Top

asserted the right to nominate Ms. Li Han to fill the vacancy created by Ms.

Swenson's resignation because such resignation was not effected in accordance with

the Heads of Agreement, and thus, the provision that Ms. Swenson's seat would remain

empty until the Annual Meeting did not apply. FF Top maintained that it believed that

Ms. Swenson's vacancy should be filled with a nominee of FF Top, notwithstanding the

current level of FF Top's beneficial ownership of the Company shares, in light of

substantial dilution in its ownership of the Company shares based on recent financing

transactions entered into by the Company. See "Management - Governance Agreement with


        FF Top and FF Global" for more information.



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? On October 22, 2022, FFIE and FF Top entered into the FF Top Amendment to the FF Top

Voting Agreement. Pursuant to the FF Top Amendment, FF Top (among other things)

reaffirmed its commitment under the FF Top Voting Agreement, in light of the

extension of the maturity date of the Bridge Notes under the Third Amendment, to vote

all of its shares of the Company voting stock in favor of the proposal to approve

(for purposes of the Nasdaq listing rules) the issuance, in the aggregate, of shares

in excess of 19.99% of the total issued and outstanding shares of the Company Common

Stock pursuant to the Financing Documents at the special meeting of the Company's

stockholders held on November 3, 2022. FF Top's obligations pursuant to the FF Top

Amendment are conditioned on (i) the appointment of Mr. Chad Chen (or a substitute

nominee, as applicable), in lieu of Ms. Li Han, to the Board of Directors of the

Company as the fourth FF Top designee no later than October 27, 2022 (provided that

Mr. Chen or a substitute nominee, as applicable, is reasonably acceptable to the

Nominating and Corporate Governance Committee of the Board with respect to the Nasdaq

independence rules and legal compliance and criminal compliance) (provided that if

Mr. Chen is not so reasonably acceptable to the Nominating and Corporate Governance

Committee of the Board, then FF Top will be permitted to nominate another individual

to the Board); and (ii) constructive engagement by Mr. Adam (Xin) He, the Chairman of

the Board, directly with representatives of FF Top on certain additional governance

and management matters and, to the extent the Chairman of the Board so determines, in

his discretion, such matters will be put to a discussion and a vote of the full

Board. On October 27, 2022, Mr. Chad Chen was appointed to the Board. On October 28,

2022, Mr. Brian Krolicki tendered his resignation from the Board effective

immediately. See "Certain Relationships and Related Person Transactions - Certain

Relationships and Related Person Transactions - the Company - Voting Agreements by FF

Top Holding LLC and Season Smart Limited" for more information.

? On November 26, 2022, the Board appointed Mr. Xuefeng Chen as Global CEO, effective

as of November 27, 2022. Mr. Xuefeng Chen replaced Dr. Carsten Breitfeld, who was


        removed from the Global CEO position by the Board on November 26, 2022.

? On November 29, 2022, Mr. Robert Kruse, FF's former Senior Vice President, Product

Execution, resigned from the Company. On December 13, 2022, Mr. Matthias Aydt took

on the role of Senior Vice President, Product Execution, effective immediately.

? On December 15, 2022, Mr. Lee Liu tendered his resignation from the Board, which

resignation was effective on December 18, 2022. On December 18, 2022, Mr. Jie Sheng

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

Liu. On December 25, 2022, Mr. Edwin Goh tendered his resignation from the Board,

which resignation was effective on December 26, 2022. On December 27, 2022, Ms. Ke

Sun was appointed to the Board, effective immediately, following the resignation of

Mr. Goh. Mr. Sheng and Ms. Sun are designees of FF Top pursuant to the Amended

Shareholder Agreement. On December 26, 2022, Dr. Carsten Breitfeld tendered his

resignation from the Board, which resignation was effective immediately. On December

27, 2022, Mr. Xuefeng Chen was appointed to the Board, effective immediately,

following the resignation of Dr. Breitfeld. On January 20, 2023, Mr. Qing Ye tendered

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

remains a consultant of the Company as an independent contractor until November 18,

2023, at which time both parties will mutually reassess the relationship. On January

25, 2023, Mr. Chui Tin Mok was appointed to the Board, effective immediately,

following the resignation of Mr. Ye.

? On February 26, 2023, after an assessment by the Board of FF's management structure,

the Board approved Mr. Yueting Jia (alongside Mr. Xuefeng Chen) reporting directly to

the Board, as well as FF's product, mobility ecosystem, I.A.I., and advanced R&D

technology departments reporting directly to Mr. Jia. The Board also approved FF's user

ecosystem, capital markets, human resources and administration, corporate strategy and

China departments reporting to both Mr. Jia and Mr. Xuefeng Chen, subject to processes

and controls to be determined by the Board after consultation with the Company's

management. The Company's remaining departments continue to report to Mr. Xuefeng Chen.

Based on the changes to his responsibilities within the Company, the Board determined

that Mr. Jia is an "officer" of the Company within the meaning of Section 16 of the

Exchange Act and an "executive officer" of the Company under Rule 3b-7 under the


        Exchange Act.



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? On January 13, 2023, the Company entered into an Amended and Restated Shareholder

Agreement (the "Amended Shareholder Agreement") with FF Top and, solely for purposes

of certain amendments to the Heads of Agreement, FF Global, which amended and

restated the Shareholder Agreement, as amended by the Heads of Agreement. Pursuant to

the Amended Shareholder Agreement, (a) FF Top has the right to nominate certain

designees to the Board, (b) the Company agreed not to elect to be treated as a

"controlled company" as defined under Nasdaq rules, (c) the Company agreed to

cooperate with any written requests by FF Top relating to any pledge, hypothecation

or grant of shares of Common Stock, (d) FF Top informed the Company that FF Top

expects certain proposals to be submitted to Company stockholders for approval to

amend provisions of the Company's Amended and Restated Charter related to voting

power of Class B Common Stock, FF Top designees to the Board and written consent of

stockholders, (e) the Company agreed not to enter into any transaction or series of

related transactions that would require a shareholder vote under Nasdaq Listing Rule

5635(d) (without giving effect to Section 5635(f) thereof) without FF Top's prior

written consent, which written consent shall not be unreasonably withheld,

conditioned or delayed, (f) the Company agreed that investors under the SPA shall

have the right to enter into any voting agreement or grant a voting proxy, at any

time and on any terms, with or to FF Top with respect to any shares of Common Stock

held by such investors, (g) FF Top agreed (i) to vote all shares of Common Stock that

it beneficially owns in favor of an increase in the Company's authorized shares of

Class A Common Stock from 815.0 million to 1.69 billion (as such number may be

adjusted due to any stock split, reverse stock split or other similar corporate

action after January 13, 2023) at the next meeting of the Company's shareholders held

to consider such proposal (as such meeting may be adjourned or postponed) and (ii)

not to transfer, convert or otherwise take any action that would result in the

conversion of any shares of Class B Common Stock into Class A Common Stock of the

Company prior to the Company's receipt of shareholder approval for an increase in the

number of authorized shares of Class A Common Stock in accordance with the foregoing,

(h) (i) FF Top released and waived claims it or any other "FF Top Parties" (i.e., FF

Top, FF Peak Holding LLC, a Delaware limited liability company, Pacific Technology

Holding LLC, a Delaware limited liability company, FF Global and each of their

affiliates, and their respective successors and assigns) may have had against the

Company and the Company Parties (described below; such claims, the "FF Top Claims")

relating to matters occurring at any time after September 23, 2022 but prior to the

execution of the Amended Shareholder Agreement (the "FF Top Release"), and (ii) the

Company released and waived any and all claims it or any other "Company Parties"

(i.e., the Company and each of the Company's controlled affiliates, each individual

currently serving as a director or on the management team of the Company or any of

its controlled affiliates, and the respective successors and assigns of any of the

foregoing) may have against FF Top Parties relating to any matters occurring at any

time after September 23, 2022 but prior to the execution of the Amended Shareholder

Agreement, and (i) the Company, FF Top and FF Global agreed that certain conditions

in the Heads of Agreement have been satisfied, that there are no Definitive Documents

(as such term is defined in the Heads of Agreement) beyond the Heads of Agreement and

the Amended Shareholder Agreement, and to certain other amendments of the Heads of

Agreement. See "Management - Governance Agreement with FF Top and FF Global" for more


        information.

Recent Financing Developments

? On August 14, 2022, FFIE entered into a definitive Securities Purchase Agreement

with FF Simplicity and RAAJJ Trading LLC for $52.0 million of committed near-term

convertible senior secured notes financing and the potential for an additional

$248.0 million of incremental senior secured convertible notes financing to be

funded within 90 days after the initial closing.

? On September 23, 2022, FFIE entered into Amendment No. 1 to the SPA and Convertible

Senior Secured Promissory Notes, to amend, among other things (a) the SPA, (b) that

certain Convertible Senior Secured Promissory Note in favor of FF Simplicity in the

principal amount of $25.0 million, dated as of August 15, 2022, and (c) that

certain Convertible Senior Secured Promissory Note in favor of FF Simplicity in the

principal amount of $10.0 million, dated as of September 14, 2022.

? On September 25, 2022, FFIE entered into a Joinder and Amendment Agreement with

Senyun, FF Simplicity and RAAJJ Trading LLC, for the purchase of up to $60.0

million under the SPA, subject to the completion of due diligence by the Company of

Senyun and its financing sources.


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? On October 24, 2022, FFIE entered into a Limited Consent and Third Amendment to the

SPA (the "Third Amendment") with FF Simplicity as administrative and collateral agent

and purchaser, Senyun as purchaser, and RAAJJ Trading LLC as purchaser.

? On November 8, 2022, FFIE entered into a Limited Consent and Amendment to the SPA

(the "Fourth Amendment") with FF Simplicity as administrative and collateral agent

and purchaser, Senyun as purchaser, and RAAJJ Trading LLC as purchaser.

? On December 28, 2022, FFIE entered into a Letter Agreement and Amendment to the SPA

(the "Senyun Amendment") with FF Simplicity as administrative and collateral agent

and Senyun as purchaser.

? On January 25, 2023, FFIE entered into a Limited Consent and Amendment No. 5 to the

SPA (the "Fifth Amendment") with FF Simplicity as administrative and collateral agent

and Senyun as purchaser.

? On February 3, 2023, FFIE entered into an Amendment No. 6 to Securities Purchase

Agreement (The "Sixth Amendment") with FF Simplicity as administrative and collateral

agent and Senyun, FF Top, FF Simplicity, FF Prosperity, Acuitas and other purchasers.

? Beginning on August 16, 2022, FF Aventuras SPV XI, LLC, FF Adventures SPV XVIII

LLC, FF Ventures SPV IX LLC and FF Venturas SPV X LLC, entities affiliated with ATW

Partners LLC (the "ATW Investors"), converted portions of the aggregate principal

amount of the outstanding convertible notes issued by the Company in a private

placement pursuant to a Second Amended and Restated Note Purchase Agreement, dated

as of October 9, 2020 (as amended from time to time, the "NPA," and such

convertible notes issued under the NPA, the "ATW NPA Notes"), into shares of Class


        A Common Stock, as follows below:


                                                Total Principal
                                                   Amount of
                                                 ATW NPA Notes                                                                Total Number of Shares
                                                   Converted                              Conversion                             of Class A Common
         Conversion Period                       (in thousands)                              Price                                 Stock Issued
  August 16, 2022 to September 14,
                2022                                $67,218                                  $0.84 to $2.29                                    64,843,850

? On September 26, 2022, the ATW Investors exercised 2,687,083 ATW NPA Warrants, each

with an exercise price of $0.64 per share, into an equivalent number of shares of

Class A Common Stock, resulting in net cash exercise proceeds to FFIE of $1.7

million.

? On September 27, 2022, the ATW Investors exercised 29,158,364 ATW NPA Warrants,

each with an exercise price of $0.50 per share, on a cashless basis into 14,339,110

shares of Class A Common Stock.

? On September 27, 2022, the Board approved the issuance of 3,169,822 stock option

awards, each exercisable into one share of Class A Common Stock, as part of the

Company's 2021 Stock Incentive Plan. Vesting terms include annual vesting in 25%

increments from the vesting start date, 100% vesting as of the vesting start date,

and vesting upon the start of FF 91 production.

? On October 10, 2022, FFIE entered into an exchange agreement with the ATW

Investors, pursuant to which, on October 10, 2022, the ATW Investors exchanged $4.0

million in aggregate principal amount of the outstanding ATW NPA Notes for

6,269,031 newly issued shares of Class A Common Stock, reflecting a price per share

of Class A Common Stock of $0.64.

? On October 19, 2022, FFIE and the ATW Investors entered into an exchange agreement,

pursuant to which, on October 19, 2022, the ATW Investors exchanged $2.7 million in

aggregate principal amount of the outstanding ATW NPA Notes for 5,227,837 newly issued

shares of the Class A Common Stock, reflecting a price per share of Class A Common

Stock of $0.51. Following the completion of such exchange, there were no outstanding


        ATW NPA Notes.


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? Between November 22, 2022 and February 28, 2023, FF Simplicity, Senyun and RAAJJ

Trading LLC converted portions of the aggregate principal amount of the outstanding

convertible notes of $68.9 million issued by the Company pursuant to the SPA at a

conversion price of $0.23 to $1.05 per share into 258,909,938 shares of Class A

Common Stock.

? Between November 22, 2022 and February 7, 2023, FF Simplicity, Senyun and RAAJJ

Trading LLC exercised 43,874,615 SPA Warrants using exercise prices of $0.28 to

$0.2275 per share into 39,647,862 shares of Class A Common Stock. Between December

15, 2022 and February 6, 2023, the ATW Investors exercised 28,597,331 NPA ATW

Warrants using an exercise price of $0.2275 per share into 23,557,189 shares of

Class A Common Stock.

? On November 14, 2022, FFIE announced entry into the SEPA with Yorkville, with an

initial commitment of $200.0 million. Under the terms of the SEPA, FFIE has the

right, but not the obligation, to issue and sell to Yorkville up to $200.0 million in

shares Class A Common Stock subject to customary conditions including an effective

registration statement for the resale of such shares. FFIE has the right to increase

the $200.0 million commitment by up to $150.0 million in one or more installments.

The shares will be sold to Yorkville at a discounted price of 97% of the three-day

VWAP at the time of funding, and generally limited to one-third of FFIE's trading

volume during such time period. On December 8, 2022, FFIE filed with the SEC a

registration statement on Form S-1 (File No. 333-268722) to register shares of Class

A Common Stock to be issued under the SEPA.

Special Committee Investigation



As previously disclosed on November 15, 2021, the Board established a special
committee of independent directors ("Special Committee") to investigate
allegations of inaccurate Company disclosures, including those made in an
October 2021 short seller report and whistleblower allegations, which resulted
in FFIE being unable to timely file its third quarter 2021 Quarterly Report on
Form 10-Q, Annual Report on Form 10-K for the year ended December 31, 2021,
first quarter 2022 Quarterly Report on Form 10-Q and amended Registration
Statement on Form S-1 (File No. 333-258993). The Special Committee engaged
outside independent legal counsel and a forensic accounting firm to assist with
its review. On February 1, 2022, FFIE announced that the Special Committee
completed its review. On April 14, 2022, FFIE announced the completion of
additional investigative work based on the Special Committee's findings which
were performed under the direction of the Executive Chairperson, reporting to
the Audit Committee. In connection with the Special Committee's review and
subsequent investigative work, the following findings were made:

In connection with the Business Combination, statements made by certain Company
employees to certain investors describing the role of Mr. Yueting Jia, the
Company's founder and former CEO, within the Company were inaccurate and his
involvement in the management of the Company post-Business Combination was more
significant than what had been represented to certain investors.

? The Company's statements leading up to the Business Combination that it had

received more than 14,000 reservations for the FF 91 vehicle were potentially

misleading because only several hundred of those reservations were paid, while the

others (totaling 14,000) were unpaid indications of interest.

? Consistent with FFIE's previous public disclosures regarding identified material

weaknesses in its internal control over financial reporting, the Company's internal

control over financial reporting requires an upgrade in personnel and systems.

? The Company's corporate culture failed to sufficiently prioritize compliance.

? Mr. Jia's role as an intermediary in leasing certain properties which were

subsequently leased to the Company was not disclosed in FFIE's corporate housing

disclosures.

? In preparing FFIE's related party transaction disclosures, the Company failed to

investigate and identify the sources of loans received from individuals and

entities associated with Company employees.


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 In addition, the investigation found that certain individuals failed to fully
disclose to individuals involved in the preparation of FFIE's SEC filings their
relationships with certain related parties and affiliated entities in connection
with, and following, the Business Combination, and failed to fully disclose
relevant information, including but not limited to, information in connection
with related parties and corporate governance to FFIE's former independent
registered public accounting firm PricewaterhouseCoopers LLP.

The investigation also found that certain individuals failed to cooperate and
withheld potentially relevant information in connection with the Special
Committee investigation. Among such individuals were non-executive officers or
members of the management team of FF, and remedial action was taken with respect
to such individuals based on the extent of non-cooperation and/or withholding of
information. The failure to cooperate with the investigation was taken into
consideration in connection with the remedial actions outlined below with
respect to Jerry Wang, and withholding of information also affected the remedial
action taken with respect to Matthias Aydt.

Based on the results of the investigation, the Special Committee concluded that,
except as described above, other substantive allegations of inaccurate FF
disclosures that it evaluated, were not supported by the evidence reviewed.
Although the investigation did not change any of the above findings with respect
to the substantive allegations of inaccurate FF disclosures, the investigation
did confirm the need for remedial actions to help ensure enhanced focus on
compliance and disclosure within FF.

Based on the results of the Special Committee investigation and subsequent investigative work described above, the Board approved the following remedial actions designed to enhance oversight and corporate governance of the Company:

? the appointment of Susan Swenson, a former member of the Board, to the then newly

created position of Executive Chairperson of FF.

? Dr. Carsten Breitfeld, FF's former Global CEO, reporting directly to Ms. Swenson

and receiving a 25% annual base salary reduction;

? the removal of Mr. Jia as an executive officer, although continuing in his position

as Chief Product & User Ecosystem Officer of FFIE. Certain dual-reporting

arrangements were eliminated with respect to Mr. Jia, and he is required to report

directly to Ms. Swenson, a non-independent director nominated by FF Top. Please see

"Risk Factors - Risks Related to FF's Business and Industry - Yueting Jia and FF

Global, over which Mr. Jia exercises significant influence, have control over the

Company's management, business and operations, and may use this control in ways that

are not aligned with the Company's business or financial objectives or strategies or

that are otherwise inconsistent with the Company's interests. Such significant

influence may increase if and to the extent the current members of the Board and

management are removed and replaced with individuals who are aligned with Mr. Jia

and/or FF Global." Mr. Jia also received a 25% annual base salary reduction, and his

role was limited from a policy-making position to focusing on (a) Product and

Mobility Ecosystem and (b) Internet, Artificial Intelligence, and Advanced R&D

technology;

? Matthias Aydt, then Senior Vice President, Business Development and Product

Definition and a director of FFIE, and currently Senior Vice President, Product

Execution and a director of FFIE, being placed on probation as an executive officer

for a six-month period, during which period he remained a non-independent member of


        the Board, which probationary period has since ended;

? the appointment of Jordan Vogel as Lead Independent Director; certain changes to

the composition of Board committees, including Brian Krolicki stepping down from

his role as Chairman of the Board and Chair of the Nominating and Corporate

Governance Committee and becoming a member of the Audit and Compensation Committees

of the Board; Jordan Vogel stepping down from the Nominating and Corporate

Governance Committee; and Scott Vogel becoming the Chair of the Audit Committee and


        the Nominating and Corporate Governance Committee of the Board;

? the suspension without pay of Jiawei ("Jerry") Wang, FFIE's former Vice President,

Global Capital Markets, who subsequently notified the Board of his decision to

resign from FF on April 10, 2022;


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? the assessment and enhancement of FF's policies and procedures regarding financial

accounting and reporting and the upgrading of FF's internal control over financial

accounting and reporting, including by hiring additional financial reporting and

accounting support, in each case at the direction of the Audit Committee;

? the implementation of enhanced controls around FF's contracting and related party

transactions, including regular attestations by FF's employees with authority to bind

FF to contracts and related party transactions, for purposes of enabling FF to make

complete and accurate disclosures regarding related party transactions;

? the implementation of a comprehensive training program for all directors and officers

regarding, among other things, internal FF policies;

? the separation of Jarret Johnson, FF's Vice President, General Counsel and

Secretary; and

? certain other disciplinary actions and terminations of employment with respect to

other FF employees (none of whom is an executive officer).




As of February 27, 2023, FF is continuing to implement certain of the remedial
actions approved by the Board. However, certain of these remedial actions are no
longer in effect. For instance, Ms. Swenson resigned from the Board on October
3, 2022. Moreover, effective on February 26, 2023, certain departments within
the Company report to both Mr. Jia and Mr. Xuefeng Chen, including the Company's
user ecosystem, capital markets, human resources and administration, corporate
strategy and China departments, subject to processes and controls to be
determined by the Board after consultation with the Company's management. The
Company's product, mobility ecosystem, I.A.I., and advanced R&D technology
departments report directly to Mr. Jia, while the remaining departments continue
to report to Mr. Xuefeng Chen. Further, based on the changes to his
responsibilities within FF, the Board determined that Mr. Jia is an "officer" of
the Company within the meaning of Section 16 of the Exchange Act, and an
"executive officer" of the Company under Rule 3b-7 under the Exchange Act.

In addition to the above, the Company strengthening its compliance policies and
procedures, including the hiring of a Compliance Officer with the title of
Deputy General Counsel (hired in March 2023), who will report on a dotted line
to the Chair of the Audit committee, and a Director of Risks and Internal
Controls. However there is no assurance can be provided that the remedial
measures that continue to be implemented and additional actions by the Company
to enhance its compliance policies and procedures will be implemented in a
timely manner or at all, or will be successful to prevent inaccurate disclosures
in the future. Please see "Risk Factors - Risks Related to FF's Business and
Industry - FF is taking remedial measures in response to the Special Committee
findings. There can be no assurance that such remedial measures will be
successful. In addition, there can be no assurance that such remedial measures
will be fully implemented in light of the recent corporate governance agreements
with FF Top and FF Global." However, pursuant to the Heads of Agreement, FF has
implemented certain governance changes that impact certain of the
above-discussed remedial actions. On October 3, 2022, Ms. Swenson tendered her
resignation from her role as both Executive Chairperson and member of the Board
effective immediately. In addition, on October 3, 2022, Mr. Scott Vogel resigned
from the Board effective immediately and Mr. Jordan Vogel resigned effective on
October 5, 2022 upon his receipt of a supplemental release pursuant to the
Mutual Release. On October 28, 2022, Mr. Brian Krolicki tendered his resignation
from the Board effective immediately. On December 15, 2022, Mr. Lee Liu tendered
his resignation from the Board, which resignation was effective on December 18,
2022. On December 18, 2022, Mr. Jie Sheng was appointed to the Board, effective
immediately, following the resignation of Mr. Liu. On December 25, 2022, Mr.
Edwin Goh tendered his resignation from the Board, which resignation was
effective on December 26, 2022. On December 27, 2022, Ms. Ke Sun was appointed
to the Board, effective immediately, following the resignation of Mr. Goh. Mr.
Sheng and Ms. Sun are designees of FF Top pursuant to the Amended Shareholder
Agreement. On December 26, 2022, Dr. Carsten Breitfeld tendered his resignation
from the Board, which resignation was effective immediately. On December 27,
2022, Mr. Xuefeng Chen was appointed to the Board, effective immediately,
following the resignation of Dr. Breitfeld. On January 20, 2023, Mr. Qing Ye
tendered his resignation from the Board, which resignation was effective
immediately. Mr. Ye remains a consultant of the Company as an independent
contractor until November 18, 2023, at which time both parties will mutually
reassess the relationship. On January 25, 2023, Mr. Chui Tin Mok was appointed
to the Board, effective immediately, following the resignation of Mr. Ye. See
"Management - Governance Agreement with FF Top and FF Global" for more
information.

Subsequent to FFIE announcing the completion of the Special Committee
investigation on February 1, 2022, FFIE, certain members of the management team
and employees of FFIE received a notice of preservation and subpoena from the
staff of the SEC stating that the SEC had commenced a formal investigation
relating to the matters that were the subject of the Special Committee
investigation. FFIE, which had previously voluntarily contacted the SEC in
connection with the Special
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Committee investigation in October 2021, is cooperating fully with the SEC's
investigation. The outcome of such an investigation is difficult to predict. FF
has incurred, and may continue to incur, significant expenses related to legal
and other professional services in connection with the SEC investigation. At
this stage, FF is unable to assess whether any material loss or adverse effect
is reasonably possible as a result of the SEC's investigation or estimate the
range of any potential loss. In addition, in June 2022, FF received a
preliminary request for information from the DOJ in connection with the matters
that were the subject of the Special Committee investigation. FF has responded
to that request and intends to fully cooperate with any future requests from the
DOJ.

South Korea Contract Manufacturing



In February 2022, the Company entered into a definitive contract manufacturing
and supply agreement with Myoung Shin Co., Ltd. ("Myoung Shin"), a South
Korea-based automotive manufacturer and parts supplier, to manufacture the
Company's second vehicle, the FF 81. The agreement has an initial term of nine
years from the start of production of the FF 81, which is scheduled as early as
2024. Pursuant to the agreement, Myoung Shin shall maintain sufficient
manufacturing capabilities and capacity to supply FF 81 vehicles to the Company
in accordance with the Company's forecasts and purchase orders. The Company and
Myoung Shin will each manufacture and supply certain FF 81 parts that Myoung
Shin will use in the manufacture and assembly of FF 81 vehicles.

Financing Discussions and New Convertible Note and Warrant Financings



The Company has received financing commitments for the funds required for the
start of production of the FF 91 assuming timely receipt of funds, but might
need to raise additional capital in the event such financing commitments are not
received in a timely manner. Although FF has successfully obtained commitments
since August 2022 from several investors totaling $267.0 million in convertible
note financing, subject to certain conditions, and continues financing
discussions with multiple parties, FF has experienced delays in securing
additional funding commitments, which have exacerbated the supply chain
pressures on FF's business. These factors, in addition to the continued rise in
inflation and other challenging macroeconomic conditions, have led FF to take
steps to preserve its current cash position, including implementing headcount
reductions and other expense reduction and payment delay measures. Further
efforts, including additional headcount reductions, may be undertaken in
response to FF's financial condition and market conditions. Based on certain
management assumptions, including the timely receipt of $38.4 to $58.4 million
of additional funding, which commitments have been secured as part of the Sixth
Amendment, and approval by stockholders of the proposal to increase FFIE's
authorized shares of Class A Common Stock from 815,000,000 to 1,690,000,000,
increasing the total authorized shares from 900,000,000 to 1,775,000,000, which
approval was obtained during the special meeting of stockholders held on
February 28, 2023, timely completion of key equipment installation and
commissioning work at the ieFactory California in Hanford, California, suppliers
meeting our supply chain requirements, the implementation and effectiveness of
certain expense reduction and payment delay measures, and timely and successful
testing and certification, FF expects start of production of the FF 91 Futurist
at the end of March 2023, coming off the line in early April, and deliveries to
users anticipated to begin before the end of April 2023. There is no assurance
FF will be able to timely receive sufficient funding under existing financing
commitments to produce and deliver the FF 91 Futurist on that timeline or at
all. If unable to receive sufficient funding, FF will be required to obtain new
financing commitments, which may not be available to it under reasonable
commercial terms. Further, there cannot be any assurance that FF will be able to
develop the manufacturing capabilities and processes, or secure reliable sources
of component supply to meet the quality, engineering, design or production
standards, or the required production volumes to successfully grow into a viable
business. There is also no assurance that FFIE stockholder approval of an
authorized share increase will be obtained in a timely manner or at all.

On August 14, 2022, FF entered into a definitive Securities Purchase Agreement
(the "SPA") with FF Simplicity Ventures LLC, an entity affiliated with ATW
Partners LLC, and RAAJJ Trading LLC for $52.0 million of committed near-term
convertible senior secured notes financing subject to certain conditions (which
was increased on September 23, 2022 to $57.0 million, which increase was
subsequently terminated upon the funding of the initial $10.0 million tranche of
SPA Notes to Senyun, which occurred on October 27, 2022, another $10.0 million
on November 15, 2022, and another $10.0 million in December 2022), and the
potential for an additional $243.0 million of incremental senior secured
convertible notes financing to be funded within 90 days after the initial
closing. A committed amount of $52.0 million ($43.3 million net of original
issue discount and transaction costs) has been funded to date. On September 23,
2022, FF and certain investors affiliated with ATW Partners LLC entered into a
Warrant Exercise Agreement (the "Warrant Exercise Agreement"), pursuant to
which, subject to the satisfaction of certain minimum trading price, minimum
trading volume and certain other Equity Conditions (as described below), FF will
have the right, exercisable on one or more occasions prior to January 23, 2023,
to require the ATW Investors to exercise on a cash basis (each, a "Forced
Exercise") certain warrants held by the ATW Investors, in part, in exchange for
newly issued shares of Class A Common Stock in an amount not to exceed (a) for
any single Forced Exercise, $7.0 million in
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aggregate exercise price, and (b) for all Forced Exercises in the aggregate, the
difference of (x) the maximum exercise price amount allowed under the Warrant
Exercise Agreement (which is approximately $20.0 million) less (y) the aggregate
exercise price of any voluntary exercises of the same warrants held by the ATW
Investors after the date of the Warrant Exercise Agreement. The "Equity
Conditions" are defined in the Warrant Exercise Agreement to include (among
others): (a) the effectiveness of one or more registration statements under the
Securities Act, (b) the availability of the Annual Report on Form 10-K contained
in such registration statement(s) for the resale of the applicable Warrant
shares, (c) the continued listing of shares of the Company's Class A Common
Stock on a national securities exchange, (d) no occurrence of any "Price
Failure" (i.e., the VWAP of the Class A Common Stock failing to exceed $0.85 per
share (as adjusted for stock splits, stock dividends, stock combinations,
recapitalizations or other similar transactions) on any two (2) trading days
during the ten (10) trading day measurement period immediately preceding the
relevant determination date), subject to certain permitted adjustments, and (e)
no occurrence of any "Volume Failure" (i.e., the aggregate daily dollar trading
volume (as reported on Bloomberg) falling below $10.0 million on any two (2)
trading days during the ten (10) trading day measurement period immediately
preceding the relevant determination date).

On September 25, 2022, FFIE entered into a Joinder and Amendment Agreement with
Senyun, FF Simplicity and RAAJJ Trading LLC, for the purchase of up to $60.0
million under the SPA (with potential increase to $90.0 million), of which $35.6
million (net of original issue discount and transaction costs) has been funded
to date. The initial $10.0 million tranche was funded on October 27, 2022, the
second $10.0 million tranche was funded on November 15, 2022, and the third
$10.0 million tranche was funded in parts on different dates in December 2022.

On October 24, 2022, FFIE entered into a Limited Consent and Third Amendment to
the SPA with FF Simplicity as administrative and collateral agent and purchaser,
Senyun as purchaser, and RAAJJ Trading LLC as purchaser.

On November 8, 2022, FFIE entered into a Limited Consent and Amendment to the
SPA (the "Fourth Amendment") with FF Simplicity as administrative and collateral
agent and purchaser, Senyun as purchaser, and RAAJJ Trading LLC as purchaser.

On December 28, 2022, FFIE entered into a Letter Agreement and Amendment to the
SPA (the "Senyun Amendment") with FF Simplicity as administrative and collateral
agent and Senyun as purchaser.

On January 25, 2023, FFIE entered into a Limited Consent and Amendment No. 5 to the SPA (the "Fifth Amendment") with FF Simplicity as administrative and collateral agent and Senyun as purchaser.



On February 3, 2023, FFIE entered into an Amendment No. 6 to Securities Purchase
Agreement (The "Sixth Amendment") with FF Simplicity as administrative and
collateral agent and Senyun, FF Top, FF Simplicity, FF Prosperity, Acuitas and
other purchasers. As of the date this Annual Report on Form 10-K is filed, we
have received $70.0 million ($62.2 net of original issue discount and
transaction costs) under the Sixth Amendment.

FF is actively engaged in confidential discussions and negotiations with
entities affiliated with FF Top and other potential investors with respect to
purchasing incremental convertible senior secured notes and/or convertible
junior secured notes on the same terms as FF Simplicity Ventures LLC under the
SPA. There can be no assurance that FF will be able to successfully obtain
additional incremental convertible senior secured note purchasers under the SPA
or other debt or equity financing in a timely manner or on acceptable terms, if
at all. In particular, the Company is currently conducting due diligence on
potential financing sources. This process has been time consuming and may result
in the Company not being able to consummate any financing from these or other
financing sources on a timely basis or at all. If we are unable to raise
sufficient additional funds in the near term, we may be required to further
delay our production and delivery plans for the FF 91, reduce headcount,
liquidate our assets, file for bankruptcy, reorganize, merge with another
entity, and/or cease operations.

FF's cash needs after the start of production of the FF 91 will depend on the
extent to which FF's actual costs vary from FF's estimates and FF's ability to
control these costs and raise additional funds. Any challenges in supplier
engagements, delays in ramping capacity or labor at the Hanford facility or for
sales and service engagements, rising prices of materials, or ongoing global
supply chain disruptions may further increase the need for additional capital to
produce and deliver the FF 91 series. In particular, recently, some suppliers
have threatened to terminate their relationship with the Company because of late
payments or requested accelerated payments and other terms and conditions as a
result of our past payment history and concerns about the Company's financial
condition, leading to less favorable payment terms than the Company had
anticipated, and delaying or putting at risk certain deliveries. FF is in active
negotiations with these suppliers to minimize these risks. Apart from the FF 91
series, substantial additional capital will be required to fund operations,
research, development, and design efforts for future vehicles.
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Components of FF's Results of Operations

Key Factors Affecting Operating Results

FF's performance and future success depend on several factors that present significant opportunities but also pose risks and challenges including those discussed below and in the section titled "Risk Factors" in Item 1A of this Annual Report on Form 10-K.

Faraday Future Vehicle Production and Delivery



FF expects to derive revenue from sales of the FF 91. Based on certain
management assumptions, including the timely receipt of $38.4 million to $58.4
million of additional funding, which commitments have been secured as part of
the Sixth Amendment, and approval by stockholders of the proposal to increase
FFIE's authorized shares of Class A Common Stock from 815,000,000 to
1,690,000,000, increasing the total authorized shares from 900,000,000 to
1,775,000,000, which approval was obtained during the special meeting of
stockholders held on February 28, 2023, timely completion of key equipment
installation and commissioning work at the ieFactory California in Hanford,
California, suppliers meeting their commitments on program deliverables
including parts, the implementation and effectiveness of certain expense
reduction and payment delay measures, and timely and successful testing and
certification, FF expects start of production of the FF 91 Futurist at the end
of March 2023, coming off the line in early April, and deliveries to users
anticipated to begin before the end of April 2023.

The FF 81, FF 71, and SLMD electric vehicle models are in various stages of planning or development and expected to be released after the FF 91 depending on availability of adequate funding and other strategic factors.

Production and Operations



FF expects to continue to incur significant operating costs that will impact its
future profitability, including research and development expenses as it
introduces new models and improves existing models; capital expenditures for the
expansion of its manufacturing capacities; additional operating costs and
expenses for production ramp-up; raw material procurement costs; general and
administrative expenses as it scales its operations; interest expense from debt
financing activities; and selling and distribution expenses as it builds its
brand and markets its vehicles. FF may incur significant costs in connection
with its services once it delivers the FF 91, including servicing and warranty
costs. FF's ability to become profitable in the future will depend on its
ability to successfully market its vehicles and control its costs.

To date, FF has not yet sold any electric vehicles. As a result, FF will require
substantial additional capital to develop products and fund operations for the
foreseeable future. Until FF can generate sufficient revenue from product sales,
FF will fund its ongoing operations through a combination of various funding and
financing alternatives, including equipment leasing and construction financing
of the Hanford, California, ieFactory California, manufacturing facility,
secured syndicated debt financing, convertible notes, working capital loans, and
equity offerings, among other options. The particular funding mechanisms, terms,
timing, and amounts are dependent on the Company's assessment of opportunities
available in the marketplace and the circumstances of the business at the
relevant time. Any delays in the successful completion of its ieFactory
California manufacturing facility will impact FF's ability to generate revenue.
For additional discussion of the substantial doubt about FF's ability to
continue as a going concern, see Note 2, Liquidity and Capital Resources in the
notes to the Consolidated Financial Statements for the year ended December 31,
2022 included elsewhere in this Annual Report on Form 10-K and for further
details on liquidity, please see the "- Liquidity and Capital Resources" section
below.

Revenues

FF is a development stage company and has not generated any revenue to date.
FF's anticipated introduction of the FF 91, its first vehicle, is expected to
generate FF's future revenue while other vehicles are in development.

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Operating Expenses

Research and Development



Research and development activities represent a significant part of FF's
business. FF's research and development efforts focus on the design and
development of FF's electric vehicles and continuing to prepare its prototype
electric vehicles to exceed industry standards for compliance, innovation, and
performance. Research and development expenses consist of personnel-related
costs (including salaries, bonuses, benefits, and stock-based compensation) for
FF's employees focused on research and development activities, other related
costs, depreciation, and an allocation of overhead. FF expects research and
development expenses to increase as FF continues to develop its vehicles. FF
anticipates an increase in activities in the U.S. and China, where FF's research
and development operations are primarily located.

Sales and Marketing



Sales and marketing expenses consist primarily of personnel-related costs
(including salaries, bonuses, benefits, and stock-based compensation) for FF's
employees focused on sales and marketing, costs associated with sales and
marketing activities, and an allocation of overhead. Marketing activities are
those related to introducing FF's brand and its electric vehicle prototypes to
the market. FF expects selling and marketing expenses to continue to increase as
FF brings its electric vehicles to market and seeks to generate sales.

General and Administrative



General and administrative expenses consist primarily of personnel-related
costs, (including salaries, bonuses, benefits, and stock-based compensation) for
employees associated with administrative services such as legal, human
resources, information technology, accounting and finance, other related costs,
and legal loss contingency expenses, which are FF's estimates of future legal
settlements. These expenses also include certain third-party consulting
services, certain facilities costs, and any corporate overhead costs not
allocated to other expense categories. FF expects its general and administrative
expenses to increase as FF continues to grow its business. FF also anticipates
that it will incur additional costs for employees and third-party consulting
services now that it operates as a public company.

Loss on Disposal of Property and Equipment



Loss on disposal of property and equipment relates to the abandonment of certain
FF 91 program construction in progress assets, primarily vendor tooling,
machinery, and equipment, due to the redesign of the related FF 91 components
and implementation of FF's cost reduction program. Charges associated with
disposals are recognized within operating expenses in the Consolidated
Statements of Operations and Comprehensive Loss.

Non-operating Expenses

Change in Fair Value Measurements



Change in fair value measurements consists of the losses and gains as a result
of fair value measurements of certain financial instruments which FF records at
fair value. Changes in fair value measurement of related party notes payable and
notes payable have decreased following the Business Combination as the majority
of the liabilities converted to equity or were paid in cash.

Related Party Interest Expense



Related party interest expense consists of interest expense on notes payable
with related parties. Related party interest expense has decreased relative to
prior periods, as the majority of related party notes payable converted to
equity upon completion of the Business Combination.

Interest Expense



Interest expense primarily consists of interest on outstanding notes payable,
capital leases, certain supplier payables, and vendor payables in trust.
Interest expense decreased as the majority of notes payable and vendor payables
in trust were either settled in cash or converted to equity upon completion of
the Business Combination.

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Other Expense, net



Other expense, 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. FF
expects other expense to fluctuate as FF continues to transact internationally.

Loss on Extinguishment or Settlement of Related Party Notes Payable, Notes Payable and Vendor Payables in Trust, net



Loss on extinguishment or settlement of related party notes payable, notes
payable, and vendor payables in trust, net consists of losses resulting from the
settlement of related party notes payable, notes payable, and vendor payables in
trust.

Results of Operations

To date, FF has not generated any revenue from the design, development, manufacturing, engineering, sale or distribution of its electric vehicles. Please refer to Part I, Item 1A. Risk Factors for a full discussion on the risks and uncertainties related to costs.

Comparison of the Years Ended December 31, 2022 and 2021



                                                                         Year Ended December 31,
(dollars in thousands)                                                   2022                 2021
Consolidated Statements of Operations
Operating expenses
Research and development                                           $     311,084          $  174,935
Sales and marketing                                                       20,772              17,118
General and administrative                                               116,437              97,905
Loss on disposal of property and equipment                                 2,695              64,191
Total operating expenses                                                 450,988             354,149

Loss from operations                                                    (450,988)           (354,149)
Change in fair value measurements                                        (69,671)            (22,700)
Interest expense                                                          (7,236)            (30,181)
Related party interest expense                                            (3,879)            (16,663)
Other expense, net                                                       (12,544)             (5,668)

Loss on settlement of related party notes payable, notes payable, and vendor payables in trust, net

                                         (7,690)            (86,904)
Loss before income taxes                                                (552,008)           (516,265)
Income tax provision                                                         (61)               (240)
Net loss                                                           $    (552,069)         $ (516,505)


Research and Development

                                 Year Ended December 31,                   Change
(dollars in thousands)             2022               2021          Amount           %
Research and development   $     311,084           $ 174,935      $ 136,149        77.8  %


The increase in research and development expense of $136.1 million for the year
ended December 31, 2022, compared to the prior year, was primarily due to the
increase in engineering, design and testing (ED&T) services of $120.8 million
and professional services related expense of $9.1 million as the Company
re-engaged suppliers and made significant purchases of ED&T services to progress
the development of the FF 91; an increase in personnel and compensation related
expenses and stock-based compensation expenses due to increased headcount of
$37.6 million and $3.7 million, respectively; an increase in information
technology related expense due to increases in business activities and headcount
of $8.6 million, partially offset by a decrease in miscellaneous expenses of
$54.1 million, primarily due to expensing a one-time amount of $50.0 million for
a

                                      115
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non-exclusive, perpetual, irrevocable, and sublicensable license to use a
platform owned by Liankong, a subsidiary of Geely Holdings, and recognition
stock-based compensation expense of $7.6 million related to restricted stock
awards issued as a bonus to employees and other service providers in connection
with the closing of the Business Combination during the year ended December 31,
2021 with no comparable activity in 2022.

Sales and Marketing

                                 Year Ended December 31,                   Change
(dollars in thousands)              2022                2021        Amount          %
Sales and marketing        $      20,772             $ 17,118      $ 3,654        21.3  %


The increase of $3.7 million in sales and marketing expense for the year ended
December 31, 2022, compared to the prior year, was primarily due to an increase
in personnel and compensation related expenses of $4.7 million, and employee
benefits relates expenses of $0.4 million due to an increase in headcount; an
increase in marketing expenses due to an increase in marketing efforts of $2.9
million, partially offset by primarily restricted stock awards issued as a bonus
to employees and other service providers in connection with the closing of the
Business Combination during the year ended December 31, 2021, with no comparable
activity in 2022 and other overhead expenses including IT dues and subscriptions
of $5.2 million.

                                   Year Ended December 31,                  Change
(dollars in thousands)               2022                2021         Amount          %
General and administrative   $     116,437            $ 97,905      $ 18,532        18.9  %


The increase of $18.5 million in general and administrative expense for the year
ended December 31, 2022, compared to the same period in the prior year, was
primarily due to an increase in professional service expenses related to the
Special Committee investigation in the amount of $49.3 million; an increase in
personnel and compensation related expenses of $9.7 million due to headcount
changes; an increase in insurance related expenses of $10.6 million, partially
offset by legal expense of approximately $20.0 million related to additional
accruals for contingent legal liabilities related to the year ended December 31,
2021, with no comparable activity in 2022; decrease in general expenses of $15.5
million primarily related to expenses recognized in connection with issuance of
restricted stock awards as compensation for prior salary reductions during the
year ended December 31, 2021 with no comparable activity in the year ended
December 31, 2022; decrease in stock based compensation of $5.2 million due to a
decrease in headcount specifically in G&A, a decrease in engineering, design and
testing related expense and other overhead expenses primarily due to allocations
of expenses to Research and development and Sales and Marketing of $5.1 million,
a decrease of $1.4 million related to information technology related expenses, a
$1.4 million decrease in depreciation and amortization expenses, a decrease of
$1.2 million in rent and related expenses and a $0.7 million decrease in
non-capitalizable equipment and furniture.

Loss on Disposal of Property and Equipment



                                                Year Ended December 31,                          Change
(dollars in thousands)                          2022                 2021              Amount                %

Loss on disposal of property and equipment $ 2,695 $ 64,191

         $ (61,496)              NM


The decrease in loss on disposal of property and equipment during the year ended
December 31, 2022, compared to the prior year is due to the write off of $64.2
million relating to the abandonment of certain construction in process assets
including vendor tooling, machinery and equipment. This was due to the redesign
of various FF 91 components and implementation of FF's cost reduction program
during the year ended December 31, 2022.

Change in Fair Value Measurements



                                          Year Ended December 31,

Change


(dollars in thousands)                      2022               2021          Amount           %

Change in fair value measurements $ (69,671) $ (22,700) $ (46,971) 206.9 %





The increased loss in fair value measurements of $47.0 million for the year
ended December 31, 2022, compared to the prior year, was primarily due to the
issuances during the period of new notes, which contained significant original
issue discounts, and warrants measured at fair value at each reporting period,
resulting in a charge to fair value measurement expense
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due to their favorable conversion and exercise features, which was partially
offset by notes payable, related party notes payable and warrant liabilities
that were measured at fair value in the comparative period in 2021 and were
converted during 2022.

Interest Expense

                                 Year Ended December 31,                  Change
(dollars in thousands)             2022               2021          Amount          %
Interest expense           $     (7,236)           $ (30,181)     $ 22,945       (76.0) %


The decrease in interest expense during the year ended December 31, 2022,
compared to the prior year, was primarily due to notes payable with a principal
amount of $85.2 million that were outstanding during a portion of 2021 and
settled upon closing of the Business Combination in 2021, with no comparable
charges in 2022. Further decreases resulted from the repayment of $85.0 million
of Ares notes payable principal in the year ended December 31, 2022 and interest
related to finance leases as a result of the successful sale leaseback
transaction of the Company's Gardena, California headquarters in the year ended
December 31, 2021. These decreases were partially offset by increases in
interest expense related to the ATW NPA Notes which bore interest in 2022 due to
the triggering of interest clauses, interest expense related to new Bridge Notes
in 2022 with principal balances of $44.5 million.

Related Party Interest Expense



                                       Year Ended December 31,

Change


(dollars in thousands)                   2022               2021          Amount          %
Related party interest expense   $     (3,879)           $ (16,663)     $

12,784 (76.7 %)




The decrease in related party interest expense for year ended December 31, 2022,
compared to the prior year, was primarily due to the Company's settlement of
$91.4 million principal amounts of related party notes payable upon closing of
the Business Combination in July 2021, which accrued interest from July 1, 2021,
to July 21, 2021.

Other Expense, net

                                 Year Ended December 31,                  Change
(dollars in thousands)             2022                2021         Amount          %
Other expense, net         $     (12,544)           $ (5,668)     $ (6,876)      121.3  %

The change in other expense, net was primarily due to change in unrealized loss driven by change in exchange rate.



Loss at Settlement of Related Party Notes Payable, Notes Payable, and Vendor
Payables in Trust, Net

                                                    Year Ended December 31,                            Change
(dollars in thousands)                              2022                   2021              Amount                %
Loss on settlement of related party notes
payable, notes payable and vendor payables
in trust, net                               $     (7,690)              $ (86,904)         $  79,214               NM


The loss in the year ended December 31, 2022, compared to the same period in the
prior year, relates to a modification of the conversion price as part of an
amendment to notes issued during the period, which was treated as extinguishment
for accounting purposes. The loss in the year ended December 31, 2021 represents
the conversion of certain related party notes payable, notes payable, and vendor
payables in trust to equity at $10 per share which was below the fair value of
the stock on the date of conversion in connection with the closing of the
Business Combination.

Liquidity and Capital Resources



As described in the "Overview" section of this MD&A, the COVID-19 pandemic
impacted FF's ability to raise funds and may have a material adverse impact on
future periods as FF prepares to bring its vehicles to market, including its
cash flows from financing activities, which fund its operations. The extent of
COVID-19's impact on FF's liquidity will depend upon, among other things, the
duration and severity of the outbreak or subsequent outbreaks and related
government responses, such
                                      117
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as required physical distancing, restrictions on business operations and travel,
the pace of recovery of economic activity and the impact to consumers, all of
which are uncertain and difficult to predict. In addition, FF's ability to raise
additional funds is subject to a number of other material risks and assumptions.
Refer to Part I, Item 1A. Risk Factors for a full discussion of the risks
associated with the COVID-19 pandemic and other risks.

As of December 31, 2022, the Company's principal source of liquidity was cash
totaling $17.0 million, which was held for working capital and general corporate
purposes.

The Company has received financing commitments for the funds required for the
start of production of the FF 91 assuming timely receipt of funds. Based on
certain management assumptions, including the timely receipt of approximately
$38.4 million to $58.4 million of additional funding, which commitments have
been secured as part of the Sixth Amendment, and approval by stockholders of the
proposal to increase FFIE's authorized shares of Class A Common Stock from
815,000,000 to 1,690,000,000, increasing the total authorized shares from
900,000,000 to 1,775,000,000, which approval was obtained during the special
meeting of stockholders held on February 28, 2023, timely completion of key
equipment installation and commissioning work at the ieFactory California in
Hanford, California, suppliers meeting their commitments on program deliverables
including parts, the implementation and effectiveness of certain expense
reduction and payment delay measures, and timely and successful testing and
certification, FF expects to start production on the FF 91 Futurist at the end
of March 2023, coming off the line in early April, with deliveries to users
anticipated to begin before the end of April 2023. There is no assurance FF will
be able to timely receive sufficient funding under existing financing
commitments to produce and deliver the FF 91 Futurist on that timeline or at
all. If unable to receive sufficient funding, FF will be required to obtain new
financing commitments, which may not be available to it under reasonable
commercial terms. Further, there cannot be any assurance that FF will be able to
develop the manufacturing capabilities and processes, or 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 business. There is also no assurance that FFIE stockholder approval of
an authorized share increase will be obtained in a timely manner or at all.

Since August 14, 2022, the Company has obtained commitments from several
investors totaling $267.0 million in new convertible note financing and in
committed forced warrant exercise proceeds, subject to certain conditions. A
total of $171.4 million under these commitments has been funded to date, through
which the Company has received $150.4 million (net of original discount and
transaction costs). The Company had the right to force the conversion of the
warrants underlying the Warrant Reserve, as such term is defined in Note 14,
Stockholders' Equity, in the notes to the Consolidated Financial Statements for
the years ended December 31, 2022 included elsewhere in this Annual Report on
Form 10-K, for a total exercise price of $20.0 million in cash ($9.4 million of
which has been funded to the Company), upon the completion of certain milestones
and conditions. The right to force exercise of the Warrant Reserve expired upon
the holders exercising their warrants during 2023. In February 2023, Senyun and
a purchaser affiliated with ATW Partners LLC exercised 20% of their respective
options to purchase additional senior secured notes and SPA Warrants of the
Company under the same terms as the Incremental Notes. The Company received
aggregated gross proceeds of $18.0 million ($16.2 million net of original
issuance discount) in exchange for such issuances. The Company has continued
financing discussions with multiple parties, but has experienced delays in
securing additional funding commitments, which have exacerbated the supply chain
pressures on FF's business. These factors, in addition to the continued rise in
inflation and other challenging macroeconomic conditions, have led FF to take
steps to preserve its current cash position, including reducing spending,
extending payment cycles and implementing other similar measures. If our ongoing
capital raising efforts are unsuccessful or significantly delayed, or if we
experience prolonged material adverse trends in our business, our production
will be delayed or decreased, and our actual use of cash, production volume and
revenue for 2023 will vary from our previously disclosed forecasts, and such
variances may be material. While FF is actively engaged in negotiations with
potential financing sources, there is no guarantee that it will be able to raise
additional capital on terms acceptable to it or at all. In addition to the risk
that FF's assumptions and analyses may prove incorrect, the projections may
underestimate the professional fees and other costs to be incurred related to
the pursuit of various financing options currently being considered and ongoing
legal risks. Incremental capital needs beyond March 2023 to fund development of
the Company's remaining product portfolio will be highly dependent on the market
success and profitability of the FF 91 and the Company's ability to accurately
estimate and control costs. Apart from the FF 91 series, substantial additional
capital will be required to fund operations, research, development, and design
efforts for future vehicles.

As described under "Management's Discussion and Analysis of Financial Condition
and Results of Operations - Recent Developments - Financing Discussions and New
Convertible Note and Warrant Financing," on November 11, 2022, the Company
entered into a SEPA with Yorkville, which provides the Company the sole right,
but not the obligation, to direct Yorkville from time to time to purchase up to
$200.0 million ("Commitment Amount") of the Company's shares of Class A Common
Stock ("Commitment Shares") during the commitment period ending November 11,
2025, at a 3% discount of the VWAP (as defined below) of the shares during the
three preceding days of each issuance. The Company has the option to increase
the Commitment Amount to up to $350.0 million during the commitment period. On
November 23, 2022, the
                                      118
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Company issued 789,016 Commitment Shares in satisfaction of the commitment fee
agreed upon in the SEPA. As of the date the Consolidated Financial Statements
were issued, the Company has not directed Yorkville to buy any shares of Class A
Common Stock. The Company shall not have the ability to draw funds under the
SEPA until the effectiveness of its registration statement on Form S-1,
initially filed with the SEC on December 8, 2022 (File No. 333-268722),
registering the resale by Yorkville of its shares of Class A Common Stock to be
issued under the SEPA (including the 789,016 Commitment Shares) and the
satisfaction of certain other conditions under the SEPA.

Any purchase would be subject to certain limitations, including that Yorkville
shall not purchase any shares that would result in it and its affiliates
beneficially owning more than 9.99% of the then outstanding voting power or
number of shares of Class A Common Stock or any shares that would exceed 19.99%
of all shares of Class A Common Stock and Class B Common Stock of the Company
outstanding on the date of the SEPA, unless Company shareholder approval was
obtained allowing for issuances in excess of such amount (the "Exchange Cap").
The Exchange Cap will not apply under certain circumstances, including where the
average price of all shares of Class A Common Stock equals or exceeds $0.62 per
share. On February 28, 2023, the stockholders approved, as is required by the
applicable Nasdaq rules and regulations, advances of Class A Common Stock to be
issued under the SEPA, including the issuance of any shares in excess of 19.99%
of the issued and outstanding shares of Common Stock. The proposal was approved
on February 28, 2023.

Despite the access to liquidity resulting from the SEPA when and if it shall
become effective, the Warrant Reserve and the unfunded commitments from the SPA,
the Company projects that it may require additional funds in order to continue
operations and support the ramp-up of production of the FF 91 to generate
revenues to put the Company on a path to cash flow break-even. Incremental
capital needs beyond March 2023 to fund development of the Company's remaining
product portfolio will be highly dependent on the market success and
profitability of the FF 91 and the Company's ability to accurately estimate and
control costs.

Since its formation, the Company has devoted substantial effort and capital
resources to strategic planning, engineering, design, and development of its
electric vehicle platform, development of initial electric vehicle models, and
capital raising. Since inception, the Company has incurred cumulative losses
from operations, negative cash flows from operating activities, and has an
accumulated deficit of $3,476.6 million as of December 31, 2022. After the
closing of the Business Combination and the PIPE Financing on July 21, 2021, the
Company received gross proceeds aggregating $991.0 million which it used to
settle certain liabilities and the remainder of which management has used to
finance the ongoing operations of the business.

The Company has funded its operations and capital needs primarily through the
net proceeds received from capital contributions, the issuance of related party
notes payable and notes payable (see Note 9, Related Party Notes Payable and
Note 10, Notes Payable), the sale of Preferred and Common Stock (see Note 14,
Stockholders' Equity) and the net proceeds received from the Business
Combination and the PIPE Financing (see Note 3, Business Combination) in the
notes to the Consolidated Financial Statements included elsewhere in this Annual
Report on Form 10-K.

The Company's ongoing liquidity needs will depend on the extent to which the
Company's actual costs vary from the Company's estimates and the Company's
ability to control these costs, as well as the Company's ability to raise
additional funds. The 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, potential impact of
the COVID-19 pandemic, and general macroeconomic conditions. Refer to Part I,
Item 1A, "Risk Factors" of this Annual Report on Form 10-K for a full discussion
of the risks. The Company's forecasts and projections of working capital reflect
significant judgment and estimates for which there are inherent risks and
uncertainties. The Company expects to continue to generate significant operating
losses for the foreseeable future. The plans are dependent on the Company being
able to continue to raise significant amounts of capital through the issuance of
additional notes payable and equity securities.

The Company has evaluated whether there are certain conditions and events, when
considered in the aggregate, that raise substantial doubt about the Company's
ability to continue as a going concern within one year after the date that the
Consolidated Financial Statements were issued. Based on its recurring losses
from operations since inception and continued cash outflows from operating
activities, 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 the Consolidated Financial Statements for the years ended December 31, 2022
were issued.

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
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manner or on acceptable terms, if at all or that the Company will be able to
satisfy the closing conditions under its financing agreements. 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.

Significant Related Party Notes Payable and Notes Payable Facilities



The Company has 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 the Company's founder and Chief Product and User Ecosystem
Officer. For more information on the outstanding related party notes payable and
notes payable as well as the related schedules of maturities, see Note 9,
Related Party Notes Payable, and Note 10, Notes Payable, of the notes to the
consolidated financial statements included in this Annual Report on From 10-K.

Related party notes payable consists of the following as of December 31, 2022 and December 31, 2021 (dollars in thousands):



                                                                                December 31, 2022
                                                                                                                 Interest          Interest
                                                                                                                Expense for       Expense for
                                                                                               Balance           the Year          the Year
                                           Contractual                 Contractual              as of              Ended             Ended
                                             Maturity                   Interest            December 31,         December          December
Note Name                                      Date                       Rates                 2022             31, 2022          31, 2021
Related party notes - China
(1)                                  December 31, 2023                          12.0%       $    4,651          $     3,879       $     3,369
Related party notes - China
various other                        Due on Demand                                 -%            3,755                    -                 -
                                                                                            $    8,406          $  3,879          $  3,369


                                                                           December 31, 2021
                                                                                                                           Net Carrying
                                                   Contractual              Contractual              Unpaid                  Value at
Note Name                                         Maturity Date           Interest Rates            Balance                  12/31/21
Related party notes - China                       Due on Demand               18.00%              $   9,411                $    9,411
Related party notes - China various other         Due on Demand                0.00%                  4,244                     4,244
Total related party notes payable                                                                 $  13,655                $   13,655

Schedule of Principal Maturities of Related Party Notes Payable

The future scheduled principal maturities of related party notes payable as of December 31, 2022 and December 31, 2021 were as follows:




Year ended December 31, 2022
Due on demand     $ 3,755
2023                4,651
                  $ 8,406



Year ended December 31, 2021
Due on demand                       $ 13,655


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Notes payable consists of the following as of December 31, 2022 and December 31,
2021:

                                                                                    December 31, 2022
                                                                                                                              Original
                                                                                                                               issue                                Interest
                                                                                                                            discount and                         Expense for the
                                                              Contractual             Unpaid            Fair Value            proceeds             Net            Twelve Months
                                     Contractual                Interest            Principal           Measurement         allocated to        Carrying         Ended December
Note Name                           Maturity Date                Rates               Balance            Adjustments           warrants            Value             31, 2022
Bridge Notes (4)                  October 27, 2028                10%              $  36,622          $        264          $ (10,878)         $ 26,008          $      1,676
Notes payable - China
other                               Due on Demand                  -%                  4,997                     -                  -             4,997                     -
Auto loans                        October 26, 2026                 7%                    100                     -                  -               100                     7
                                                                                   $  41,719          $        264          $ (10,878)         $ 31,105          $      1,683


                                                                                                December 31, 2021
                                                                                                                                             Original
                                                                                                                                              issue
                                                                                                                                           discount and
                                                                                                                       Fair Value            proceeds             Net
                                             Contractual                  Contractual                Unpaid            Measurement         allocated to         Carrying
Note Name                                   Maturity Date                Interest Rates             Balance            Adjustments           warrants            Value
March 1, 2021 Notes                         March 1, 2022

14.00 % $ 55,000 $ 7,692 $ (5,997)

       $  56,695
August 26, 2021 Notes                       March 1, 2022                          14.00  %          30,000                 1,011                (87)

30,924


June 9, 2021 Note 1 and Note 2             December 9, 2022                            -  %          40,000                 8,503             (9,522)

38,981


August 10, 2021 Optional Notes            February 10, 2023                        15.00  %          33,917                12,283            (11,518)

34,682


Notes payable - China various
other                                       Due on demand                              -  %           5,458                     -                  -              5,458
Notes payable                               April 17, 2022                          1.00  %             193                     -                  -                193
Auto loans                                     Various                      Various                     121                     -                  -                121
Total notes payable                                                                               $ 164,689          $     29,489          $ (27,124)         $ 167,054

Schedule of Principal Maturities of Notes Payable

The future scheduled principal maturities of notes payable as of December 31, 2022 and December 31, 2021 are as follows:



Year ended December 31, 2022
Due on demand     $ 4,997
2026                  100
2028               36,622
                   41,719



Years ended December 31, 2021
2022                               130,772
2023                                33,917
                                 $ 164,689


                                      121


--------------------------------------------------------------------------------

Cash Flow Analysis



Presented below is a summary of FF's cash flows for the periods indicated
(dollars in thousands):

                                                                           For the Year Ended
                                                                              December 31,
                                                                        2022                2021
Net cash (used in) provided by
Operating activities                                                $ (383,058)         $ (339,765)
Investing activities                                                  (123,222)            (95,681)
Financing activities                                                    (6,721)            966,569
Effect of exchange rate changes on cash and restricted cash              1,038              (2,473)


Operating Activities

FF continues to experience negative cash flows from operations as FF designs and
develops its vehicles and builds its infrastructure both in the United States
and China. FF's cash flows from operating activities are significantly affected
by FF's cash investments to support the growth of FF's business in areas such as
research and development associated with FF's electric vehicles, corporate
planning, and general and administrative functions. FF's operating cash flows
are also affected by its working capital needs to support growth and
fluctuations in personnel related expenditures, accounts payable, accrued
interest, other current liabilities, deposits, and other current assets.

Net cash used in operating activities was $383.1 million and $339.8 million for
the years ended December 31, 2022 and 2021, respectively. The largest components
of FF's cash used by operating activities during the year ended December 31,
2022 were professional and contracted services totaling $124.6 million,
compensation, benefits and related expenses totaling $120.4 million and prepaid
insurance totaling $21.7 million. Other movements were related to changes in
working capital.

The largest components of FF's cash used by operating activities during the year
ended December 31, 2021 were $90.0 million for wages and compensation related
expenses; $50.0 million for a non-exclusive, perpetual, irrevocable, and
sublicensable license to use a platform, the Geely License, owned by Liankong, a
subsidiary of Geely Holding; $28.4 million for professional services and for
prepayment of software hosting costs. Other movements were related to changes in
working capital.

Investing Activities

Net cash used in investing activities was $123.2 million and $95.7 million for
the years ended December 31, 2022 and 2021 related to acquisition of property
and equipment.

Financing Activities

Net cash used in financing activities was $6.7 million for the year ended December 31, 2022 and net cash provided by financing activities was $966.6 million for the year ended December 31, 2021.



Cash used in financing activities during the year ended December 31, 2022
primarily consists of cash payments of $87.3 million for settling notes payable
and accrued interest, $0.5 million for settling related party notes payable and
accrued interest, $3.8 million for settling vendor payables in trust,
$1.9 million principal pay down for finance lease liabilities, and $0.8 million
for repurchase and retirement of Class A Common Stock. These were partially
offset by $73.8 million in proceeds from the issuance of notes payable net of
original issuance discounts, $9.5 million from the exercise of stock options and
$4.2 million in proceeds from the exercise of warrants.

Cash provided from financing activities during the year ended December 31, 2021
primarily consists of $229.6 million in cash proceeds from the issuance of Class
A Common Stock, net of $0.2 million redemptions of as a result of the Business
Combination, $761.4 million in cash proceeds from the PIPE Financing,
$172.0 million in proceeds from the issuance of notes payable net of original
issuance discounts, and $10.6 million from the exercise of stock options. These
were partially offset by cash payments of $61.1 million for PIPE Financing
transaction costs, $48.2 million for settling notes payable and accrued
interest, $38.2 million for settling related party notes payable and accrued
interest, $27.7 million for settling vendor payables in trust, $23.1 million for
Business Combination transaction costs, $3.4 million for debt transaction costs,
and $3.2 million for capital lease obligations.
                                      122
--------------------------------------------------------------------------------

Effect of Exchange Rate Changes on Cash and Restricted Cash



The exchange rates effect on Cash and Restricted Cash was negative for the years
ended December 31, 2022 and 2021. 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. dollar may positively or
negatively affect FF's operating results. The effect of exchange rate change was
a favorable $1.0 million and an unfavorable $2.5 million for the years ended
December 31, 2022 and 2021, respectively.

Off-Balance Sheet Arrangements



The Company 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, the Company did not have any off-balance sheet
arrangements as of December 31, 2022 and 2021.

Critical Accounting Estimates



Our consolidated financial statements are prepared in accordance with U.S. GAAP.
The preparation of our consolidated financial statements requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities, disclosures of contingent liabilities, and the reported amounts of
expenses during the reporting period. Management has based its estimates on
historical experience and on various other assumptions that are believed to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values that are not readily apparent from
other sources.

Actual results may differ from these estimates under different assumptions or
conditions. Changes in the accounting estimates are reasonably likely to occur
from period to period. Accordingly, actual results could differ significantly
from the estimates made by FF's management. To the extent that there are
material differences between these estimates and actual results, future
financial statement presentation, financial condition, results of operations,
and cash flows will be affected. Given the global economic climate and
unpredictable nature and unknown duration of the COVID-19 pandemic, estimates
are subject to additional variability and volatility.

For a description of FF's significant accounting policies, see Note 1, Nature of
Business and Organization, and Summary of Significant Accounting Policies of the
Notes to Consolidated Financial Statements included elsewhere in this Annual
Report on Form 10-K. An accounting policy is considered to be critical if it
requires an accounting estimate to be made based on assumptions about matters
that are highly uncertain at the time the estimate is made, and if different
estimates that reasonably could have been used, or changes in the accounting
estimates that are reasonably likely to occur periodically, could materially
impact the Consolidated Financial Statements. Management believes the following
critical accounting policies reflect the more significant estimates and
assumptions used in the preparation of FF's Consolidated Financial Statements.

                                      123
--------------------------------------------------------------------------------

Effect if Actual Results Differ


             Description                    Judgements and Uncertainties               from Assumptions
Stock-Based Compensation
The Company's stock-based compensation FF estimates the fair value of stock    These estimates involve inherent
awards consist of options granted to   options using the Black-Scholes         uncertainties and the application
employees, directors and non-employees option-pricing model. Determining the   of management's judgment. If FF
for the purchase of common stock. The  fair value of stock-based compensation  had made different assumptions,
Company recognizes stock-based         awards under this model requires highly FF's stock-based compensation
compensation expense in accordance     subjective assumptions, including the   expense and its net loss could
with the provisions of ASC 718,        fair value of the underlying common     have been materially different.
Compensation - Stock Compensation      share (when there is no public market
("ASC 718"). ASC 718 requires the      for the share), the risk-free interest  An increase in risk-free interest
measurement and recognition of         rate, the expected term of the award,   rate will reduce the estimated
compensation expense for all           the expected volatility of the price of fair value of a stock option
stock-based compensation awards based  FF's common shares, and the expected    grant, while decrease in these
on the grant date fair values of the   dividend yield of FF's common share.    factors will have an opposite
awards.

effect.

The Company estimates the fair value Expected term - The estimate of the of stock options using the

             expected term of awards was determined  Likewise, a decrease in
Black-Scholes option pricing model.    in accordance with the simplified       volatility and expected term will
For options with service conditions,   method, which estimates the term based  decrease the estimated fair value
the value of the award is recognized   on an averaging of the vesting period   of a stock option grant, while an
as expense over the requisite service  and contractual term of the option      increase in these factors will
period on a straight-line basis. For   grant for employee awards and the

have an opposite effect. performance-based awards, stock-based contractual term of the stock option compensation expense is recognized award agreement for non-employees.

      The Company does not expect to
over the expected performance                                                  change the dividend yield
achievement period of individual       Expected volatility - The Company       assumption in the near future.
performance milestones when the        determines the expected volatility by
achievement of each individual         weighing the historical average
performance milestone becomes          volatilities of publicly traded
probable.                              industry peers and it own trading
                                       history. FF intends to continue to

Fair value of Common Stock - Prior to consistently apply this methodology the close of the Business Combination, using the same or similar public there was no public market for Legacy companies until a sufficient amount of FF's Class A Ordinary Stock.

           historical information regarding the
Therefore, Legacy FF's Board of        volatility of the Company's own Class A
Directors determined the fair value of Common Stock price becomes available,
Legacy FF's Class A Ordinary Stock at  unless circumstances change such that
the time of the grant of stock options the identified companies are no longer
by considering a number of objective   similar to FF, in which case more
and subjective factors. The fair value suitable companies whose stock prices
of the stock was determined in         are publicly available would be
accordance with applicable elements of utilized in the calculation.
the practice aid issued by the
American Institute of Certified Public Risk-free interest rate - The risk-free
Accountants titled, "Valuation of      interest rate used to value awards is
Privately Held Company Equity          based on the United States Treasury
Securities Issued as Compensation".    yield in effect at the time of grant
Legacy FF's Board of Directors granted for a period consistent with the
stock options with exercise prices     expected term of the award.
equal to the fair value of Legacy FF's
Class A Ordinary Stock on the date of  Dividend yield - The Company has never
grant. After the close of the Business declared or paid any cash dividends and
Combination, the closing price of FF's does not presently plan to pay cash
Class A Common Stock on the Nasdaq as  dividends for the foreseeable future.
reported will be used.
                                       Forfeiture rate - Stock-based
                                       compensation expense is reduced for
                                       forfeitures, which the Company
                                       estimates based on an analysis of
                                       actual forfeitures. The Company will
                                       continue to evaluate the
                                       appropriateness of the forfeiture rate
                                       based on actual forfeiture experience,
                                       analysis of employee turnover, and
                                       other factors. Changes in the estimated
                                       forfeiture rate can have a significant
                                       impact on the Company's stock-based
                                       compensation expense as the cumulative
                                       effect of adjusting the rate is
                                       recognized in the period the estimated
                                       forfeiture rate is changed.





                                      124


--------------------------------------------------------------------------------

Effect if Actual Results Differ from


           Description                  Judgements and Uncertainties                      Assumptions
Fair Value of Ordinary Shares
Prior to the Business Combination, FF considered various objective and    During 2020 and 2021 (prior to the closing
FF was required to estimate the    subjective factors to determine the    of the Business Combination), FF's estimated
fair value of the ordinary shares  fair value of FF's ordinary shares as  fair value of its Class A Ordinary Shares
underlying FF's stock-based        of each grant date, including:         remained relatively consistent, fluctuating
awards. The fair value of the                                             between $2.449 per share as of March 31,
ordinary shares underlying FF's    •Contemporaneous valuations performed  2020 ("March 2020 valuation") and $2.767 per
stock-based awards had been        by unrelated third-party experts;      share as of January 20, 2021 ("January 2021
determined in each case by FF's    •The progress of FF's research and     valuation"). As of April 20, 2021, FF's
Board, with input from management  development;                           estimated fair value of its Class A Ordinary
and contemporaneous third-party    •FF's stage of development and         Shares was $7.948 ("April 2021 valuation").
valuation expert. FF believes that commercialization and FF's business
its Board has the relevant         strategy;                              In order to estimate the fair value of FF's
experience and expertise to        •Industry information, such as         Class A Ordinary Stock, FF utilized more
determine the fair value of FF's   external market conditions affecting   than one valuation approach. The March 2020
ordinary shares. FF's Board        the electric car industry and trends   valuation was completed prior to the
intends all stock options granted  within the electric car industry;      contemplation of the Business Combination.
to be exercisable at a price per   •Lack of marketability of FF's         As such, income and market approaches were
share not less than the fair value ordinary shares;                       utilized in estimating the fair value. The
per share of the ordinary share    •Likelihood of achieving a liquidity   January 2021 valuation and April 2021
underlying those stock options on  event, such as an initial public       valuation used a Hybrid Method, applying a
the date of grant. In the absence  offering, SPAC merger, or strategic    probability-weighted expected return method
of a public market for FF's        sale given prevailing market           ("PWERM") to weight the indicated equity
ordinary shares, the valuation of  conditions and the nature and history  value determined under the option pricing
FF's ordinary shares had been      of FF's business;                      model, income, and market approaches for the
determined using a hybrid method,  •Prices, privileges, powers,           scenario in which the Business Combination
which incorporated a               preferences, and rights of our         does not close, and the equity value implied
scenario-based method and an       convertible preferred stock relative   by the planned Business Combination.
option pricing method. The         to those of FF's ordinary shares;
valuation was performed in         •Forecasted cash flow projections for  During 2020, FF experienced financial
accordance with the guidelines     FF's business;                         hardship and was unable to satisfy its
outlined in the American Institute •Liquidity of stock-based awards       liabilities, including payables in vendor
of Certified Public Accountants    involving securities in a private      trust, notes payable, and related party
Practice Guide, Valuation of       company; and                           notes payable. Further, given these
Privately Held Company Equity      •Macroeconomic conditions.             financial hardships, FF was unable to
Securities Issued as Compensation.

successfully achieve its strategic plans,


                                   The assumptions underlying these

including completing its manufacturing


                                   valuations represented management's

facility in Hanford or generating revenues


                                   best estimate, which involved inherent

from the sale of FF 91. Please refer to Key


                                   uncertainties and the application of

Factors Affecting Operating Results and


                                   management's judgment. The probability

Liquidity and Capital Resources and Going


                                   of a liquidity event and the derived

Concern within FF's Management's Discussion


                                   discount rate are significant

and Analysis of Financial Condition and


                                   assumptions used to estimate the fair

Results of Operations for further details on


                                   value of FF's ordinary shares. If FF

FF's operations, capital resources, and


                                   had used different assumptions or

going concern.


                                   estimates, the fair value of FF's

The increase in value between the January


                                   ordinary shares and FF's stock-based

2021 valuation and the April 20, 2021 was


                                   compensation expense could have been

due to FF's progress towards the Business


                                   materially different.

Combination. During the latter half of 2020,

FF started contemplating a SPAC merger and

began taking the necessary steps to prepare

for the Business Combination with PSAC. The

necessary steps undertaken to prepare for

the Business Combination included meeting

with PSAC and investment bankers, discussing

timing expectations, and negotiating the

preliminary letter of intent between PSAC

and FF. As FF's ongoing negotiations related

to the Business Combination reflected an

increased likelihood of a near-term exit

transaction and/or liquidity event, the

valuation of FF's equity as of the January

2021 valuation and April 2021 valuation took

into consideration the indicated equity

value implied by the negotiations as well as

the uncertainty inherent in the future key

milestones including execution of the Merger

Agreement and PSAC's stockholder vote.


                                      125
--------------------------------------------------------------------------------

Effect if Actual Results Differ


                Description                     Judgements and Uncertainties               from Assumptions
Fair Value Measurements and Fair Value of
Related Party Notes Payable and Notes
Payable
The accounting guidance for financial       Fair value measurement applies to     Certain of the related party notes
instruments allows entities to voluntarily  financial assets and liabilities as   payable and notes payable contain
choose to measure certain financial assets  well as other assets and liabilities  embedded liquidation premiums with
and liabilities at fair value (fair value   carried at fair value on a recurring  conversion rights that represent
option). The fair value option may be       and nonrecurring basis. Fair value is embedded derivatives whose value is
elected on an instrument-by-instrument      an exit price, representing the       directly related to the fair value
basis and is irrevocable unless a new       amount that would be received to sell of the Common Stock. As the value
election date occurs. If the fair value     an asset or paid to transfer a        of the Common Stock increases, the
option is elected for an instrument,        liability in an orderly transaction   value of these related party notes
unrealized gains and losses for that        between market participants. As such, payable and notes payable
instrument should be reported in earnings   fair value is a market-based

increases, and as the value of at each subsequent reporting date. measurement that should be determined Common Stock decreases, the value


                                            based on assumptions that market      of these related party notes
FF has elected the fair value option for    participants would use in pricing an  payable and notes payable decrease.
certain related party notes payable and     asset or liability. As a basis for
notes payable with embedded derivatives.    considering such assumptions, the
The fair value of certain related party     standard establishes a three-tier
notes payable and notes payable was         value hierarchy, which prioritizes
determined using a yield method,            the inputs used in measuring

fair


probability weighted for the likelihood of  value as follows:
a liquidity event prior to maturity that
would result in the conversion of the notes Valuations for assets and liabilities
payable into ordinary shares. The           traded in active exchange markets, or
probability of a liquidity event and the    interest in open-end mutual funds
derived discount rate are assumptions used  that allow a company to sell its
to estimate the fair value of FF's notes    ownership interest back at net asset
payable carried at fair value. For further  value on a daily basis. Level 1
discussion see Note 8, Fair Value of        valuations are obtained from readily
Financial Instruments in the Notes to FF's  available pricing sources for market
Consolidated Financial Statements included  transactions involving identical
elsewhere in this Annual Report on Form     assets, liabilities, or funds.
10-K,
                                            Valuations for assets and liabilities
                                            traded in less active dealer, or
                                            broker markets, such as quoted prices
                                            for similar assets or liabilities or
                                            quoted prices in markets that are not
                                            active. Level 2 instruments typically
                                            include U.S. government and agency
                                            debt securities, and corporate
                                            obligations. Level 2 valuations are
                                            usually obtained through market data
                                            of the investment itself as well as
                                            market transactions involving
                                            comparable assets, liabilities or
                                            funds.

                                            Valuations for assets and liabilities
                                            that are derived from other valuation
                                            methodologies, such as option pricing
                                            models, discounted cash flow models
                                            and similar techniques, and not based
                                            on market exchange, dealer, or
                                            broker-traded transactions. Level 3
                                            valuations incorporate certain
                                            assumptions and projections in
                                            determining the fair value assigned
                                            to such assets or liabilities.






                                      126


--------------------------------------------------------------------------------

Effect if Actual Results Differ from


            Description                  Judgements and Uncertainties                  Assumptions
Income Taxes
FF recognizes deferred tax           In evaluating the need for a          The Company has recognized a full
liabilities and assets for the       valuation allowance, management       valuation allowance as of December
expected future tax consequences of  considers the weighting of all        31, 2022 and 2021 since, in the
temporary differences between the    available positive and negative       judgment of management given the
carrying amounts and the tax bases   evidence, which includes, among other Company's history of losses, the
of assets and liabilities. Deferred  things, the nature, frequency and     realization of these assets was not
income tax assets and liabilities    severity of current and cumulative    considered more likely than not. The
are measured using enacted tax rates taxable income or losses, future      valuation allowance was $366,349 and
expected to apply to taxable income  projections of profitability, and the $256,413 as of December 31, 2022 and
in the years in which those          duration of statutory carryforward    2021, respectively. The ultimate
temporary differences are expected   periods.                              realization of deferred tax assets
to be recovered or settled. The                                            is dependent upon the generation of
effect of a change in tax rates on   FF recognizes the tax benefit from an future taxable income during the
deferred tax assets and liabilities  uncertain tax position only if it is  period in which the temporary timing
is recognized in the Consolidated    more likely than not that the tax     differences become deductible.
Statements of Operations and         position will be sustained on
Comprehensive Loss in the period     examination by the taxing
that includes the enactment date. A  authorities, based on the technical
valuation allowance is recorded when merits of the position. The tax
it is more likely than not that some benefits recognized in FF's
of the deferred tax assets will not  Consolidated Financial Statements
be realized.                         from such positions are then measured
                                     based on the largest benefit that has
                                     a greater than 50% likelihood of
                                     being realized. FF recognizes
                                     interest and penalties accrued with
                                     respect to uncertain tax positions,
                                     if any, in its provision for income
                                     taxes in the Consolidated Statements
                                     of Operations and Comprehensive Loss.

Recent Accounting Pronouncements



See Note 1 in the sections titled "Recent Accounting Pronouncements" as referred
to in FF's Consolidated Financial Statements included elsewhere in this Annual
Report on Form 10-K for a discussion about our recently adopted accounting
pronouncements and the recently issued accounting pronouncements not yet adopted
which are determined to be applicable to the Company.

Latest news about Faraday Future Intelligent Electric Inc.

Top Premarket Gainers	May. 15	MT
Wall Street Set to Open Flat Tuesday as Key Inflation Gauge Rises More Than Expected	May. 14	MT
Top Premarket Gainers	May. 14	MT
Faraday Future Intelligent Electric Inc. Appoints Werner Wilhelm as Executive Launch Director	Apr. 23	CI
Faraday Future Continues Progress in the Middle East Market with Establishment of A Middle East Sales Entity	Apr. 09	CI
Faraday Future files lawsuit against former executive for trade secrets infringement	Mar. 04	RE
Faraday Future Intelligent Electric Inc. Announces That Xuefeng (Xf) Chen Transitioned from His Role as China Chief Executive Officer to Senior Vice President	Mar. 01	CI
Faraday Future plans second reverse stock split in five months	Feb. 26	RE
Faraday Future Intelligent Electric Inc. Delivers an FF 91 2.0 to Motev	Feb. 07	CI
Faraday Future Intelligent Electric Inc. Completes Nearly 1,600 OTA Upgrades and Product Enhancements on Its FF 91 2.0	Jan. 21	CI
EV startup Faraday Future's sinking share price prompts Nasdaq notice	Dec. 29	RE
Faraday Future Intelligent Electric Inc. announced that it has received $0.0001 million in funding	Dec. 20	CI
Faraday Future Intelligent Electric Inc.(NasdaqCM:FFIE) dropped from S&P Global BMI Index	Dec. 18	CI
Global markets live: Amazon, Blackrock, General Motors, Eli Lilly, Novavax...	Nov. 28
Faraday Future Intelligent Electric Enters Middle East Market Via Agreements With Master Investment Group, Siraj Holding	Nov. 24	MT
Faraday Future Intelligent Electric Inc. Announces Entry into Middle East, Signs Strategic Cooperation Agreements with Master Investment Group and Siraj Holding LLC	Nov. 23	CI
Transcript : Faraday Future Intelligent Electric Inc. - Special Call	Nov. 23
Faraday Future Intelligent Electric Inc. Unveils FF aiPal	Nov. 16	CI
Transcript : Faraday Future Intelligent Electric Inc., Q3 2023 Earnings Call, Nov 13, 2023	Nov. 13
Faraday Future Intelligent Electric Inc. Reports Earnings Results for the Third Quarter and Nine Months Ended September 30, 2023	Nov. 13	CI
Faraday Future Intelligent Electric Plans to Deliver Five FF 91 2.0 Futurist Alliance Cars in November	23-10-30	MT
Justin Bell Takes Delivery of His FF 91 2.0 Futurist Alliance	23-10-25	CI
Faraday Future Intelligent Electric Inc. Completes the Sale-Leaseback of Its Hanford, California Manufacturing Facility	23-10-19	CI
Faraday Future Intelligent Electric Inc. acquired Hanford, California manufacturing facility.	23-10-18	CI
Faraday Future Intelligent Electric Plans Cost Reductions, Insourcing of Capital-Intensive Systems	23-10-17	MT

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Company Profile

Faraday Future Intelligent Electric Inc. is a shared intelligent mobility ecosystem company. The Company designs and engineers intelligent, connected, electric vehicles. Its technologies include its Variable Platform Architecture (VPA), propulsion system, and Internet, Autonomous Driving, and Intelligence (I.A.I.) system. The VPA is a modular skateboard-like platform, which can be sized to accommodate various motor and powertrain configurations, enabling product development for both the passenger and commercial vehicle segments. Its propulsion system includes an inverter design, and a propulsion system that provides electric drivetrain performance. Its advanced I.A.I. technology offers computing, high-speed Internet connectivity, over-the-air (OTA) updates, an open ecosystem for third party application integration, and a level III autonomous driving-ready system. Its business-to-consumer (B2C) passenger vehicle pipeline includes the FF 91 series, FF 81 series, and FF 71 series.

Sector

Auto & Truck Manufacturers

Calendar

2024-05-27 - Q4 2023 Earnings Release

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