Notes Payable

9 Months Ended

Sep. 30, 2021

Debt Disclosure [Abstract]

Notes Payable

Notes Payable

The Company has entered into notes payable agreements with third parties, which consists of the following as of September 30, 2021:

Note Name	Contractual Maturity Date	Contractual Interest Rates	Unpaid Principal Balance		Fair Value Measurement Adjustments		Proceeds Allocated to Warrants		Net Carrying Value		Interest Expense for the Three Months Ended Sept. 30, 2021		Interest Expense for the Nine Months Ended Sept. 30, 2021
Notes payable – China various other(3)	Due on Demand	0.00%	$	5,366	$	—	$	—	$	5,366	$	—	$	—
March 1, 2021 Notes(1)	March 1, 2022	14.00%	55,000		5,076		(2,507)		57,569		1,962		4,536
August 26, 2021 Notes(1)	March 1, 2022	14.00%	30,000		1,402		—		31,402		393		393
PPP Loan	April 17, 2022	1.00%	9,168		—		—		9,168		23		68
June 9, 2021 Note 1 (2)	December 9, 2022	0.00%	20,000		10,079		(2,563)		27,516		—		—
June 9, 2021 Note 2 (2)	December 9, 2022	0.00%	20,000		7,402		(2,562)		24,840		—		—
August 10, 2021 Optional Notes(2)	February 10, 2023	15.00%	33,917		21,321		(7,976)		47,262		—		—
			$	173,451	$	45,280	$	(15,608)	$	203,123	$	2,378	$	4,997
Notes payable, current portion									$	103,505
Notes payable, less current portion									99,618
Total notes payable									$	203,123

(1)On March 1, 2021, the Company amended the NPA to permit the issuance of additional notes payable with principal amounts up to $85,000. On the same day, the Company entered into notes payable agreements with Ares for an aggregate principal of $55,000, receiving net proceeds of $51,510, inclusive of a 4.00% original issue discount and $90 of debt issuance costs paid directly by the lender. The notes payable are collateralized by a first lien on virtually all tangible and intangible assets of the Company and bear interest at 14% per annum. The notes payable mature on March 1, 2022.

In addition, in conjunction with the issuance of the notes payable, the Company committed to issue the Ares Warrants to the lender to purchase the Company’s Class A Common Stock no later than August 11, 2021, or if earlier, 15 days after consummation of the Business Combination. The warrants have a term of six years, be equal to 0.20% of the fully diluted capitalization of FFIE’s Class A Common Stock and have an exercise price of $10.00 per share. The commitment to issue the warrants meets the definition of a derivative, was accounted for as a liability, and will be marked to fair value at the end of each reporting period with changes in fair market value recorded in the Condensed Consolidated Statements of Operations and Comprehensive Loss. The Company determined the commitment to issue warrants was a liability as of March 1, 2021, and estimated the fair value of the warrants to be $5,000 using the Black-Scholes option-pricing model under two scenarios (see Note 8, Fair Value of Financial Instruments).

On August 5, 2021, the Company issued Ares warrants to purchase 670,092 shares of Class A Common Stock at an exercise price of $10.00 per share in satisfaction of this commitment. The warrants are exercisable at any time within six years of the issuance date. Upon their issuance, the warrants met all requirements for equity classification under the equity scope exception in ASC 815-40 as the number of shares underlying the warrants and their exercise price were fixed. Accordingly, the Company determined the fair value of the Ares Warrants to be $2,507 on August 5, 2021 and recorded the value as a discount to the Notes Payable and an increase in APIC in the unaudited Condensed Consolidated Balance Sheets as of September 30, 2021.

On August 26, 2021, the Company exercised its option under the March 1, 2021 notes payable agreement with Ares to draw an additional principal amount of $30,000, receiving net proceeds of $29,913, inclusive of $87 of debt issuance costs paid directly by the lender.

The notes payable are collateralized by a first lien on virtually all tangible and intangible assets of the Company, bear interest at 14% per annum and mature on March 1, 2022. As the August 26, 2021 Notes mature in less than one year, according to the terms of the amended NPA, the Company expects to repay them with a payment premium of 14% (“Payment Premium”). The

Company has elected the fair value option to value the notes as the notes include features, such as a contingently exercisable put option, which meet the definition of an embedded derivative.

Upon the closing of the Business Combination, the cash requirement prescribed in the NPA increased from $5,000 to $25,000. The Company has classified $25,000 as Restricted Cash on its unaudited Condensed Consolidated Balance Sheet as of September 30, 2021.

On February 25, 2022, the Company paid $96,921 in cash to settle the March 1, 2021 Notes and the August 26, 2021 Notes with principal amount of $85,000, accrued interest of $9,856 and Payment Premium of $2,065.

March 1, 2021 Notes
Outstanding principal	$	55,000
Accrued interest	4,536
Interest expense for the three months ended September 30, 2021	1,962
Interest expense for the nine months ended September 30, 2021	4,536
Original issue discount	3,490
Debt issuance costs	315
Principal payments	—
Interest payments	—
Net proceeds	51,510

August 26, 2021 Notes
Outstanding principal	$	30,000
Accrued interest	393
Interest expense for the three months ended September 30, 2021	393
Interest expense for the nine months ended September 30, 2021	393
Original issue discount	—
Debt issuance costs	87
Principal payments	—
Interest payments	—
Net proceeds	29,913

(2)On June 9, 2021, the Company amended the NPA to permit the issuance of two notes payable, each with a principal value of $20,000 (“June 2021 Notes”), to a US-based investment firm. The Company received net proceeds of $35,603 as part of the June 2021 Notes inclusive of $4,200 of original issue discount and $197 of debt issuance costs paid by the lender. The June 2021 Notes are subordinate to the notes payable issued to Ares on March 1, 2021 and August 26, 2021 (see (1) above) and senior in priority to the notes payable issued under the NPA prior to September 9, 2020. The June 2021 Notes mature on December 9, 2022, and do not bear interest unless extended beyond its maturity date by the US-based investment firm, in which case, the June 2021 Notes will bear interest at 10% per annum starting upon their original maturity. Each of the June 2021 Notes are subject to an original issue discount of 8% and 13%, respectively. One of the June 2021 Notes with a principal amount of $20,000, contains a conversion premium that, within a year from a Qualified SPAC Merger, the then outstanding principal and accrued interest of the notes playable plus a 30% premium may convert into Class A Common Stock of the Company, at the election of the US-based investment firm.

In conjunction with the issuance of the June 2021 Notes, the Company issued warrants to the US-based investment firm to purchase up to 1,500,000 shares of the Company’s Class A Common Stock for $10.00 per share and an expiration date of June 9, 2028, which were adjusted for down-round provisions in the original warrant agreements. The fair value of the warrants of $5,125 upon issuance was recorded in APIC (see Note 8, Fair Value of Financial Instruments).

As part of the amendment to the NPA from June 9, 2021, on or prior to the 12-month anniversary of the Qualified SPAC Merger, the US-based investment firm has the option to purchase additional notes for up to $40,000 and if drawn, would be subject to similar original issue discounts, warrant provisions, and conversion premiums as the June 2021 Notes. The warrants issued with the June 2021 Notes and the Optional Notes, along with the notes previously issued to the same lender, are provided

with anti-dilution protection. The US-based investment firm has not elected to convert the Optional Notes to Class A Common Stock and they are outstanding as of September 30, 2021.

On August 10, 2021, in accordance with the NPA, the US-based investment firm exercised its option to purchase optional notes (“Optional Notes”) with principal of $33,917, whose option was in conjunction with the original September 9, 2020, January 13, 2021 and March 12, 2021 Notes Payable. The Company received net proceeds of $30,375, which is the total principal amount of $33,917 net of 8% original issue discount and $828 of issuance costs. The Optional Notes bear interest at 15% beginning December 2021 and have a maturity date of February 10, 2023. The Optional Notes are convertible at the option of the holder with a conversion price of $10.00 per share. The Optional Notes contain a conversion premium, effective until August 10, 2022, according to which the outstanding principal and accrued interest of the notes payable at the time of liquidation plus a 30% premium are convertible into shares of Class A Common Stock. The Company elected the fair value option to measure the Optional Notes (see Note 8, Fair Value of Financial Instruments).

In conjunction with the issuance of the Optional Notes, the Company issued the US-based investment firm warrants to purchase up to 1,187,083 shares of Class A Common Stock with an exercise price of $10.00 per share. The warrants are exercisable within seven years of their original issuance dates. The fair value of the warrants of $7,976 upon issuance was recorded in APIC (see Note 8, Fair Value of Financial Instruments).

Subsequent to the balance sheet date, in January 2022, the Company defaulted on the Optional Notes. The holders of the Optional Notes have waived the default.

June 9, 2021 Note 1:
Outstanding principal	$	20,000
Accrued interest	—
Interest expense for the three months ended September 30, 2021	—
Interest expense for the nine months ended September 30, 2021	—
Original issue discount	1,600
Debt issuance costs	197
Principal payments	—
Interest payments	—
Net proceeds	18,203

June 9, 2021 Note 2:
Outstanding principal	$	20,000
Accrued interest	—
Interest expense for the three months ended September 30, 2021	—
Interest expense for the nine months ended September 30, 2021	—
Original issue discount	2,600
Debt issuance costs	—
Principal payments	—
Interest payments	—
Net proceeds	17,400

August 10, 2021 Optional Notes:
Outstanding principal	$	33,917
Accrued interest	—
Interest expense for the three months ended September 30, 2021	—
Interest expense for the nine months ended September 30, 2021	—
Original issue discount	2,714
Debt issuance costs	828
Principal payments	—
Interest payments	—
Net proceeds	30,375

(3)On January 15, 2021, the Company borrowed $102 from a Chinese lender. The unsecured note payable is payable on demand and does not have a stated interest rate.

The Company settled select notes payable during the three months ended September 30, 2021 through the conversion of notes payable into Class A Common Stock just prior to the Business Combination and a combination of cash payments and the commitment to issue Class A Common Stock in settlement of outstanding principal plus accrued interest and conversion premiums pursuant to the closing of the Business Combination, as follows:

Note Name	Contractual Maturity Date	Contractual Interest Rates	Principal balance at June 30, 2021		Accrued Interest at Settlement		Fair Value Adjustment at Settlement		Cash Payment		Settlement with commit-ment to issue Class A Common Stock		Loss on Settlement for the Three and Nine Months Ended Sept. 30, 2021
Settlement prior to the Business Combination:
Note payable(8)	Various	12.00%	$	56,000	$	17,177	$	—	$	—	$	(73,177)	$	—
Notes payable(8)	June 30, 2021	12.00%	19,100		6,098		—		—		(25,198)		—
Subtotal settlements just prior to the closing of the Business Combination			75,100		23,275		—		—		(98,375)		—
Pursuant to the closing of the Business Combination:
Notes payable (NPA)(9)	October 6, 2021	10.00%	17,636		3,613		3,527		(17,636)		(7,141)		2,699
January 13 and March 8, 2021 Notes(4)(9)	October 6, 2021	Various	9,350		82		4,301		(11,582)		(2,151)		813
January 13 and March 12, 2021 Notes(5)(9)	October 6, 2021	0.00%	18,250		—		5,475		—		(23,725)		8,968
Note payable(6)(9)	October 6, 2021	12.75%	15,667		—		4,700		—		(20,367)		7,698
Note payable(7)(9)	March 9, 2022	0.00%	15,667		270		6,110		(18,992)		(3,055)		1,155
Notes payable – China(7)(9)	Various Dates in 2021	6.00%	4,917		757		—		—		(5,674)		2,145
Notes payable – China(7)(9)	Due on Demand	9.00%	3,715		2,713		—		—		(6,428)		2,430
Subtotal settlements pursuant to the closing of the Business Combination			85,202		7,435		24,113		(48,210)		(68,541)		25,908
Total			$	160,302	$	30,710	$	24,113	$	(48,210)	$	(166,916)	$	25,908

(4)On January 13, 2021, the Company amended the NPA to permit the issuance of additional secured convertible notes payable and issued $3,750 of notes payable to Birch Lake (“BL Notes”), receiving net proceeds of $3,285, inclusive of a 6.50% original issue discount, and $225 of debt issuance costs paid directly by the lender. The additional secured convertible notes payable accrue interest at 8% per annum. The BL Notes contained a liquidation premium that ranges from 35% to 45% depending on the timing of settlement, with 50% of this premium convertible into equity. The Company determined that the feature to settle the BL Notes at a premium upon the occurrence of a default, change in control, or a Qualified SPAC Merger was a contingently exercisable put option with a liquidation premium and represents an embedded derivative. The Company elected the fair value option to measure this note payable (see Note 8, Fair Value of Financial Instruments).

On March 8, 2021, the Company entered into a notes payable agreement under the NPA with Birch Lake for total principal of $5,600, receiving net proceeds of $4,933, net of a 6.50% original issue discount and $307 of debt issuance costs paid directly by the lender. The notes payable accrued interest at 15.75% per annum. The notes payable contain a liquidation premium that ranges from 42% to 52% depending on timing of settlement, with 50% of this premium convertible into equity. The Company determined that the feature to settle the notes payable at a premium upon the occurrence of a default, change in control, or a Qualified SPAC Merger was a contingently exercisable put option with a liquidation premium and represents an embedded derivative. The Company elected the fair value option to measure these notes payable (see Note 8, Fair Value of Financial Instruments).

January 13 and March 8, 2021 Notes
Outstanding principal	$	—
Accrued interest	—
Interest expense for the three months ended September 30, 2021	82
Interest expense for the nine months ended September 30, 2021	632
Original issue discount recorded in interest expense	600
Debt issuance costs recorded in interest expense	532
Principal payments	9,350
Interest payments	632
Net proceeds	8,218

(5)On January 13, 2021, the Company entered into a notes payable agreement under the NPA, (“January 13 Notes”) with a US-based investment firm for total principal of $11,250, receiving net proceeds of $9,870, net of an 8% original issue discount and $480 of debt issuance costs paid directly by the lender. The note payable is collateralized by a first lien on virtually all tangible and intangible assets of the Company and bears interest at 0% per annum. On March 12, 2021, the Company and the US-based investment firm entered into a notes payable agreement (“March 12 Notes”) for an aggregate principal amount of $7,000, receiving net proceeds of $6,440, net of an 8% original issue discount. The terms of this note payable are the same as the note payable issued on January 13, 2021. The January 13 Notes and March 12 Notes were automatically converted into 2,372,500 shares of Class A Common Stock at an amount equal to 130% of all outstanding principal, accrued and unpaid interest and accrued original issue discount under the notes pursuant to the closing of the Business Combination and the notes and interest were deemed satisfied in full and terminated. The Company elected the fair value option for these note payable because the inclusion of a conversion feature that allowed the lenders to convert the notes payable into Class A Common Stock after the closing of the Business Combination.

In conjunction with the issuance of the January 13 Notes and March 12 Notes, the Company issued warrants to purchase 38,182 shares of the Class A Common Stock with an exercise price of $19.25 per share and 306,228 shares of the Company’s Class A Common Stock with an exercise price of $19.18 per share, respectively. The warrants were issued with a term of seven years and are subject to certain down-round adjustments. The Company recorded the fair value of the warrants in APIC in accordance with the derivative accounting scope exception in ASC 815 for certain contracts involving an entity’s own stock. The Company estimated the fair value of the warrants to be $1,988 using the Black-Scholes option-pricing model (see Note 8, Fair Value of Financial Instruments). On August 10, 2021, these warrants, along with warrants to purchase 272,730 shares of Class A Common Stock that were issued on September 9, 2020, were replaced with the issuance of warrants to purchase 1,187,083 of the Company’s Class A Common Stock at an exercise price of $10.00 per share, as adjusted by down-round provisions contained in the warrant agreement. The replacement warrants have the same expiration dates as the warrants they replaced.

January 13 and March 12, 2021 Notes:
Outstanding principal	$	—
Accrued interest	—
Interest expense for the three months ended September 30, 2021	—
Interest expense for the nine months ended September 30, 2021	—
Original issue discount	1,460
Debt issuance costs recorded in interest expense	480
Principal payments	18,250
Interest payments	—
Net proceeds	16,310

(6)On January 13, 2021, the Company amended the NPA to increase the principal amount of its September 9, 2020 $15,000 note payable with a US-based investment firm by $667. The Company received no cash proceeds as the increase in principal was used to pay a consent fee to the US-based investment firm. The Company recorded the consent fee in Interest Expense on the unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the nine months ended September 30, 2021. The consent fee permitted the issuance of additional notes payable to the US-based investment firm of $11,250 and $7,000, as described in (3) above.

(7)On January 13, 2021, the Company amended the NPA to issue an additional note to Birch Lake, with the same terms as its $15,000 note payable to Birch Lake, in the amount of $667. The Company received no cash proceeds as the additional note was used to pay a consent fee to Birch Lake. The Company recorded the consent fee in Interest Expense on the unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the nine months ended September 30, 2021. The consent fee permitted the issuance of additional notes payable to Birch Lake of $3,750 and $5,600, as described in (2) above.

(8)Conversion of Notes Payable

Just prior to the Business Combination, the Company converted notes payable with an aggregate principal balance of $75,100 and accrued interest of $23,275 into 7,823,306 shares of Class A Common Stock.

(9)Closing of the Business Combination

As further described in Note 3, Business Combination, in conjunction with the closing of the Business Combination, the Company paid $48,210 in cash and a commitment to issue 6,854,013 shares of Class A Common Stock to settle notes payable principal amounts of $85,202 and accrued interest of $7,435. Where the Company converted notes payable into Class A Common Stock, the Company recorded a loss on settlement of the notes payable of $25,908 in the unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2021 due to converting the notes payable at $10.00 per share which was below the fair value of the stock on the date of conversion.

Fair Value of Notes Payable Not Carried at Fair Value

The estimated fair value of the Company’s notes payable not carried at fair value, using inputs from Level 3 under the fair value hierarchy, was $14,429 and $105,610 as of September 30, 2021 and December 31, 2020, respectively.

Schedule of Principal Maturities of Notes Payable

The future scheduled principal maturities of notes payable as of September 30, 2021 are as follows:

Due on demand	$	5,366
2021	—
2022	134,168
2023	33,917
	$	173,451