Notes Payable

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

Notes Payable

Notes Payable

The Company has entered into notes payable agreements with third parties, which consist of the following as of June 30, 2023 and December 31, 2022:

	June 30, 2023
(in thousands)	Contractual Maturity Date	Contractual Interest Rates	Unpaid Principal Balance		Fair Value Measurement Adjustments		Original Issue Discount and Proceeds Allocated to Warrants		Net Carrying Value
Secured SPA Notes (1)	Various	10%-15%	$	101,456	$	(33,840)	$	(6,751)	$	60,865
Unsecured SPA Notes (1)	Various dates in 2029	10%-15%	11,379		(575)		(2,017)		8,787
Notes payable – China other	Due on Demand	—%	4,816		—		—		4,816
Auto loans	October 2026	7%	89		—		—		89
			$	117,740	$	(34,415)	$	(8,768)	74,557
Less: Related party notes payable									(7,777)
Less: Notes payable, current portion									(4,905)
Total: Notes payable, less current portion									$	61,875

	December 31, 2022
(in thousands)	Contractual Maturity Date	Contractual Interest Rates	Unpaid Principal Balance		Fair Value Measurement Adjustments		Original Issue Discount and Proceeds Allocated to Warrants		Net Carrying Value
Secured SPA Notes (1)	October 27, 2028	10%	$	36,622	$	264	$	(10,878)	$	26,008
Notes payable – China other	Due on Demand	—%	4,997		—		—		4,997
Auto loans	October 2026	7%	100		—		—		100
			$	41,719	$	264	$	(10,878)	31,105
Less: Notes payable, current portion									(5,097)
Total: Notes payable, less current portion									$	26,008

(1) Secured and Unsecured SPA Notes

On August 14, 2022, the Company entered into a Securities Purchase Agreement (the “Secured SPA”) with certain entities affiliated with ATW Partners LLC and RAAJJ (and together with Senyun the “Secured SPA Purchasers”) to issue and sell the Company’s senior secured convertible notes (the “Secured SPA Notes”) in three tranches aggregating to $52.0 million in principal and maturing on August 14, 2026 (subsequently extended to October 27, 2028). On May 8, 2023, as further described below, the Company entered into an Unsecured SPA with MHL and VW to issue and sell $100.0 million aggregate principal of the Company’s senior unsecured convertible notes (the “Unsecured SPA Notes”, and collectively with the Secured SPA Notes the “SPA Notes”). The terms of the Secured SPA Notes and Unsecured SPA Notes are generally the same, however, the Secured SPA Notes are secured by the grant of a second lien upon substantially all of the personal and real property of the Company and its subsidiaries, as well as guarantee by substantially all of the Company’s domestic subsidiaries.

The SPA Notes are subject to an original issue discount of 10%, and are convertible, along with any interest accrued, into shares of Class A Common Stock at the Conversion Price (as defined in each SPA Note), subject to full ratchet anti-dilution price protection. The original conversion price for the Secured SPA Notes was $2.69 (or $2.2865 for the initial tranche) and has been subsequently amended, as described below numerous times.

The SPA Notes bear interest at 10% per annum (or 15% if interest or settlement is paid in shares) payable on each conversion date and on the maturity date in cash or in shares of Class A Common Stock. Unless earlier paid, the SPA Notes entitle the purchasers, at each conversion date, to an interest make-whole (“Make-Whole Amount”), in a combination of cash or Class A Common Stock at the Company’s discretion, in the amount of the interest that would have been payable if such converted amount was held to maturity. The original conversion price for the Make-Whole Amount is the lesser of (a) the conversion price or (b) 90% of the lowest VWAP (as defined in the Secured SPA) for the five consecutive trading days. When calculating the shares issuable upon conversion, the Make-Whole Amount shall be decreased by 50% of the original issue discount pertaining to such amount.

Total commitments under the Secured SPA shall not exceed $300.0 million, however, each Secured SPA Purchaser has the option within 12 months from November 12, 2022 to purchase additional senior secured convertible notes under similar terms for a total potential commitments of up to $300.0 million (“Tranche B Notes”).

In connection with the issuance of the SPA Notes, the Company also granted to each Secured Purchaser and Unsecured SPA Purchaser a warrant to purchase shares of Class A Common Stock equal to 33% of the shares issuable upon conversion of the aggregate principal amount under the SPA Notes funded.

The Company elected the fair value option afforded by Accounting Standards Codification (“ASC”) 825, Financial Instruments, with respect to the SPA Notes because the notes include features, such as a contingently exercisable put option, which meet the definition of an embedded derivative. The Company expenses transaction costs to Changes in fair value of notes payable and warrant liabilities in the unaudited Condensed Consolidated Statement of Operations and Comprehensive Loss.

Secured SPA Amendment

On September 23, 2022, the Secured SPA Note was amended (the “First Secured SPA Amendment”), pursuant to which the Secured SPA Purchasers agreed to accelerate their funding obligations. The First Secured SPA Amendment modified the

conversion price to $1.05 per share and extended the maturity date to October 27, 2028. All of the other terms and conditions of the Secured SPA Notes were unchanged.

The Company evaluated the First Secured SPA Amendment in accordance with ASC 470-50, Debt–Modifications and Extinguishments, and determined that it constitutes an extinguishment because the change in the fair value of the conversion feature is substantial. Accordingly, the Company recognized a loss on extinguishment in Loss on settlement of notes payable in the unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss in the amount of $7.7 million, calculated as the difference between the reacquisition price of the debt and the net carrying amount of the Secured SPA Notes.

Third and Fourth Amendments to the Secured SPA

On October 24, 2022, the Company entered into a Limited Consent and Third Amendment to the Secured SPA (the “Third Secured SPA Amendment”), pursuant to which the maturity date for the Secured SPA Notes was extended from August 14, 2026 to October 27, 2028. In addition, pursuant to the Third Secured SPA Amendment, each Secured SPA Purchaser and the Agent waived certain defaults and events of default under the Secured SPA Notes, any notes issued pursuant to the Secured SPA Notes, and other related documents. The Third Secured SPA Amendment was accounted for as a troubled debt restructuring under ASC 470-60, Debt – Troubled Debt Restructurings by Debtors, because the Company was experiencing financial difficulty and the extension of the maturity date following the restructuring results in a reduced effective borrowing rate for the Company. The Third Secured SPA Amendment was accounted for prospectively with no gain or loss recorded in the Consolidated Statements of Operations and Comprehensive Loss for the year ended December 31, 2022.

On November 8, 2022, the Company entered into a Limited Consent and Amendment to the Secured SPA (the “Fourth Secured SPA Amendment”), pursuant to which the parties agreed that (i) in no event will the effective conversion price of any interest or interest make-whole amount payable in shares of Class A Common Stock be lower than $0.21 per share of Class A Common Stock, and (ii) in order for the Company to make payment of any interest or interest make-whole amount in shares of Class A Common Stock, certain price and volume requirements must be met, namely that (x) the VWAP of the Class A Common Stock is not less than $0.21 per share on any trading day during the preceding seven trading day period, and (y) the total volume of the Class A Common Stock does not drop below $1.5 million on any trading day during the same period (in each case, as adjusted for any stock splits, stock dividends, stock combinations, recapitalizations or other similar transactions). The Fourth Secured SPA Amendment was accounted for as a troubled debt restructuring under ASC 470-60, Debt – Troubled Debt Restructurings by Debtors, because the Company was experiencing financial difficulty and the addition of a floor price on the conversion of the convertible notes is assessed as a concession to the Company. The Fourth Secured SPA Amendment was accounted for prospectively with no gain or loss recorded in the Consolidated Statements of Operations and Comprehensive Loss for the year ended December 31, 2022.

Senyun Amendment

On December 28, 2022, the Company entered into a Letter Agreement and Amendment to the Secured SPA Notes (the “Senyun Amendment”) with Senyun pursuant to which the conversion rate of notes totaling $19.0 million was lowered from $1.05 to $0.89 and future funding timeframes were renegotiated. As a result of the new conversion rate, the Company was obligated for the year then ended to issue additional shares to Senyun based on the lower conversion rate. The Company accounted for this obligation by crediting Other current liabilities in the Consolidated Balance Sheet for $0.9 million, which represents the fair value of the additional shares owed to Senyun. In addition, the $0.9 million was recognized as a Loss on settlement of notes payable in the Consolidated Statement of Operations and Comprehensive Loss as the underlying debt instruments were extinguished on the date the Senyun Amendment was entered into. During the six months ended June 30, 2023, the Company remitted the shares to Senyun.

Sixth Amendment to the SPA

On February 3, 2023, the Company entered into Amendment No. 6 to the Secured SPA (the “Sixth Secured SPA Amendment”) in which the Company agreed to sell up to $135.0 million in aggregate principal (the “Tranche C Notes”) with terms largely congruent to prior issuances and a $1.05 base conversion price subject to full ratchet anti-dilution price protection. Each secured purchaser has the option to purchase additional Secured SPA Notes on the same terms as the Tranche C Notes in

an amount not to exceed 50% of the initial principal amount of the Tranche C Notes issued to each Secured SPA Purchaser (the “Tranche D Notes”).

Pursuant to the Sixth Secured SPA Amendment, certain outstanding Secured SPA Notes issued by the Company to Secured SPA Purchasers with an aggregate outstanding principal amount of $31.0 million were replaced by the same principal amount of new notes (each, a “Replacement Note”) with a $0.89 base conversion price. In accordance with ASC 470-50, Debt— Modifications and Extinguishments, the change in conversion price qualifies as an extinguishment because the change in the fair value of the conversion feature was substantial. Accordingly, the Company recognized a Loss on settlement of notes payable in the unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2023 in the amount of $3.0 million, calculated as the difference between the reacquisition price of the debt and the net carrying amount of the Secured SPA Notes.

Pursuant to the Sixth Secured SPA Amendment, the Company entered into an agreement with certain Secured SPA Purchasers (the “Exchange Agreement”) holding a total of 198,129,990 warrants to exchange them for an aggregate 90,489,346 warrants and principal convertible notes (the “Exchange Notes”) totaling $41.0 million. The issued warrants have terms that limit down-round ratchet clauses to price adjustments only. The Exchange Notes mature on February 3, 2025, bear interest at 11% per annum, have no original issuance discount, do not have a fixed price conversion, and convert using a VWAP calculation as described in the Exchange Agreement. The remainder of the terms of the Exchange Notes are largely congruent to the existing Secured SPA Notes, including most-favored nation rights. In connection with the Exchange Agreement, equity-classified warrants were exchanged for warrants which satisfy liability classification per ASC 480, Distinguishing Liabilities from Equity, and were reclassified from equity to Warrant liabilities during the six months ended June 30, 2023 in an amount totaling $6.8 million. As a result of the transaction the Company did not recognize a gain or loss in the unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the six months ended June 30, 2023, as the fair value of the instruments exchanged and received were approximately the same.

Seventh Amendment to the SPA

On March 23, 2023, the Company entered into an Amendment No. 7 to the Secured SPA (the “Seventh Secured SPA Amendment”) with Senyun and entities affiliated with ATW Partners LLC, pursuant to which the parties agreed to accelerate the funding timeline of Tranche C Notes in the amount of $40.0 million, and an entity affiliated with ATW Partners LLC agreed to purchase additional Tranche B Notes in the amount of $5.0 million, in each case, subject to meeting certain conditions, in exchange for an agreement to increase the original issuance costs associated with such funding. As part of the agreement, the Company agreed that the original issuance discount related to $25.0 million in principal amount of Tranche C Notes and Tranche B Notes was 14% and 16%, respectively.

Unsecured SPA

On May 8, 2023, the Company entered into the Unsecured SPA. The Unsecured SPA Notes are subject to an original issue discount of 10%, and are convertible, along with any interest accrued, into shares of Class A Common Stock at a conversion price equal to $0.89, subject to anti-dilution protection. When calculating the shares issuable upon conversion, the converted amount shall be decreased by 50% of the original issue discount pertaining to such amount.

Unless earlier paid, the Unsecured SPA Notes entitle the Unsecured SPA Purchasers, at each conversion date, to a Make-Whole Amount, in a combination of cash or Class A Common Stock at the Company’s discretion, in the amount of the interest that would have been payable if such converted amount was held to maturity based on an interest rate of 15% per annum. The conversion price of interest is the greater of (a) the floor price, $0.10 (as adjusted for stock splits, stock dividends, stock combinations, recapitalizations or other similar transactions occurring after the date hereof) and (b) 90% of the lowest VWAP for the five consecutive trading days ending immediately prior to the conversion date.

Each Unsecured SPA Purchaser has the option within 12 months from the closing date to purchase additional Unsecured SPA Notes under similar terms for a total potential commitment of up to $50.0 million or with the consent of the Company a total of $100.0 million.

The Company elected the fair value option afforded by ASC 825, Financial Instruments, with respect to the Unsecured SPA Notes because the notes include features, such as a contingently exercisable put option, which meets the definition of an embedded derivative. The Company expenses the transaction costs to Changes in fair value of notes payable and warrant

liabilities in the unaudited Condensed Consolidated Statement of Operations and Comprehensive Loss for the three and six months ended June 30, 2023.

As part of the Unsecured SPA the Unsecured SPA Purchasers also received warrants consistent with the rights, terms and privileges of the warrants afforded to the holders of the Secured SPA Notes.

Eighth Amendment to the Secured SPA

On May 8, 2023, the Company entered into an eighth amendment to the Secured SPA (the “Eighth Secured SPA Amendment”) with Senyun and on May 9, 2023 with entities affiliated with ATW Partners LLC.

Both Senyun and entities affiliated with ATW Partners LLC agreed to amend the floor price of all outstanding Secured SPA Notes, including the Exchange Notes, from $0.21 to $0.10 and to change the exercise price of the Secured SPA Notes and warrants from $1.05 to $0.89.

In accordance with ASC 470-50, Debt— Modifications and Extinguishments, the change in conversion price qualifies as an extinguishment because the change in the fair value of the conversion feature was substantial. Accordingly, the Company recognized a Loss on settlement of notes payable in the unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2023 in the amount of $11.4 million, calculated as the difference between the reacquisition price of the debt and the net carrying amount of the notes.

First Amendment to the Unsecured SPA

On June 26, 2023, the Company entered into the First Unsecured SPA Amendment. The First Unsecured SPA Amendment enabled the Unsecured SPA Purchasers to postpone or cancel any closing of their commitment to purchase the Unsecured SPA Notes if the Company has not issued a press release or other public announcement confirming that the second phase of the Company’s three-phase delivery plan has begun on or prior to August 31, 2023, within 15 calendar days of such date. The First Unsecured SPA Amendment did not change the cash flows of the Unsecured SPA and is accounted for prospectively with no gain or loss recognized. On August 9, 2023, the Company announced that it had completed the relevant processes and steps that are needed for the second phase of delivery to begin.

Joinder Agreements

On June 26, 2023, the Company entered into a Joinder and Amendment Agreement (the “FFVV Joinder”) with FFVV, pursuant to which FF Simplicity Ventures LLC (“FFSV”) agreed to exercise its option to purchase $20.0 million of Tranche B Notes, subject to certain closing conditions, including the delivery of a warrant to purchase shares of the Company’s Class A Common Stock equal to 33% of FFSV’s conversion shares with an exercise price equal to $0.89. If FFSV exercises its option to invest another $10.0 million of Tranche B Notes in accordance with the terms of the Secured SPA on or prior to the later of (x) August 1, 2023 or (y) four business days after the meeting of the Company’s stockholders for the required stockholder approval under the Unsecured SPA to increase the Company’s authorized shares of Common Stock, then the Company agrees to subsequently amend the Unsecured SPA whereby FFVV will invest another $20.0 million in new unsecured notes subject to terms substantially identical to those provided in the Unsecured SPA.

Pursuant to the FFVV Joinder, FFVV agreed to purchase, Unsecured SPA Notes up to $40.0 million in eight installments. The floor price of the FFVV Unsecured SPA Notes and for each of the notes issued to FFSV (or its affiliates) under the Secured SPA, shall be $0.05 (as adjusted for stock splits, stock dividends, stock combinations, recapitalizations or other similar transactions occurring thereafter). The funding at each closing is subject to various closing conditions, including: (a) an effective registration statement with respect to the shares of Common Stock issuable upon exercise of the warrants issuable under the Unsecured SPA and the shares of Common Stock issuable pursuant to the FFVV Unsecured SPA Notes and (b) the Company shall have reserved the Required Reserve Amount in full. In addition, FFVV has the option, for 12 months from June 25, 2023, to purchase Unsecured SPA Notes. FFVV agreed, on behalf of its affiliates, that FFSV may exchange any Tranche B Notes for either (x) Tranche D Notes, and/or (y) any Unsecured SPA Notes.

The Company agreed to pay FFVV a one-time $0.3 million working fee and legal fees not to exceed $0.4 million, which shall be paid by netting the purchase price for any new notes with the amount of such fees. As of June 30, 2023 the Company received $9.0 million in proceeds, net of original issuance discount from FFVV, pursuant to the FFVV Joinder.

On June 26, 2023, Senyun executed a Second Joinder and Amendment Agreement (the “Senyun Joinder”), pursuant to which, Senyun agreed to exercise its option to purchase $15.0 million of Tranche A Notes in accordance with the terms of the Secured SPA Notes. If Senyun exercises its option to invest another $10.0 million of Tranche A and/or Tranche B Notes in accordance with the terms of the Secured SPA Notes on or prior to the later of (x) August 1, 2023 or (y) four business days after the meeting of the Company’s stockholders for the Stockholder Approval (as defined below), then the Company agrees to subsequently amend the Unsecured SPA Notes whereby Senyun will invest another $20.0 million.

Pursuant to the Senyun Joinder, Senyun agreed to purchase, under the Unsecured SPA Notes, unsecured notes in an aggregate principal amount of up to $30.0 million in eight installments. The floor price, for each note issued to Senyun (or its affiliates) under the SPA Notes, is $0.05 (as adjusted for stock splits, stock dividends, stock combinations, recapitalizations or other similar transactions occurring thereafter).

The Company agreed to pay Senyun a one-time $0.2 million working fee and legal fees not to exceed $0.3 million, which shall be paid by netting the purchase price for any new notes with the amount of such fees. As of June 30, 2023, the Company had not received any of the funding pursuant to the Senyun Joinder.

The FFVV and Senyun Joinders do not trigger any adjustment to the conversion or exercise price of the notes and warrants under the SPA Notes, and Senyun and FFSV waived any such rights to any adjustment to the conversion or exercise price in each of the Secured SPA and/or the Unsecured SPA, as applicable, and the related warrants.

End of Period Secured and Unsecured SPA Information

The Company received cash proceeds, net of original issue discounts, of $48.8 million and $180.6 million in exchange for the issuance of the SPA Notes and incurred approximately $1.1 million and $2.2 million in transaction costs during the three and six months ended June 30, 2023, respectively.

During the six months ended June 30, 2023, the Company issued to the Secured SPA Purchasers and Unsecured SPA Purchasers a total of 161,494,918 warrants pursuant to both the Secured SPA and Unsecured SPA arrangements and in connection with the Warrant Exchange. As of June 30, 2023 the warrants had an exercise price of either $0.23 or $0.89 per share, subject to anti-dilution ratchet price protection, exercisable for seven years from the date of issuance (see Note 11, Stockholders' Equity ). The Company may repurchase the warrants for $0.01 per share if and to the extent the VWAP of the Company’s Class A Common Stock during 20 out of 30 trading days prior to the repurchase is greater than $15.00 per share, subject to certain additional conditions. During the six months ended June 30, 2023, the Secured SPA Purchasers exercised warrants to purchase 51,128,708 shares of Class A Common Stock issued pursuant to the SPA Notes, via both cash and cashless exercise. As of June 30, 2023, there were 112,780,647 warrants outstanding issued pursuant to the SPA Notes.

On June 30, 2023 the Company determined that the fair value of the SPA Notes and warrants was $69.7 million and $21.1 million, respectively. The Company recorded a gain in Change in fair value of notes payable and warrant liabilities in the unaudited Condensed Consolidated Statement of Operations and Comprehensive Loss for the three and six months ended June 30, 2023 in the amount of $24.7 million and $72.8 million, respectively, for the SPA Notes and warrants.

During the six months ended June 30, 2023, total SPA Notes principal of $168.0 million with a fair value of $106.5 million was converted to Additional paid-in capital. In connection with the conversions of the SPA Notes the Company recognized a Loss on settlement of notes payable for the three and six months ended June 30, 2023 in the amount of $80.5 million and $175.6 million, respectively.

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, approximated their carrying value as of June 30, 2023 and December 31, 2022, respectively.

Schedule of Principal Maturities of Notes Payable

The future scheduled principal maturities of notes payable as of June 30, 2023 are as follows:

(in thousands)
Due on demand	$	4,816
2023	—
2024	—
2025	41,000
2026	89
2027	—
Thereafter	61,878
	$	107,783