Subsequent Events

6 Months Ended

Jun. 30, 2024

Subsequent Events [Abstract]

Subsequent Event

15. Subsequent Events

The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the Unaudited Condensed Consolidated Financial Statements were issued. Other than as described below, the Company did not identify any subsequent events that would have required adjustment or disclosure in the Unaudited Condensed Consolidated Financial Statements.

The Company is generally required to maintain certain insurance coverage that, as of and subsequent to June 30, 2024, lapsed due to lack of payment.

Subsequent Unsecured Convertible Notes

Subsequent to June 30, 2024, the Company issued Unsecured Convertible Notes to a third party totaling $3.3 million with due dates ranging from October 1, 2024 through October 27, 2024 at 4.27% interest. Principal and accrued interest are convertible at the option of the third party into either (a) Common Stock of the Company at a conversion price per share equal to the closing stock price on the trading day immediately prior to the day on which the lender provides a conversion notice or (b) unsecured convertible notes of the Company pursuant to the terms contained in the Unsecured SPA.

On August 2, 2024, Senyun exercised its right to convert the outstanding balance of its Unsecured Convertible Notes into Unsecured SPA Notes pursuant to terms contained in the Unsecured Convertible Notes. Senyun converted its outstanding principal balance of $19.9 million into $21.1 million Unsecured SPA Notes.

Subsequent SPA Activity

Subsequent to June 30, 2024, the Company received additional funding through additional SPA Notes totaling $23.4 million in aggregate principal amount. In addition, $8.8 million of principal and $1.6 million of interest of SPA Notes was converted into 46.2 million shares of Class A Common Stock.

Subsequent Waiver Agreement

On August 2, 2024, the Company entered into that certain Waiver Agreement (the “Waiver Agreement”) with certain investors (each, a “Holder” and, collectively, the “Holders”), who (a) beneficially own and hold one or more of the following securities of the Company: (i) certain secured convertible notes of the Company (including any secured convertible notes issued in exchange therefor, collectively, the “Original Secured Notes”) that were issued pursuant to the Secured SPA, and (ii) certain unsecured convertible notes of the Company (including any unsecured convertible notes issued in exchange therefore,

collectively, the “Original Unsecured Notes”, and together with the Original Secured Notes, the “Original Notes”) that were issued pursuant to the Unsecured SPA and (b) have the right to acquire one or more of: (i) certain additional secured convertible notes issuable in accordance with the terms to the Secured SPA Notes and (ii) certain additional unsecured convertible notes (the “Additional Unsecured Notes”, and together with the Additional Secured Notes, the “Additional Notes”, and together with the Original Notes, the “Updated SPA Notes”), issuable pursuant to the Unsecured SPA.

Prior to the Waiver Agreement, the Company had certain obligations under the Updated SPA Notes to pay accrued and unpaid interest and a Make-Whole Amount in cash in connection with conversions of such Updated SPA Notes. In an effort to reduce the Company’s ongoing cash obligations pursuant to such Updated SPA Notes and to encourage the continued conversion of the Updated SPA Notes into shares of Common Stock, the Company has agreed to make certain voluntary adjustments to the Updated SPA Notes as described below. Pursuant to the Waiver Agreement, the Company irrevocably agreed that with respect to each conversion of any Updated SPA Note on or after the effective date of the Waiver Agreement, if the Holder delivers a conversion notice (the “Notice of Conversion”) to the Company at a time that 90% of the VWAP (as defined in the SPA Notes) of the Company’s common stock as of the trading day ended immediately prior to the time at which such Notice of Conversion is delivered to the Company (each, an “Adjustment Price”) is less than the conversion price then in effect pursuant to the applicable Updated SPA Note (the “Updated Conversion Price”), the Company shall voluntary reduce the Updated Conversion Price solely with respect to such portion of such Updated SPA Note to be converted in accordance with such Notice of Conversion (and not with respect to any other portion of such Updated SPA Note) to such Adjustment Price (the “Voluntary Adjustment”). The Company also agreed, in exchange for the Holder’s waiver of any accrued and unpaid interest (if any, as of such conversion date) (an “Interim Interest Waiver”) with respect to such aggregate principal of such SPA Note to be converted pursuant to such applicable Notice of Conversion (the “Full Voluntary Adjustment”), to (i) further reduce such Adjustment Price in respect of a Voluntary Adjustment (as adjusted, each a “Full Adjustment Price”); and (ii) issue a number of shares of the Company’s common stock to the Holder such that the aggregate number of shares of common stock to be issued to the Holder in such conversion at such Full Adjustment Price equals the quotient of (x) the sum of (i) such aggregate principal of such SPA Note to be converted pursuant to such applicable Notice of Conversion and (ii) any accrued and unpaid interest thereon, divided by (y) such Adjustment Price prior to any Interim Interest Waiver. Such Full Voluntary Adjustment shall be applicable until the fifth (5th) business day after the Company delivers written notice to the Holder electing to revoke such election.

Pursuant to the Waiver Agreement, the Holder irrevocably agreed that instead of receiving the accrued and unpaid interest, each holder of any such applicable Updated SPA Note shall receive upon conversion of such Updated SPA Note an amount in cash equal to all accrued and unpaid interest on such Updated SPA Note to such date of conversion (or such cash amount shall be deemed satisfied in full without any payment of cash by the Company if the Company effects a Full Voluntary Adjustment with respect to the applicable Notice of Conversion) with respect to the applicable Notice of Conversion.

Further pursuant to the Waiver Agreement, a Holder’s right to purchase any Additional Notes in any agreement with the Company (including, without limitation, the Secured SPA and/or the Unsecured SPA, as applicable) shall be extended until the first (1st) anniversary of the effective date of the Waiver Agreement.

The Company also intends to incorporate the changes in the Waiver Agreement into certain of its other existing notes and notes issuable in the future pursuant to existing purchase agreements, as applicable, through one or more waivers, amendments and/or exchange agreements, as applicable.

Subsequent Lease and Other

On July 11, 2024, Faraday&Future, Inc. (“F&F”), a California corporation and a wholly owned subsidiary of the Company, entered into a $4.9 million lease financing arrangement under a Master Lease Agreement (the “Master Lease”) with UTICA LEASECO, LLC (“Utica”). Under the Master Lease, Utica is leasing to F&F certain machinery, vehicles, equipment and/or other assets (the “Equipment”) described in the equipment schedule dated as of July 11, 2024 (the “Equipment Schedule”) and F&F will pay Utica 51 monthly payments of $0.1 million. The Master Lease has a four-year term, subject to an end of term buyout option for $0.5 million, under certain conditions. In addition, after the 19th month, F&F may terminate the lease under certain conditions and upon payment of certain fees.

Under the Master Lease, F&F retains title to the Equipment, granting Utica a first priority security interest therein. The Master Lease contains customary representations and warranties, covenants relating to the use and maintenance of the Equipment, indemnification and events of default, including payment defaults, breach of representations and warranties, covenant defaults, cross-defaults, and certain bankruptcy and insolvency events, customary for leases of this nature. The Master

Lease further grants to Utica certain remedies upon a default, including the right to cancel the Master Lease, to accelerate all rent payments for the remainder of the term of the Master Lease, to recover liquidated damages, or to repossess and re-lease, sell or otherwise dispose of the Equipment.

The Master Lease and all related arrangements are guaranteed by the Company under a Master Lease Guaranty (the “Guaranty”). Under the Guaranty, the Company has unconditionally guaranteed the obligations of F&F under the Master Lease and related agreements for the benefit of the Utica.

On July 11, 2024, F&F and Utica entered into a Post-Closing Agreement, pursuant to which F&F agreed to provide Utica rent-free access to the Company’s Hanford location (the “Hanford Premises”) and Gardena location (the “Gardena Premises”) for 120 days (the “Hanford Premises Access Period” and the “Gardena Premises Access Period”), in order to reclaim the collateral under the Master Lease in the event of a default. F&F agreed to make immediate prepayments of $0.1 million and $1.4 million for the Hanford Premises Access Period and the Gardena Premises Access Period, respectively, to be applied as set forth in the Post-Closing Agreement. F&F agreed to make an additional prepayment of $0.1 million under the Master Lease, also to be applied in accordance with the Post-Closing Agreement.