Related Party Transactions

3 Months Ended

Mar. 31, 2025

Related Party Transactions [Abstract]

Related Party Transactions

Related Party TransactionsThe tables below summarize the related party note payable agreements as of March 31, 2025 and December 31, 2024, providing details on contractual maturity dates, contractual interest rates, and net carrying values.

	March 31, 2025
(in thousands)	Contractual Maturity Date	Contractual Interest Rates			Net Carrying Value
Unsecured Convertible Note	June 2025 (3)	4.27%			$	451
2025 March Unsecured SPA Notes	April 2030	10.00%			143
Notes Payable — China	April 2027	18.0	%	(2)	4,215
Notes Payable on Demand — China	Due on Demand	—%			413
FFGP Note	Various 2024 (1)	4.27%			1,576
Convertible FFGP Note	May 2024 (1)	4.27%			250
Other Notes	Due on Demand	12.0%			75
					$	7,123
Related party notes payable, current					$	4,298
Related party notes payable, long-term					$	2,825
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(1) The term was extended upon receipt of waivers of enforcement rights and remedies under the loan agreements, as described below, with the expected settlement in 2025.
(2) The restructured loan bears no stated interest, and the repayment schedule requires fixed installment payments through the contractual maturity date. If the Company fails to comply with the payment schedule, interest at a rate of 18.0% would be retroactively applied to the unpaid balance. During the term of the revised loan, the Company remained in compliance with the payment schedule, and no contingent interest has been recorded as of March 31, 2025.
(3) Subsequent to March 31, 2025 and prior to the issuance of these financial statements, MHL exchanged the Unsecured Convertible Note due June 2025 into 2025 March Unsecured SPA Notes pursuant to the terms of the original agreement. As a result, management classified the Unsecured Convertible Note as a long-term related party debt instrument for the period ended March 31, 2025.

	December 31, 2024
(in thousands)	Contractual Maturity Date	Contractual Interest Rates	Net Carrying Value
Unsecured Convertible Note	April 2024 (1)	4.27%	$	1,364
Notes Payable — China	April 2027	18.0%	4,382
Notes Payable on Demand — China	Due on Demand	—%	417
FFGP Note	Various (1)	4.27%	1,576
Convertible FFGP Note	May 2024 (1)	4.27%	250
Other Notes	Due on demand	12.00%	75
			$	8,064
Related party notes payable, current			$	5,310
Related party notes payable, long-term			$	2,754
_______________
(1) The term was extended upon receipt of waivers of enforcement rights and remedies under the loan agreements, as described below, with the expected settlement in 2025.

Schedule of Principal Maturities of Related Party Notes Payable

The future scheduled principal maturities of Related party notes payable as of March 31, 2025, are as follows:

(in thousands)
Years Ending December 31,	Amount
Due on demand	$	488
2025 (9 months remaining)	4,813
2026	1,983
2027	745
2028	—
2029	—
2030	376
Thereafter	—
	$	8,405

The Company has entered into various financing arrangements with related parties, categorized as follows: (i) Unsecured Convertible Note; (ii) Unsecured Convertible Note; (iii) 2025 March Unsecured SPA Notes; (iv) Notes Payable — China; (v) Notes Payable on Demand — China; (vi) FFGP Note; and (vii) Convertible FFGP Note.

2023 Unsecured SPA Notes

In May 2023, June 2023, and October 2023, the Company issued unsecured convertible notes to MHL, a related party, under the 2023 Unsecured SPA Notes as the anchor investor. (For information on the terms of this note, see Note 7, Notes Payable 2023 Unsecured SPA Notes issued to third-parties.)

The Company elected the fair value option under ASC 825, Financial Instruments, for the 2023 Unsecured SPA Notes because the notes include features such as a contingently exercisable put option, which meets the definition of an embedded derivative.

MHL converted $0.7 million of gross principal balance in exchange for 33,107 shares of Class A Common Stock during the quarter ended March 31, 2024. During the quarter ended March 31, 2024, the Company recognized a loss of $0.2 million on the settlement (conversion) of related party notes payable into shares of Class A Common stock and losses of $0.1 million, due to fair value adjustments under ASC 825.

As of March 31, 2024, there were no related party notes payable outstanding pursuant to the 2023 Unsecured SPA Notes

Unsecured Convertible Note

In January 2024, the Company issued an unsecured convertible note to MHL, a related party, in a principal amount of $1.5 million. The note was due three months from the date of issuance (April 2024), accrued interest at an annual rate of 4.27% per annum, and is convertible at the option of the holder into either Class A Common Stock or into a 2023 Unsecured SPA Note. In February 2025, MHL converted the outstanding debt with a principal balance of $1.5 million into 1,352,767 shares of Class A Common Stock The conversion of the Unsecured Convertible Note into Class A Common Stock resulted in a Loss on extinguishment of $1.2 million

In March 2025, the Company issued an unsecured convertible note to MHL, in a principal amount of $1.5 million. The note was due three months from the date of issuance, accrued interest at an annual rate of 4.27% per annum, and is convertible at the option of the holder into either Class A Common Stock or into unsecured convertible notes issued subsequently pursuant to a Securities Purchase Agreement. If conversion into Class A Common Stock is elected, the conversion price would be based on the latest closing price of the Company’s Class A Common Stock on the conversion date. If settlement in a subsequent Securities Purchase Agreement is elected, the new note would be issued with a 15% original issue discount. Subsequent to March 31, 2025 and prior to the issuance of these financial statements, MHL exchanged the Unsecured Convertible Note into 2025 March Unsecured SPA Notes. As a result, management classified the $1.5 million Unsecured Convertible Note as a long-term related party debt instrument for the period ended March 31, 2025.

The Company elected to apply the fair value option under ASC 825, Financial Instruments, for these notes, based on its expectation that the note will be exchanged into SPA Portfolio Notes pursuant to the holder’s conversion rights. SPA Portfolio Notes include features such as a contingently exercisable put option, which meet the definition of an embedded derivative under applicable accounting standards.

For the three months ended March 31, 2025 the Company recognized a gain in the amount of approximately zero in Change in fair value of related party notes payable, warrant liabilities, and derivative call options within the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss. This gain reflects the adjustment to the note’s fair value during the reporting period.

For the three months ended March 31, 2024, the Company recognized a $0.1 million gain from fair value remeasurement of the Unsecured Convertible Note under ASC 825, recorded in Change in fair value of related party notes payable, warrant liabilities, and derivative call options within the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss.

2025 March Unsecured SPA Notes

Certain investors in the 2025 March Unsecured SPA Notes (see Note 7, Notes Payable) include related parties.

Summary of Activity

During the three months ended March 31, 2025, related party investors funded a portion of the Company’s total proceeds under the 2025 March Unsecured SPA. The Company issued $0.4 million in principal amount of2025 March Unsecured SPA Notes to related parties in connection with these closings. These related party investors also received 2025 March Unsecured SPA Warrants and Incremental Warrants on terms identical to those described in Note 7, Notes Payable.

The fair value of these related party-held notes as of March 31, 2025, was approximately $0.1 million. During the three months ended March 31, 2025, the Company recognized a change in fair value of approximately zero, under ASC 825, recorded in Change in fair value of related party notes payable, warrant liabilities, and derivative call options within the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss.

Notes Payable — China

The Company has outstanding debt payable to Leshi Small Loan Co., Ltd. (“Chongqing”), a related party, also known as “Notes Payable — China.” In 2022, Chongqing agreed to modify the debt agreement, contingent on the Company making an initial payment of 10% of the agreed upon discounted principal amount. Under the modified terms, the Company received a waiver of accrued interest, a reduction in the principal balance, and an extended repayment schedule requiring full payment of the discounted principal by December 31, 2023. However, the Company did not pay the outstanding principal amount in full by the maturity date of December 31, 2023, and as a result, in January 2024 the Company incurred substantial interest and penalties. Per the terms of the 2022 agreement, in the event of a default at maturity all outstanding interest and penalties since the inception of the original agreement reverted to Chongqing and the discounted principal balance returned to the full unpaid amount. As a result, the Company recognized a loss of $14.1 million shown as component of Loss on settlement of related party notes payable in the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss during the three months ended March 31, 2024.

In December 2024, the Company repaid $0.1 million and entered into supplementary agreements with Chongqing, further restructuring its outstanding debt. The December 2024 agreements largely restored the debt to amounts outstanding prior to the default on December 31, 2023. If the Company defaults again on its payment plan with Chongqing the interest and penalties accrued since the inception of the original agreement and the note principal will revert back to Chongqing in proportion to the unpaid portion of the discounted principal balance. The agreements maintain an 18.0% stated interest rate for the debt and establish a payment plan for periodic principal and interest payments until the revised maturity date of April 2027. The Company accounted for the restructuring as a troubled debt restructuring under ASC 470-60, Debt – Troubled Debt Restructurings by Debtors. As a result of the restructuring, the Company recognized a gain of $0.7 million in additional paid-in capital, reflecting the related party nature of the transaction. Following the restructuring and subsequent principal payments, the Company's Notes Payable—China is in good standing as of March 31, 2025.

As of March 31, 2025, the principal value of this note payable was $4.2 million, compared to $4.4 million as of December 31, 2024. During the three months ended March 31, 2025, the Company repaid $0.1 million and recognized a gain of $0.7 million in additional paid-in capital, As of March 31, 2025 and December 31, 2024, the Company had accrued but unpaid

interest and penalties of $22.2 million and $23.1 million recorded in Related party accrued interest on the Unaudited Condensed Consolidated Balance Sheets.

Notes Payable on Demand — China

The Company's notes payable with investors based in China (“Notes Payable on Demand — China”) bear a zero percent interest rate. The outstanding balance as of March 31, 2025 and December 31, 2024, was $0.4 million and $0.4 million, respectively.

FFGP Note

In November 2023 and January 2024, the Company issued unsecured promissory notes to FFGP Investment Holding I, LLC (“FFGP”), a related party, in an aggregate principal amount of $1.6 million. These notes, referred to as the “FFGP Note”, were due three months from their respective dates of issuance and accrued interest at either 4.27% or 5.27%.

FFGP fully waived its enforcement rights and remedies under the loan agreement with respect to the outstanding principal balance until final settlement. As a result, the FFGP Note is in good standing as of March 31, 2025, however, it remains due on-demand. The carrying values of the FFGP Note were $1.6 million as of March 31, 2025 and December 31, 2024.

Convertible FFGP Note

In February 2024, the Company and FFGP entered into an unsecured convertible note in the principal amount of $0.3 million. The note referred to as the “Convertible FFGP Note”, has a maturity date of May 2024 accrued interest at a rate of 4.27% per annum, and is convertible into the Company’s Class A Common Stock at the holder’s option. The conversion price is the latest closing price of the Company’s Class A Common Stock on the conversion date.

FFGP fully waived its enforcement rights and remedies under the loan agreement with respect to the outstanding principal balance until final settlement. As a result, the Convertible FFGP Note is in good standing as of March 31, 2025, however, it remains due on-demand. The carrying value of the Convertible FFGP Note was $0.3 million as of March 31, 2025 and December 31, 2024.

Related Party Accounts Payable, Accrued Liabilities and Other Significant Transactions

The Company engages in various related party transactions that do not involve notes payable, including property leases, consulting services, advertising services, and other financial arrangements with entities affiliated with its founder, key executives, and their family members. This section excludes related party notes, which are discussed separately, and focuses on summarizing the nature, terms, and financial impacts of these non-debt-related transactions as of March 31, 2025 and December 31, 2024, including payments, outstanding balances, and other key details.

X-Butler Transactions

The Company leased two real properties, located in Rancho Palos Verdes, California (the “Rancho Palos Verdes Properties”), from X-Butler from January 1, 2018, through March 31, 2022. X-Butler in turn leased the Rancho Palos Verdes Properties from Mr. Yueting Jia, the Company’s founder and Global Co-CEO. The Rancho Palos Verdes Properties were used by the Company to provide long-term or temporary housing to employees of the Company (including a former Global CEO). According to the agreement between the parties, the Company paid X-Butler for rent and certain services, including catering, room services and organization of meetings, external gatherings and events, for the Rancho Palos Verdes Properties. For the quarters ended March 31, 2025 and 2024, the Company paid to X-Butler $0.1 million and $0.1 million, respectively, for rent and business development services rendered to the Company and its executives. The Company has recorded approximately $0.3 million and $0.3 million in Accounts Payable as of March 31, 2025 and December 31, 2024, respectively.

FF Global Transactions and Consulting Services

FF Global is an affiliate of the Company’s founder and Global Co-CEO, Mr. Yueting Jia, and has historically exerted significant influence over the Company’s governance. Effective March 23, 2025, the Company terminated its Consulting Services Agreement with FF Global, which had originally become effective on February 1, 2023. The agreement, which provided for a monthly fee of $0.2 million in exchange for strategic and operational advisory services, had automatically renewed on March 6, 2024, for an additional 12-month term. It also permitted FF Global to request reimbursement for reasonable and documented out-of-pocket expenses, including travel and legal fees, subject to certain limits.

In early 2023, FF Global submitted a request for $6.5 million in legal expense reimbursements related to governance matters. The request was not approved by the Board, no liability has been recorded, and the matter remains unresolved. Following the termination of the agreement, the Company has no further obligations to FF Global other than for consulting fees and reimbursable expenses incurred prior to March 23, 2025. The Company has recorded approximately $2.0 million and $2.0 million in Accounts Payable as of March 31, 2025 and December 31, 2024, respectively. These amounts do not include the $6.5 million reimbursement request.

Advertising Services Payable to Leshi Information Technology Co., Ltd. (“LeTV”)

The Company has recorded a payable to LeTV within Related party accrued expenses and other current liabilities in the amount of $7.8 million and $7.7 million as of March 31, 2025 and 2024, respectively, in connection with advertising services provided to the Company in prior years. LeTV is a Shanghai Stock Exchange-listed public company founded and controlled by Mr. Yueting Jia, the Company’s founder and Global Co-CEO.

Grow Fandor

During 2024 the Company entered into several related party transactions with Grow Fandor Inc. (“Grow Fandor”). Grow Fandor is considered a related party because it is significantly influenced by Mr. Yueting Jia, the Company’s Global Co-CEO, who has a financial and operational interest in the entity. Grow Fandor was co-founded by Mr. Jia and Mr. Jerry Wang, who currently serves as President of the Company and is the sole director of Grow Fandor. There have been no related party transactions with Grow Fandor during 2025. Below is a summary of the Company’s transactions with Grow Fandor and the related accounting treatment:

•Promissory Note: In September 2024, the Company executed a promissory note with Grow Fandor in the principal amount of $75,000. This note has been classified as “Other Notes” in table above that the summarizes the related party note payable agreements as of March 31, 2025.

•Share Donation: In October 2024, the Company received a donation of 15,000,000 shares of Class B Common Stock of Grow Fandor from Mr. Yueting Jia, which represents an approximately 10% ownership interest. Because Grow Fandor is in the preliminary stages of development and has not begun commercial operations, management concluded that the shares do not currently have value within the financial statements.

•Trademark License Agreement: In October 2024, the Company and Grow Fandor executed the Trademark License Agreement. Under the terms of the licensing agreement, Grow Fandor has exclusive licensing rights as the only third-party allowed to use the FF and FX brands and marks during the contract term. In exchange Grow Fandor will pay to the Company: (1) a royalty fee, payable quarterly, calculated as the greater of: (a) 50% of the annual net profit from FF and FX ecosystem products, and (b) 5% of net sales revenue from all relevant brand ecosystem products; and (2) a $250,000 annual base license fee. Grow Fandor paid the initial annual license fee. Subsequent annual license fees will be payable within 30 days after each contract year. The Company recorded the initial license fee as a capital contribution due to the related party nature of the relationship with Grow Fandor and Yueting Jia’s public statements that the relationship is designed to provide incremental capital to the Company.