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Nature of Business and Organization, Basis of Presentation, and Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2025

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Principles of Consolidation

The Unaudited Condensed Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the U.S. (“GAAP”) and include the accounts of the Company, its wholly-owned subsidiaries and all other entities in which the Company has a controlling financial interest, including the accounts of any variable interest entity, in which the Company has a controlling financial interest and for which it is the primary beneficiary in accordance with Accounting Standards Codification (“ASC”) 810, Consolidation (“ASC 810”). All intercompany transactions and balances have been eliminated upon consolidation.

These Unaudited Condensed Consolidated Financial Statements do not include all disclosures that are normally included in the Annual audited financial statements prepared in accordance with GAAP and should be read in conjunction with the Company’s Audited Consolidated Financial Statements and notes thereto for the year ended December 31, 2024, included in the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”) on March 31, 2025, (the “Form 10-K”). Accordingly, the Unaudited Condensed Consolidated Balance Sheet as of September 30, 2025, has been derived from the Company’s Annual audited Consolidated Financial Statements but does not contain all of the footnote disclosures from the annual financial statements. The Company believes that the disclosures included in this Quarterly Report on Form 10-Q (this “Form 10-Q”) are adequate to make the information presented not misleading.

In the opinion of management, the Unaudited Condensed Consolidated Financial Statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of its financial position, results of operations, and cash flows for the periods presented. The accounting policies used in the preparation of these Unaudited Condensed Consolidated Financial Statements are the same as those disclosed in the audited Consolidated Financial Statement for the year ended December 31, 2024, included in the Form 10-K, except as described below.

Our annual reporting period is the calendar year. The results of operations for the three and nine months ended September 30, 2025 are not necessarily indicative of the results to be expected for the 2025 full year or any future periods.

Basis of Presentation

Use of Estimates and Judgments

The preparation of the Company’s Unaudited Condensed Consolidated Financial Statements in conformity with GAAP and in accordance with the rules and regulations of the SEC requires management to make estimates and assumptions which affect the reported amounts in the Unaudited Condensed Consolidated Financial Statements.

Estimates are based on historical experience, where applicable, and other assumptions which management believes are reasonable under the circumstances. On an ongoing basis management evaluates its estimates, including those related to the: (i) recognition and disclosure of contingent liabilities, including litigation reserves; (ii) fair value of related party notes payable and notes payable; (iii) calculations for evaluating potential long-lived asset impairment; (iv) inventory reserve and (v) valuation of warrants and other derivative instruments. Such estimates often require the selection of appropriate valuation methodologies

and financial models and may involve significant judgment in evaluating ranges of assumptions and financial inputs. Actual results may differ from those estimates under different assumptions, financial inputs, or circumstances.

Given the global economic climate, estimates are subject to additional volatility. As of the date of filing the Company’s Unaudited Condensed Consolidated Financial Statements on this Form 10-Q with the SEC for the period ended September 30, 2025, the Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or to revise the carrying value of its assets or liabilities. However, these estimates and judgments may change as new events occur and additional information is obtained, which may result in changes being recognized in the Company’s Unaudited Condensed Consolidated Financial Statements in future periods. Actual results could differ from those estimates and any such differences may have a material impact on the Company’s Unaudited Condensed Consolidated Financial Statements.

Variable Interest Entity

In accordance with ASC Topic 810, Consolidation (“ASC 810”), the Company assesses whether it has a variable interest in legal entities in which it has a financial relationship and, if so, whether or not those entities are variable interest entities (“VIEs”). For those entities that qualify as VIEs, ASC 810 requires the Company to determine if the Company is the primary beneficiary of the VIE, and if so, to consolidate the VIE.

Segments

The Company has three operating segments—AI Electric Vehicle (“AIEV”), Life Sciences, and Crypto —but only our AIEV segment meets the criteria for separate reporting under ASC 280. Through August 12, 2025, the Company’s two Global Co-Chief Executive Officers (“Global Co-CEOs”), acting jointly serving as Co-Chief Operating Decision Makers (“CODMs”), and regularly evaluated the Company’s financial performance using consolidated financial information at the total-company level including consolidated loss from operations, cash flows, liquidity, and strategic initiatives. Effective August 13, 2025, in connection with temporary governance adjustments approved by the Board, Mr. Matthias Aydt serves as the Company’s sole CODM for purposes of ASC 280.

Management has identified Loss from operations, as presented in the Company's Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss, as the primary measure used by the CODM to evaluate the performance of the business and allocate resources. This measure is critical for a going concern that must carefully manage its cash outflows, particularly given that the timing of its cash inflows is influenced by external investor decisions. The Company defines “significant segment expense” as controllable operating costs that are regularly provided to and reviewed by management, which include the expenses presented in the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss as Cost of revenue, Research and development, Sales and marketing, and General and administrative.

Management closely tracks its expenditure on these key expense categories through regular reviews of cash balances, near‑term cash flow projections, monthly management reports, and project management reports. The CODM, works in close collaboration with the Company’s business leaders to establish critical operational targets, sets project timelines, and adjusts spending plans. These leaders are responsible for implementing its strategic plans and revising targets and deadlines based on continuous internal communications and review meetings, thereby ensuring that any deviations from target spending or project timelines are promptly addressed. This rigorous oversight supports the Company’s strategic objectives to focus business activities on production, sales, and leasing of its FF 91 vehicles, the planned FF 92 upgrade program, and the commercialization of the FX Series vehicles.

In addition, the Company defines “other segment items” as other operating expense adjustments that arise from lease or other impairments, gains and losses on the sale or disposition of its fixed assets, or other market‑driven factors that impact Loss from operations presented in the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss and are not part of the Company’s recurring and controllable operating costs. By segregating these “Other Segment Items” from “Loss from operations,” the Company provides investors with a clear view of the expenses that management can directly influence versus those driven by external factors.

During the third quarter of 2025, the Company consolidated AIXC, a VIE that operates a legacy life-sciences business. The acquisition closed on September 29, 2025, and AIXC’s results were included in the Company’s consolidated financial statements for the final two days of the quarter. AIXC does not earn revenue and the operating loss attributable to AIXC was immaterial and did not meet the quantitative thresholds under ASC 280 for separate segment reporting. The Company also intends to use AIXC as the platform for future crypto-related initiatives; however, no crypto operations were active during the quarter, and the Company liquidated its crypto holdings to fund the AIXC transaction. (For further information see Note 3 - Business Acquisition - Consolidation of AIXC, and Note 1 - Nature of Business and Organization).

Other potentially reportable items, such as separate automotive sales and leasing revenues (currently immaterial), geographic information, depreciation expense, interest expense, or other segment-specific activities, are not separately reviewed by the CODM. Accordingly, these detailed segment components do not influence the CODM’s decision-making or resource allocation processes and thus are not separately disclosed.

Short-term notes receivable

Short-term notes receivable are measured in accordance with ASC 326-20 (Current Expected Credit Losses, “CECL”), which requires recognition of expected credit losses over the life of the receivable based on historical experience, current conditions, and reasonable and supportable forecasts.

The Company, through its acquisition of AIXC, holds short-term notes receivable originally issued by Marizyme, Inc. (“Marizyme”) in exchange for cash advances. These notes bear interest at 18% per annum, are payable on demand, and may be prepaid at any time without penalty. Because AIXC has limited loss history for similar exposures, expected credit losses are estimated using a probability-weighted model that considers multiple settlement scenarios, including potential recovery through acquisition, liquidation, or other realizations of the debtor’s assets. The resulting allowance for expected credit losses reflects an assessment of Marizyme’s financial condition, estimated recoverable amounts, and the likelihood of each outcome. The allowance is reassessed each reporting period and updated as new information becomes available.

As of September 30, 2025, the estimate for expected credit losses on the Marizyme Notes is $0.3 million. Given the inherently uncertain nature of the debtor’s financial condition and future outcomes, actual credit losses may differ materially from this estimate. The Company will continue to monitor relevant events and conditions and update its assumptions and allowance as necessary.

Inventory

Inventory is stated at the lower of cost or net realizable value and consists of raw materials, work in progress, and finished goods. The Company primarily computes cost using standard cost, which approximates cost on the first-in, first-out basis. Net realizable value is the estimated selling price of inventory in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The Company assesses the valuation of inventory and periodically

adjusts its value for estimated excess and obsolete inventory based upon expectations of future demand and market conditions, as well as damaged or otherwise impaired goods.

Inventory is classified as a current asset when it is expected to be sold, consumed, or used in production within twelve months or the operating cycle, whichever is longer.

Inventory that is not expected to be realized or used within twelve months or the operating cycle is classified as a non-current asset within Other non-current assets on the Unaudited Condensed Consolidated Balance Sheets. This includes, for example, spare parts, service parts, or production parts held for future models or to fulfill warranty obligations on discontinued products

During the three months ended September 30, 2025, the Company reclassified $11.3 million of inventory from current to non-current. The reclassified inventory consists primarily of raw materials and spare parts that are not expected to be used within twelve months or the operating cycle. These inventories are intended to support future product models and service obligations.

Property, Plant and Equipment, Net

Property, plant and equipment are stated at cost less accumulated depreciation and amortization. Expenditures for major renewals and betterments are capitalized, while minor replacements, maintenance and repairs, which do not extend the assets lives, are charged to operating expense as incurred. Upon sale or disposition, the cost and related accumulated depreciation or amortization are removed from the Unaudited Condensed Consolidated Balance Sheets and any gain or loss is included in the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss.

Depreciation and amortization on property and equipment is calculated using the straight-line method over the estimated useful lives of the assets and for building improvements, over the term of the lease, if shorter.


			Useful Life (in years)
Buildings			39
Building improvements			15
Computer hardware			5
Tooling, machinery, and equipment			5 to 10
Vehicles			5
Lease vehicles			7
Computer software			3
Leasehold improvements			Shorter of asset useful life or term of the lease

Construction in process (“CIP”) consists of the construction activities related to the FF ieFactory California production facility in plant and tooling, machinery and equipment being built to serve the manufacturing of production vehicles. These assets are depreciated once put into service.

The amounts capitalized in CIP that are held at vendor sites relate to the completed portion of work-in-progress of tooling, machinery and equipment built based on the Company’s specific needs. The Company may incur storage fees or interest fees related to CIP which are expensed as incurred. CIP is presented within Property, Plant, and Equipment, Net in the Unaudited Condensed Consolidated Balance Sheets.

Impairment of Long-Lived Assets

The Company reviews its long-lived assets, consisting primarily of property and equipment, deposits and right-of-use assets (“ROU”), for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset (or asset groups) may not be recoverable. The Company performs impairment testing at the asset group level that represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Recoverability of these assets is determined by comparing the forecasted undiscounted cash flows attributable to such assets, including any cash flows upon their eventual disposition, to the assets carrying values. If the carrying value of the assets exceeds the forecasted undiscounted cash flows, then the assets are written down to their fair value. Assets classified as held for sale are also assessed for impairment and such amounts are determined at the lower of the carrying amount or fair value, less costs to sell the asset.

The Company’s long-lived assets have been evaluated for impairment on a quarterly basis due to the Company’s low market capitalization when compared with the carrying value of its long-lived assets. Additionally, in July 2025, the One, Big, Beautiful Bill Act (“Act”) was signed into law, eliminating federal tax credits for electric vehicles effective September 30, 2025. This policy change, combined with escalating U.S. - China trade tensions and potential restrictions on critical materials, created significant macroeconomic uncertainty and cost pressures. Management determined these developments, in addition to the Company’s low market-capitalization compared with the carrying value of our fixed assets, constituted triggering events under ASC 360 and performed an impairment assessment of long-lived assets during the quarter ended September 30, 2025.

The Company noted through the performance of the recoverability test and the calculation of the fair value of the long-lived assets, as proscribed in ASC 360, Property, Plant and Equipment, that certain of its long-lived assets were impaired. Fair value was determined based on a combination of income, sales comparison and market approaches, with valuation categories assigned to asset classes based on similar characteristics. The Company recorded an impairment charge of $130.0 million for both the three and nine months ended September 30, 2025, related to its long-lived assets. No impairments were recognized for the three and nine months ended September 30, 2024.

The impairment was primarily attributable to certain tooling, machinery, and equipment located at vendor sites and at the Company’s FF ieFactory California production facility in Hanford, California, that are no longer fully supported under updated operational plans and near-term production forecasts, as the Company shifts focus from FF 91 program activities to the planned FF 92 upgrade program and to reorganization and retooling in preparation for the commercial production of the FX Super One. See Note 6, Property, Plant, and Equipment, Net for further details.

Additionally, the Company recorded impairments related to deposits the Company paid for future goods and services of $8.5 million for the three and nine months ended September 30, 2025. No impairments were recognized for the three and nine months ended September 30, 2024. See Note 5, Deposits and Other Current Assets.

Further, the Company recorded a $7.7 million impairment related to lease right-of-use assets associated with facility exits in the nine months ended September 30, 2024. See Note 11, Leases for further details.

Cash and Cash Equivalents

The Company considers all highly liquid instruments with an original maturity of 90 days or less from the date of purchase to be cash equivalents. The Company holds cash balances of $38.2 million and $0.0 million classified as cash equivalents as September 30, 2025 and December 31, 2024, respectively.

Digital Assets

In December 2023, FASB issued ASU 2023-08, Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets. When crypto assets do not meet the definition of cash, cash equivalent, financial assets or inventory, ASU 2023-08 requires certain crypto assets to be measured periodically at fair value and presented as a separate long-lived intangible asset on the balance sheet with gains and losses from changes in the fair value reported as unrealized gains or losses in the Company’s Consdensed Consolidated Statement of Operations and Comprehensive Loss (Unaudited) each reporting period. The Company determines fair value of its digital assets based on quoted prices in their principal markets, which represent the markets with the greatest volume and level of activity that the Company can access through its custodian and trading counterparty, BitGo. BitGo executes transactions via its institutional OTC desk, which sources U.S. accessible exchanges and institutional liquidity providers, including but not limited to Coinbase & Kraken etc. The Company records digital assets at the fair value as of 11:59pm on the final day of each quarter. The Company measures digital assets at fair value in accordance with ASC 820, Fair Value Measurement, based on quoted prices in its principal market, with changes recognized in earnings. Gains and losses from purchases, sales, and period-end remeasurement of Company-owned digital assets are presented in the Company's Consdensed Consolidated Statement of Operations and Comprehensive Loss (Unaudited) as non-operating (income) and expenses. The Company does not currently recognize revenues from contracts with customers related to digital assets.

On August 16, 2025, Faraday Future Intelligent Electric Inc. issued a press release announcing the launch of its “EAI + Crypto” strategy and the unveiling of the “C10 Index” and the “C10 Treasury.” The index is a market-capitalization-weighted basket of the world’s top 10 crypto assets (excluding stablecoins), calculated from midnight Pacific Time on August 16, 2025, with a base value of 1,000. The index is centered on Bitcoin and Ethereum, and covers the top ten cryptocurrencies by free-float market capitalization, excluding stablecoins. It is calculated using market-capitalization weighted rules, with a maximum 50% allocation to any single asset. The C10 Treasury is a portfolio of investments aimed at being dynamically allocated based on the C10 Index. The strategy aims to grow assets through professional, compliant custody, staking yield from locked holdings, and portfolio compounding, while multiple downside-protection mechanisms help manage risk.

The addition of a crypto business is part of the Company’s new strategy of generating high growth driven by crypto asset investments with dedicated financing that supplements the intelligent electric mobility EV business. The newly acquired business, AIXC, is expected to be rebranded as CXC10, reflecting the Company’s new strategic direction around crypto investments.

During the quarter ended September 30, 2025, the Company invested $10.5 million in crypto assets. As of September 30, 2025, the crypto holdings were predominantly liquidated in order to fund the acquisition of AIXC, except for ETH coins that were being staked. The realized total loss was $0.2 million and the unrealized loss on staked ETH coins was $0.2 million, presented as part of Other (loss) income, net in the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss. The table below summarizes the cost basis, fair value at the time of sale, losses, net that are realized and unrealized by crypto asset, and the fair value of outstanding coin as of September 30, 2025 (amounts shown in thousands, except for units purchased and units sold, which are presented in whole numbers):


Crypto Asset	Units Purchased	Total Cost (1)		Units Sold	Proceeds (1)/ Advances			Gain / (loss)		Fair Value of Outstanding Coins
Realized gains and (losses)
USDC	500,000.00	$	500	500,000.00	$	500		$	—	$	—
BTC	35.31	3,947		35.31	3,894			(53)		—
DOGE	525,633.97	135		525,633.97	120			(15)		—
HYPE	6,518.85	232		6,518.85	267			34		—
LINK	8,816.53	173		8,816.53	182			9		—
TRX	355,433.17	127		355,433.17	117			(10)		—
XRP	219,060.68	705		219,060.68	614			(91)		—
BNB	1,317.08	1,173		1,317.08	1,291			119		—
ETH	162.09	739		162.09	628			(111)		—
SOL	1,261.38	272		1,261.38	244			(28)		—
ADA	131,830.65	113		131,830.65	101			(13)		—
SOL	2,936.70	633		2,936.70	568			(65)		—
		8,749			8,526			(224)		—
Unrealized gains and (losses)
ETH	384.08	1,751						(159)		1,592

Advances received on staked coins					1,445		(2)
		$	10,500		$	9,971		$	(383)	$	1,592

(1) includes transaction fees
(2) included as component of Accrued expenses and other current liabilities

Goodwill and Indefinite-lived Intangible Assets

Goodwill represents the excess of the purchase price paid over the fair value of the net assets acquired in business acquisitions. The Company annually reviews goodwill at the reporting unit level for impairment and when events or changes in circumstances indicate the carrying value of the reporting unit might exceed its current fair values.

The Company’s intangible assets consist of In-Process Research & Development (“IPR&D”) acquired in connection with the investment in AIXC and the Company’s domain name acquired in prior periods. The domain name is amortized on a straight-line basis over its estimated useful life of approximately five years. Amortization expense related to this asset was immaterial for all periods presented.

The IPR&D is considered an indefinite-lived intangible asset, and the Company evaluates its recoverability for possible impairment at least annually, or more frequently if events or circumstances indicate that the carrying amount may not be recoverable. See Note 3, Business Acquisition—Consolidation of AICX for information on the IPR&D asset purchased. To test indefinite-lived intangible assets for impairment, the Company first performs a qualitative assessment to determine if it is more likely than not that the carrying amount of each of its indefinite-lived intangible assets exceeds its fair value. If it is, a quantitative assessment is required. Alternatively, the Company may bypass the qualitative assessment and perform a quantitative impairment test. The qualitative assessment requires the consideration of factors such as recent market transactions,

macroeconomic conditions and changes in projected future cash flows. The quantitative assessment compares the fair value of an indefinite-lived intangible asset to its carrying amount. If the carrying amount of an indefinite-lived intangible asset exceeds its fair value, an impairment loss is recognized for the excess. Fair values of indefinite-lived intangible assets are determined based on discounted cash flows or appraised values, as appropriate. If such a review indicates that the carrying amount of intangible assets is not recoverable, the carrying amount of such assets is reduced to fair value.

Revenue Recognition

The following table disaggregates our revenue by major source:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2025		2024		2025		2024
Automotive sales	$	37	$	—	$	37	$	312
Automotive leasing - Sales type	—		—		265		—
Automotive leasing - Operating type	—		9		105		(8)
	$	37	$	9	$	407	$	304

Automotive Sales Revenue

The Company recognizes automotive sales revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers. Automotive sales revenue includes cash deliveries of new vehicles, and specific other features and services including home charger, charger installation, twenty-four-seven roadside assistance, over-the-air (“OTA”) software updates, internet connectivity and destination fees that meet the definition of a performance obligation under ASC 606.

As part of the first step in applying ASC 606, the Company assesses whether multiple contracts entered into with the same customer—such as a vehicle sale and a co-creation agreement—should be combined. When these contracts are negotiated together and are economically interdependent, they are accounted for as a single arrangement. This evaluation ensures that the revenue recognition reflects the substance of the transaction. Refer to the subsequent section of this note for a detailed discussion of the co-creation arrangements with customers and their impact on revenue recognition under ASC 606.

Revenue is recognized when control of the vehicle transfers upon delivery to the customer. Payments are typically received at the point control transfers or according to payment terms customary to the business as specified in the sales contract. Vehicle contracts do not contain a significant financing component. For obligations related to automotive sales, transaction prices are allocated among performance obligations based on relative standalone selling prices, determined using market prices, estimated internal costs, and comparable third-party offerings. The transaction price is allocated among the performance obligations in proportion to the standalone selling price of its performance obligations.

Other features and services as discussed above are provisioned upon transfer of control of the vehicle and are required to be recognized on a straight-line basis over the performance period, as the Company has a stand-ready obligation to deliver such services to the customer. However, due to immateriality, revenue from other features and services are combined with the vehicle performance obligation and recognized upon the transfer of the vehicle.

The Company provides certain customers with a residual value guarantee which may or may not be exercised in the future. Residual value guarantees provided to customers had an immaterial impact on revenue for the three and nine months ended September 30, 2025, and 2024.

Automotive Leasing Revenue

The Company accounts for its automotive leasing revenue program under ASC 606 and ASC Topic 842, Leases (“ASC 842”).

Operating Leasing Program: The Company offers a vehicle operating leasing program in the U.S., allowing qualifying customers to lease a vehicle directly from the Company for a lease term of up to 36 months. At the end of the lease term, customers are generally required to return the vehicle to the Company, at which point the Company may either sell or re-lease the returned vehicle. Leasing revenue from operating leases is recognized on a straight-line basis over the lease term, as long as collectability is probable in accordance with ASC 842. If collectability of lease payments is not probable at lease commencement, lease income is recognized on a cash basis, meaning payments received are recorded as revenue only when collected. Depreciation expense related to leased vehicles is recorded in cost of automotive leasing revenue on a straight-line basis over the lease term, reflecting the expected residual value of the vehicles at lease termination. Upfront payments related to

lease agreements are deferred and recognized as revenue on a straight-line basis over the respective lease term. Taxes collected from customers in connection with automotive leasing transactions are excluded from the transaction price and reported separately in accordance with ASC 606.

As part of the revenue recognition process, the Company evaluates whether a lease contract should be combined with other agreements—such as co-creation arrangements—under ASC 606 when the contracts are negotiated together and are economically interdependent. Refer to the subsequent section of this note for a detailed discussion of the co-creation arrangements with customers and their impact on revenue recognition under ASC 606.

Sales-Type Leasing Program: The Company enters into sales-type lease arrangements in accordance with ASC 842, under which customers generally have the option to purchase the leased vehicle at the end of the lease term, which is typically 36 months. The lease is classified as a sales-type lease when the Company concludes that the customer is reasonably certain to exercise the purchase option and, as a result, the Company expects the customer to obtain title to the vehicle upon completion of all contractual payments. At lease commencement, if collectability of the lease payments is probable, the Company derecognizes the leased vehicle and recognizes:

•Automotive leasing revenue for the present value of lease payments and any guaranteed residual value; and

•Automotive leasing cost of revenue for the carrying value of the leased vehicle.

If collectability is not deemed probable at lease commencement, revenue recognition is deferred, and lease payments received are recorded as a deposit liability. The leased vehicle remains on the Company’s balance sheet until collectability becomes probable, at which point revenue recognition is triggered.

The Company recognizes a net investment in sales-type leases, which includes both the lease receivable and the unguaranteed residual asset. The unguaranteed residual asset represents the estimated fair value of the leased vehicle at the end of the lease term that is not guaranteed by the lessee or any third party. As of September 30, 2025, the carrying amount of unguaranteed residual assets included in the net investment in sales-type leases, and presented within accounts receivable, was approximately $0.2 million. The estimate of unguaranteed residual value reflects management’s judgment, informed by historical residual value experience, current market conditions, and the anticipated future utility of the leased assets.

Co-creation Arrangements

As part of the Company’s Futurist Product Officers (“FPO”) Co-Creation Delivery program, which began in August 2023, the Company has entered into co-creation agreements with certain customers. This arrangement leverages select sales and leasing customers to provide valuable driving data, insights, marketing, and brand awareness for the FF 91 vehicle. In exchange for these services, the Company compensates customers through a one-time consulting fee, consulting fees paid in installments or a discount on their lease payments. The services provided are considered distinct and could be purchased separately from a third party.

The Company evaluates the economic substance of both the vehicle sale or lease contract and the co-creation agreement to determine whether they should be combined under the contract combination guidance in ASC 606. When the contracts are economically linked, the Company accounts for them as a single arrangement. Under this approach, the cash inflows from the customer and the cash outflows from the Company are netted and treated as a single transaction. The resulting net amount is recorded as marketing expense if the net amount is more than the sale price of the vehicle. In situations where the net amount is less than the vehicle’s sale price or the contractual lease payment, the difference between the net amount and the sale price or lease payment is recognized as revenue.

For the three months ended September 30, 2025, and 2024, the Company recognized $0.2 million and $0.2 million, respectively, in co-creation fees as marketing expenses for the same periods. For the nine months ended September 30, 2025 and 2024, the Company recognized $0.5 million and $0.5 million, respectively, in co-creation fees as marketing expenses for the same periods. Co-creation fees related to R&D were considered insignificant and included in Sales and marketing expenses. All co-creation fees are presented in the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss.

Customer Deposits

As of September 30, 2025, the Company held approximately $4.1 million in customer deposits, compared to $3.0 million as of December 31, 2024. These deposits relate to vehicle reservations under both business and consumer programs.

Business-to-business (B2B) reservations are made through non-binding pre-order deposits agreements and require fixed, non-refundable deposits that may be applied toward the purchase of a limited number of vehicles. These programs are designed to incentivize volume interest by allowing the deposits to be applied toward the purchase of a limited number of vehicles under

future purchase agreements. Business-to-consumer (B2C) reservations are typically submitted on a one-to-one basis with a specific vehicle and involve refundable or promotional deposits.

Customer deposits are recorded in Accrued expenses and other current liabilities on the Company’s Unaudited Condensed Consolidated Balance Sheets and will be recognized as revenue upon delivery of the vehicle or resolution of the reservation in accordance with the applicable terms.

Deferred Revenue

When vehicle purchase agreements are executed, the consideration for the vehicle and any accompanying products and services must be paid in advance before the transfer of products or services by the Company. Unlike customer deposits, which are refundable, these advance payments are non-refundable. The Company recognizes revenue when control of the vehicle or related services transfers to the customer and defers revenue only when payments are received for undelivered products or services. Deferred revenue represents the total transaction price allocated to performance obligations that remain unsatisfied or partially unsatisfied as of the balance sheet date. As of September 30, 2025 and December 31, 2024 deferred revenue related to products and services were insignificant for both periods.

Cost of Revenue

Automotive Sales Revenue

Cost of automotive sales revenue includes direct and indirect materials, labor costs, manufacturing overhead, including depreciation costs of tooling and machinery, shipping and logistic costs, vehicle connectivity costs, and reserves for estimated warranty expenses. Cost of automotive sales revenues also includes adjustments to warranty expense.

Cost of services and other revenue includes costs associated with providing non-warranty after-sales services, costs for retail merchandise, and costs to provide vehicle insurance. Cost of services and other revenue also includes direct parts and material. Cost of services and other revenue was insignificant for the three and nine months ended September 30, 2025, and 2024.

Automotive Leasing Program

Cost of automotive leasing revenue includes the depreciation of operating lease vehicles, cost of goods sold associated with direct sales-type leases and warranty expenses related to leased vehicles.

Warranties

The Company provides a manufacturer’s warranty on all vehicles sold. The warranty covers the rectification of reported defects via repair, replacement, or adjustment of faulty parts or components. The warranty does not cover any item that fails due to normal wear and tear. This assurance-type warranty does not create a performance obligation separate from the vehicle. Management tracks warranty claims by vehicle ID, owner, and date. As the Company continues to manufacture and sell more vehicles it will reassess and evaluate its warranty claims for purposes of its warranty accrual.


	Nine Months Ended September 30,
(in thousands)		2025		2024
Accrued warranty- beginning of period		$	545	$	684
Provision for warranty		22		(40)
Warranty costs incurred		(178)		(173)
Accrued warranty- end of period		$	389	$	471

Income Taxes

The Company accounts for income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized for temporary differences between the financial reporting and income tax bases of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years when those temporary differences are anticipated to reverse.

A valuation allowance is established if it is more likely than not that some or all of the deferred tax assets will not be realized. The carrying value of deferred tax assets is adjusted to reflect the amount that is more likely than not to be realized. As

of September 30, 2025 and December 31, 2024, the Company maintained a full valuation allowance against its net deferred tax assets, based on the conclusion that it is more likely than not the assets will not be realized.

The Company applies the guidance in ASC 740-10, Income Taxes, to account for uncertain tax positions. This guidance requires a two-step approach: (1) determine whether it is more likely than not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation; and (2) measure the tax benefit as the largest amount that is more likely than not to be realized upon settlement. The Company evaluates its tax positions based on a number of factors and may update its assessments as facts and circumstances change.

The Company is subject to taxation in the U.S. federal jurisdiction, the state of California, China, and U.A.E. The income tax provision for each period represents the aggregate estimated tax expense or benefit for these jurisdictions.

The income tax provision did not impact the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended September 30, 2025, and 2024, and by $15 thousand and $3 thousand, respectively, for the nine months ended September 30, 2025 and 2024. The Company recognizes interest and penalties on unrecognized tax benefits as a component of income tax expense. There were no material interest or penalties for the three and nine months ended September 30, 2025, and 2024.

Recent Accounting Pronouncements

In early 2025, the Financial Accounting Standards Board (“FASB”) issued several ASUs to enhance financial reporting and provide clearer guidance on various accounting topics. As a December 31 year-end filer and a Smaller Reporting Company (“SRC”), the Company is required to adopt these ASUs in accordance with the effective dates applicable to SRCs. The Company is currently evaluating the impact of these ASUs on the Company’s financial statements and related disclosures. Below is a summary of these ASUs:

Recently issued accounting pronouncements not yet adopted

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU enhances the transparency of income tax disclosures by requiring more detailed information about the rate reconciliation and income taxes paid, disaggregated by jurisdiction. This update is effective for the Company beginning January 1, 2025 and will first apply to the Company’s December 31, 2025 Form 10-K (as a public business entity, including SRCs). Early adoption is permitted.

In December 2024, the FASB issued ASU 2024-04, Debt—Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments. This ASU clarifies when a settlement of a convertible debt instrument should be accounted for as an induced conversion rather than a debt extinguishment. Key provisions include (a) applying a pre-existing-contract approach to assess whether the form and amount of consideration are preserved; and (b) expanding the guidance to cover certain convertible debt instruments not previously convertible. This update is effective for the Company beginning January 1, 2026 (fiscal year and interim periods beginning after December 15, 2025) and will first apply to the Company’s December 31, 2026 Form 10-K. Early adoption is permitted, provided ASU 2020-06 has been adopted.

In December 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40). This ASU requires public business entities to disclose additional details about certain expenses in the notes to financial statements, such as inventory purchases, employee compensation, depreciation, and intangible asset amortization. This update is effective for the Company beginning January 1, 2027 (fiscal year and interim periods beginning after December 15, 2026) and will first apply to the Company’s December 31, 2027 Form 10-K (as a public business entity, including SRCs). Early adoption is permitted.

In May 2025, the FASB issued ASU 2025-04, Compensation—Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606): Clarifications to Share-Based Consideration Payable to a Customer. This ASU (a) revises the master-glossary definition of ‘performance condition’ to include customer-based targets; (b) eliminates the forfeiture-policy election for awards granted to customers unless exchanged for a distinct good or service; and (c) clarifies that the variable-consideration constraint in ASC 606 does not apply to share-based consideration payable to a customer. This update is effective for the Company beginning January 1, 2027 (fiscal year and interim periods beginning after December 15, 2026) and will first apply to the Company’s December 31, 2027 Form 10-K (as a public business entity, including SRCs). Early adoption is permitted.

In September 2025, the FASB issued ASU 2025-07, Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606). This Update addresses stakeholders’ concerns about (1) the application of derivative accounting to contracts with features based on the operations or activities of one of the parties to the contract and (2) the diversity in accounting for share-based noncash consideration from a customer that is consideration for the transfer of goods or services.

The amendments are expected to (a) reduce the cost and complexity of evaluating whether contracts with features based on the operations or activities of one of the parties to the contract are derivatives, (b) better portray the economics of those contracts in the financial statements, and (c) reduce diversity in practice resulting from the broad application of the current guidance and changing business environment. The amendments also are expected to reduce diversity in practice by clarifying the applicability of Topic 606, Revenue from Contracts with Customers, to share-based noncash consideration from a customer for the transfer of goods or services. This update is effective for the Company beginning January 1, 2027 (fiscal year and interim periods beginning after December 15, 2026) and will first apply to the Company’s December 31, 2027 Form 10-K (as a public business entity, including SRCs). Early adoption is permitted.