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Faraday Future(FFIE) - 2024 Q2 - Quarterly Report
FFIEFaraday Future(FFIE)2024-08-14 20:51
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Patents and Production - As of June 30, 2024, the company has been granted approximately 660 patents globally[289]. - The company started production of the FF 91 Futurist and delivered the first FF 91 2.0 Futurist Alliance in 2023[289]. - The planned B2C passenger vehicle pipeline includes the FF91 series, FF81 series, and FF71 series[289]. - The FF 81 is expected to compete against the Tesla Model S and similar vehicles, while the FF 71 is designed to compete with the Tesla Model 3 and BMW 3-series[290]. - The company began delivering its first electric vehicle, the FF 91 Futurist, in the third quarter of 2023, following the start of production in April 2023[325]. - Automotive sales revenue was 0.3millionforthethreemonthsendedJune30,2024,asvehicledeliveriesbeganinthethirdquarterof2023[324].−Automotivesalesrevenuewas0.3 million for the three months ended June 30, 2024, as vehicle deliveries began in the third quarter of 2023[324]. - Automotive sales revenue was 0.3 million, with the first electric vehicle, the FF 91 Futurist, starting production in March 2023[345]. Financial Performance - Revenue for the three months ended June 30, 2024, was 0.293million,asignificantincreasefrom0.293 million, a significant increase from 0 in the same period in 2023[323]. - Revenue for the six months ended June 30, 2024, was 0.3million,asignificantincreasefrom0.3 million, a significant increase from 0 in the same period in 2023[344]. - Cost of revenues for the three months ended June 30, 2024, was 20.97million,comparedto20.97 million, compared to 6.613 million in 2023, resulting in a gross profit loss of 20.677million[323].−CostofrevenuesforthesixmonthsendedJune30,2024,was20.677 million[323]. - Cost of revenues for the six months ended June 30, 2024, was 41.7 million, representing a 530% increase from 6.6millionin2023[346].−Thenetlossfortheperiodwas6.6 million in 2023[346]. - The net loss for the period was 108.685 million, compared to a net loss of 124.928millioninthesamequarterof2023,indicatinganimprovement[323].−LossfromoperationsforthesixmonthsendedJune30,2024,was124.928 million in the same quarter of 2023, indicating an improvement[323]. - Loss from operations for the six months ended June 30, 2024, was 94.2 million, an improvement from a loss of 151.8millionin2023[344].−Lossonsettlementofnotespayabledecreasedto151.8 million in 2023[344]. - Loss on settlement of notes payable decreased to 58.4 million, a 68% reduction from 183.5millioninthesameperiodlastyear[360].ExpensesandCostManagement−Researchanddevelopmentexpensesdecreasedto183.5 million in the same period last year[360]. Expenses and Cost Management - Research and development expenses decreased to 3.317 million from 25.269 million year-over-year, indicating a reduction in R&D activities[323]. - Research and development expenses decreased to 10.0 million for the six months ended June 30, 2024, down 88% from 83.1millionin2023[348].−Salesandmarketingexpenseswere83.1 million in 2023[348]. - Sales and marketing expenses were 1.782 million, down from 7.699millioninthepreviousyear,reflectingcostcontrolmeasures[323].−Salesandmarketingexpensesdroppedto7.699 million in the previous year, reflecting cost control measures[323]. - Sales and marketing expenses dropped to 4.3 million, a 67% decrease from 12.8millionintheprioryear[349].−Generalandadministrativeexpensesincreasedslightlyto12.8 million in the prior year[349]. - General and administrative expenses increased slightly to 17.201 million from 17.062million,showingstabilityinadministrativecosts[323].−Generalandadministrativeexpenseswere17.062 million, showing stability in administrative costs[323]. - General and administrative expenses were 31.0 million, down 29% from 43.6millionin2023[350].−Aleaseimpairmentlossof43.6 million in 2023[350]. - A lease impairment loss of 7.5 million was recognized due to the termination of leases for a store and a research facility during the three months ended June 30, 2024[330]. Cash Flow and Liquidity - Net cash used in operating activities was 29.1millionforthesixmonthsendedJune30,2024,asignificantdecreasefrom29.1 million for the six months ended June 30, 2024, a significant decrease from 160.7 million for the same period in 2023[386]. - Net cash used in investing activities was 0.3millionforthesixmonthsendedJune30,2024,comparedto0.3 million for the six months ended June 30, 2024, compared to 25.9 million for the same period in 2023, indicating a reduction in fixed asset acquisitions[387]. - Net cash provided by financing activities was 26.7millionforthesixmonthsendedJune30,2024,downfrom26.7 million for the six months ended June 30, 2024, down from 181.8 million for the same period in 2023[388]. - The company continues to experience negative cash flows from operations due to investments in R&D for electric vehicles and infrastructure development in the U.S. and China[385]. - The company reported an accumulated deficit of 4,115.4millionandanunrestrictedcashbalanceof4,115.4 million and an unrestricted cash balance of 0.8 million as of June 30, 2024[369]. - The company has commitments totaling 554.5millionundervariousSPAagreements,with554.5 million under various SPA agreements, with 343.2 million funded and 211.3millionremainingtobefundedasofJune30,2024[370].−Thecompany’sprimarysourceofliquidityistheissuanceofvariousconvertiblenoteinstrumentsduetorestrictionsonaccessingtheATMProgram[372].StrategicInitiatives−ThecompanyplanstodevelopaSmartLastMileDeliveryvehicletoaddresshigh−growthdeliveryopportunitiesinEurope,China,andtheU.S.[292].−ThecompanyhasupdateditscorporatestrategytoincludeaChina−U.S.AutomotiveBridgeStrategy,aimingtoestablishasecondmass−marketbrand[293].−AMiddleEasternsalesentitywasestablishedinDubai,U.A.E.onApril9,2024[300].−ThecompanyheldaninteractiveinvestorCommunityDayatitsLosAngelesheadquartersonJuly20,2024[300].−NasdaqgrantedthecompanycontinuedlistingonNasdaqsubjecttocompliancewithperiodicreportingrequirementsbyJuly31,2024[302].DebtandRelatedPartyTransactions−Thecompanyincurredarelatedpartyinterestexpenseof211.3 million remaining to be funded as of June 30, 2024[370]. - The company’s primary source of liquidity is the issuance of various convertible note instruments due to restrictions on accessing the ATM Program[372]. Strategic Initiatives - The company plans to develop a Smart Last Mile Delivery vehicle to address high-growth delivery opportunities in Europe, China, and the U.S.[292]. - The company has updated its corporate strategy to include a China-U.S. Automotive Bridge Strategy, aiming to establish a second mass-market brand[293]. - A Middle Eastern sales entity was established in Dubai, U.A.E. on April 9, 2024[300]. - The company held an interactive investor Community Day at its Los Angeles headquarters on July 20, 2024[300]. - Nasdaq granted the company continued listing on Nasdaq subject to compliance with periodic reporting requirements by July 31, 2024[302]. Debt and Related Party Transactions - The company incurred a related party interest expense of 6.6 million for the six months ended June 30, 2024, reflecting a 9329% increase from the prior year[365]. - Related party interest expense increased significantly to (1.5)million,ariseof(1.5) million, a rise of 1.4 million or 2051% from (70,000)in2023,duetodefaultonarelatedpartynote[341].−AsofJune30,2024,thecompanyhadoutstandingprincipalof(70,000) in 2023, due to default on a related party note[341]. - As of June 30, 2024, the company had outstanding principal of 7.6 million and interest payable of 18.5millionrelatedtoitsdebtagreementwithChongqingLeshiSmallLoanCo.,Ltd.[377].−ThecompanyhasbeenindefaultonSPAcommitmentssinceApril2023andispresentingrelatednotesascurrent[377].−Thecompanyhastherighttoissueandselluptoanadditional18.5 million related to its debt agreement with Chongqing Leshi Small Loan Co., Ltd.[377]. - The company has been in default on SPA commitments since April 2023 and is presenting related notes as current[377]. - The company has the right to issue and sell up to an additional 192.5 million of Class A Common Stock under the Standby Equity Purchase Agreement as of June 30, 2024[371]. Accounting and Estimates - Management's estimates for financial reporting are based on historical experience and reasonable assumptions, but actual results may differ significantly[392]. - There have been no changes to critical accounting estimates that have materially impacted the financial statements as of the date of this report[393]. - The effect of exchange rate changes on cash and restricted cash was immaterial for the six months ended June 30, 2024, compared to $5.6 million for the same period in 2023[389]. - The company did not have any off-balance sheet arrangements as of June 30, 2024[390].