FF issued the third quarterly report of 2021 to temporarily relieve the risk of delisting Jia Yueting's founding team "fell apart"

Financial Associated Press, May 7 (reporter Xu Hao) The "delisting" limit has arrived, and Faraday Future (FF) finally handed over the long-postponed third quarter of 2021 financial report at the last moment, temporarily lifting the risk of delisting.

After the U.S. stock market closed on May 6, Faraday Future Intelligent Electric Inc. (FF) announced its financial results for the third quarter ended September 30, 2021. According to the financial report, in the first nine months of 2021, the company's net loss reached $432 million. Meanwhile, FF said it would hold a conference call open to investors after submitting its first quarter results for 2022 in mid-May.

"After the end of the third quarter, we achieved the first four milestones towards SOP at our manufacturing facility in Hanford." Regarding the progress of the first production car FF 91, which has attracted much attention, FF Global CEO Bi Fukang said that FF is still confident of delivering the FF 91 in the third quarter of 2022.

Net loss widened nearly 10-fold over the same period

Operating expenses for the third quarter ended September 30, 2021 were $186 million, compared to $17.55 million for the three months ended September 30, 2020, up about 960% year-over-year, according to the earnings report. FF explained that "the significant increase in operating expenses is mainly due to the increase in investment in the Hanford manufacturing plant in preparation for full commercial production." ”

FF also explained the nearly 10-fold widening of net losses over the same period. "The increase in net loss was primarily due to a significant increase in operating expenses, losses on changes in fair value of notes payable, notes payable denominated at fair value, fair value liabilities, and losses arising from the treatment of notes payable to related parties, notes payable and supplier payments payable." FF said in the earnings report.

The earnings report showed a net loss of $304 million for the third quarter ended September 30, 2021, compared to a net loss of $33 million for the same period last year; and a balance of cash and cash equivalents of $666 million. Cash balance as of March 31, 2022 was $276 million, including $97 million in notes and planned interest payments.

In the financial report, FF also mentioned the current progress of the business, in addition to re-promising to deliver FF 91 on time, FF said that it is preparing sales channels for FF 91. Currently, FF has obtained a sales license from the State of California for online sales nationwide and has signed a lease agreement for FF's flagship store in Beverly Hills, California, for an initial lease period of 126 months, with the lessee enjoying two five-year renewal rights. In addition, FF announced that it is actively looking for a second flagship store location in the United States. FF also said it has signed a contract with South Korea-based automaker Myoung Shin Co., Ltd. to build its second car, the FF 81, which is scheduled for SOP in 2024.

It is worth mentioning that FF China has published a large number of recruitment information on the recruitment website, and there are 134 recruitment positions, covering engineering, design, intelligence, marketing, branding, sales, etc., the main work places are in Beijing and Shanghai, and a small number of positions are located in Chengdu. Most of the mature employees recruited by FF China this time, and most of the annual salaries offered are more than 200,000 yuan. Among them, the senior software project manager is responsible for the research and development of software project management for vehicle machines and auto parts products.

At present, FF's China headquarters has not yet landed. The reporter of the Financial Associated Press has reported that Zhuhai, Wuhan and Shanxi Changzhi have all been the subjects of scandals settled in the headquarters, but there is still no conclusive conclusion to this day.

Jia Yueting's founding team "fell apart"

In July 2021, FF listed on the NASDAQ through SPAC and completed a $1 billion financing. However, the good times were not long, less than 3 months after the listing, FF encountered institutional shorts.

In response to the allegation that "FF has made no real progress in mass production" and concluded that "FF Company cannot sell even one car", FF said that the company needed additional time to complete the investigation, so it could not disclose the financial report within the specified time. Based on this, since the listing, FF has not published a complete financial report, and has postponed the release of the third quarter report and annual report of last year.

In November 2021, due to the delay in releasing the third quarter earnings report, FF received a delisting warning letter from the US Securities and Exchange Commission. The SEC set a financial reporting date for FF on May 6, 2022, and if it is not submitted, FF will be at risk of delisting.

During this period, the FF Board of Directors deliberately established a special committee composed of independent directors. In February 2022, FF submitted a special finding denying the short claims, but admitting that only a few hundred of the previously claimed 14,000 orders had paid a deposit, misleading investors. In the third quarter of 2021 financial results disclosed on May 7, FF announced that the number of car bookings as of March 31, 2022 was 401 units, but the deposit paid for the reservation was fully refundable and non-binding.

To this end, the founding team led by Jia Yueting was punished, Wang Jiawei, vice president of the company's global capital market, was suspended, and CEO Bi Fukang and founder Jia Yueting lowered their annual basic salary by 25%.

Delays in disclosing earnings reports and penalties triggered a chain reaction. In the secondary market, since the listing, the total market value of FF has evaporated by more than 80% to $769 million in less than 10 months, and its stock price has fallen from $13.78 to the current $2.37; on April 13, Wang Jiawei left FF, and Wang Jiawei's other identity is Jia Yueting's nephew. At the same time, Jia Yueting will no longer serve as the company's executive officer, will continue to serve as the company's chief product and user ecology officer, and will continue to report to the executive chairman.

"The reason behind Wang Jiawei's departure may be related to the escalation of contradictions between the current FF board of directors and the management team dominated by Jia Yueting." Some industry insiders commented on this, "Jia Yueting's credibility in the capital market has actually become a negative asset of Faraday Future. ”