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spk02: Greetings. Welcome to Faraday Future Intelligent Electric, Inc. Fourth Quarter 2022 Earnings. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Charles Shea, Investor Relations. Thank you. You may begin.
spk05: Thank you and welcome to Faraday Futures' fourth quarter 2022 earnings call. We issued a press release reporting our fourth quarter and annual 2022 results this afternoon, March 8th, 2023. Joining the call today from Faraday Futures is our Global Chief Executive Officer, XF Chen, Matthias Eit, Global SVP of Product Execution, and our Chief Accounting Officer and Interim Chief Financial Officer, Yun Han. You can find a copy of the Q4 2022 press release now and a replay of this call later today in the investor relations section of our website, investors.ff.com. Please note that on this call, we will be making forward-looking statements based on current expectations and assumptions, which are subject to risks and uncertainties. These statements reflect our views only as of today, should not be relied upon as representative of views as of any subsequent date, and we undertake no obligation to revise or publicly release the results of any revision to these forward looking statements in light of new information or future events. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations. For further discussion of the material risks and other important factors that could affect our financial results, please refer to our filings with the SEC. In addition, during today's call, Our management team will give their prepared remarks and answers to investors' questions in English. The translator will provide simultaneous Chinese translation, which can be accessed through investors.ff.com. All translations are provided for convenience only. In the case of any discrepancy, management's statement in English will prevail. With that, I will turn the call over to XF Chen, Global CEO of Faraday Future.
spk04: Thank you, Charles. And thanks to everyone for joining us today. This is my first earning call as a FF Global CEO, and I want to let you know that I plan to make it a priority to have consistent and open communications with investors moving forward. I would like to begin today's call with what is FF? FF is a pioneer of ultimate tech luxury, ultra-inspired market in the intelligent EV area, and a disruptor of the traditional ultra-luxury car civilization optimized by Ferrari and Maybach. FF is not just an EV company, but also a software-driving company of intelligent internet AI products. Ultimately, FF aims to become a user company by offering a shared intelligent mobility ecosystem. envision the growth of FF in three phases. Our phase one goal is to deliver to our global ultra-aspired users the FF91 Futurist Alliance, FF91 Futurist, and FF91 with high quality and high product power. Thereby, distributing traditional ultra-luxury brands like Ferrari, Maybach, Royce, Royce, and Bentley, and ultimately become the top leaders in the global SPIRE user market. We are in the process of developing our five-year business plan. The company's goal is to create a profitable business with operating cash flow breakeven in 2025. As we introduced more upcoming WECO models, the user ecosystem will begin to take shape and we expect our hardware revenue will grow, and the equal revenues, which include internet, apps, software, and sharing, will also grow as well. Our phase two goal is to establish ourselves as a major player in the high-value user market. During phase three, FF intends to sustain the growth of its hardware revenue and equal revenue. which we believe will constitute an increasingly substantial portion of the overall profit. With this mid to long-term strategic plan, we aim to rapidly grow the company to become a $10 billion, then $50 billion, then $100 billion company in the future. Let's look at a brief company overview of where we stand today. our upcoming start of production milestone, and our go-to-market plans. Matthias will then provide an overview of the FF91 future risks, and Vinh will present a review of our financials. Update to Q1 2023. Fundraising and other actions we are taking to ensure a strong Friday future. 2022 was a tough year with several challenges for the company. But despite the challenges, our unwavering commitment to our vision persisted, putting this path behind us. FF stands stronger today than ever. We have also made significant improvements to our board to align with the stakeholder interests and brought in new key management hires such as VIN, our Chief Accounting Officer and Interim Chief Financial Officer, Mike Beck, our Interim General Counsel, as well as moving me from our China operations to now leading Fargate Futures global business. The new FF today is fully aligned from shareholder level to employee level, all for the of the company and its shareholder interests. Over the past three months, I have seen the unparalleled dedication of the FF team and the hard work they put into the company. We are excited to introduce the FF91 Futurist in the coming months, which marks a significant milestone in Faraday Futures' goal to become a revenue-generating company this year. Now, I would like to take a few moments to talk about our manufacturing efforts being undertaken at our Hanford CA factory, or the IE factory, California, as we refer to it, which is a foundation for the ultimate intelligent tech luxury FF91 filters. This factory covers a row spanning 1.1 million square feet and will have an initial production capacity of 10,000 cars annually. On the staff side, we are intensifying recruitment and training, which will support our start of production. We have also set up a launch team consisting of cross-functional colleagues who will be temporarily moved to Hanford to support the manufacturing and provide immediate assistance for any potential issue. Back in September of 2021, highlighted six milestones needed to reach the start of production of the FF91 field test at our manufacturing plant in Hanford. Since then, the FF team has worked diligently to complete all six of the necessary production milestones, including the initial installation of our pilot equipment, the completion of the factory foundation construction, to most recently. finalizing a major construction and installation in our SOP vehicle manufacturer area. In addition to the aforementioned production milestones, we are confident to reach our first start of production milestone number seven by March 30, 2023, assuming timely receipt of funds from our investors, which we will talk about more later. We will host the FF91 Futurist final launch event on April 26, and we look forward to your participation. Building such an innovative car is no small task. We are in close communication with our participants. We strive to maintain a high level of quality assurance throughout all production stages. Furthermore, we seek to actively engage with suppliers and other strategic partners to capitalize on their expertise in optimizing the supplier process and ensuring that our vehicles meet the high-risk standard. Internally, we have initiated the supplier champions project, where we have assigned one of our vice presidents for each supplier relationship to ensure our alignment. I want to take the opportunity to thank all our suppliers for their continuous commitment and support. As we prepare to commence a delivery by end of April, assuming timely receipt of funds from our investors and the suppliers meeting our supply chain requirements, I also want to talk a little bit about our go-to-market strategy. FF focuses on co-creation in our go-to-market strategy. redefining how user and the partners interact with company to generate higher efficiency, higher value, and a bridging user to our mobility ecosystem. We have started inviting early adopters to experience the vehicle performance through the field trust product officer program. FPOs are invited to experience the FF91 field trust and provide direct feedback to FF team and improve future vehicle through the co-creation progress. FPOs will enjoy value sharing based on the quality of the feedback and ideas on the product. We are reaching out to candidates to join FF Spire Club, which is a group of units who share the same mission with FF and who would like to co-create value in the FF mobility ecosystem through exclusive tech luxury branding and experiential events, social media sharing, and invitation-only referral programs. Spire Club members will share the benefits of creating a new mobility ecosystem by leveraging their circle of influence. We will launch FF91 Futurist through our direct sales model, where users can place orders online and are also able to experience our costs as FF's safe owned and partner owned showrooms and experiences. FF's O2O sales and service platform allow partners to integrate seamlessly in our sales and service solution. With our direct sales model, FF has fulfilled the necessary direct sales licensing requirements to operate as a leading auto luxury OEM. We have started our flagship brand experience center project in Beverly Hills and look forward to showcasing our car there soon. Through the operation of our own distribution network, FF can efficiently handle the customer relationship and provide a fully seamless, and transparent sales journey for our users. Our retail strategy will be focused on establishing our presence in the top 20 cities across primary regions worldwide. Our initial 2023 sales efforts will begin in the LA metro region, followed by the San Francisco Bay area, and subsequently the New York metro region, In China, our initial sales efforts will begin with Shanghai and Beijing. Additionally, we are exploring potential opportunities to launch our product in Europe and the Middle East markets as it aligns with our product positioning and cutters to the growing demand for ultra-luxury vehicles in the regions. To help ensure exceptional service for our customers, We will be launching a fleet of mobile service ones to provide Council Earth level service. Additionally, service hub located in K geographic area will provide a comprehensive network of warranty service and repair capabilities. I take great pride in acknowledging the commendable efforts put forth by the FF team. Their perseverance has enabled us to advance our strategic initiatives despite facing numerous challenges. I'm eagerly anticipating the journey ahead as we continue to pursue our growth path and strive towards enhanced stockholder value. Now, I would like to turn the call over to Matthias. Thanks, Xie.
spk01: I would like to take a few moments to elaborate on our innovative product, the FF91 Futurist. The FF91 Futurist provides unsurpassed user experience and offers industry-leading performance metrics. The FF91 Futurist has bespoke electric drive units with a fully integrated design, active oil cooling, and offering independent rear axle drive and the 1,050 horsepower propulsion System is driven by FF in-house developed software and control algorithms, optimizing the performance, stability, and safety. The car also boasts an EPA certified range of 381 miles of range, which is almost 50 to 70 miles more than our direct competitors in a comparable price category. The FF91 can go from 0 to 60 miles per hour in a least during 2.27 seconds. In addition to performance, the FF91 Futurist has true mobile connectivity, which is unrivaled in the industry. You can think of FF91 Futurist as a smart device on wheels, a game changer in the automotive industry that sets a new benchmark for both the driver and passenger experience. The FF91 Futurist offers a unique, real intelligent internet system and a revolutionary user experience designed to create a mobile, connected, intelligent, and luxurious third internet living space and user mobility ecosystem platform. Its interior cabin features unique rear zero gravity seats inspired by another offering the largest rear legroom area in the industry and can recline up to 60 degrees for maximum comfort. It also offers a revolutionary and immersive driving experience coupled with an unsurpassed passenger experience. A total of 100 plus inches across 11 displays, including a 27-inch ultra-wide rear display to deliver a portal to passengers in every seat. Rear seat passengers in the FF91 would be able to lower and raise industry-leading rear passenger display with a simple voice command. Once the RST is done, passengers will now also be able to conduct in-vehicle video conferencing to allow them to continue their work while on the road commuting. The FF91 will have additional advanced features, including touchless entry, voice control for navigation input, and self-parking capabilities in most normal environmental conditions. Our dedicated R&D team has undertaken extensive product testing and validation to ensure product readiness of the FF91 Futurist. These tests include safety and regulation tests, extreme weather and durability testing, and final customer use case testing on public roads. We have tested the FF91 Futurist in cold weather conditions under subzero temperatures and extreme desert heat environments, and we are pleased with the results. Additionally, we recently sent our first vehicle to China for market testing and validation, including charging and infrastructure compatibility, along with other hardware and software applications. This shipment is a further step in our planned promotion of our US-China dual home market strategy, which calls for production and sales in both the US and China, the two leading global markets for electric vehicles. We are pleased to report that our safety testing is proceeding as planned and that the results are exceeding our virtual validation targets by a significant margin. In addition to our product testing, we are proud to announce the completion of generational enhancement, which we have identified as product and technology generation 2.0. This consists of significant upgrades of systems and car components for both the vehicle and IAI areas. IAI is our advanced core. which stands for Internet Autonomous Driving and Intelligence. We updated 26 major systems and components with 13 key upgrades through our powertrain battery, charging, chassis, and interior areas, as well as 13 key upgrades from computing, sensing, communication, user interaction to the newest technology from IEI. These updates have resulted in a significant performance improvement to the SF91 Futurist. We look forward to sharing more detailed highlights of the car at our final launch event ahead of deliveries. So what does this all mean for our users? Specifically, it means getting the following upgrades to name a few. A new dual Qualcomm chip that powers the infotainment center. Eight megapixel interior and exterior cameras. Ultra wide band sensors for faster data transmission speeds. compared to conventional Bluetooth and a cutting-edge LiDAR system with the capability to detect up to 500 meters in any weather conditions. We look forward to sharing more at our upcoming final launch event on April 26. Now, I will turn the call over to Yun, who will go over the financials.
spk03: Thank you, Matthias. I'm excited to be working with the entire Fire Day Future team. I would like to begin by providing a financial overview, followed by a discussion on our funding effort, cost-cutting strategy, and our focus on ensuring that all the ICC findings are up to date, as well as our plans in place to address weaknesses in internal controls over financial reporting. First, I would like to summarize our financial results for 2022. Friday future reported operating loss of 451 million for the full year 2022 as compared to operating loss of 354 million for the full year 2021. Operating expenses for Q4 2022 were 84 million compared to 121 million for Q4 2021. The overall increase in operating expenses for the year was mainly due to the increase in research and development expenses. The decrease in operating expenses for Q4 2022 in comparison to Q4 2021 are mainly due to timing as significant research and development expenses were incurred in the first nine months of the year. Night loss increased to $552 million for the full year in 2022 as compared to $517 million for the full year in 2021. The increase is mainly due to the increase in research and development expenses and the non-cash mark-to-market changes of certain notes payable and warrant liabilities in 2022 compared to a one-time loss on conversion of certain notes payables in connection with the closing of the business combination in 2021. Net loss for Q4 2022 was $154 million compared to $84 million for Q4 2021. The increase is mainly due to the increase in non-cash changes in fair value measurement of certain notes payable and warrant liabilities in 2022 and again of settlement on certain notes payables compared to a one-time gain on forgiveness of company's payroll protection loan during Q4 2021. Turning to our balance sheet, total assets on December 31st, 2022 were 510 million compared to 907 million of total assets as of December 31st, 2021. Total liabilities were 328 million versus 340 million on December 31st, 2021. Since the inception, the company has incurred cumulative losses from operations and negative cash flows from operating activities, and the company's accumulative deficit was approximately $3.5 billion as of December 31, 2022. Net cash used in operating activities for 2022 was $383 million compared to $340 million in 2021. Capital expenditures were $123 million for the full year 2022 compared to $96 million for the full year 2021. Net cash used by financing activities for the full year 2022 was $7 million compared to net cash provided by financing activities of $967 million for the full year in 2021. Cash as of December 31, 2022 was $19 million including restricted cash of $2 million. The decrease in cash from December 31, 2021 to December 31, 2022 was mainly due to our significant research and development spend and equipment purchases. Research and development accounted for 69% of total operating expenses in 2022. As of March 3, 2023, our cash position was $38 million, including restricted cash of 2 million. Our remaining cash on hand together with expected funding to be received in March and April is expected to provide us a sufficient funding to produce our FF91 Futures product and get into the hands of customers. Now I would like to provide a funding update. On December 15th of last year, we announced that we expect to start production of a sellable FF91 Futures at the end of March 2023, subject to timely availability of $150 to $170 million of additional funding and timely stockholder approval of authorized share increase. Since then, we have been diligently working towards that goal. On February 5th, we announced that we secured $135 million in new financing commitments pending FF stockholder vote to increase the authorized shares outstanding and approval of the financing and certain other closing conditions. At the February 28 special meeting of stockholders, we received sufficient votes that were in favor of the increase in authorized shares. Additionally, we scheduled another special meeting of stockholders on March 30, 2023, to vote on approval of this transaction as it exceeds 99.99% of shares outstanding. You should have received voting instructions by now. Please vote now to approve the $135 million in new financing commitments. If you have any questions with regards to voting, please refer to our voting guide at i5.com slash vote. Please see the definitive process statement that the company filed with ICC for more information. Since December 15, 2022, we have received $112 million growth funding and secured $10 million schedule to be received in Q1 2023. $55 million is scheduled to be funded within five business days of effective registration statement for shares underlining the secured convertible nodes and the stockholders' approval of the issuance of shares at upcoming special meeting of stockholders which we just spoke about, as well as certain other conditions. We also expect that we will receive additional $9 million from our existing investors by the end of March, which will be funded at investors' options. Additionally, we have entered into a standby equity purchase agreement with Yorkville Advisors, which allows the company to draw funds in exchange for share issuances for up to $350 million at the company's discretion. We'll be very strategic and careful in using this facility in a manner both beneficial to stockholder value. Access to the full amount of this equity credit line is subject to certain conditions and share price ratios being met. Subject to certain conditions, 20 million of additional capital has been committed by one of our current investors and some of our existing investors have the right to commit up to 160 million of additional funds. It is always our plan and expectation that we should raise additional funds to move beyond the initial launch of FY91 futures. We have just begun a $50 million raise to have better liquidity to support our production ramp and have already received indications of interest from investors for nearly the full amount. We would like to offer this investment opportunity to all existing stockholders that are credited investors to consider. We'll send out an investor letter shortly after this earnings call. For those current accredited investors, stockholders with interest, please email us at ir at iff.com. We'll continue to explore various debt and equity financing possibilities, and we believe that after FF91 futures delivery and as the company starts to generate revenue, we'll have better access to a lower cost of capital. Finally, since I joined the company, we have implemented several cost-cutting initiatives that have enabled us to focus our budget on core items that are essential to delivering the I-5 Futurist and maintain strong relationships with key suppliers. Finally, since I joined the company, we have implemented several cost-cutting initiatives that have enabled us to focus our budget on core items that are essential to delivering the I-591 Futurist and maintain strong relationships with key suppliers. Also, I'm happy to say that our team has kept our ICC findings up to date since Q1 2022, and we respect it will continue to stay current. Additionally, I have worked with the team to evolve business and system processes, and we're implementing internal controls to strengthen our corporate governance, as well as financial reporting. We have recently hired several key accounting positions as well as compliance officer who will also serve as our deputy legal counsel. We're also engaging a third-party consulting firm to help us build our internal audit function. With that, I'll hand it back to XF.
spk04: Thank you, Min. XF appreciates the trust shown by investors and would like to thank them for their loyal and ongoing support of the recent governance structure, board of directors, and management. We are looking forward to the upcoming SOP milestone at our Hanford facility. And we would be delighted to have you visit us in the coming months. Thank you for your time and interest in Faraday future. And I look forward to providing you with further updates as we move closer to launch.
spk05: Operator, we are ready to take questions.
spk02: Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove the question from the queue. And for a participant choosing speaker equipment, it may be necessary to pick up your handset before pressing the star keys. We will pause for a brief moment to poll for questions. Our first question is from Michael Ward with Benchmark. Please proceed.
spk06: Thank you. Good evening, everyone, and thank you for doing the call. Maybe just starting with a big picture question and then getting a little more specific on the cash side. First of all, on a big picture side, has your definition of your market changed? How are you defining your key customers? Are you still assuming you're going to go down and produce the 81 and 71, or is something shifted?
spk00: Okay.
spk04: Excuse me. This is XF. I got some problems about the facility. Sorry, could you repeat your question because I've got a little bit of trouble.
spk06: No problem. So just a big picture type thing, as you define your market and your key customers, what are the key things you're looking at? Has it changed? Are you still looking out at coming out with the 81 and also the 71? How would you define your market the way you're seeing it over the next two, three, five years?
spk04: Well, okay, this is a very good question. You know, FF, we design our product as a very high-end premium product. First of all, first product will be our FF91 field test. We are designed as an ultra-tech-luxury vehicle, and we are aimed at the top segment of the market. You know, that's our first product we want to bring into the market this year. But for the development, three-year, five-year, this kind of cycle plan or this kind of mid-term, long-term plan. I think the company have also to consider how we apply the platform technology and our very advanced IAI technology into the FF81, FF71, because we do think FF as a very unique design and we will build our very strong brand and with our very strong performance of the car as Matthias just introduced. So we will get the FF91 as the first strong brand position for the higher, very high segment in the market. And then we will get the price, get the position down to meet the premium brand segment and also the intro premium segment to provide that kind of a similar experience to our different level of customer. So this is our mid-term, non-term strategy. We're still working on that. Does that answer your question? Sorry?
spk06: Yes, it does. Very much. Thank you. And then, now, it sounds like, do you have full approval to sell the vehicle in the United States? And it sounds like you're still waiting on final approval in China, is that right?
spk04: Well, first of all, you know, we got a plan to launch a car by end of this month. And in parallel, with that kind of funding rising arrived, we got a plan and opportunity to deliver the car by end of, sorry, We have a plan to launch a car by end of March, actually this month, end of this month. And with that kind of a condition, once we get the funding right, and also we get the supplier deliver our program requirements, we will deliver the 9-1-1 field test by end of April, next month.
spk06: It's got all approvals in the U.S. It's met all the regulatory approvals.
spk04: Not 100%, because some of the testing is still ongoing, and the results will be available by the end of this month, and some of them will be early next month. But before we do the start of delivering America by the end of next month, all the FMVSS, the U.S. national requirements, have to be finished. So that's our current plan, and we do have a We do have a very robust plan and high confidence for that one. In parallel, for your question about the China market, as I stated in my last speech, I think right after the U.S. delivering to the customers, we will accelerate the delivering for China market. That's the biggest EV market in the world. Quite similar things. We also have a plan to take over the China homologation and regulation-related application. We had a very good relationship with one of the China agencies, and we go through all of this kind of technical detail and have a very robust plan. In the coming months, we plan to ship the card to China to do this kind of testing for the China market. I think that this, and also, you know, February, early February, we already sent one car to China to do some of the charging system performance testing. So you can see that right after the U.S. market delivery, we will, no doubt, accelerate our China strategy.
spk06: Okay. And what kind of cadence do you expect for deliveries in the U.S. and China as we go through 2023? Well...
spk04: This one, because internally we do not put this as disclosure information yet. So I really like your question, but I probably cannot answer. Sorry about that.
spk06: No problem. On the cash side, I just wanted to see if I – because there were a lot of different commitments and dollars thrown about. So I want to see if I got this right. You mentioned – I think you ended the year with about $18 million of cash, and now you have $38 million. And so was some of the, it sounds like in the first quarter, you've received 10 million in the first quarter, but the 112 in gross proceeds, did some of that come into the first quarter? Into January, February, I guess? You're ending March at like 38, I'm sorry. Beginning of March at 38 million, right? Right, okay.
spk03: Yeah, this is Yoon, I can take this one. Yeah, so we in the beginning of March, we had about 38 billion on hand and we are, you know, through March and April, we're expecting to get additional committed funding. So, you know, with the committed funding, we have another 10 million coming in March and then also 55. Fifty-five, right. Fifty-five upon the effectiveness of the registration statement and then amongst You know, other things, we're still, you know, we're scheduled the second special stockholders meeting to approve, you know, the cap of 1999% and that to be scheduled by the end of March.
spk06: Okay.
spk03: So after that, go ahead.
spk06: Is the 135 in new commitments, is that in addition to the 150 to 170 you announced back in December?
spk03: We announced 150 to 170 and with the 135 that will get us you know enough through SOP and as well as SOD and we're currently finalizing our you know the span of the remaining of the year so we can tell you the remaining but you know at least you know with the 135 that get us through SOD And then, as you know, we also have access to ELOC.
spk06: Right, right.
spk03: You know, that is up to 350, but we got, we got to be very careful on how we use it. Right, right. You know, have to be the best for the, for the stakeholders. And then we also have 130, 160 million. That's an option of investors. So.
spk00: Okay.
spk03: So that, that is also likely to come. So we have a few things going on, and we're currently talking to the investors.
spk06: Okay. I just want to make sure I got this straight. So there are four different parts to it. In December, you announced $150 million to $170 million of funding, right?
spk03: Yep.
spk06: Now, on February 5th, you announced an additional $135 million. And then you have... You have... additional funding it sounds like you know different raises and from investors and from it looks like another 50 million or so from investors and then you have the equity purchase agreement the 350 so it looks like it just on paper it looks like you're right if you get the start of delivery You get those vehicles delivered, then the cash flow, then you have the capital flexibility to get through this year to push you into 24 and 25. Am I reading that correctly?
spk03: Well, I just want to clarify that $150,000 to $170,000 is the fund we need to get into SOP. Oh. That's the announcement. I got you.
spk06: I got you. Okay. That's what you said you needed. I thought that was a commitment you received. That's what you were looking for.
spk03: That's what we're looking for. And subsequently, we got $135,000. And so now obviously we also get some other funding and that'll get us through SOD.
spk06: Got it. Now I understand it. Thank you. That's where I was confusing it. Okay, so that's getting you through SOD and then the next steps as needed and hopefully the cash will start coming in the door as well.
spk03: Yeah, we're strengthening our capital market group. We hire more people. We also hire more experienced consultants. financial advisors, so we're working hard on getting more funding in the future.
spk06: Getting the product out the door is the first step, right?
spk03: Yep. And after that, our funding will be, hopefully we'll have access with a lower cost of capital.
spk06: All right. I really appreciate it. Thank you for your time. Thank you very much.
spk03: Thank you, Mike.
spk02: Thank you. This will conclude today's question and answer session and this will conclude today's conference. You may disconnect your lines at this time and thank you for your participation.
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