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United States securities and exchange commission logo
July 6, 2022
Carsten Breitfeld
Global Chief Executive Officer
Faraday Future Intelligent Electric Inc.
18455 S. Figueroa Street
Gardena, CA 90248
Re: Faraday Future
Intelligent Electric Inc.
Amendment No. 2 to
Registration Statement on Form S-1
Filed June 9, 2022
File No. 333-258993
Dear Dr. Breitfeld:
We have reviewed your amended registration statement and have the
following
comments. In some of our comments, we may ask you to provide us with
information so we
may better understand your disclosure.
Please respond to this letter by amending your registration
statement and providing the
requested information. If you do not believe our comments apply to your
facts and
circumstances or do not believe an amendment is appropriate, please tell
us why in your
response.
After reviewing any amendment to your registration statement and
the information you
provide in response to these comments, we may have additional comments.
Unless we note
otherwise, our references to prior comments are to comments in our
October 19, 2021 letter.
Amendment No. 2 to Form S-1
General
1. Revise your prospectus
to disclose the price that each selling securityholder paid for the
shares and warrants
being registered for resale. Highlight any differences in the current
trading price, the
prices that the sponsor and other selling securityholders acquired their
shares and warrants,
and the price that the public securityholders acquired their shares and
warrants. Disclose that
while the sponsor and, if applicable, other selling
securityholders may
experience a positive rate of return based on the current trading price,
the public
securityholders may not experience a similar rate of return on the securities
they purchased due to
differences in the purchase prices and the current trading price.
Please also disclose
the potential profit the selling securityholders will earn based on the
Carsten Breitfeld
FirstName LastNameCarsten Breitfeld
Faraday Future Intelligent Electric Inc.
Comapany
July 6, 2022NameFaraday Future Intelligent Electric Inc.
July 6,2 2022 Page 2
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FirstName LastName
current trading price. Lastly, please include appropriate risk factor
disclosure.
2. Please revise your disclosure to clarify the number of shares
outstanding as of a recent
date and following the offering, assuming full exercise of the
overlying warrants and
convertible notes. Additionally revise your prospectus summary to
quantify all issuable
shares (e.g., pursuant to other convertible securities, employee stock
options, etc.) and
describe how these shares are treated throughout the prospectus. In
this regard, we note
the following:
Disclosure on page 7 indicates that 238,276,213 shares are
outstanding, which is less
than the 256,127,887 shares being offered by the selling
securityholders.
The difference between the number of shares disclosed on page 7
as outstanding
before and after the offering does not correspond to the number
of shares disclosed as
issuable upon exercise of the overlying securities.
Disclosure on page 123 indicates that beneficial ownership is
based on 325,074,413
shares outstanding, yet the shares identified (20,410,111
issuable upon transfer agent
paperwork submission and 2,387,500 upon registration statement
effectiveness), does
not account for the difference compared with 238,276,213 shares
outstanding per
page 7.
Disclosure regarding the unissued shares as of March 31, 2022,
should be updated to
the most recent practicable date (pages 123 and F-10).
We note disclosure on page F-10 that, "Until the holder of the
right to receive shares
of the Company s Class A Common Stock is issued shares, that
holder does not have
any of the rights of a stockholder." Please provide your legal
analysis regarding the
appropriateness of registering such unissued shares and
identifying such holders as
selling securityholders in the registration statement.
3. Please revise to update your disclosures throughout the filing and
address areas that
appear to need updating or that present inconsistencies. Non-exclusive
examples of areas
where disclosure should be updated are as follows:
You state on page 10 that you "expect" to use net proceeds of
$767.1 million from
the business combination, in addition to $172.0 million from
notes payable, to to
finance the ongoing operations of the business, including
settlement of indebtedness.
This statement should be updated given that the business
combination was completed
more than 11 months ago.
You refer to the company's "operating results forecast" (pages
4 and 9-
10) and "forecasts and projections of working capital" (pages 12,
65, and F-10), but
we could not find these financial forecasts and projections in
the prospectus.
Carsten Breitfeld
FirstName LastNameCarsten Breitfeld
Faraday Future Intelligent Electric Inc.
Comapany
July 6, 2022NameFaraday Future Intelligent Electric Inc.
July 6,3 2022 Page 3
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You state on pages 42-43 that the market prices of your
securities "may" decline if
the business combinations' benefits do not meet the expectations
of investors or
securities analysts. This and similar risk factor disclosure, for
instance on pages 43-
44 and 48, should be updated to describe your actual trading
history and analyst
coverage since the business combination was completed.
You state on page 59 that "FF expects these amounts to decrease
significantly
following the completion of the Business Combination." This
disclosure should be
updated to reflect actual changes that have taken place since the
business
combination was completed.
4. We note your response to comment 1. Please revise your definition of
"PRC" and "China"
to include Hong Kong or, alternatively, revise your risk factors and
other relevant
disclosure to address Hong Kong with the same degree of
comprehensiveness as you
describe China. We also note that the registrant is defined as "FFIE,"
while the
consolidated company is defined as "FF." Accordingly, please revise
references to the
securities or offering throughout to refer to the registrant; for
instance, references on page
5 to "the value of FF's securities" and "FF s . . . ability to offer
or continue to offer our
shares."
5. If any of your officers and directors are located in China, please
revise to include a
separate Enforceability section (i.e., in addition to your disclosure
on page 42), to disclose
the difficulty of bringing actions and enforcing judgements against
these individuals.
Refer to Item 101(g) of Regulation S-K.
Cover Page
6. For each of the shares and warrants being registered for resale,
disclose the price that the
selling securityholders paid for such shares, warrants, or securities
overlying such shares.
Revise the statement, "We will not receive any proceeds from the sale
of shares of Class
A Common Stock by the Selling Securityholders," to additionally refer
to the sale of
private warrants and, if true, the conversion of the convertible note.
Make conforming
changes in the prospectus summary and elsewhere as appropriate.
7. Disclose the exercise prices of the warrants compared to the market
price of the
underlying shares. If the warrants are out of the money, please
disclose the likelihood that
warrant holders will not exercise their warrants. Provide similar
disclosure in the
prospectus summary, risk factors, MD&A, and use of proceeds section
and disclose that
cash proceeds associated with the exercises of the warrants are
dependent on the stock
price. As applicable, describe the impact on your liquidity and update
the discussion on
the ability of your company to fund your operations on a prospective
basis with your
current cash on hand.
8. We note that the shares being registered for resale will constitute a
considerable
percentage of your public float. We also note that some of the shares
being registered for
Carsten Breitfeld
FirstName LastNameCarsten Breitfeld
Faraday Future Intelligent Electric Inc.
Comapany
July 6, 2022NameFaraday Future Intelligent Electric Inc.
July 6,4 2022 Page 4
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FirstName LastName
resale were purchased by the selling securityholders for prices
considerably below the
current market price of the Class A common stock. Highlight the
significant negative
impact sales of shares on this registration statement could have on
the public trading price
of the Class A common stock.
The Company, page 1
9. Please file the contract manufacturing agreement with Myoung Shin Co.,
Ltd. as an
exhibit to the registration statement.
Summary
PRC Subsidiaries
How Cash is Transferred Through Our Corporate Organization, page 2
10. Please revise to disclose a narrative of the cash management policies
and procedures that
dictate how funds are transferred between your entities, including
whether cash generated
from one subsidiary is used to fund another subsidiary's operations,
and whether you have
ever faced or could face difficulties or limitations in your ability
to transfer cash between
subsidiaries.
Requirements under PRC Laws and Regulations, page 4
11. Please revise this section to disclose how you determined that no
permissions or approvals
were required in connection with your offering. If you relied on
counsel, identify counsel
and file an exhibit. If you did not consult counsel, provide an
explanation as to why you
did not consult counsel. Please expand or revise related risk factors
as appropriate.
Risk Factors, page 8
12. Include an additional risk factor highlighting the negative pressure
that potential sales of
shares pursuant to this registration statement could have on the
public trading price of the
Class A common stock. To illustrate this risk, disclose the purchase
price of the securities
being registered for resale and the percentage that these shares
currently represent of the
total number of shares outstanding. Also disclose that even though the
current trading
price is significantly below the SPAC IPO price, the private investors
have an incentive to
sell if they will still profit on sales because of the lower price
that they purchased their
shares than the public investors.
13. We note that you have deleted disclosures that, "We do not believe our
PRC Subsidiaries
are among the 'operators of critical information infrastructure' or
'data processors'" and
"We believe that our PRC Subsidiaries are in compliance with the
aforementioned
regulations and policies that have been issued by the Cyber
Administration of China," and
that disclosure on page 41 indicates your PRC Subsidiaries may or
could become subject
to enhanced cybersecurity review or non-compliance investigations.
Please revise to
disclose your basis and reasons for changing the foregoing
determinations. If you relied
on counsel, identify counsel and file an exhibit. If you did not
consult counsel, provide an
Carsten Breitfeld
FirstName LastNameCarsten Breitfeld
Faraday Future Intelligent Electric Inc.
Comapany
July 6, 2022NameFaraday Future Intelligent Electric Inc.
July 6,5 2022 Page 5
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FirstName LastName
explanation as to why you did not consult counsel.
FF identified material weaknesses in its internal control over financial
reporting. . . . , page 16
14. Please address the following:
Quantify the misstated amounts and/or provide a cross-reference
to the notes to your
financial statements where these amounts are quantified.
Revise the following disclosure to clarify its meaning and
scope, "Additionally, each
of the material weaknesses described above could result in a
misstatement of
substantially all of our accounts or disclosures that would
result in a material
misstatement to the annual or interim consolidated financial
statements that would
not be prevented or detected." Eliminate wording that appears to
imply an
inappropriate disclaimer of responsibility for your disclosure
and financial
statements; e.g., "would result in a material misstatement . . .
that would not be
prevented or detected."
Revise to address specifically what remediation efforts you
have taken so far and
what remains to be completed in your remediation plan. Also,
disclose how long you
estimate it will take to complete your plan and any associated
material costs that you
have incurred or expect to incur.
FF Global, which is governed by an executive committee consisting of seven
managers, may
exert influence. . . . , page 31
15. We note your revised disclosure regarding FF Global. Please further
revise to address the
following:
The risk factor caption should be tailored to reflect the risks
described therein, for
instance potential conflicts of interest and forced changes to
management.
Expand your disclosure regarding the shareholder litigation
threatened by FF Global
to describe the board and management changes sought by FF Global,
including the
request referenced in your Form 8-K filed June 27, 2022, the
actions FF Global has
taken to date, and the expected response of the company.
Additionally clarify how
these relate to the company's internal review and consequent
management changes.
We note that disclosure describing Dr. Breitfeld as a
non-voting member of FF
Global's board of managers has been deleted, while a note on page
112 refers to him
"stepping down." Revise to clarify whether Dr. Breitfeld's
removal from the board of
managers was voluntary or involuntary, and to describe the
reasons for such removal.
File the instruments governing FF Global's board of managers as
exhibits to
registration statement. In this regard, we note that Exhibit 10.4
identifies Mr. Jia as
Carsten Breitfeld
FirstName LastNameCarsten Breitfeld
Faraday Future Intelligent Electric Inc.
Comapany
July 6, 2022NameFaraday Future Intelligent Electric Inc.
July 6,6 2022 Page 6
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the managing partner and indicates his approval is needed for
certain matters.
Management's Discussion and Analysis of Financial Condition and Results of
Operations, page
53
16. We note that the projected revenues for 2022 were $504 million, as set
forth in the
unaudited prospective financial information management prepared and
provided to the
SPAC in connection with the evaluation of the business combination. We
also note that
you have no actual revenues for the three months ended March 31, 2022,
and do not
expect to begin commercial production until the third quarter of 2022.
It appears likely
that you will miss your 2022 revenue projection. Please update your
disclosure in
Liquidity and Capital Resources, and elsewhere, to provide updated
information about the
company s financial position and further risks to the business
operations and liquidity in
light of these circumstances.
17. In light of the unlikelihood that the company will receive significant
proceeds from
exercises of the warrants because of the disparity between the
exercise price of the
warrants and the current trading price of the Class A common stock,
expand your
discussion of capital resources to address any changes in the company
s liquidity position
since the business combination. If the company is likely to have to
seek additional capital,
discuss the effect of this offering on the company s ability to
raise additional capital.
18. Please expand your discussion here to reflect the fact that this
offering involves the
potential sale of a substantial portion of shares for resale and
discuss how such sales could
impact the market price of the company s common stock. Your
discussion should
highlight the fact that FF Top Holding LLC and Season Smart Limited,
beneficial owners
of over 36% and 20% of your outstanding shares, respectively, will be
able to sell all of
their shares for so long as the registration statement of which this
prospectus forms a part
is available for use.
19. We note your disclosure on page 56 that "certain individuals failed to
cooperate and
withheld potentially relevant information in connection with the
Special Committee
investigation." Please expand your disclosure to assess whether and
how this
noncooperation and withheld information affected the outcome of the
Special Committee
investigation and subsequent investigative work. If significant
uncertainties resulted,
describe these and the related risks to the company and investors.
Clearly state if any of
these individuals continue to be affiliated with the company. If
members of management
or Mr. Jia were involved, specifically identify them by name.
20. We note the Special Committee's finding that Mr. Jia's role was
inaccurately described,
with his involvement in the management of the company following the
business
combination more significant than represented to certain investors.
Please further revise
your disclosure to address the following:
You disclose that Mr. Jia has been removed as an executive
officer, yet his title
Carsten Breitfeld
Faraday Future Intelligent Electric Inc.
July 6, 2022
Page 7
(Chief Product and User Ecosystem Officer) remains unchanged. Revise
to clearly
describe Mr. Jia's current role and to identify the functions and/or
responsibilities that
have been removed to change this to a non-executive position.
Expand disclosure that Mr. Jia reports directly to the Executive
Chairperson to clearly
identify Ms. Swenson as a non-independent director, describe her
nomination by FF
Top, and state that Mr. Jia may control FF Top. Cross-reference
related risk factor
disclosure.
Describe Ms. Swenson's role as Executive Chairperson and file any
employment
agreement related to this position as an exhibit to the registration
statement.
Add a separate risk factor specifically assessing the risks to the
company and
investors arising from Mr. Jia's relationship, including the fact
that Mr. Jia "has
significant influence over and may control the outcome of any
actions taken by the
FF Global Board through a series of familial and personal
relationships," as disclosed
on page 31 and elsewhere.
Clarify Mr. Jia's position with respect to the shareholder
litigation threatened by FF
Global for the purpose of changing your management.
Please contact Jennifer Angelini at 202-551-3047 or Erin Purnell at
202-551-3454 with
any questions.
Sincerely,
FirstName LastNameCarsten Breitfeld
Division of
Corporation Finance
Comapany NameFaraday Future Intelligent Electric Inc.
Office of
Manufacturing
July 6, 2022 Page 7
cc: Michael P. Heinz
FirstName LastName