Business context and reporting period
This is Property Solutions Acquisition Corp.’s audited Form 10-K for the fiscal year ended December 31, 2020—not an operating-company filing by Faraday Future. Property Solutions was a special purpose acquisition company (SPAC), formed in February 2020, with no operating business or revenue. The financial results cover inception through December 31, 2020, rather than the fourth quarter alone.
After year-end, on January 27, 2021, the SPAC agreed to merge with FF Intelligent Mobility Global Holdings Ltd. (“FF”), which designs and engineers connected electric vehicles. If completed, the combined company was to be renamed Faraday Future Intelligent Electric, Inc. The transaction was expected to close in the second quarter of 2021, subject to stockholder approval and other conditions.
Financial results and liquidity
| Metric | Reported amount |
|---|---|
| Revenue | None; the company had not begun operations. |
| Operating costs and operating loss | $2.218 million |
| Interest and unrealized gain on trust investments | $108,799 |
| Net loss, inception through December 31, 2020 | $2.109 million |
| Basic and diluted loss per non-redeemable share | $0.35 |
| Cash outside the trust account | $549,395 |
| Trust-account cash and marketable securities | $229.884 million |
| Total assets | $230.562 million |
| Accrued current liabilities | $2.042 million |
| Working capital deficit | $1.222 million, excluding $141,771 of franchise taxes payable |
| Stockholders’ equity | $5.000 million |
Cash used in operating activities was $304,885; the company had no off-balance-sheet arrangements and reported no long-term debt or lease obligations at year-end. Offering-related transaction costs were $5.117 million, including $4.596 million of underwriting fees. The trust assets were invested principally in short-term U.S. Treasury securities or qualifying money-market funds. The filing does not provide operating margins or comparable prior-year results; this was the company’s first reporting period.
Material developments, outlook and risks
- Proposed merger: The agreement set a $2.716 billion reference value, subject to adjustments for FF’s cash and debt, debt converted to equity, and potential bridge financing of up to $100 million. Up to 25 million additional shares could be issuable to FF stockholders upon specified price thresholds.
- PIPE financing: Investors agreed to purchase 79.5 million shares at $10 per share, for approximately $795 million. The financing was conditioned on closing the merger; issuance of 17.5 million shares to an anchor investor was subject to regulatory approvals. Resale registration was required after closing.
- Going concern: The auditor highlighted substantial doubt about the SPAC’s ability to continue as a going concern because cash and working capital outside the trust were insufficient for planned activities. Management expected to need additional financing, which was not assured. The financial statements included no adjustments for the outcome of this uncertainty.
- Subsequent sponsor note: In February 2021, the sponsor agreed to provide a non-interest-bearing convertible note of up to $500,000, repayable upon a business combination or from funds outside the trust if no deal closes. The filing’s MD&A says there was no outstanding balance, while the subsequent-events note reports a $500,000 balance as of the financial-statement issuance date.
- Deadline and redemption: The SPAC had 21 months from its July 2020 IPO closing—until April 24, 2022—to complete a business combination. If unsuccessful, it was required to redeem public shares, subject to creditor claims and applicable law; warrants would expire worthless. Public redemptions, financing needs and transaction conditions could affect funds available at closing.
- Other risks: The filing cites transaction-completion, dilution, target diligence, sponsor and management conflicts, competition for SPAC targets, COVID-19 disruption, and possible claims against the trust. The sponsor’s indemnity was subject to exceptions, and the filing questioned the sponsor’s ability to satisfy it.
Most important facts for investors to verify
- Whether the merger and PIPE closed, including required approvals, redemptions, bridge financing and actual cash delivered at closing.
- FF’s audited historical financial statements, cash needs, debt, operating outlook and material risks in the merger registration statement/prospectus.
- The final exchange ratio, fully diluted share count, potential earnout shares, converted debt and resulting ownership and dilution.
- The status and repayment or conversion terms of the sponsor note, and the SPAC’s liquidity position before closing.
- Any trust-account claims, sponsor indemnification capacity, and the impact of redemptions on funds available to the combined company.