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Thinkific Announces Fourth Quarter and Full Year 2023 Financial Results

Published

3 years ago

on

Fourth Quarter Revenue up 13% to $15.6 million, Ahead of Issued Guidance
Full Year 2023 Revenue of $59.1 million Grows 15% Versus 2022
Second Consecutive Quarter of Positive Cash Flow from Operations and Adjusted EBITDA

Thinkific reports in U.S. dollars and in accordance with IFRS

VANCOUVER, BC, March 4, 2024 /CNW/ – Thinkific Labs Inc. (“Thinkific” or the “Company”) (TSX: THNC), a leading cloud-based software platform that enables entrepreneurs and established businesses of all sizes to create, market, and sell digital learning products, today announced its financial results for the quarter ended December 31, 2023.

“Thinkific delivered a solid Q4 to end what was truly a milestone year for the company,” said Greg Smith, CEO of Thinkific.  “In 2023 we achieved our cost efficiency and productivity targets, while continuing to grow the top line in double digits.  We also released more new and innovative products and features in the past twelve months than in any other time in our history.  The Thinkific Platform has never been easier for our customers to start a business, sell their digital products, and grow their businesses to new heights. We are seeing evidence of this success of our customers in key performance metrics in the business.” 

“This sets the stage for 2024 where we intend to incrementally invest in those areas of the business we have already seen significant momentum. Thinkific is in a good position to accelerate top line growth while maintaining our commitment to remain profitable. Our primary focus continues to be on the success of our customers and providing them with the tools they need to grow their businesses.”

Fourth Quarter Financial Highlights 

The below results include enhanced disclosure with revenue split between Subscription and Thinkific Commerce (Commerce) streams, with an additional separation at the customer level between Self Service and Thinkific Plus (Plus) customers.

Total revenue increased 13% year-over-year to $15.6 million compared with the fourth quarter of 2022, above our guided range of $15.2 – $15.4 million.Commerce revenue increased 96% year-over-year to $1.8 million, building on the success of Thinkific Payments and other recently launched commerce tools.Subscription revenue increased 7% to $13.8 million.On a customer group basis (inclusive of both subscription and commerce revenue), Self Service revenue grew 9% to $12.2 million and Plus increased 31% to $3.4 million.Gross margin decreased from 78% recorded for the fourth quarter last year to 75% due to an increasing mix of Thinkific Commerce.Net income for the fourth quarter of 2023 was $0.3 million, compared to a net loss of $3.7 million in the fourth quarter of 2022.Adjusted EBITDA(1) of $0.6 million remained positive for the second consecutive quarter, and is an improvement of $4.9 million over the prior year.Total Paying Customers(2) grew 4% to 34.8 thousand in the fourth quarter of 2023 compared to the prior year.ARPU(2) increased 9% to $150 per month compared with $138 per month in the fourth quarter of 2022.ARR(2) grew 7% to $55.3 million from $51.5 million, primarily driven by strong growth in our Plus business.GPV(2) processed through Thinkific Payments was $38.8 million compared to $22.8 million in the prior year, a 70% increase. GPV represented 34% of GMV.GMV(2) in the fourth quarter was $115 million, up 9% compared to the fourth quarter of 2022. This is the fifth consecutive quarter of year over year growth.Cash and cash equivalents were $87 million at December 31, 2023. Cash flow from operations in the fourth quarter of 2023 totaled $1.0 million.Thinkific repurchased and cancelled 393,336 shares for a total of $0.9 million under our NCIB.

“Our commitment to a strategy of profitable growth resulted in our second consecutive quarter of positive Adjusted EBITDA and cash flow from operations while still maintaining double digit growth”,  said Corinne Hua, CFO of Thinkific.  “In 2024, we plan to take advantage of our strong financial position and make targeted investments in areas we believe will result in an acceleration of revenue growth.”

(1)

Non-IFRS measure. See “Non-IFRS Measures” and the reconciliation to the most directly comparable IFRS measure.

(2)

Key Performance Indicators. See definition in “Key Performance Indicators”.

Fiscal Year 2023 Financial Highlights

FY 2023 total revenue increased 15% to $59.1 million compared with full year fiscal 2022.Commerce revenue increased 92% to $5.8 million on solid new customer adoption and incremental product introductions that have increased take rates.Subscription revenue increased 10% to $53.3 million.On a customer group basis (inclusive of both Subscription and Commerce revenue), Self Service revenue grew 10% to $46.8 million and Plus revenue grew 36% to $12.2 million.Gross margin for 2023 was 75%, a slight decrease from 76% recorded in 2022. The decrease reflects a mix-shift resulting from the strong growth of lower margin commerce revenue.Net loss for full year 2023 was $9.8 million, compared to a net loss of $36.4 million in 2022.Full year 2023 Adjusted EBITDA(1) of $(3.0) million improved by $23.4 million versus 2022.GPV(2) processed through Thinkific Payments was $134 million compared to $67 million in the prior year, a 100% increase. GPV represented 30% of GMV.GMV(2) for 2023 was $445 million, up 9% from the prior year – evidence of the increasing success our Creators are having in monetizing their learning products on Thinkific.

Fourth Quarter Operational Highlights

Launched a Normal Course Issuer Bid (“NCIB”) on November 10, 2023. The authorization allows Thinkific to purchase for cancellation, an aggregate of 2,444,358 Subordinate Voting Shares, being approximately 10% of the public float of the Subordinate Voting Shares as of October 30, 2023.

Launched The Leap by Thinkific, a powerful AI tool for content creators and influencers that makes it easy to build, promote and sell exceptional digital products in minutes. To date, The Leap has seen approximately 13,000 new accounts being created and we are observing strong activation rates.

Introduced new features on Commerce including Gifting and improved analytics reporting and dashboards. Gifting allows customers to increase sales by offering their learning products as unique and specialized gifts.

Recognized for our strong culture and commitment to building an exceptional team. Thinkific was recognized as a Certified Great Place to Work® for the third year, after a thorough, independent analysis conducted by Great Place to Work Institute® Canada. The certification is based on direct feedback from Thinkific employees, provided as part of an extensive and anonymous survey about our workplace experience and culture.

Announced a suite of new features to support business customers on its fast-growth Plus platform, the most significant of which are the new learnings paths feature and advanced analytics. Plus provides enterprises with a robust, highly-secure and scalable learning management solution to educate, engage, and retain customers.

Thinkific Payments reached a major milestone by surpassing $200 million in total payments volume processed since it launched in November 2021.

(1)

Non-IFRS measure. See “Non-IFRS Measures” and the reconciliation to the most directly comparable IFRS measure.

(2)

Key Performance Indicators. See definition in “Key Performance Indicators”.

Subsequent to Quarter End

On February 20, 2024, the Company attained the Service Organization Control Type 2 (SOC2 Type II) level of assurance with no audit findings. The certification affirms that the Company’s information security practices, policies, procedures, and operations meet the stringent SOC 2 standards for security.

Full Year 2023 Operational Highlights

In partnership with Stripe, Thinkific announced it would be the world’s first platform to distribute Stripe’s apps with the intention of helping customers automate their administration and increase their sales.

Added AI powered features that help our customers sell more such as AI sales funnels and generative AI learning product building tools. The launch of an AI service layer built into the Thinkific platform will empower the continued innovation of AI tools for our customers.

In Q1 2023, Thinkific Payments reached a major milestone by surpassing $100 million in total payments volume processed, six quarters after launch. Thinkific doubled the total payment volume processed in half that time, exceeding the $200 million mark in Q4.

Thinkific obtained SOC 2 Type 1 cybersecurity compliance certification through the successful completion of the Service Organization Control (SOC) 2 Type 1 audit with no findings. The certification affirms that the Company’s information security practices, policies, procedures, and operations meet the stringent SOC 2 standards for security.

Launched an automated sales tax solution, powered by Stripe, which removes the complexity and confusion associated with sales taxes for our Thinkific Payments customers, allowing them to focus on growing their business rather than tracking and remitting taxes.

Provided Buy Now, Pay Later (BNPL) credit options through providers Affirm, Klarna and Afterpay, Thinkific’s BNPL functionality allows customers to more easily sell higher-priced products, and provide their students with more flexible payment options. The latest functionality enables Thinkific’s customers to offer credit at checkout options thereby increasing accessibility of their products to wider audiences and driving increased sales.

Added advanced analytics capabilities that provide Thinkific customers with deeper insights into their enrollments, orders, student and course engagement, revenue and bottom line business performance, so they and their teams can track ROI and make smart, informed decisions to grow and scale their businesses quickly and effectively.

Launched mobile app solutions “Thinkific Mobile”, and “Branded Mobile”. that enable creators to reach their audience anywhere, anytime. “Thinkific Mobile” is a dedicated Thinkific app that makes course content and communities more easily available to students on the device they use the most. “Branded Mobile”, is a fully customizable mobile app development solution for creators who want their own brand, on their own app, and enables creators to deliver incredible educational and community experiences that meet their students exactly where and when they want to learn.

Introduced “Thinkific Analytics”: New dashboards that provide valuable insights to creators helping them earn more, and provide more impactful learning experiences. The analytics tool offers superior performance and usability, including data on enrollments, orders, revenue, and course engagement.

Completed the localization of pricing across the United Kingdom and European Union which removes a barrier to new creators getting started in these territories.

(1)

Non-IFRS measure. See “Non-IFRS Measures” and the reconciliation to the most directly comparable IFRS measure.

Outlook 

For the first quarter of 2024, the Company expects Revenue of $15.8 million – $16.0 million.  We will continue to invest in the business to accelerate topline growth; however, we are committed to maintaining positive Adjusted EBITDA 

Actual results may differ materially from Thinkific’s financial outlook as a result of, among other things, the factors described under “Forward-Looking Statements” below.

Quarterly Conference Call and Webcast Information

A conference call will be held at 5:00 PM ET (2:00 PM PT) on March 4, 2024 to discuss Thinkific’s fourth quarter financial and operational results. To participate in the call, please dial 1.888.664.6383 (US/Canada toll-free) or 1.416.764.8650 (International/Toronto). For those unable to participate, a replay will be available an hour after the event by dialing 1.888.390.0541 (US/Canada toll-free) or 1.416.764.8677 (International/Toronto). The passcode is 823394 #. The replay will expire at midnight ET on March 11, 2024. The conference call will also be available via webcast on the Investor Relations section of Thinkific’s website at investors.thinkific.com/events-and-presentations.

Thinkific’s consolidated financial statements and accompanying notes, and Management’s Discussion and Analysis for the three months and year ended December 31, 2023 are available on the Company’s website at www.thinkific.com and on SEDAR at www.sedar.com.

About Thinkific

Thinkific (TSX:THNC) makes it simple for Creator Educators and established businesses of any size to scale and generate revenue by teaching what they know. Our Platform gives businesses everything they need to build, market, and sell digital learning products – from courses to communities –  and to run their business seamlessly under their own brand, on their own site. Thinkific’s 50,000+ active customers earn hundreds of millions of dollars in direct course, membership and community sales while teaching tens of millions of students. Thinkific is headquartered in Vancouver, Canada, with a distributed team.

For more information, please visit www.thinkific.com.

Non-IFRS Measures

The information presented within this press release includes “Adjusted EBITDA” and certain industry metrics. The “Adjusted EBITDA” is not a recognized measure under International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board, does not have a standardized meaning prescribed by IFRS, and is therefore unlikely to be comparable to similar measures presented by other companies. Rather, this measure is provided as additional information to complement those IFRS measures by providing further understanding of our results of operations from management’s perspective. Accordingly, it should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS. We also use certain industry metrics: “Annual Recurring Revenue”, “Paying Customers”, “Average Revenue per User”, “Gross Merchandise Volume” and “Gross Payments Volume”. These industry metrics are unaudited and are not directly derived from our financial statements. The non-IFRS measure and industry metrics are used to provide investors with supplemental measures of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS measures. We also believe that securities analysts, investors and other interested parties frequently use non-IFRS measures and industry metrics in the evaluation of issuers. Our management also uses the non-IFRS measure and industry metrics in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts and to determine components of management compensation.

“Adjusted EBITDA” is defined as net income (loss) excluding taxes, interest, depreciation and amortization (or EBITDA), as adjusted for stock-based compensation, foreign exchange (gain) loss, finance income, restructuring costs and loss on disposal of property and equipment. Adjusted EBITDA does not have a standardized meaning under IFRS and is not a measure of operating income, operating performance or liquidity presented in accordance with IFRS, and is subject to important limitations.

Please refer to “Reconciliation to IFRS from Non-IFRS measures” in this press release for more information.

(1)

Non-IFRS measure. See “Non-IFRS Measures” and the reconciliation to the most directly comparable IFRS measure.

Key Performance Indicators

We monitor the following industry metrics to help us evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions: “Annual Recurring Revenue” or “ARR”, “Average Revenue per User” or “ARPU”, “Gross Merchandise Volume” or “GMV”,  “Paying Customers” and “Gross Payments Volume” or “GPV”. Our key performance indicators may be calculated in a manner different than similar key performance indicators used by other companies.

“Paying Customers” is the count of unique Thinkific subscribers on paid plans as of period end, excluding all trial and free customers, and including both monthly and annual subscribers.

“ARPU” is the average monthly Revenue per Paying Customer in the quarter. ARPU is calculated by taking the average Revenue for each month in the quarter and dividing this by the average number of Paying Customers for the same quarter.

“ARR” is the annual value of all current Paying Customer subscriptions at the end of the period, with the number of Paying Customers multiplied by 12 times the average monthly subscription plan fee in effect on the last day of that period.

“GMV” is the total dollar value of all transactions of course sales, membership subscriptions, or other products or services by our customers, facilitated through our platform during the period, net of refunds. GMV does not include transactions for course sales, membership subscriptions, or other products or services processed by APIs or certain apps where the Company does not record the transaction value.

“GPV” is the total dollar value of transactions processed using Thinkific Payments in the period, net of refunds and inclusive of sales taxes where applicable. GPV does not represent revenue earned by us. We believe that growth in GPV is an indicator of success of our customers in monetizing their learning products and of our Thinkific Payments offering. It is also a positive growth driver of revenue, which is derived from payment processing fees. Revenue earned from Thinkific Payments is included in our commerce revenue.

Forward-Looking Statements

This press release includes forward-looking statements and forward–looking information within the meaning of applicable securities laws in Canada. Forward-looking statements and information may relate to our future financial outlook and anticipated events or results and may include information regarding our financial position, business strategy, growth strategies, addressable markets, budgets, operations, financial results, taxes, dividend policy, plans and objectives. Particularly, information regarding our expectations of future results, performance, achievements, prospects or opportunities or the markets in which we operate is forward-looking information. In some cases, forward-looking information can be identified by the use of forward-looking terminology such as “plans”, “targets”, “trends”, “directional indicator”, “indicator”, “future success”, “expects”, “is expected”, “opportunity”, “budget”, “scheduled”, “estimates”, “outlook”, “forecasts”, “projection”, “scalability”, “trajectory”, “prospects”, “strategy”, “intends”, “anticipates”, “adoption”, “believes”, or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “might” or, “will”, “occur” or “be achieved”, and similar words, or the negative of these terms and similar terminology. In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts but instead represent management’s expectations, estimates and projections regarding future events or circumstances. Forward-looking statements in this press release include, but are not limited to statements regarding our financial position, management’s ability to effectively invest, increase business efficiencies necessary to build and maintain a sustainable cost structure; business strategy, budgets, operations, investments, financial results, our ability to retain a profitable Adjusted EBITDA run rate, plans and objectives around growth and profitability; industry trends; growth in our industry; our growth rates and growth strategies including our product-led growth strategy through the introduction of additional features to support the success of our customers; addressable markets for our solutions; customer acquisition improvements; the achievement of advances in and expansion of our offered platform service (defined as “Thinkific Platform” and “Our Platform” in the 2022 Annual Information Form); the roll-out, development and success of new products, features, and services; the expectations regarding our revenue and the revenue generation potential of Our Platform and other products; and Thinkific’s commitment towards strong corporate governance, the expected benefits from the collective experience of the company’s board directors, their experience and skill set as a member of the board of directors and the expected benefits that board directors may bring to position the Company for greater success and value creation in the future; and our competitive position in our industry.

Forward-looking statements and information are based on our opinions, estimates and assumptions that, while considered by the Company to be appropriate and reasonable as of the date of this press release, are subject to known and unknown risks, uncertainties, and other factors that may cause the actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information, including, but not limited to, the Company’s ability to execute on its growth strategies; the impact of changing conditions and increasing competition in the global e-learning market in which the Company operates; the Company’s ability to keep pace with technological and marketplace changes including, but not limited to the ethical, legal and regulatory implications in the advancement and potential use of artificial intelligence; fluctuations in currency exchange rates and volatility in financial markets; changes in attitudes, financial condition and demand of our target market; developments and changes in applicable laws and regulations; and such other factors discussed in greater detail under the “Risk Factors” section of our Annual Information Form (“AIF”).

Forward-looking statements and information are necessarily based upon estimates and assumptions, which are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the Company’s control and many of which, regarding future business decisions, are subject to change. Assumptions or factors underlying the Company’s expectations regarding forward-looking statements or information contained in this press release include, among others: our ability to continue investing in infrastructure to support our growth and brand recognition; our ability to continue maintaining, innovating, improving and enhancing our technological infrastructure and functionality, performance, reliability, design, security and scalability of our Platform (as defined in our AIF); our ability to maintain existing relationships with customers (as defined in our AIF) and to continue to expand our customers’ use of our platform; our ability to acquire new customers; our ability to maintain existing material relationships on similar terms with service providers, suppliers, partners and other third parties; our ability to build our market share and enter new markets and industry verticals; the continued development, rollout, integration and success of new products, features, and services; our ability to retain key personnel; our ability to maintain and expand geographic scope; our ability to execute on our expansion and growth plans; our ability to obtain and maintain existing financing on acceptable terms; currency exchange and interest rates; the impact of competition; the changes and trends in our industry or the global economy; and the changes in laws, rules, regulations, and global standards. The foregoing list of assumptions cannot be considered exhaustive.

If any of these risks or uncertainties materialize, or if the opinions, estimates or assumptions underlying the forward-looking information prove incorrect, actual results or future events might vary materially from those anticipated in the forward-looking information provided herein. The opinions, estimates or assumptions referred to above are described in greater detail in “Summary of Factors Affecting our Performance” and in the “Risk Factors” section of our 2023 Annual Information Form, which is available under our profile on SEDAR+ at www.sedarplus.ca, should be considered carefully by prospective investors. Although we have attempted to identify important risk factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other risk factors not presently known to us or that we presently believe are not material, that could also cause actual results or future events to differ materially from those expressed in such forward-looking information. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. No forward-looking statement is a guarantee of future results. Accordingly, you should not place undue reliance on forward-looking information, which speaks only as of the date made. The forward-looking information contained in this press release represents our expectations as of the date specified herein, and are subject to change after such date. However, we disclaim any intention or obligation or undertaking to update or revise any forward-looking information whether as a result of new information, future events or otherwise, except as required under applicable securities laws.

All of the forward-looking information contained in this press release is expressly qualified by the foregoing cautionary statements. Readers are cautioned that any such forward-looking information should not be used for purposes other than for which it is disclosed.

THINKIFIC LABS INC.
Consolidated Statements of Financial Position
(expressed in U.S. dollars)

December 31,
2023

December 31,
2022

$

$

Assets

Current assets

Cash and cash equivalents

86,610,721

93,846,091

Trade and other receivables

4,097,321

2,712,671

Prepaid expenses and other assets

3,173,932

1,797,108

Contract acquisition assets

527,738

322,643

Lease receivable

159,748

—

Derivative asset

569,803

—

Total current assets

95,139,263

98,678,513

Property and equipment

853,245

1,507,600

Lease right-of-use assets

812,367

2,005,835

Contract acquisition assets

874,709

660,185

Intangible assets

109,530

118,275

Lease receivable

5,540

—

Total assets

97,794,654

102,970,408

Liabilities and shareholders’ equity

Current liabilities

Accounts payable and accrued liabilities

5,294,145

4,927,349

Lease liabilities

555,024

443,928

Deferred revenue

9,528,815

8,238,516

Total current liabilities

15,377,984

13,609,793

Lease liabilities

476,595

1,512,180

Total liabilities

15,854,579

15,121,973

Shareholders’ equity

Share capital

147,739,303

146,179,189

Contributed surplus

8,667,182

6,925,869

Accumulated other comprehensive income (loss)

531,690

(38,113)

Accumulated deficit

(74,998,100)

(65,218,510)

Total shareholders’ equity

81,940,075

87,848,435

Total liabilities and shareholders’ equity

97,794,654

102,970,408

 

THINKIFIC LABS INC.
Consolidated Statements of Net Income (Loss) and Comprehensive Income (Loss)
(expressed in U.S. dollars)

Three months ended
December 31,

Twelve months ended
December 31,

2023

2022

2023

2022

$

$

$

$

Revenue

15,573,536

13,807,930

59,054,073

51,476,010

Cost of revenue

3,905,354

3,044,670

14,492,581

12,362,462

Gross profit

11,668,182

10,763,260

44,561,492

39,113,548

Operating expenses

Sales and marketing

4,847,098

6,135,512

20,767,447

25,670,240

Research and development

4,802,726

5,937,660

19,470,932

27,450,046

General and administrative

3,187,609

4,064,652

14,924,054

16,936,764

Restructuring

(60,698)

—

2,940,734

2,287,885

Total operating expenses

12,776,735

16,137,824

58,103,167

72,344,935

Operating loss

(1,108,553)

(5,374,564)

(13,541,675)

(33,231,387)

Other income (expenses)

Finance income (expense)

897,026

702,604

3,477,412

1,427,801

Foreign exchange gain (loss)

512,710

1,005,702

434,299

(4,618,051)

Loss on disposal of property and equipment

—

—

(149,626)

—

Total other income (expenses)

1,409,736

1,708,306

3,762,085

(3,190,250)

Net income (loss)

301,183

(3,666,258)

(9,779,590)

(36,421,637)

Other comprehensive income

Unrealized gain/loss on derivatives

569,803

—

569,803

—

Total comprehensive income (loss)

870,986

(3,666,258)

(9,209,787)

(36,421,637)

Weighted average number of common
shares outstanding – basic

81,366,415

79,586,034

80,775,745

78,701,528

Weighted average number of common
shares outstanding – diluted

84,644,590

79,586,034

80,775,745

78,701,528

Net Income (loss) per share

Basic

$               —

$          (0.05)

$          (0.12)

$          (0.46)

Diluted

$               —

$          (0.05)

$          (0.12)

$          (0.46)

 

THINKIFIC LABS INC.
Consolidated Statements of Cash Flows
(expressed in U.S. dollars)

Years ended

December 31,

2023

2022

$

$

Cash from (used in):

Operating activities

Net loss

(9,779,590)

(36,421,637)

Items not affecting cash and cash equivalents:

Depreciation and amortization

1,341,555

1,195,702

Loss on disposal of property and equipment

149,626

—

Stock-based compensation

5,751,065

2,786,162

Unrealized foreign exchange (gain) loss

(447,572)

4,652,441

Finance expense

(3,477,412)

(1,427,801)

Changes in non-cash working capital:

Trade and other receivables

(605,103)

(1,041,275)

Prepaid expenses and other assets

(1,467,310)

938,071

Contract acquisition assets

(820,379)

(652,784)

Accounts payable and accrued liabilities

(510,094)

1,260,932

Deferred revenue

1,290,299

1,609,767

Cash used in operating activities

(5,426,133)

(25,853,392)

Investing activities

Proceeds on disposal of property and equipment

70,974

—

Investment in property and equipment

(17,604)

(1,232,537)

Investment in intangible assets

—

(26,984)

Cash from (used in) investing activities

53,370

(1,259,521)

Financing activities

Operating lease payments

(531,705)

(521,952)

Payments received on net investment in finance lease

73,289

—

Exercise of stock options

230,554

280,768

Tax remittances on stock based compensation

(1,286,394)

—

Shares repurchased for cancellation under normal course issuer bid

(900,158)

—

Cash used in financing activities

(2,414,414)

(241,184)

Effect of foreign exchange on cash and cash equivalents

551,807

(4,854,645)

Decrease in cash and cash equivalents

(7,235,370)

(32,208,742)

Cash and cash equivalents, beginning of year

93,846,091

126,054,833

Cash and cash equivalents, end of year

86,610,721

93,846,091

 

Reconciliation from IFRS to Non-IFRS Measures (unaudited)
(expressed in thousands of U.S. dollars)

Three months ended

December 31,

Years ended

December 31,

2023

$

2022

$

2023

$

2022

$

(In thousands of U.S. dollars)

Net income (loss)

301

(3,666)

(9,780)

(36,422)

Stock-based compensation

1,401

663

5,751

2,786

Depreciation and amortization

318

328

1,342

1,196

Foreign exchange (gain) loss

(513)

(1,006)

(434)

4,618

Finance income

(897)

(703)

(3,477)

(1,428)

Restructuring costs (1)

(61)

—

3,435

2,875

Loss on disposal of property and equipment

—

—

150

—

Adjusted EBITDA

550

(4,383)

(3,014)

(26,374)

(1)

Represents employee compensation for severance amounts for Company wide restructurings in the first quarters of 2023 and 2022. Credit in the fourth quarter relates to accrual reversal due to employees with termination dates in the fourth quarter of 2023 being retained by the Company.

SOURCE Thinkific Labs Inc.

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Edvance and CWG open RealRelay’s third vertical, bringing tested and rated AI agents to finance as MAS sets out how AI in the sector should be governed.

SINGAPORE, Oct. 19, 2026 /PRNewswire/ — On Oct. 17, Edvance International Holdings Limited (HKEX: 1410) (“Edvance”), through its wholly-owned Singapore subsidiary Paradise Matrix Pte. Ltd., and CWG Innovations Pte. Ltd. (“CWG”) today launched RealRelay Fintech, the third vertical on RealRelay.ai, the platform on which organisations build, test and run AI agents without writing code. The launch took place at a one-day youth AI event at Suntec Convention Centre, co-organised by the Digital Defence Alliance Singapore (DDAS) and CWG with the support of the National Youth Council (NYC).

The event was conceptualised, planned and developed by Mr Aaron Ang (linkedin.com/in/aaronangsg), Chief Commercial Officer of CWG, who leads the RealRelay project. Mr Ang built the day around one challenge. Participants were handed a simulated fraud case and asked to use agentic AI to find out what had happened. Within hours they had worked through tens of thousands of transaction records, traced the money, flagged the entries that did not add up and shown how they got there. The same job, done by hand, would take an audit team weeks. The event was graced by Mr Ong Kah Kuang, Assistant Chief Executive of the National Youth Council.

That is what RealRelay Fintech sets out to do. Work that is slow, manual and easy to get wrong, such as reconciling accounts, checking documents and finding the one record in a million that should not be there, becomes something an agent on the platform does accurately, in hours, with every step on record. Fraud detection is the clearest example, and it is where the fintech vertical begins. In finance, though, a fast answer counts for nothing unless the institution can trust it.

Trust comes first

Finance is the sector where trust in AI matters most, and Singapore has moved first. On 7 October the Monetary Authority of Singapore (MAS) issued its Guidelines on AI Risk Management. They cover every financial institution and every form of AI, agents included. Boards are expected to oversee AI risk, keep an inventory of each AI use, manage third-party AI and control the whole life cycle, from testing to monitoring. The guidelines take effect in October 2027. In August, MAS also committed S$220 million under FSTI 4.0 to get AI into the sector faster, including an AI Pathfinder track for solutions listed on PathFin.ai.

Every agent on RealRelay passes through the Trust and Control Layer. The platform’s own security agent tests it before it goes live and tests it again each time it changes. Permissions, logging, retention and access are controlled centrally, and every agent carries a risk rating that covers the data it can touch, the actions it can take and how it behaved under test. That rating, the agent inventory and the full log are the same things MAS now asks financial institutions to keep. The Trust and Control Layer draws on Edvance’s more than 20 years in cybersecurity.

Asked what the launch represents, Mr Ang said:

“Singapore has been clear about how it wants AI to enter finance. Innovate, but with trust and control in place from the start. We believe that is the next phase of fintech, and we built RealRelay Fintech on exactly that principle. The Trust and Control Layer is the foundation of the platform. Every agent is tested before it goes live, and the institution keeps full control over what it can see and do. When people can see that, they stop hesitating. That is how banks, funds and founders will actually put AI to work, and that is what we are here to make possible.”

What RealRelay Fintech does

At launch the vertical covers four areas of work.

Research and analysis. Agents that read filings, news and market data, run scenarios and produce forecasts with the reasoning shown.

Decision documents. Credit memos, investment committee packs, portfolio risk briefs and client review notes, drafted from a firm’s own data and templates.

Fraud, compliance and document checks. Agents that reconcile transactions, flag anomalies, check onboarding documents against policy and keep a record of every check.

Learning. A guided track for students and new joiners, using the same tools professionals use, at a price a student can afford.

Institutional deployments, including Singapore-hosted and on-premises options, are available on request.

Three verticals, one platform

RealRelay has two layers sitting on a Trust and Control Layer. The Token Exchange launched on 30 September 2026 and puts more than 300 mainstream AI models behind one subscription, routing each task to a suitable model at a lower cost than buying them separately. The Agentic Layer sits on top. Users describe what they need in plain language, assemble an agent from ready-made modules, test it and deploy it in one click, with no code. Three verticals run on these layers: education, cybersecurity and now fintech.

Education came first, and it is where the platform found its first users. At the APEX Bootcamp in September, students and young working adults with no technical background built working agents in two days. Interest from educational institutions has followed, and CWG is finalising details with these institutions to provide RealRelay and the full AI ecosystem around it to their students. Fintech now follows the same path, on the same layers and under the same controls.

What comes next

RealRelay Fintech will run a series of masterclasses in parallel with the Singapore FinTech Festival from 18 to 20 November 2026, and CWG is preparing its listing on PathFin.ai. Over 2027, the Trust and Control Layer will be mapped to the MAS guidelines so that an institution can take an agent’s test record straight into its own risk assessment. Agents built to individual institutions’ own policies and templates will follow.

For Edvance, fintech opens a subscription market where the buyers are large, regulated, and now required to show trust and control over the AI they use. Edvance is responsible for commercialising the platform and holds the intellectual property in its cybersecurity agents. The platform is owned and operated from Singapore, and the two companies are preparing to take it global, with partner talks under way and expansion plans already in place.

About Edvance International Holdings Limited

Edvance International Holdings Limited (HKEX: 1410) is a Hong Kong-headquartered value-added distributor of cybersecurity products and provider of cybersecurity services, with more than 20 years of experience in the market. Paradise Matrix Pte. Ltd. is Edvance’s wholly-owned subsidiary in Singapore. For more information, visit https://www.paradisematrix.sg.

About CWG Innovations Pte. Ltd.

CWG Innovations Pte. Ltd. is a Singapore company focused on AI solutions development and enterprise AI deployment. CWG is the operator of RealRelay.ai. For more information, visit https://www.cwgsg.ai.

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SOURCE CWG Innovations; Edvance International Holdings Limited; RealRelay

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140th Canton Fair Amplifies Visibility for Hundreds of Product Debuts, Connecting Innovation with Global Demand

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GUANGZHOU, China, Oct. 19, 2026 /PRNewswire/ — The 140th Canton Fair opened on October 15 and will be held in three phases. Over 700 New Collection events will take place, representing a 15% increase from the previous session. To share these innovations with a broader audience, the fair has introduced a range of initiatives designed to enhance product visibility and facilitate business connections.

Canton Fair New Collection Gallery Debuts

A dedicated Canton Fair New Collection Gallery has been introduced for the first time at the 140th Canton Fair. Located near the high-traffic platform connecting Area A and B, the gallery is divided into three sections: a product display area, a digital interactivity area and a business matching area.

Together, these sections create an integrated platform that combines product showcase and commercial matchmaking. The setup enables buyers and exhibitors to connect more efficiently, supporting on-site trade discussions and demand matching throughout the event.

Exhibition Meets Livestreaming

To help global buyers stay updated on emerging opportunities in real time, the Canton Fair is combining its physical exhibition with livestreaming programs. A series of featured broadcasts will highlight exhibition tours, product demonstrations and new product launches across a wide range of industries.

By extending product showcases beyond the exhibition floor, these livestreams provide international buyers with convenient access to the latest innovations and market trends regardless of their location.

Theme Release Events

The fair also hosts daily New Collection Theme Release events at the central platform between Area A and B. During Phase 1, featured themes include smart living appliances, service robots, low-altitude smart inspection, smart electronics, precision tools and green energy storage. These sessions provide exhibitors with additional opportunities to present newly launched products and engage directly with buyers from around the world.

As the Canton Fair continues to evolve alongside global trade, its expanded launch platforms, digital engagement initiatives and business matching services reflect a growing commitment to helping innovative products gain market exposure and accelerate commercial opportunities. By creating more touchpoints between exhibitors and buyers, the fair is bolstering a 70-year history as a gateway for international business collaboration in China and a leading product innovation showcase.

For more convenient attendance, please click here for pre-registration:
https://buyer.cantonfair.org.cn/register/buyer/email?source_type=16

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SOURCE Canton Fair

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FF EAI Robotics Ecosystem Inc. (FFR) Highlights Faraday Future Founder and Global CEO YT Jia’s Weekly Investor Update: Three New Product Offerings Launched; More Details on FFR’s Acquisition of FFAI’s Robotics Business and Independent Public Listing

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On October 26, FFR will hold its listing ceremony and first Investor Day at the Nasdaq Tower in New York, where management will share more about FFR’s strategy and business plans, with more details to follow soon.Two new EAI Devices launched including FF Nova—America’s first entry-level EAI humanoid robot under $2,500, and the second is Nova Mini, a humanoid robot for foundational Physical AI education, priced at $299, with the accompanying curriculum at $499.FF EAI launched two new education and developer training initiatives, the Physical AI Spark Program Curriculum and the Nova Reinforcement Learning Developer Program, while also opening enrollment for its developer community to help expand participation in its embodied AI ecosystem.

LOS ANGELES, Oct. 18, 2026 /PRNewswire/ — FF EAI Robotics Ecosystem Inc. (NASDAQ: FFR) (“FFR” or the “Company”), a U.S.-based Embodied AI (EAI) robotics company, today highlighted a weekly business update from YT Jia, Founder and Global CEO of Faraday Future Intelligent Electric Inc. (NASDAQ: FFAI) (“Faraday Future” or “FF”). For purposes of attribution, references to “we,” “our,” and “FF” in the following transcript refer to FFAI and its robotics business, except where FFR named.

“Welcome to Weekly Report 77. This week, let’s start with some big news from FFR. On October 26, we will hold FFR’s listing ceremony and first Investor Day at the Nasdaq Tower in New York. Our management team will share more about our strategy and business plans. We’ll also have the chance to talk with investors face to face. To our stockholders and partners, we hope you can join us and help open this new chapter for FFR. Formal invitations to the event will go out tomorrow! Now, let me share what we’ve been working on this week.

This week, FFR and FFAI jointly launched three new offerings.

1. Two new EAI Devices. The first is FF Nova—America’s first entry-level EAI humanoid robot under $2,500. Your Physical AI lab in a backpack. The Nova device costs $2,490, and the Developer Skills Package is $390. The second is Nova Mini, our humanoid robot for foundational Physical AI education. The robot is priced at $299, and the accompanying curriculum is $499. With these additions, the “One-Brain Multi-Form Multi-Capability” FF EAI Robot World 2.0 we are building now includes more than 20 EAI Devices across 11 models, seven series, and three robot forms.

2. A new FF EAI Education Skills product—the “Physical AI Spark Program Curriculum.”

3. The Nova Reinforcement Learning Developer Program. We also opened enrollment in our developer community. 

Our EAI Brain and Developer Platform Cores also made two breakthroughs this week.

Regarding the EAI brain, The All-New Futurist now fully supports SONIC. That opens up more room for development and applications on more advanced robotics platforms. This is how our approach of combining in-house development with open collaboration is starting to deliver more value. 

On the Developer Platform side, we’ve made the NVIDIA SONIC data, models, and deployment solutions based on FF Master fully open source through GitHub and Hugging Face. What does that mean for developers? You now have a complete path from open-source research and testing algorithms to deploying robots and building solutions. And that path is open to universities, research institutions, and industry partners around the world, too. 

Over the past few days, we’ve received some questions from stockholders about FFR’s acquisition of FFAI’s robotics business and its independent public listing. Let me take a moment to clarify a few points and explain what this means. Giving the robotics business its own operations, financing, and public listing is much more than moving assets within FFAI. It fundamentally reshapes FFR and unlocks its value.  We see this as the starting point for a major breakthrough in business value and a faster release of value in the capital markets. Let me explain this in four areas.

One is a sharper strategic focus. We will concentrate our resources on delivering our “Four-Core Full-Stack AI” robotics strategy. Every dollar we invest, every decision we make, and every financing round will serve that goal. This focus will help us refine what we do, deepen our expertise, expand our scale, and strengthen our business.

Another is a clearer basis for valuation. With its own public listing as a pure-play robotics business, FFR can be valued directly against its industry peers. Its valuation will no longer be held back by other factors affecting FFAI.  Combined with continued deliveries at positive contribution margins, this gives FFR significant room to unlock value.

We will also have more transparent business results and cleaner financial statements. You will be able to see how each financing round translates into business performance. That transparency can help attract strategic investors and long-term capital. After closing, FFR will have almost no debt. Its balance sheet, income statement, and cash flow statement will be cleaner, making the company’s value easier to see.

The fourth area is lower funding needs and financing costs. FFR has seven unique advantages, including our “Four-Core Full-Stack AI” EAI technology and asset-light operating model. Building on these strengths, we aim to achieve positive operating cash flow no later than the third quarter of 2028. Until then, we expect to need no more than $150 million in total financing. 

For FFAI, once the transaction closes, we will remain FFR’s controlling and majority stockholder and continue to share in its potential future growth in value. As a Physical AI investment company following a Berkshire-style model, FFAI will share further business updates soon. We want to reward our stockholders for your continued support.

Over the years, we’ve received encouragement, faced ridicule, and taken harsh criticism, yet we’ve seldom felt the need to explain ourselves. Our passion for building a business is still there. It comes from working alongside people who share our vision, and driving change in the industry together. Failure itself doesn’t stop us. What stops us is losing the belief that we can try again. “Try again.” A message to myself, and to every entrepreneur who keeps going. Thank you for being part of this journey. See you next week.”

About FF EAI Robotics Ecosystem Inc. 

FF EAI Robotics Ecosystem Inc. (NASDAQ: FFR) (renamed from AIxCrypto Holdings, Inc. and AIXC, effective September 30, 2026) is a U.S.-based Embodied AI (EAI) robotics company that is in the process of acquiring the FF EAI Robotics business. Upon completion of the acquisition, the Company will focus on the research and development, manufacturing, commercialization, and deployment of intelligent robotic technologies, products, and industry solutions.  

The Company is committed to building a “Four-Core Full-Stack” AI ecosystem covering the full lifecycle of robotics, consisting of EAI Brain & Developer Platform, EAI Devices, Industry Productivity Solutions, and EAI Data Factory. Guided by the technology and product philosophy of “One Brain, Multi-forms, Multi-capabilities,” the Company aims to empower humanoid, biomimetic, and other robotic form factors through a unified EAI Brain, while continuously expanding their multi-task and multi-scenario capabilities. The ecosystem is designed to support the full robotics lifecycle, including R&D, deployment, data collection and training, operations, and commercial applications.  

The FF EAI Robotics business has already achieved commercial deliveries of humanoid and biomimetic robotic products. Through its multi-form-factor robotic products, EAI technology platform, closed-loop data capabilities, and industry solutions, the business continues to advance the scaled adoption of robotics across real-world applications. The Company also operates RoboShare, a robot-sharing and services platform designed to connect robotic assets, service capabilities, customer demand, and ecosystem partners, further strengthening its robotics commercialization and service ecosystem. 

For more information, visit www.ff.com. 

About Faraday Future 

Founded in 2014, Faraday Future (FF) is a U.S.-based Physical AI ecosystem company dedicated to reshaping the future of robotics and mobility solutions through AI innovation and technologies. FF focuses on two major product strategies within the Embodied AI (EAI) robotics business: EAI humanoid and bionic robots, and EAI automotive-focused robots. By building a “Four-Core Full-Stack AI” ecosystem of EAI Brain and Developer Platform, EAI Devices, Industry Productivity Solutions and EAI Data Factory, FF aims to create an evolutionary flywheel: scaled device delivery, data collection and training, continuous evolution of the EAI Brain, stronger product capability, and even larger-scale delivery and deployment. Through this flywheel, FF seeks to maximize its commercial value and lead to the advancement of Physical AI. For more information, please visit Faraday Future’s official website: https://www.ff.com/ 

FFR Forward-Looking Statements 

This communication, including any presentation, press release, investor materials or other document of which it forms a part (this “Communication”), contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, as amended, and other securities laws, regarding FF EAI Robotics Ecosystem Inc. (“FFR,” the “Company,” “us,” “our,” or “we”) and our industry. All statements, whether written or oral, other than statements of historical fact, including any financial projections and any statements regarding future events, our strategy, our transition to robotics operations, our plans for RoboShare, our digital asset disposition plans, the proposed acquisition of the FF EAI Robotics business, the projections referenced in this communication, our name and ticker change, any related financing, and the anticipated benefits and timing of the foregoing, our objectives, expectations, or anticipated actions or results, are forward-looking statements. You can often identify forward-looking statements by words such as “may,” “might,” “will,” “shall,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” “goal,” “objective,” “seeks,” “likely,” or “continue,” or the negative of these terms or other similar expressions; the absence of these words does not mean a statement is not forward-looking. These statements reflect our current expectations and projections about future events as of the date of this Communication and are necessarily based on estimates and assumptions that, while considered reasonable by management, are inherently uncertain. FFR can give no assurance that such forward-looking statements or financial projections will prove to be correct. 

Actual results may differ materially from those expressed or implied by these forward-looking statements as a result of numerous risks and uncertainties, both general and specific, including, but not limited to: 

The proposed acquisition transaction and PIPE. The definitive agreements may be terminated in accordance with their terms, and the proposed transactions may not be completed on the terms described or at all; the conditions to closing, including the completion of FFAI’s internal restructuring of the robotics business, the execution of key employee agreements and other customary conditions, and the parties’ ability to satisfy them; the risk that the stockholder approval required under Nasdaq listing rules for the conversion of the preferred stock issued as consideration is not obtained or is delayed, and the effect of the conversion restrictions and the information statement process on the timing of conversion; the timing of the transaction and the costs of pursuing it; the issuance of a substantial number of shares as consideration and the resulting dilution to existing stockholders; the fact that the counterparty is our controlling stockholder, that it will hold a substantial majority of our outstanding shares following closing, that certain members of management serve both companies, and the conflicts of interest inherent in the transaction; the risk that the agreed valuations do not reflect the market value of our shares or of the acquired business; our dependence on the counterparty for transition, supply and support following any closing; the scope and enforceability of the non-competition and governance arrangements; the consequences of the transaction under Nasdaq listing rules, including the possibility that Nasdaq determines that the transaction requires us to satisfy initial listing requirements in connection with a business combination, change of control or change in the nature of our business; the risk that the PIPE financing, on which the transaction is not conditioned, is not completed on the anticipated terms or at all; the risk of litigation relating to the transaction; our ability to integrate and operate the acquired business; and the risk that the acquired business performs differently than anticipated. 

Projections. The projections referenced in this communication were prepared by FFAI management for the FF EAI Robotics business on a standalone basis and do not reflect our existing business, transaction-related expenses or the combined company. We have not independently verified them or adopted them as guidance. They were not prepared with a view toward public disclosure or toward compliance with the published guidelines of the Securities and Exchange Commission or the American Institute of Certified Public Accountants regarding prospective financial information, and no independent registered public accounting firm has examined, compiled or performed any procedures with respect to them, and none expresses an opinion or any other form of assurance with respect to them. The projections reflect estimates and assumptions that are inherently uncertain and subject to change, including through due diligence and the review of our special committee and its financial advisor. Actual results are likely to differ, and may differ materially. 

Liquidity, capital and going concern. Our limited cash and liquidity position and our history of operating losses and negative operating cash flow; substantial doubt regarding our ability to continue as a going concern, as described in our periodic reports; our need to obtain additional financing on acceptable terms or at all, and the substantial dilution to existing stockholders that additional financing may cause, including any financing completed in connection with the proposed transaction, which may not be completed or may be on less favorable terms than anticipated; our ability to fund operations pending and following the disposition of our digital asset positions; and our ability to satisfy the continued listing requirements of The Nasdaq Stock Market, including stockholders’ equity, minimum bid price and other applicable standards. 

Our strategic transition and the disposition of digital assets. Risks associated with a fundamental shift in our business strategy and the redeployment of resources from a digital asset treasury strategy to robotics operations; our ability to execute the disposition of our digital asset positions in an orderly manner and on acceptable terms; the risk that amounts realized on disposition are materially less than carrying value as a result of price volatility, market depth, execution timing, custody or transfer constraints, or other limitations; tax, accounting and regulatory consequences of the dispositions; the continued volatility and regulatory uncertainty associated with digital assets and cryptocurrencies during the wind-down period; the concentration of a substantial portion of our assets in a single equity investment, including an investment in a related party, and the illiquidity, valuation uncertainty, holding-period and transfer restrictions associated with that investment; and risks arising from our relationships and agreements with related parties and significant stockholders.  

Our robotics operations business. Our limited operating history in robotics operations and commercialization and the absence of a meaningful revenue history; the early stage of RoboShare and the risk that customer demand, repeat demand, pricing, utilization or unit economics do not develop as anticipated; our dependence on a small number of customers, on a single initial geographic market, and on individual events or engagements, and the risk that the loss of, or a change in the terms of, any such relationship has a disproportionate effect; our dependence on third-party robot owners, operators, suppliers, original equipment manufacturers and local partners, and on their willingness to make robots available on our platform; risks relating to the availability, cost, quality, maintenance, transport, insurance and technological obsolescence of robots and related equipment, and to supply chains, tariffs and trade measures affecting them; and our ability to expand into additional markets and to attract and retain participants on both sides of our marketplace. 

Operations, safety and liability. Risks of property damage, personal injury or death arising from the operation of humanoid robots, quadrupeds and other autonomous or semi-autonomous machines in proximity to performers, employees, guests and the public, including at live events and in uncontrolled environments; product liability, premises liability, negligence and related claims and the adequacy, scope, availability and cost of our insurance coverage and of contractual indemnities from customers, owners and suppliers; the allocation of responsibility among us, robot owners, venues, event producers and customers; permitting, licensing, occupational safety and event-specific regulatory requirements; and the reputational consequences of any safety incident. 

Technology, data and intellectual property. Systems, network, telecommunications or service disruptions, failures, defects or cyber-attacks; the performance, reliability and autonomy limitations of robotic systems and of the software, models and networks that support them; our collection, use, storage, transmission and protection of personal information, including images and any biometric or biometric-adjacent data captured in the course of robot deployments, and evolving privacy, biometric and artificial intelligence laws and regulations across the jurisdictions in which we operate or intend to operate; our ability to obtain, maintain, protect and enforce our intellectual property rights and to defend against third-party claims of infringement or misappropriation; and our reliance on third-party technology, platforms and licenses. 

Legal, regulatory and general. The regulated industries and jurisdictions in which we operate; current or future laws or regulations and new interpretations of existing laws or regulations, including those applicable to digital assets, robotics, autonomous systems, consumer protection, advertising and endorsements; the risk that our marketplace arrangements, or the manner in which they are described, are characterized differently than we intend by regulators or courts; the failure of counterparties to perform their contractual obligations; litigation, regulatory inquiries, investigations and enforcement actions, and their costs and outcomes; business, economic, market and capital-market conditions; competition in our industry; changes in market demand for, and the pricing of, our products and services; our ability to define, design and release new products and services in a timely manner that meet customer needs; our ability to attract, retain and motivate qualified personnel, including key management; our ability to manage our growth and our transition; and our ability to maintain effective internal control over financial reporting and disclosure controls and procedures. 

This list of factors is not exhaustive. Additional risks and uncertainties are described more fully in our filings with the U.S. Securities and Exchange Commission (the “SEC”), including our Annual Report on Form 10-K for the year ended December 31, 2025, our Quarterly Reports on Form 10-Q, and our subsequent filings, which are available on the SEC’s website at www.sec.gov. Investors are urged to review the liquidity, capital resources and going concern disclosures contained in those reports.  

The forward-looking statements in this Communication speak only as of the date hereof. Except as required by law, neither FFR nor any other person undertakes any obligation to update or revise any forward-looking statement or financial projection set out herein, whether as a result of new information, future events or otherwise. This Communication is provided for informational purposes only, does not constitute an offer to sell or the solicitation of an offer to buy any security, and does not constitute investment, tax or legal advice or any investment recommendation, and does not take into account the investment objectives or financial situation of any person. FFR reserves the right to amend or replace the information contained herein, in whole or in part, at any time, and undertakes no obligation to notify any recipient thereof. Readers are cautioned not to place undue reliance on these forward-looking statements. This caution is made under, and these forward-looking statements are intended to be covered by, the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995.

FFAI FORWARD LOOKING STATEMENTS

Important factors that may affect actual results or outcomes include, among others: the Company’s ability to continue as a going concern and improve its liquidity and financial position; the Company’s ability to pay its outstanding obligations, which it currently lacks; the availability of sufficient share capital to meet its current obligations and execute on its strategy; the willingness of convertible debt investors to fund the Company; demand for the Company’s robotics products; competition in the robotics industry, which includes companies with far superior experience, funding and name recognition; the ability of the Company to build an EAI education ecosystem that serves both the B2C consumer market and the B2B institutional education market; the acceptance by teachers and students of the Company’s robotics products in the education market; the ability of the Company to expand into additional markets for its robotics products; the Company’s reliance on a single OEM for most of its robotics products; the Company’s reliance on Chinese OEMs for all of its robotics products; the possibility of the federal government banning imports of Chinese robotics products; the Company’s ability to get the planned robotics products to comply with all applicable U.S. rules and regulations; the ability of the robotics OEM to timely supply robotics to the Company; tariff uncertainty for imported products, particularly from China; the ability of the Company to close its transaction with FF EAI Robotics Ecosystem Inc. (FFR) for the sale of its robotics business; demand from automobile dealers for robotics products; the Company’s ability to homologate FX vehicles for sale; the Company’s ability to secure the necessary funding to execute on the FX strategy, which is substantial; the Company’s ability to secure an occupancy certificate covering all of its Hanford facility; the Company’s ability to remediate its material weaknesses in internal control over financial reporting and the risks related to the restatement of previously issued consolidated financial statements; the Company’s limited operating history and the significant barriers to growth it faces; the Company’s history of substantial losses and expectation of continued losses; the success of the Company’s payroll expense reduction plan; the Company’s ability to execute on its plans to develop and market its vehicles and the timing of these development programs; the Company’s ability to execute on its plans to enter the robotaxi and cybercab industries; the Company’s estimates of the size of the markets for its vehicles and cost to bring those vehicles to market; the rate and degree of market acceptance of the Company’s vehicles; the Company’s ability to cover future warranty claims; the success of other competing manufacturers; the performance and security of the Company’s vehicles; current and potential litigation involving the Company; the Company’s ability to receive funds from, satisfy the conditions precedent of and close on the various financings described elsewhere by the Company; the result of future financing efforts, the failure of any of which could result in the Company seeking protection under the Bankruptcy Code; the Company’s indebtedness; the Company’s ability to use its “at-the-market” program; insurance coverage; general economic and market conditions impacting demand for the Company’s products; potential negative impacts of a reverse stock split; potential cost, headcount and salary reduction actions may not be sufficient or may not achieve their expected results; circumstances outside of the Company’s control, such as natural disasters, climate change, health epidemics and pandemics, terrorist attacks, and civil unrest; risks related to the Company’s operations in China; the success of the Company’s remedial measures taken in response to the Special Committee findings; the Company’s dependence on its suppliers and contract manufacturer; the Company’s ability to develop and protect its technologies; the Company’s ability to protect against cybersecurity risks; and the ability of the Company to attract and retain employees, any adverse developments in existing legal proceedings or the initiation of new legal proceedings; the volatility of the Company’s stock price; the ability of the Company to maintain its stock price above $1.00; and the ability of the Company to maintain compliance with Nasdaq regulations for continued listing. You should carefully consider the foregoing factors and the other risks and uncertainties described in the “Risk Factors” section of the Company’s Form 10-Q for the quarter ended June 30, 2026, filed with the SEC on August 13, 2026; the quarter ended March 31, 2026, filed with the SEC on May 14, 2026; and Form 10-K filed with the SEC on March 31, 2026, and other documents filed by the Company from time to time with the SEC.

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SOURCE FF EAI Robotics Ecosystem Inc.

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