false 0001499961 0001499961 2021-08-18 2021-08-18
 
 
UNITED STATES
 
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
 
 
FORM 8-K
 
CURRENT REPORT
 
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of report (Date of earliest event reported) August 18, 2021
 
 
Net Element, Inc.
 
(Exact Name of Registrant as Specified in Charter)
 
 
Delaware
 
001-34887
 
90-1025599
(State or Other Jurisdiction
of Incorporation)
 
(Commission File
Number)
 
(IRS Employer
Identification No.)
 
 
3363 NE 163rd Street, Suite 605, North Miami Beach, FL         33160
 
 
           (Address of Principal Executive Offices)                                        (Zip Code)
 
     
 
(305) 507-8808
 
 
(Registrant’s telephone number, including area code)
 
     
 
Not Applicable
 
 
(Former Name or Former Address, if Changed Since Last Report)
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
☒
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
Trading symbol(s)
Name of each exchange on which registered
Common Stock, $0.0001 par value per share
NETE
The Nasdaq Stock Market, LLC (Nasdaq Capital Market)
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
Emerging growth company             ☐
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
 
 
 
 
 
Item 1.01 Entry into a Material Definitive Agreement.
 
On August 18, 2021, Net Element, Inc., a Delaware corporation (the “Company”), entered into a First Amendment (the “Amendment”) to Second Amended and Restated Agreement and Plan of Merger (the “Restated Merger Agreement”) with Mullen Technologies, Inc., a California corporation (“Mullen Technologies”), Mullen Acquisition, Inc., a California corporation and wholly owned subsidiary of the Company (“Merger Sub”), and Mullen Automotive, Inc. (“Mullen”), a California corporation and a wholly-owned subsidiary of Mullen Technologies.
 
Pursuant to the Amendment, the parties to the Amendment and the Restated Merger Agreement amended (i) subsection (c) of Section 1.04 of the Restated Merger Agreement and Exhibit F to the Restated Merger Agreement that contains the proposed amendment and restatement of the Company’s certificate of incorporation (the “Parent COI Amendment”) to provide that Series A Preferred Stock will have the liquidation preference of $0.10 per share of Series A Preferred Stock and (ii) subsection (b) of Section 6.07 of the Restated Merger Agreement to provide that the period during which the Company shall maintain in effect the current directors’ and officers’ liability insurance policies is at least six years from the Merger Effective Time.
 
The foregoing description of the Amendment and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Amendment, a copy of which is attached hereto as Exhibit 2.1 and incorporated herein by reference.
 
Cautionary Note Regarding Forward-Looking Statements
 
Certain statements contained in this communication may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can typically be identified by such words as “aim”, “anticipate,” “believe,” “continue,” “could,” “estimate,” “evolve,” “expect,” “forecast,” “intend,” “looking ahead,” “may,” “opinion,” “plan,” “possible,” “potential,” “project,” “should,” “will,” and variations of such words and other similar expressions.
 
These forward-looking statements are only predictions based on current expectations and assumptions and are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. There are important factors that could cause actual results to differ materially from the results expressed or implied by forward-looking statements, including (i) the risk factors set forth under “Risk Factors” in Part I, Item 1A of Insight’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, set forth in the Company’s subsequent Quarterly Reports on Form 10-Q or set forth in the Company’s other filings with the SEC and (ii) any of the following:
 
•
the failure of the Company to effectuate the Private Placement or the Divestiture anticipated to consummate the Merger and/or the transactions contemplated in the Restated Merger Agreement;
 
•
the failure of the Company to obtain the listing of the Company shares of common stock on the Nasdaq Capital Market after the change of control due to the Merger;
 
•
the failure to consummate or a delay in the consummation of the Merger and/or the transactions contemplated in the Restated Merger Agreement for other reasons;
 
•
the timing to consummate the Merger and/or the transactions contemplated in the Restated Merger Agreement;
 
•
the risk that a condition to the consummation of the Merger and/or the transactions contemplated in the Restated Merger Agreement may not be satisfied or waived;
 
2
 
 
•
the failure of the Company’s stockholders to approve the Merger and/or the transactions contemplated in the Restated Merger Agreement;
 
•
unexpected costs or liabilities in connection with the consummation of the Merger and/or the transactions contemplated in the Restated Merger Agreement;
 
•
operating costs, customer loss and business disruptions arising from the Merger and/or the transactions contemplated in the Restated Merger Agreement and the pendency or consummation thereof (including, without limitation, difficulties in maintaining relationships with employees, customers, clients or suppliers), which may be greater than expected;
 
•
uncertainties surrounding the transaction;
 
•
other adverse economic, business, and/or competitive factors; and
 
•
other risks to consummation of the transaction, including circumstances that could give rise to the termination of the Restated Merger Agreement and the risk that the transaction will not be consummated within the expected time period, without undue delay, cost or expense, or at all.
 
All forward-looking statements are qualified by, and should be considered in conjunction with, these cautionary statements. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date on which such statements are made. Except as required by applicable law, neither the Company nor Mullen undertakes any obligation to update forward-looking statements to reflect events or circumstances arising after such date.
 
Additional Information and Where to Find It
 
In connection with the Merger, the Company has filed with the SEC the registration statement on Form S-4 (with the proxy statement included as part of the prospectus), as well as other relevant materials regarding the Merger, including the definitive proxy statement included as part of the prospectus (the “Proxy Statement”) and a proxy card to each stockholder entitled to vote at the special meeting relating to the Merger and the transactions contemplated in the Restated Merger Agreement requiring the Company’s stockholders’ approval. The Company stockholders are urged to carefully read the registration statement on Form S-4, as amended, the Proxy Statement and other materials relating to the Merger (and any amendments or supplements thereto) and any other relevant documents filed with the SEC when they become available because they will contain important information. The registration statement on Form S-4, as amended, the Proxy Statement, and other relevant materials regarding the Merger (when they become available), and any other documents filed by the Company with the SEC, may be obtained free of charge at the SEC’s website (http://www.sec.gov) or at the Company’s website (http://www.netelement.com).
 
Participants in a Solicitation
 
The Company, its directors and officers and Mullen and its directors and officers may be deemed to be, participants in the solicitation of proxies from the Company’s stockholders with respect to the Merger and other transactions described in the Proxy Statement. Information about the Company’s directors and executive officers and their ownership of the Company’s common stock is set forth in the Company’s Form 10-K filed with the SEC on March 31, 2021 (Company’s “Form 10-K”). To the extent that holdings of the Company’s securities have changed since the amounts printed in the Company’s Form 10-K, such changes have been or will be reflected on Statements of Change in Ownership on Form 4 filed with the SEC. Information regarding the identity of the participants in the proxy solicitation and their direct or indirect interests in the transaction, by security holdings or otherwise, will be set forth in the Proxy Statement and other materials to be filed with SEC in connection with the Merger.
 
Item 9.01 Financial Statements and Exhibits
 
(d) Exhibits
 
2.1
 
104
Cover Page Interactive Data File (embedded within the Inline XBRL document)
 
3
 
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
Dated: August 18, 2021
 
NET ELEMENT, INC.
 
By:
/s/ Jeffrey Ginsberg
Name: Jeffrey Ginsberg
Title:   Chief Financial Officer
 
4
 
 
EXHIBIT INDEX
 
Exhibit No.  Description
     
2.1 First Amendment, dated as of August 18, 2021, to Second Amended and Restated Agreement and Plan of Merger, dated as of July 16, 2021, among Net Element, Inc., Mullen Technologies, Inc., Mullen Acquisition, Inc. and Mullen Automotive, Inc
                                                                                               
 
5

Exhibit 2.1

 

FIRST AMENDMENT TO SECOND AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER

 

This First Amendment to the Second Amended and Restated Agreement and Plan of Merger (this “Amendment”) is effective as of August 18, 2021.

 

WHEREAS, Net Element, Inc., a Delaware corporation (“Parent”), Mullen Acquisition, Inc., a California corporation and a wholly-owned subsidiary of Parent (“Merger Sub”), Mullen Technologies, Inc., a California corporation (“Mullen Technologies”), and Mullen Automotive, Inc., a California corporation and a wholly-owned subsidiary of Mullen Technologies (the “Company”), are parties to that certain Second Amended and Restated Agreement and Plan of Merger, dated as of July 20, 2021, (the “Agreement”). Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Agreement.

 

WHEREAS, Subsection (c) of Section 1.04 of the Agreement provides that Parent shall amend its Certificate of Incorporation to, among other things, authorize a sufficient number of shares of three series of preferred stock of Parent with identical rights, preferences and privileges currently afforded holders of Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock of the Company.

 

WHEREAS, the parties wish to amend Subsection (c) of Section 1.04 of the Agreement and Exhibit F to the Agreement (the Parent COI Amendment) to provide that Series A Preferred Stock shall have the liquidation preference as set forth in this Amendment.

 

WHEREAS, Subsection (b) of Section 6.07 of the Agreement provides that the period during which the Parent shall maintain in effect the current directors’ and officers’ liability insurance policies is at least two years from the Merger Effective Time.

 

WHEREAS, the parties wish to amend Subsection (b) of Section 6.07 of the Agreement to increase such period to six years from the Merger Effective Time.

 

WHEREAS, Section 8.03 of the Agreement permits the Agreement to be amended by amendment in writing signed by Parent, Merger Sub and the Company.

 

WHEREAS, each of the Parent Board, the Merger Sub Board and the board of directors of the Company has approved and adopted this Amendment.

 

NOW THEREFORE, in consideration of the mutual covenants contained herein, Parent, Merger Sub and the Company hereby agree that the Agreement shall be amended as follows:

 

1.           Recitals. All of the recitals contained herein are true and correct and are incorporated herein by this reference.

 

2.           Amendments.

 

 

(a)

Subsection (c) of Section 1.04 of the Agreement is hereby amended and restated in its entirety as follows:

 

 
 

 

“(c) Parent shall amend its Certificate of Incorporation to (i) authorize a sufficient number of shares of three series of preferred stock of Parent with identical rights, preferences and privileges currently afforded holders of Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock of the Company, provided, however, that holders of Series A Preferred Stock shall have the liquidation preference as set forth in Exhibit F attached to this Agreement (upon the Parent Board’s designation of such new series of preferred stock, such stock shall be referred to as “Parent Series A Preferred Stock,” “Parent Series B Preferred Stock” and “Parent Series C Preferred Stock”) and (ii) change its name to “Mullen Automotive, Inc.” (the “Parent COI Amendment”).”

 

 

(b)

Subsection (b) of Section 6.07 of the Agreement is hereby amended and restated in its entirety as follows:

 

“(b) Parent shall maintain in effect for at least six years from the Merger Effective Time, the current directors’ and officers’ liability insurance policies maintained by the Company (provided that Parent may substitute therefor policies of at least the same coverage containing terms and conditions that are not materially less favorable) with respect to matters occurring prior to the Merger Effective Time.”

 

 

(c)

Each of Exhibit F attached to this Agreement and the Parent COI Amendment (set forth in Exhibit F to the Agreement) is hereby amended by amending and replacing subsection (c) to Article III, Section B.2 of the Parent COI Amendment in its entirety as follows:

 

“Upon the completion of the distribution required by subsections (a) and (b) of this Section 2, the holders of Series A Preferred Stock shall be entitled to receive, prior and in preference to any distribution of any Proceeds to the holders of the Common Stock, by reason of their ownership thereof, $0.10 per share for each share of the Series A Preferred Stock (as adjusted for any stock splits, stock dividends, combinations, recapitalizations or the like with respect to the Series A Preferred Stock), plus declared but unpaid dividends on such share. If, upon the occurrence of such event, the Proceeds thus distributed among the holders of the Series A Preferred Stock shall be insufficient to permit the payment to such holders of the full aforesaid preferential amounts, then the entire Proceeds legally available for distribution shall be distributed ratably among the holders of the Series A Preferred Stock in proportion to the full preferential amount that each such holder is otherwise entitled to receive under this subsection (c). Upon the completion of the distribution required by subsection (a), (b) and the first and second sentence of this subsection (c) of this Section 2, any remaining Proceeds available for distribution to shareholders shall be distributed among the holders of Common Stock pro rata, based on the number of shares of Common Stock held by each (assuming full conversion of all such Preferred Stock).”

 

3.          Limited Effect. Except as expressly amended and modified by this Amendment, the Agreement shall continue to be, and shall remain, in full force and effect in accordance with its terms.

 

4.          Governing Law. This Amendment and the rights and obligations of the parties hereto shall be construed in accordance with and governed by the internal laws of the State of Delaware applicable to contracts executed in and to be performed in that State.

 

5.          Counterparts. This Amendment may be executed simultaneously in any number of counterparts. Each counterpart shall be deemed to be an original, and all such counterparts shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page of this Amendment in Portable Document Format (PDF) or by facsimile transmission shall be as effective as delivery of a manually executed original counterpart of this Amendment.

 

[Signatures are on next page.]

 

 
 

 

 

IN WITNESS WHEREOF, the parties to this Amendment have caused their names to be signed hereto by their respective officers thereunto duly authorized as of the date first set forth above.

 

 

 

MULLEN AUTOMOTIVE, INC.

 

By: /s/ David Michery                             

Name: David Michery

Title:   Chief Executive Officer

 

 

 

 

MULLEN TECHNOLOGIES, INC.

 

 

By: /s/ David Michery                               

Name: David Michery

Title:   Chief Executive Officer

 

 

 

 

NET ELEMENT, INC.

 

 

By: /s/ Oleg Firer                                       

Name: Oleg Firer

Title:   Chief Executive Officer

 

 

 

 

MULLEN ACQUISITION, INC.

 

 

By: /s/ Oleg Firer                                        

Name: Oleg Firer

Title:   President