MULLEN AUTOMOTIVE INC. (Form: 10-Q, Received: 08/12/2022 15:26:58)

376786685526220616953168851008310001499961--09-30Q320220566768370483874986944810.162.900.795.79056676830.017048387498694481617573521525140213331462429545621P2MP1Yfalse0001499961srt:MinimumMembermuln:WarrantsMemberus-gaap:MeasurementInputRiskFreeInterestRateMember2022-06-300001499961srt:MaximumMembermuln:WarrantsMemberus-gaap:MeasurementInputRiskFreeInterestRateMember2022-06-300001499961srt:MinimumMemberus-gaap:MeasurementInputRiskFreeInterestRateMember2022-06-300001499961srt:MinimumMemberus-gaap:MeasurementInputExpectedTermMember2022-06-300001499961srt:MaximumMemberus-gaap:MeasurementInputRiskFreeInterestRateMember2022-06-300001499961srt:MaximumMemberus-gaap:MeasurementInputExpectedTermMember2022-06-300001499961muln:WarrantsMemberus-gaap:MeasurementInputSharePriceMember2022-06-300001499961muln:WarrantsMemberus-gaap:MeasurementInputPriceVolatilityMember2022-06-300001499961muln:WarrantsMemberus-gaap:MeasurementInputExpectedTermMember2022-06-300001499961muln:WarrantsMemberus-gaap:MeasurementInputExpectedDividendRateMember2022-06-300001499961us-gaap:MeasurementInputOptionVolatilityMember2022-06-300001499961us-gaap:MeasurementInputExpectedDividendRateMember2022-06-300001499961us-gaap:MeasurementInputExercisePriceMember2022-06-300001499961muln:SecuritiesPurchaseAgreementMember2021-10-080001499961muln:MullenTechnologiesAndEsousaHoldingsLlcLineOfCreditAgreementMember2021-09-012021-09-010001499961us-gaap:SubsequentEventMemberus-gaap:NoteWarrantMember2022-08-052022-08-050001499961us-gaap:SubsequentEventMembermuln:ExchangeAgreementMember2022-08-052022-08-050001499961us-gaap:SubsequentEventMembermuln:ConversionOfPreferredStockMember2022-08-052022-08-050001499961us-gaap:NoteWarrantMember2022-04-152022-04-150001499961muln:ExchangeAgreementMember2022-04-152022-04-150001499961muln:ConversionOfPreferredStockMember2022-04-152022-04-150001499961us-gaap:CommonStockMember2021-04-012021-06-300001499961us-gaap:CommonStockMember2021-01-012021-03-310001499961muln:MtiWarrantsMembermuln:DbiAndMtiMember2020-07-012020-07-310001499961muln:MaiWarrantsMembermuln:DbiAndMtiMember2020-07-012020-07-310001499961muln:CeoCastMember2021-10-012022-06-300001499961us-gaap:RetainedEarningsMember2022-06-300001499961us-gaap:AdditionalPaidInCapitalMember2022-06-300001499961us-gaap:RetainedEarningsMember2022-03-310001499961us-gaap:AdditionalPaidInCapitalMember2022-03-3100014999612022-03-310001499961us-gaap:RetainedEarningsMember2021-12-310001499961us-gaap:AdditionalPaidInCapitalMember2021-12-3100014999612021-12-310001499961us-gaap:RetainedEarningsMember2021-09-300001499961us-gaap:AdditionalPaidInCapitalMember2021-09-300001499961us-gaap:RetainedEarningsMember2021-06-300001499961us-gaap:AdditionalPaidInCapitalMember2021-06-300001499961us-gaap:RetainedEarningsMember2021-03-310001499961us-gaap:AdditionalPaidInCapitalMember2021-03-3100014999612021-03-310001499961us-gaap:RetainedEarningsMember2020-12-310001499961us-gaap:AdditionalPaidInCapitalMember2020-12-3100014999612020-12-310001499961us-gaap:RetainedEarningsMember2020-09-300001499961us-gaap:AdditionalPaidInCapitalMember2020-09-300001499961us-gaap:CommonStockMember2022-06-300001499961us-gaap:SeriesCPreferredStockMemberus-gaap:PreferredStockMember2022-03-310001499961us-gaap:SeriesBPreferredStockMemberus-gaap:PreferredStockMember2022-03-310001499961us-gaap:SeriesAPreferredStockMemberus-gaap:PreferredStockMember2022-03-310001499961us-gaap:CommonStockMember2022-03-310001499961us-gaap:SeriesCPreferredStockMemberus-gaap:PreferredStockMember2021-12-310001499961us-gaap:SeriesBPreferredStockMemberus-gaap:PreferredStockMember2021-12-310001499961us-gaap:SeriesAPreferredStockMemberus-gaap:PreferredStockMember2021-12-310001499961us-gaap:CommonStockMember2021-12-310001499961us-gaap:SeriesBPreferredStockMemberus-gaap:PreferredStockMember2021-09-300001499961us-gaap:SeriesAPreferredStockMemberus-gaap:PreferredStockMember2021-09-300001499961us-gaap:CommonStockMember2021-09-300001499961us-gaap:SeriesBPreferredStockMemberus-gaap:PreferredStockMember2021-06-300001499961us-gaap:SeriesAPreferredStockMemberus-gaap:PreferredStockMember2021-06-300001499961us-gaap:CommonStockMember2021-06-300001499961us-gaap:SeriesBPreferredStockMemberus-gaap:PreferredStockMember2021-03-310001499961us-gaap:SeriesAPreferredStockMemberus-gaap:PreferredStockMember2021-03-310001499961us-gaap:CommonStockMember2021-03-310001499961us-gaap:SeriesBPreferredStockMemberus-gaap:PreferredStockMember2020-12-310001499961us-gaap:SeriesAPreferredStockMemberus-gaap:PreferredStockMember2020-12-310001499961us-gaap:CommonStockMember2020-12-310001499961us-gaap:SeriesBPreferredStockMemberus-gaap:PreferredStockMember2020-09-300001499961us-gaap:SeriesAPreferredStockMemberus-gaap:PreferredStockMember2020-09-300001499961us-gaap:CommonStockMember2020-09-300001499961muln:EquityIncentivePlan2022Memberus-gaap:SubsequentEventMember2022-07-260001499961muln:DrawbridgeMember2021-10-012022-06-300001499961muln:DbiAndMtiMember2020-07-310001499961muln:DbiAndMtiMember2021-07-162021-07-160001499961muln:MnbCapitalGroupMember2022-04-012022-04-010001499961srt:MinimumMemberus-gaap:ComputerEquipmentMember2021-10-012022-06-300001499961srt:MaximumMemberus-gaap:ComputerEquipmentMember2021-10-012022-06-300001499961us-gaap:VehiclesMember2021-10-012022-06-300001499961us-gaap:MachineryAndEquipmentMember2021-10-012022-06-300001499961us-gaap:FurnitureAndFixturesMember2021-10-012022-06-300001499961us-gaap:BuildingMember2021-10-012022-06-300001499961us-gaap:VehiclesMember2022-06-300001499961us-gaap:MachineryAndEquipmentMember2022-06-300001499961us-gaap:LeaseholdImprovementsMember2022-06-300001499961us-gaap:FurnitureAndFixturesMember2022-06-300001499961us-gaap:ConstructionInProgressMember2022-06-300001499961us-gaap:ComputerEquipmentMember2022-06-300001499961us-gaap:BuildingMember2022-06-300001499961us-gaap:VehiclesMember2021-09-300001499961us-gaap:MachineryAndEquipmentMember2021-09-300001499961us-gaap:LeaseholdImprovementsMember2021-09-300001499961us-gaap:FurnitureAndFixturesMember2021-09-300001499961us-gaap:ComputerEquipmentMember2021-09-300001499961us-gaap:BuildingMember2021-09-300001499961muln:CorporateSecretaryAndDirectorMembermuln:ConsultingAgreementMember2021-10-012022-06-300001499961muln:MullenTechnologiesAndEsousaHoldingsLlcLineOfCreditAgreementMember2021-10-012022-06-300001499961srt:MaximumMembermuln:AmendedAndRestatedSecuredConvertibleNoteAndSecurityAgreementMemberus-gaap:SeriesEPreferredStockMember2022-06-170001499961muln:SeriesBAndCPreferredStockMember2022-06-300001499961us-gaap:SeriesAPreferredStockMember2021-09-300001499961muln:SeriesBAndCPreferredStockMember2021-09-300001499961us-gaap:SeriesBPreferredStockMember2022-06-300001499961us-gaap:SeriesAPreferredStockMember2022-06-3000014999612021-11-122021-11-120001499961muln:SeriesEPreferredStockCommitmentMemberus-gaap:SeriesEPreferredStockMember2022-06-170001499961muln:StrategicCooperationAgreementMember2019-11-300001499961muln:FormerChiefOperatingOfficerMembermuln:ConsultingAgreementMember2022-06-272022-06-270001499961us-gaap:RetainedEarningsMember2022-04-012022-06-300001499961us-gaap:RetainedEarningsMember2022-01-012022-03-310001499961us-gaap:RetainedEarningsMember2021-10-012021-12-310001499961us-gaap:RetainedEarningsMember2021-04-012021-06-300001499961us-gaap:RetainedEarningsMember2021-01-012021-03-310001499961us-gaap:RetainedEarningsMember2020-10-012020-12-310001499961us-gaap:SeriesEPreferredStockMember2022-06-170001499961muln:StrategicCooperationAgreementMember2019-10-012020-09-300001499961muln:LawsuitWithInternationalBusinessMachinesMember2021-12-012021-12-010001499961muln:LawsuitWithInternationalBusinessMachinesMember2016-10-012017-09-300001499961muln:LawsuitWithInternationalBusinessMachinesMember2022-05-012022-05-310001499961muln:MaturedNotesMember2022-06-300001499961muln:LoanAdvancesMember2022-06-300001499961muln:MaturedNotesMember2021-09-300001499961muln:LoanAdvancesMember2021-09-300001499961muln:ConvertibleUnsecuredNotesMember2021-09-300001499961muln:OdysseyGroupSettlementMember2020-10-012021-06-300001499961muln:LetterOfIntentMember2022-01-140001499961srt:MinimumMember2022-06-300001499961srt:MaximumMember2022-06-300001499961muln:PromissoryNotesMember2022-04-012022-06-300001499961muln:PromissoryNotesMember2021-04-012021-06-300001499961muln:PayrollTaxesMember2022-06-300001499961muln:EmploymentDevelopmentDepartmentOfCaliforniaMembermuln:PayrollTaxesMember2021-10-012022-06-300001499961srt:MaximumMember2021-10-012022-06-300001499961us-gaap:TrademarksMember2022-06-300001499961us-gaap:TrademarksMember2021-09-300001499961muln:WebsiteDesignAndDevelopmentMember2021-10-012022-06-300001499961muln:WebsiteDesignAndDevelopmentMember2020-10-012021-06-300001499961us-gaap:IntellectualPropertyMember2022-06-300001499961muln:WebsiteDesignAndDevelopmentMember2022-06-300001499961us-gaap:IntellectualPropertyMember2021-09-300001499961muln:WebsiteDesignAndDevelopmentMember2021-09-300001499961muln:LetterOfIntentMember2022-01-142022-01-140001499961muln:DbiAndMtiMember2020-07-012020-07-310001499961muln:VariousNotesMembermuln:DrawbridgeMember2021-09-300001499961srt:ChiefExecutiveOfficerMember2022-06-300001499961srt:ChiefExecutiveOfficerMember2021-09-300001499961muln:OtherDbiMember2022-06-300001499961muln:DbiAndMtiMember2022-06-300001499961muln:OtherDbiMember2021-09-300001499961muln:DbiAndMtiMember2021-09-300001499961us-gaap:SeriesAPreferredStockMember2022-04-012022-06-300001499961us-gaap:SeriesAPreferredStockMember2021-10-012022-06-300001499961us-gaap:SeriesAPreferredStockMember2021-04-012021-06-300001499961us-gaap:SeriesAPreferredStockMember2020-10-012021-06-300001499961muln:AmendedAndRestatedSecuredConvertibleNoteAndSecurityAgreementMembermuln:OtherDbiMember2020-07-232020-07-230001499961us-gaap:MeasurementInputSharePriceMemberus-gaap:SeriesEPreferredStockMember2022-06-170001499961us-gaap:MeasurementInputOptionVolatilityMemberus-gaap:SeriesEPreferredStockMember2022-06-170001499961us-gaap:MeasurementInputExpectedTermMemberus-gaap:SeriesEPreferredStockMember2022-06-170001499961us-gaap:MeasurementInputDiscountRateMemberus-gaap:SeriesEPreferredStockMember2022-06-170001499961us-gaap:MeasurementInputConversionPriceMemberus-gaap:SeriesEPreferredStockMember2022-06-170001499961srt:MinimumMembermuln:PromissoryNotesMember2022-06-300001499961srt:MinimumMembermuln:MaturedNotesMember2022-06-300001499961srt:MinimumMembermuln:LoanAdvancesMember2022-06-300001499961srt:MaximumMembermuln:MaturedNotesMember2022-06-300001499961srt:MaximumMembermuln:LoanAdvancesMember2022-06-300001499961us-gaap:ConvertibleNotesPayableMember2022-06-300001499961us-gaap:ConvertibleDebtMember2022-06-300001499961muln:RealEstateNoteMember2022-06-300001499961muln:PromissoryNotesMember2022-06-300001499961srt:MinimumMembermuln:PromissoryNotesMember2021-09-300001499961srt:MinimumMembermuln:MaturedNotesMember2021-09-300001499961srt:MinimumMembermuln:LoanAdvancesMember2021-09-300001499961srt:MinimumMembermuln:ConvertibleUnsecuredNotesMember2021-09-300001499961srt:MaximumMembermuln:PromissoryNotesMember2021-09-300001499961srt:MaximumMembermuln:MaturedNotesMember2021-09-300001499961srt:MaximumMembermuln:LoanAdvancesMember2021-09-300001499961srt:MaximumMembermuln:ConvertibleUnsecuredNotesMember2021-09-300001499961muln:RealEstateNoteMember2021-09-300001499961muln:PromissoryNotesMember2021-09-300001499961muln:DemandNoteMember2021-09-3000014999612021-12-012022-03-310001499961muln:PromissoryNotesMember2022-03-070001499961muln:AmendedAndRestatedSecuredConvertibleNoteAndSecurityAgreementMembermuln:OtherDbiMember2020-07-230001499961muln:AmendedAndRestatedSecuredConvertibleNoteAndSecurityAgreementMember2022-06-270001499961us-gaap:SeriesDPreferredStockMember2022-06-070001499961us-gaap:ConvertibleNotesPayableMember2022-06-300001499961muln:WarrantsMember2022-06-300001499961muln:CommonStockWarrantsMember2022-06-170001499961muln:WarrantsMember2021-09-3000014999612021-05-0700014999612021-06-3000014999612020-09-300001499961muln:PromissoryNotesMember2022-03-072022-03-070001499961us-gaap:CommonStockMember2020-10-012020-12-310001499961us-gaap:AdditionalPaidInCapitalMember2021-04-012021-06-300001499961us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-3100014999612021-01-012021-03-310001499961us-gaap:AdditionalPaidInCapitalMember2020-10-012020-12-3100014999612020-10-012020-12-3100014999612022-01-012022-03-310001499961us-gaap:SeriesCPreferredStockMemberus-gaap:SubsequentEventMember2022-08-052022-08-050001499961us-gaap:SeriesDPreferredStockMemberus-gaap:SubsequentEventMember2022-07-262022-07-260001499961us-gaap:AdditionalPaidInCapitalMember2022-04-012022-06-300001499961us-gaap:AdditionalPaidInCapitalMember2022-01-012022-03-310001499961us-gaap:SeriesBPreferredStockMemberus-gaap:PreferredStockMember2022-04-012022-06-300001499961us-gaap:CommonStockMember2022-04-012022-06-300001499961us-gaap:SeriesCPreferredStockMemberus-gaap:PreferredStockMember2022-01-012022-03-310001499961us-gaap:SeriesBPreferredStockMemberus-gaap:PreferredStockMember2022-01-012022-03-310001499961us-gaap:SeriesAPreferredStockMemberus-gaap:PreferredStockMember2022-01-012022-03-310001499961us-gaap:CommonStockMember2022-01-012022-03-310001499961us-gaap:SeriesAPreferredStockMemberus-gaap:PreferredStockMember2021-10-012021-12-3100014999612021-11-120001499961us-gaap:SubsequentEventMember2022-07-260001499961us-gaap:SubsequentEventMember2022-07-2500014999612021-11-050001499961us-gaap:SeriesCPreferredStockMemberus-gaap:PreferredStockMember2022-04-012022-06-300001499961us-gaap:SeriesAPreferredStockMemberus-gaap:PreferredStockMember2022-04-012022-06-300001499961muln:InvestmentBankingServicesAgreementMember2020-05-050001499961us-gaap:SeriesCPreferredStockMemberus-gaap:PreferredStockMember2021-10-012021-12-310001499961us-gaap:ConvertibleDebtMember2021-10-012022-06-300001499961us-gaap:SeriesDPreferredStockMember2022-06-072022-06-070001499961muln:DelpackLogisticsLlcMembermuln:MullenClass2ElectricVehicleCargoVansMemberus-gaap:SubsequentEventMembermuln:BindingAgreementMember2022-07-112022-07-110001499961muln:DelpackLogisticsLlcMembermuln:MullenClass2ElectricVehicleCargoVansMemberus-gaap:SubsequentEventMembermuln:BindingAgreementMember2022-07-110001499961us-gaap:SeriesCPreferredStockMember2021-10-012022-06-300001499961muln:ToaTradingLlcLitigationMembersrt:MinimumMember2021-10-012022-06-300001499961muln:ToaTradingLlcLitigationMembersrt:MaximumMember2021-10-012022-06-300001499961muln:OdysseyGroupSettlementMember2021-08-132021-08-130001499961us-gaap:FairValueMeasurementsRecurringMember2022-06-300001499961muln:ConsultantsAndEmployeesMember2022-06-300001499961muln:ConsultantsAndEmployeesMember2021-09-300001499961muln:PayrollTaxesMember2022-04-142022-04-140001499961muln:EmploymentDevelopmentDepartmentOfCaliforniaMemberus-gaap:SubsequentEventMember2022-07-192022-07-190001499961muln:SeriesDPreferredStockCommitmentMemberus-gaap:SeriesDPreferredStockMember2022-06-070001499961muln:CeoCastMember2022-04-012022-05-310001499961muln:CommonAndPreferredSharesMembermuln:DrawbridgeMemberus-gaap:CommonStockMember2022-06-300001499961muln:DrawbridgeMember2022-06-300001499961muln:CommonAndPreferredSharesMembermuln:DrawbridgeMemberus-gaap:SeriesBPreferredStockMember2021-09-300001499961muln:CommonAndPreferredSharesMembermuln:DrawbridgeMemberus-gaap:SeriesAPreferredStockMember2021-09-300001499961muln:CommonAndPreferredSharesMembermuln:DrawbridgeMemberus-gaap:CommonStockMember2021-09-300001499961muln:DrawbridgeMember2021-09-3000014999612022-04-012022-06-3000014999612021-04-012021-06-3000014999612020-10-012021-06-300001499961srt:MinimumMembermuln:StrategicCooperationAgreementMember2019-11-300001499961srt:MaximumMembermuln:StrategicCooperationAgreementMember2019-11-300001499961muln:AmendedAndRestatedSecuredConvertibleNoteAndSecurityAgreementMember2022-06-272022-06-270001499961muln:StrategicCooperationAgreementMember2019-11-012019-11-300001499961muln:StrategicCooperationAgreementMember2019-12-032019-12-030001499961muln:StrategicCooperationAgreementMember2022-06-300001499961muln:FormerChiefOperatingOfficerMembermuln:ConsultingAgreementMember2022-06-262022-06-260001499961srt:ExecutiveOfficerMembermuln:ConsultingAgreementMember2022-06-092022-06-090001499961muln:CorporateSecretaryAndDirectorMembermuln:ConsultingAgreementMember2021-10-262021-10-260001499961us-gaap:CommonStockMember2021-10-012021-12-310001499961muln:OdysseyGroupSettlementMember2021-08-1300014999612022-06-3000014999612021-09-300001499961muln:WarrantsMember2021-10-012022-06-300001499961muln:PromissoryNotesMember2020-10-012021-06-300001499961us-gaap:SubsequentEventMember2022-07-262022-07-260001499961muln:LakeviewBusinessCenterLlcMembermuln:IrvineLeaseInCaliforniaMember2022-06-290001499961muln:PromissoryNotesMember2021-10-012022-06-300001499961us-gaap:AdditionalPaidInCapitalMember2021-10-012021-12-3100014999612021-10-012021-12-310001499961muln:DetroitTechCenterMemberus-gaap:SubsequentEventMember2022-09-300001499961muln:DetroitTechCenterMemberus-gaap:SubsequentEventMember2022-08-0300014999612022-08-1000014999612021-10-012022-06-30xbrli:pureutr:kWhutr:acremuln:Yxbrli:sharesmuln:employeeiso4217:USDutr:sqftiso4217:USDxbrli:sharesmuln:Votemuln:Milestonemuln:installmentmuln:item

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____ to ___

Commission File Number: 001-34887

MULLEN AUTOMOTIVE INC.

(Exact name of registrant as specified in its charter)

Delaware		90-1025599
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

1405 Pioneer Street
Brea, California 92821

(Address of principal executive offices)

(714) 613-1900

(Registrant’s Telephone Number, Including Area Code)

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, par value $0.001 per share	MULN	The Nasdaq Stock Market, LLC (Nasdaq Capital Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
	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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

As of August 10, 2022 a total of 509,294,481 shares of the Registrant’s common stock, par value $0.001, (“Common Stock”) were issued and outstanding.

Table of Contents

MULLEN AUTOMOTIVE INC.

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS


		Page

PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements:	2

	Condensed Consolidated Balance Sheets as of June 30, 2022 (unaudited) and September 30, 2021	2

	Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended June 30, 2022 and 2021 (unaudited)	3

	Condensed Consolidated Statements of Stockholders Equity (Deficit) for the three and nine months ended June 30, 2022 and 2021 (unaudited)	4

	Condensed Consolidated Statements of Cash Flows for the nine months ended June 30, 2022 and 2021 (unaudited)	6

	Notes to Unaudited Condensed Consolidated Interim Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	42

Item 4.	Controls and Procedures	42

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	44

Item 1A.	Risk Factors	44

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44

Item 3.	Defaults Upon Senior Securities	44

Item 4.	Mine Safety Disclosures	44

Item 5.	Other Information	44

Item 6.	Exhibits	45

SIGNATURES		46

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

MULLEN AUTOMOTIVE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)


	June 30, 2022		September 30, 2021
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	60,934,439	$	42,174
Restricted cash		176,824		—
Materials and supplies		76,163		55,753
Deferred advertising		24,699		261,550
Prepaid expenses		1,142,023		6,201,247
Other current assets		734,223		250,331
Notes receivable		—		90,552
TOTAL CURRENT ASSETS		63,088,371		6,901,607
Property, equipment and leasehold improvements, net		13,443,071		1,181,477
Intangible assets, net		2,180,785		2,495,259
Right-of-use assets		1,939,829		2,350,929
Other assets		3,612,774		4,243,222
TOTAL ASSETS	$	84,264,830	$	17,172,494

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable	$	3,076,409	$	5,206,310
Accrued expenses and other current liabilities		13,911,341		19,126,765
Series E option liability		23,085,886		—
Liability to issue shares		14,118,227		7,027,500
Lease liabilities, current portion		680,185		599,898
Notes payable, current portion		3,645,764		39,200,970
TOTAL CURRENT LIABILITIES		58,517,812		71,161,443
Notes payable, net of current portion		5,256,611		247,612
Lease liabilities, net of current portion		1,334,518		1,857,894
Other liabilities		—		5,617,192
TOTAL LIABILITIES		65,108,941		78,884,141
Commitments and Contingencies (Note 17)

STOCKHOLDERS' EQUITY (DEFICIT)
Preferred Stock; $0.001 par value; 58,000,000 shares authorized; zero and 5,667,683 shares issued and outstanding at June 30, 2022 and September 30, 2021 respectively.		—		5,668
Common Stock; $0.001 par value; 500,000,000 shares authorized; 498,694,481 and 7,048,387 shares issued and outstanding at June 30, 2022 and September 30, 2021 respectively.		498,694		7,048
Additional Paid-in Capital		297,540,727		88,650,286
Accumulated Deficit		(278,883,532)		(150,374,649)
TOTAL STOCKHOLDERS' EQUITY (DEFICIT)		19,155,889		(61,711,647)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	$	84,264,830	$	17,172,494

See accompanying notes to condensed consolidated interim financial statements.

Table of Contents

MULLEN AUTOMOTIVE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)


	Three months ended June 30,				Nine months ended June 30,
	2022		2021		2022		2021
OPERATING EXPENSES
General and administrative	$	10,896,800	$	4,926,154	$	53,067,316	$	12,555,572
Research and development		7,324,365		1,479,399		9,665,126		2,535,693
Total Operating Expense		18,221,165		6,405,553		62,732,442		15,091,265
Loss from Operations		(18,221,165)		(6,405,553)		(62,732,442)		(15,091,265)

Interest expense		(5,346,766)		(8,339,195)		(29,906,225)		(13,784,976)
Other financing costs		—		(506,654)		—		(1,559,961)
Loss on debt settlement		—		—		(41,096)		—
Gain (loss) on extinguishment of indebtedness, net		—		—		74,509		890,581
Incentive fee to creditor for transfer of note payable		(23,085,886)		—		(23,085,886)		—
Loss on disposal of fixed assets		(50,574)		—		(50,574)		—
Penalty for insufficient authorized shares		(3,495,000)		—		(3,495,000)		—
Revaluation of Liability to Issue Shares		3,045,000		—		3,045,000		—
Other income (expense), net		(12,317,169)		—		(12,317,170)		—
Net Loss	$	(59,471,560)	$	(15,251,402)	$	(128,508,884)	$	(29,545,621)

Net Loss per Share	$	(0.16)	$	(2.90)	$	(0.79)	$	(5.79)

Weighted average shares outstanding, basic and diluted		376,786,685		5,262,206		169,531,688		5,100,831

See accompanying notes to condensed consolidated interim financial statements.

Table of Contents

MULLEN AUTOMOTIVE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(unaudited)


	Nine Months Ended June 30, 2021
	Preferred Stock																	Deficiency in
	Series A			Series B			Series C			Common Stock				Paid-in		Accumulated		Stockholders'
	Shares	Amount		Shares	Amount		Shares		Amount	Shares		Amount		Capital		Deficit		Equity
Balance, September 30, 2020	116,789	$	116	5,567,319	$	5,568	—	$	—	5,086,225	$	5,086	$	63,619,280	$	(106,134,069)	$	(42,504,019)
Warrant issuances	—		—	—		—	—		—	—		—		2,092,337		—		2,092,337
Beneficial Conversion Feature -Debt	—		—	—		—	—		—	—		—		172,663		—		172,663
Stock-based compensation	—		—	—		—	—		—	38,561		39		1,241,366		—		1,241,405
Net loss	—		—	—		—	—		—	—		—		—		(4,996,450)		(4,996,450)
Balance, December 31, 2020	116,789		116	5,567,319		5,568	—		—	5,124,786		5,125		67,125,646		(111,130,519)		(43,994,064)
Shares issued for cash	—		—	—		—	—		—	23,126		23		1,104,779		—		1,104,802
Warrant issuances	—		—	—		—	—		—	—		—		870,428		—		870,428
Stock-based compensation	—		—	—		—	—		—	—		—		1,631,660		—		1,631,660
Beneficial conversion feature of convertible debt	—		—	—		—	—		—	—		—		98,335		—		98,335
Net loss	—		—	—		—	—		—	—		—		—		(9,297,770)		(9,297,770)
Balance, March 31, 2021	116,789		116	5,567,319		5,568	—		—	5,147,912		5,148		70,830,848		(120,428,289)		(49,586,609)
Shares issued for cash	—		—	—		—	—		—	52,144		52		1,291,449		—		1,291,501
Warrant issuances	—		—	—		—	—		—	—		—		4,566,218		—		4,566,218
Stock-based compensation	—		—	—		—	—		—	—		—		1,705,618		—		1,705,618
Beneficial conversion feature of convertible debt	—		—	—		—	—		—	—		—		268,519		—		268,519
Net loss	—		—	—		—	—		—	—		—		—		(15,251,402)		(15,251,402)
Balance, June 30, 2021	116,789	$	116	5,567,319	$	5,568	—	$	—	5,200,056	$	5,200	$	78,662,652	$	(135,679,691)	$	(57,006,155)

Table of Contents


	Preferred Stock																	Deficiency in
	Series A			Series B			Series C			Common Stock				Paid-in		Accumulated		Stockholders'
	Shares		Amount	Shares		Amount	Shares		Amount	Shares		Amount		Capital		Deficit		Equity
Balance, September 30, 2021	100,363	$	100	5,567,319	$	5,568	—	$	—	7,048,387	$	7,048	$	88,650,286	$	(150,374,649)	$	(61,711,647)
Common shares issued for cash	—		—	—		—	—		—	7,704,082		7,704		10,886,955		—		10,894,659
Common shares issued for asset	—		—	—		—	—		—	109,412		109		140,891		—		141,000
Preferred shares issued for cash	—		—	—		—	2,263,970		2,264	—		—		19,997,736		—		20,000,000
Preferred shares issued to settle liability to issue	—		—	—		—	84,900		85	—		—		704,915		—		705,000
Warrant issuances	—		—	—		—	—		—	—		—		10,491,621		—		10,491,621
Preferred shares issued in exchange for conversion of debt	—		—	—		—	2,829,029		2,829	—		—		24,988,926		—		24,991,755
Stock-based compensation	—		—	—		—	—		—	443,124		443		4,424,825		—		4,425,268
Common shares issued to settle liability to issue	—		—	—		—	—		—	131,477		131		1,034,681		—		1,034,812
Prefunded warrant issuance	—		—	—		—	—		—	—		—		15,000,000		—		15,000,000
Issuance of common stock for conversion of preferred stock	(84,996)		(85)	—		—	—		—	8,499,680		8,500		(8,415)		—		—
Net loss	—		—	—		—	—		—	—		—		—		(36,463,938)		(36,463,938)
Balance, December 31, 2021	15,367		15	5,567,319		5,568	5,177,899		5,178	23,936,162		23,935		176,312,421		(186,838,587)		(10,491,470)
Shares issued for cash	—		—	—		—	4,974,266		4,974	57,998,313		57,998		73,536,483		—		73,599,455
Stock-based compensation	—		—	—		—	—		—	5,868,482		5,868		21,536,148		—		21,542,016
Cashless Warrant exercise	—		—	—		—	—		—	196,005,353		196,005		(196,005)		—		—
Issuance of common stock for conversion of preferred stock	(13,433)		(13)	(2,783,660)		(4,633)	(1,848,842)		—	5,975,802		5,976		(1,330)		—		—
Dividends accumulated on preferred stock	—		—	—		—	—		—	—		—		(2,519,948)		—		(2,519,948)
Beneficial conversion feature of convertible debt	—		—	—		—	—		—	—		—		—		—		—
Net loss	—		—	—		—	—		—	—		—		—		(32,573,385)		(32,573,385)
Balance, March 31, 2022	1,934	$	2	2,783,659	$	935	8,303,323	$	10,152	289,784,112	$	289,782	$	268,667,769	$	(219,411,972)	$	49,556,668
Stock-based compensation	—		—	—		—	—		—	1,912,500		1,913		5,100,822		—		5,102,735
Cashless Warrant exercise	—		—	—		—	—		—	170,231,117		170,232		(170,232)		—		—
Issuance of common stock for note receivable	—		—	—		—	—		—	14,343,550		14,344		(14,344)		—		—
Issuance of common stock for conversion of preferred stock	—		—	(2,783,659)		(935)	(2,139,543)		(2,139)	4,923,202		4,923		(1,849)		—		—
Issuance of common stock for conversion of debt	—		—	—		—	—		—	17,500,000		17,500		22,907,500		—		22,925,000
Beneficial conversion feature of convertible debt	—		—	—		—	—		—	—		—		3,336,853		—		3,336,853
Reclassification of convertible security to derivative liability	(1,934)		(2)	—		—	(6,163,780)		(8,013)	—		—		—		—		(8,015)
Dividends accumulated on preferred stock	—		—	—		—	—		—	—		—		(2,285,792)		—		(2,285,792)
Net loss	—		—	—		—	—		—	—		—		—		(59,471,560)		(59,471,560)
Balance, June 30, 2022	—	$	—	—	$	—	—	$	—	498,694,481	$	498,694	$	297,540,727	$	(278,883,532)	$	19,155,889

See accompanying notes to condensed consolidated interim financial statements.

Table of Contents

MULLEN AUTOMOTIVE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)


	Nine Months Ended June 30,
	2022		2021
Cash Flows from Operating Activities
Net Loss	$	(128,508,884)	$	(29,545,621)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		918,855		338,321
Impairment charge - materials		—		74,495
Employee stock compensation		5,056,821		2,024,426
Issuance of shares for services		27,422,889		1,731,779
Non-cash interest and other operating activities		3,879,496		—
Non-cash lease expense		411,100		391,433
Amortization of debt discount		19,584,041		4,817,504
Loss on revaluation of derivatives		14,118,227		—
Loss on asset disposal		50,574		—
Loss (gain) on extinguishment of debt		23,011,377		(890,581)
Loss on debt settlement		41,096		—

Changes in operating assets and liabilities:
Material and supplies		(20,410)		(87,165)
Other current assets		5,466,441		(564,168)
Other assets		(1,960,058)		(14,515)
Accounts payable		(2,129,901)		1,918,768
Accrued expenses and other liabilities		(10,119,169)		7,144,718
Lease liabilities		(443,089)		(376,501)
Net cash used in operating activities		(43,220,594)		(13,037,107)

Cash Flows from Investing Activities
Purchase of equipment		(10,968,389)		(78,140)
Purchase of intangible assets		(305,044)		(63,299)
Net cash used in investing activities		(11,273,433)		(141,439)

Cash Flows from Financing Activities
Changes in investment by Mullen Technologies, Inc.		—		6,157,956
Proceeds from issuance of notes payable		12,142,791		8,068,500
Proceeds from issuance of common stock		40,151,308		—
Proceeds from issuance of preferred stock		63,925,000		—
Proceeds from note receivable		15,000,000		—
Payment of notes payable		(15,655,983)		(417,051)
Net cash provided by financing activities		115,563,116		13,809,405

Increase (decrease) in cash		61,069,089		630,859
Cash, beginning of period		42,174		33,368
Cash, ending of period	$	61,111,263	$	664,227

Supplemental disclosure of Cash Flow information:
Cash paid for interest	$	1,500,106	$	11,514
Supplemental disclosure for non-cash activities:
Refinance of indebtedness	$	28,867,187	$	—
Issuance of common stock for conversion of debt	$	17,356,500	$	—
Preferred shares issued in exchange for convertible debt	$	23,192,500	$	—
Initial recognition of right-of-use assets and lease liabilities	$	—	$	1,129,003

See accompanying notes to condensed consolidated interim financial statements.

MULLEN AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Description of Business

Mullen Automotive Inc. (“MAI”, “Mullen”, “we” or the “Company”) is a development-stage electronic vehicle (EV) manufacturer. The Company operated as the EV division of Mullen Technologies, Inc. (“MTI”) until November 5, 2021, at which time the Company underwent a capitalization and corporate reorganization by way of a spin-off by MTI to its stockholders, followed by a reverse merger with and into Net Element, Inc. (“NETE” or “Net Element”).

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the "Commission"). Certain information and note disclosures normally included in the annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to those rules and regulations, but we believe the disclosures made are adequate to make the information presented not misleading. In the opinion of management, all adjustments, consisting of normal and recurring adjustments, necessary for a fair presentation have been included in the condensed consolidated financial statements included herein. These statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K filed with the Commission for the year ended September 30, 2021. The results of operations for the periods presented are not necessarily indicative of results to be expected for the full fiscal year or any other periods.

The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Mullen Investment Properties, LLC, which was established in August 2021 to hold our real estate. Intercompany accounts and transactions have been eliminated, if any. As of June 30, 2022, Mullen Investment Properties, LLC holds the Advanced Manufacturing and Engineering Center or “AMEC” in Tunica County, MS.

As MTI has not historically prepared financial statements for Mullen, and Mullen did not exist as a legal entity prior to November 5, 2021, these condensed consolidated financial statements have been prepared from the financial records of MTI on a carve-out basis. The condensed consolidated balance sheets include all of the MAI Assets. The condensed consolidated Statements of operations for each of the three and nine months ended June 30, 2022 and 2021, reflect all expenses and activities directly attributable to MAI, and an allocation of MTI’s general and administrative expenses incurred (prior to the reorganization) in each of those years, as these expenditures were shared by MAI. In some instances, certain expenses were not allocated as they would have related directly to MAI. All inter-entity balances and transactions have been eliminated.

The equity capital presented in the condensed consolidated financial statements reflect the retrospective application of the November 5, 2021 capitalization and corporate reorganization arising from the merger transaction with NETE.

These financial statements have been prepared based upon the historical cost amounts recorded by MTI. These condensed consolidated financial statements may not be indicative of MAI financial performance and do not necessarily reflect what its financial position, results of operations, and cash flows would have been had Mullen operated as an independent entity during the years presented.

Table of Contents

NOTE 2 – LIQUIDITY, CAPITAL RESOURCES, AND GOING CONCERN CONSIDERATION

The accompanying condensed consolidated financial statements have been prepared on the basis that the Company will continue as a going concern. Our principal source of liquidity consists of existing cash and restricted cash of approximately $61.1 million at June 30, 2022. During the nine months ended June 30, 2022, the Company used $43.2 million of cash for operating activities and had net working capital of approximately $4.6 million at June 30, 2022.

During the three months ended June 30, 2022, the Company obtained additional financing in the amount of $15.0 million in equity issuances. During the nine months ended June 30, 2022, the Company obtained additional financing in the amount of $12.2 million in notes payable; $10 million in equity from Net Element merger; and $108.6 million in equity issuances.

The Coronavirus (“COVID-19”) continues to impact countries, communities, supply chains and markets, global financial markets, and various industries. To date, COVID-19 has had a material and disruptive impact on our strategy in EV product development and the ability to obtain external financing to fund its development activities. Company management is unable to predict whether the global pandemic will continue to have a material impact on our future financial condition and results of operations.

Going Concern

As an early-stage development company, our ability to access capital is critical. Our management plans to continue to raise additional capital through a combination of equity and debt financings, strategic alliances, and licensing arrangements. Company management has evaluated whether there are any conditions and events, considered in aggregate, which raise substantial doubt about its ability to continue as a going concern over the next twelve months from the date of filing this report. Since inception, we have incurred significant accumulated losses of approximately $278.9 million, and management expects to continue to incur operating losses over the near future.

On July 26, 2022, MAI stockholders approved a proposal to issue $275 million in Series D Preferred Stock and associated warrants in exchange for cash. The projected capital raise is expected to provide sufficient liquidity and capital resources for 2023. On August 5, 2022, the Company filed a S-3 Registration Statement for selling stockholders. The Company will receive approximately $43 million in cash in exchange for Series C Preferred Stock and associated warrants for the remainder of 2022.

Proceeds from the planned capital raise and exercise of warrants are expected to provide Mullen with sufficient liquidity and capital resources to fund its operating expenses and capital requirements for at least the next 12 months. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Significant accounting policies are defined as those that are reflective of significant judgments and uncertainties, and potentially result in materially different results under different assumptions and conditions.

Push-Down Accounting

The carve-out financial statements for the periods presented prior to November 5, 2021 reflect costs and expenses incurred by MTI on behalf of MAI, including interest costs. As a result, share-based compensation, and other equity transactions (such as issuances of warrants and stock conversion rights embedded in issuances of indebtedness) are reflected in these carve-out financial statements. Accordingly, the classification of debt and equity issuances by MTI have been pushed down and reflected with similar classification in these carve-out financial statements. In addition, certain right-of-use assets and related lease liabilities of MTI have been pushed down to MAI.

Reverse Merger and Recapitalization

The November 2021 Business Combination with Net Element was accounted for as a reverse merger and recapitalization, with Net Element treated as the “acquired” company for accounting purposes. The Business Combination was accounted

Table of Contents

as the equivalent of Mullen Automotive Inc. issuing stock for the net assets of Net Element, accompanied by a recapitalization. Accordingly, these condensed consolidated financial statements reflect the share capital and weighted average shares outstanding via a retrospective recapitalization as shares representing the exchange ratio established in the Business Combination.

Use of Estimates

The preparation of carve-out financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the carve-out financial statements and the reported amounts of total expenses in the reporting periods. Estimates are used for, but not limited to, fair value of long-lived assets, fair value of financial instruments, depreciable lives of property and equipment, income taxes, contingencies, and inputs used to value stock-based compensation, valuation of common and preferred stock issued by MTI.

Additionally, the rates of interest on several debt agreements have been imputed where there was no stated interest rate within the original agreement. The imputed interest results in adjustments to the debt amounts reported in our condensed consolidated financial statements prepared under U.S. GAAP. Loan valuations issues can arise when trying to determine the debt attributes, such as discount rate, credit loss factors, liquidity discounts, and pricing.

Management bases its estimates on historical experience and on various other assumptions believed to be reasonable, the results of which form the basis for adjustments about the carrying values of assets and liabilities and the recording of costs and expenses that are not readily apparent from other sources. The actual results may differ materially from these estimates.

Risks and Uncertainties

We operate within an industry that is subject to rapid technological change, intense competition, and serves an industry that has significant government regulations. It is subject to significant risks and uncertainties, including competitive, financial, developmental, operational, technological, required knowledge of industry governmental regulations, and other risks associated with an emerging business. Any one or combination of these or other risks could have a substantial influence on our future operations and prospects for commercial success.

Cash and Cash Equivalents

Company management considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. There were no cash equivalents at June 30, 2022 or September 30, 2021.

Restricted Cash

Funds that are not available for immediate use and must use for a specific purpose. These funds are refundable deposits for individuals and businesses who have made $100 reservations for the Mullen FIVE SUV, which debuted at the Los Angeles Auto Show in November 2021. At June 30, 2022, the restricted cash balance was $176,824. Customer deposits are accounted for within other liabilities.

Deferred Advertising

At June 30, 2022 and September 30, 2021, deferred advertising was $24,699 and $261,550, respectively. The costs were primarily upfront costs paid related to the Los Angeles auto show during November 2021.

Prepaid Expenses and Other Current Assets

Prepaid expenses consist of various advance payments made for goods or services to be received in the future. These prepaid expenses include insurance and other contracted services requiring up-front payments.

Table of Contents

Property, Equipment and Leasehold Improvements, Net

Property, equipment and leasehold improvements are stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated economic useful lives of the assets. Repairs and maintenance expenditures that do not extend the useful lives of related assets are expensed as incurred.

Estimated Useful Lives

Description		Life
Buildings		30 Years
Furniture and Equipment		5 Years
Computer and Software		1 – 3 years
Machinery and Equipment		5 Years
Leasehold Improvements		Shorter of the estimated useful life or the underlying lease term
Vehicles		5 Years

Expenditures for major improvements are capitalized, while minor replacements, maintenance and repairs, which do not extend the asset lives, are charged to operations as incurred. Upon sale or disposition, the cost and related accumulated depreciation are removed from the accounts and any gain or loss is included in operations. Company management continually monitors events and changes in circumstances that could indicate that the carrying balances of its property, equipment and leasehold improvements may not be recoverable in accordance with the provisions of ASC 360, “Property, Plant, and Equipment.” When such events or changes in circumstances are present, we assess the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the future cash flows is less than the carrying amount of those assets, we recognize an impairment loss based on the excess of the carrying amount over the fair value of the assets.

Income Taxes

Prior to Mullen’s capitalization and corporate reorganization, our operations were included in the tax filings of MTI. The cash and deferred tax positions between us and MTI and are formalized in a tax sharing agreement.

Income taxes are recorded in accordance with ASC 740, Income Taxes (“ASC 740”), which provides for deferred taxes using an asset and liability approach. We recognize deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the consolidated financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are provided, if based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

There are transactions that occur during the ordinary course of business for which the ultimate tax determination may be uncertain. At June 30, 2022 and September 30, 2021, there were no material changes to either the nature or the amounts of the uncertain tax positions.

The Company’s income tax provision consists of an estimate for U.S. federal and state income taxes based on enacted rates, as adjusted for allowable credits, deductions, uncertain tax positions, changes in deferred tax assets and liabilities, and changes in the tax law. We maintain a full valuation allowance against the value of our U.S. and state net deferred tax assets because management does not believe the recoverability of the tax assets meets the “more likely than not” likelihood at June 30, 2022 and September 30, 2021.

Table of Contents

Intangible Assets

Intangible assets consist of acquired and developed intellectual property and website development costs. In accordance with ASC 350, “Intangibles—Goodwill and Others,” goodwill and other intangible assets with indefinite lives are no longer subject to amortization but are tested for impairment annually or whenever events or changes in circumstances indicate that the asset might be impaired. Intangible assets with determinate lives are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Amortizable intangible assets generally are amortized on a straight-line basis over periods up to 36 months. The costs to periodically renew our intangible assets are expensed as incurred.

Other Assets

Other assets are comprised primarily of Coda electric vehicles, related parts and security deposits related to the Company’s property leases related to the EV business.

Extinguishment of Liabilities

The Company derecognizes financial liabilities when the Company’s obligations are discharged, cancelled, or expired.

Leases

The Company follows the provisions of Accounting Standards Update (ASU) No. 2016 02, “Leases” (ASU 2016 02), which requires a lessee to recognize a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying leased asset for the lease term.

Accrued Expenses

Accrued expenses are expenses that have been incurred but not yet paid and are classified within current liabilities on the consolidated balance sheets.

General and Administrative Expenses

General and administrative (“G&A”) expenses include all non-production related expenses incurred by us in any given period. This includes expenses such as professional fees, salaries, rent, repairs and maintenance, utilities and office expense, employee benefits, depreciation and amortization, advertising and marketing, settlements and penalties, taxes, and licenses. Advertising costs are expensed as incurred and are included in G&A expenses. Other than trade show expenses which are deferred until occurrence of the future event, we expense advertising costs as incurred in accordance with ASC 720-35, “Other Expenses – Advertising Cost.”

Research and Development Costs

Research and development costs are expensed as incurred. Research and development expenses primarily consist of costs associated with the development of our two electric vehicle product lines, the Mullen Five car and the Mullen One van.

Share-Based Compensation

We account for share-based awards issued by MAI in accordance with ASC Subtopic 718-10, “Compensation – Share Compensation,” which requires fair value measurement on the grant date and recognition of compensation expense for all common shares of MAI issued to employees, non-employees and directors. The fair value of non-marketable share-based awards has been estimated based on an independent valuation. The MAI common and preferred share valuations have been appraised by an independent financial valuation advisor, based on assumptions management believes to be reasonable. Key assumptions and approaches to value used in estimating fair value, includes economic and industry data; business valuation; prior transactions; option value method and other cost, income and market value approaches. Share-based compensation is included within general and administrative expenses. Beginning on July 1, 2021, share based

Table of Contents

compensation awards have been valued based on valuation of the trading price of Net Element common stock, as adjusted for the share exchange ratio in the merger. See Note 9, MAI Share-Based Compensation, for the amount of share-based compensation expense that is included within General and Administrative expenses for the three and nine months ended June 30, 2022 and 2021.

Related Party Transactions

We have related party transactions with certain of our directors, officers, and principal stockholders. These transactions, which are primarily long-term in nature, include operational loans, convertible debt, and warrants for financial support associated with the borrowing of funds and are entered into in the ordinary course of business.

Fair Value of Financial Instruments

We apply fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value on a recurring basis. Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities that are required to be recorded at fair value, Company management considers the principal or most advantageous market in which we would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risk. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability.

Concentrations of Business and Credit Risk

We maintain cash balances in several financial institutions that are insured by either the Federal Deposit Insurance Corporation or the National Credit Union Association up to certain federal limitations, generally $250,000. At times, our cash balance may exceed these federal limitations and maintains significant cash on hand at certain of its locations. However, we have not experienced any losses in such accounts and management believes we are not exposed to any significant credit risk on these accounts.

Recently Issued Accounting Standards

In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. This ASU amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity’s own equity, and also improves and amends the related earnings per share guidance for both Subtopics. The ASU will be effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years and early adoption is permitted. Company management is evaluating the future impact this guidance on our consolidated financial statements.

In May 2021, the FASB issued ASU No. 2021-04, Earnings Per Share (Topic 260), Debt – Modifications and Extinguishments (Subtopic 470-50), Compensation – Stock Compensation (Topic 718) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40). The ASU will be effective for the Company’s fiscal years beginning October 1, 2022. The Company has issued debt and equity instruments, the accounting for which could be impacted by

Table of Contents

this update. Company management is evaluating the impact this guidance on our financial condition and results of operations.

NOTE 4 – INTANGIBLE ASSETS

For the nine months ended June 30, 2022 and 2021, we incurred website development and trademark costs of $310,405 and $63,299, respectively. These costs historically have been capitalized, as the website was in the development stage and costs resulted in improved functionality. Amortization of the website commenced when the website was placed in service for its intended use during the fourth quarter of 2021. Trademark costs relate to legal fees incurred for registration of trademarks and patents. Amortization of these costs will commence when the trademark application and registration process has been completed.

The weighted average useful life of the intellectual property is 3.0 years. Identifiable intangible assets with definite lives are amortized over the period of estimated benefit using the straight-line method and the estimated useful lives of three years. The straight-line method of amortization represents management’s best estimate of the distribution of the economic value of the identifiable intangible assets.


	June 30, 2022						September 30, 2021
	Gross				Net		Gross				Net
	Carrying		Accumulated		Carrying		Carrying		Accumulated		Carrying
Finite-Lived Intangible Assets	Amount		Amortization		Amount		Amount		Amortization		Amount
Website design and development	$	2,660,391	$	(886,797)	$	1,773,594	$	2,660,391	$	(221,699)	$	2,438,692
Intellectual property		71,182		(71,182)		—		71,182		(69,205)		1,977
Trademark		407,191		—		407,191		54,590		—		54,590
Total Finite-Lived Intangible Assets	$	3,138,764	$	(957,979)	$	2,180,785	$	2,786,163	$	(290,904)	$	2,495,259

Total future amortization expense for finite-lived intellectual property is as follows:


Years Ended June 30,	Future Amortization
2022 (three months)	$	221,699
2023		886,797
2024		665,099
Thereafter		407,190
Total Future Amortization Expense	$	2,180,785

For the three and nine months ended June 30, 2022, amortization expense for the intangible assets was $221,699 and $667,075 and was $5,932 and $17,796 for the three and nine months ended June 30, 2021, respectively.

NOTE 5 – DEBT

Short-term debt comprises a significant component of the Company’s funding needs. Short-term debt is generally defined as debt with principal maturities of one-year or less. Long-term debt is defined as principal maturities of one year or more.

Table of Contents

Short and Long-Term Debt

The following is a summary of our indebtedness at June 30, 2022:


	Net Carrying Value
	Unpaid Principal						Contractual		Contractual
Type of Debt	Balance		Current		Long-Term		Interest Rate		Maturity
Matured Notes	$	3,049,955	$	3,049,955	$	—	0.00% - 15.00	%	Past Due
Promissory Notes		5,000,000		—		5,000,000	8.99	%	2024
Convertible Notes		1,096,787		—		1,096,787	28.00	%	2024
Real Estate Note		256,850		37,651		219,199	5.00	%	2023
Loan Advances		558,158		558,158		—	0.00% - 10.00	%	Past Due
Less: Debt Discount		(1,059,375)		—		(1,059,375)	NA		NA
Total Debt	$	8,902,375	$	3,645,764	$	5,256,611	NA		NA

The following is a summary of our indebtedness at September 30, 2021:


	Net Carrying Value
	Unpaid Principal						Contractual		Contractual
Type of Debt	Balance		Current		Long-Term		Interest Rate		Maturity
Matured Notes	$	5,838,591	$	5,838,591	$	—	0.00% - 15.00	%	2016 - 2021
Promissory Notes		23,831,912		23,831,912		—	28.00	%	2021 – 2022
Demand Note		500,000		500,000		—	27.00	%	2020
Convertible Unsecured Notes		15,932,500		15,932,500		—	15.00%-20.00	%	2021 - 2022
Real Estate Note		283,881		36,269		247,612	5.00	%	2023
Loan Advances		1,122,253		1,122,253		—	0.00% - 10.00	%	2019 – 2020
Less: Debt Discount		(8,060,555)		(8,060,555)		—	NA		NA
Total Debt	$	39,448,582	$	39,200,970	$	247,612	NA		NA

Scheduled Debt Maturities

The following scheduled debt maturities at June 30, 2022:


	Years Ended June 30,
	2022 (6 months)		2023		2024		Total
Total Debt	$	3,645,764	$	219,199	$	5,037,412	$	8,902,375

Notes and Advances

We enter into promissory notes with third parties and company officers to support our operations. Promissory notes typically are for less than three years maturity and carry interest rates from 0% to 28.0%. There are no financial covenants associated with the promissory notes and loan advances, and there are no compliance waivers that have been received from creditors. We record imputed interest on promissory notes and advances which are deemed to be below the market interest rate. For the three and nine months ended June 30, 2022, we recorded interest expense of $5,346,766 and $29,906,225 and $8,339,195 and $13,784,976 for the three and nine months ended June 30, 2021, respectively.

In some instances, MTI issued shares of common stock or warrants along with the issuance of promissory notes, resulting in the recognition of a debt discount which is amortized to interest expense over the term of the promissory note. Debt discount amortization for the nine months ended June 30, 2022 and 2021, was $19,584,041 and $4,817,504, respectively.

During 2021, MTI issued shares of stock to certain creditors in satisfaction of debt payments or in settlement of indebtedness. These agreements essentially exchanged a predetermined amount of stock to settle debt. For the nine months

Table of Contents

ended June 30, 2022 and 2021, the carrying amount of indebtedness that was settled via issuance of MTI shares was $23,192,500 and zero, respectively.

NuBridge Commercial Lending LLC Promissory Note

On March 7, 2022, the Company’s wholly owned subsidiary, Mullen Investment Properties, LLC entered into a Promissory Note (the “Promissory Note”) with NuBridge Commercial Lending LLC for a principal amount of $5 million. The Promissory Note bears interest at a fixed rate of 8.99% per annum and the principal amount is due March 1, 2024. Collateral for the loan included the title to the Company’s property at 1 Greentech Drive, Tunica, MS Under the Promissory Note, prepaid interest and issuance costs were withheld from the principal and recorded as a discount on the note of $1.2 million, which will be amortized over the term of the note. As of June 30, 2022, the remaining unamortized discount was $973,652.

Drawbridge Relationship

During July 2020, Drawbridge-DBI and MTI entered into a settlement agreement (the “Agreement”) to restructure the aggregate obligations owed to Drawbridge-DBI and the other DBI-affiliated entities. In connection with the Agreement, (a) the Sale-Leaseback obligation in the amount of $49,500,000 was replaced by a new note with a face value of $23,831,554, (b) the other indebtedness and advances from DBI-affiliated entities with a net book value of $9,935,086 were extinguished, and (c) MTI issued 71,516,534 MAI – 5,567,319 Series B Preferred Shares to Drawbridge-DBI.

The amounts owed to Drawbridge-DBI is $27,185,390 and $33,296,648 as of June 30, 2022 and September 30, 2021, respectively. The amounts owed to other DBI-affiliated entities is zero and $982,500, as of June 30, 2022 and September 30, 2021, respectively.

On July 16, 2021, the Company and Drawbridge entered into an agreement whereby Drawbridge acknowledged, waived, and consented to the contribution and spin-off of Mullen's EV assets into a new entity. As indicated in Note 1 to the condensed consolidated financial statements, the spin-off occurred immediately prior to the consummation of the merger with Net Element. As part of the agreement, Drawbridge was paid $10,000,000, to be applied towards the outstanding principal balance. The principal pay down to Drawbridge occurred on November 15, 2021.

On June 17, 2022, the Company entered into an Amended and Restated Secured Convertible Note and Security Agreement (the “A&R Note”) with Esousa Holdings LLC, a New York limited liability company (“Esousa”). The A&R Note amends and restates that certain promissory note dated July 23, 2020, entered into between the Mullen Technologies, Inc. (“Original Borrower”) and DBI Lease Buyback Servicing LLC, a Delaware limited liability company (“DBI”) for a principal amount of $23,831,553.98 (the “Original Note”). The Company had previously assumed all of the obligations of the Original Borrower under the Original Note upon the completion of the Merger. Esousa purchased rights under the Original Note from DBI immediately prior to entering into the A&R Note.

The A&R Note extends the maturity date of the Original Note by two years, from July 23, 2022 to July 23, 2024. The A&R Note provided Esousa the right to convert all or any portion of the then-outstanding principal balance of the A&R Note into that number of shares of the Common Stock of the Company. The transaction is accounted for as an extinguishment of debt with Drawbridge and the related expense within the “Incentive fee to creditor for transfer of note payable” line item of the Statement of Operations. The new debt with Esousa is viewed as a loan modification.

Table of Contents

On June 27, 2022, the Company received notification from Esousa that it was exercising the A&R Note’s conversion feature to partially convert the note and accrued interest in exchange for 28,000,000 shares. The conversion price was $0.9918 per share and the principal of the A&R Note has a remaining balance of $1,096,787.

Due to the limited number of authorized shares available to settle the conversion only 17,500,000 shares were issued. The remaining shares owed to the creditor is recognized as a derivative liability within the “Liability to issue shares” line item of the Balance Sheet. The Company agreed to pay a $3,495,000 penalty to Esousa, settleable in cash or stock, by August 31, 2022. This fee was recognized as Penalty for insufficient authorized shares within the Statement of Operations and within Accrued Expenses on the Balance Sheet.

In connection with entering into the A&R Note with Esousa, the Company granted Drawbridge an option to purchase up to $25 million worth of shares of a yet to be created Series E Preferred Stock from the Company (the “Series E Purchase Option”). Refer to Note 6, Fair Value Measurements and Note 17, Commitments and Contingencies, for details on the Series E Purchase option.

Release of Liability, Debt Paydowns and Payoffs

Since the reverse merger with Net Element in November 2021, there have been numerous debt paydowns and payoffs with the releases of liability obtained from former creditors. The debt portfolio has been reduced by approximately $5 million, excluding the principal paydowns of $10 million on the Drawbridge Loan. The latest debt payoff occurred on April 1, 2022, the Company repaid the $500,000 loan from MNB Capital Group, which had a maturity date of December 16, 2022.

Convertible Notes 2020-2021

Between August 2020 and November 2021, MTI issued unsecured convertible notes totaling $23,192,500. The unsecured convertible notes bore interest at 15% and included warrants to acquire shares of common stock based on a specified formula. Interest was accrued in arrears until the last business day of each calendar year quarter. The default rate on the note would increase to 20% if quarterly interest payments are not timely made by MTI.

Because the market price for MTI common stock on the date of the notes exceeded the notes’ conversion price of $0.6877 per share, a beneficial conversion feature in the amount of $10,613,630 was recorded as a discount on the notes. The discount is being amortized as additional interest over the life of the notes. At June 30, 2021, the discount was fully amortized.

Company management evaluated the conversion features embedded in the convertible notes for classification and accounting under the provisions of ASC 815-40 and determined the conversion features met treatment as equity.

NOTE 6 – FAIR VALUE MEASUREMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following three levels:

Level 1: Observable inputs such as unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date.

Level 2: Inputs (other than quoted prices included in Level 1) that are either directly or indirectly observable for the asset or liability. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Table of Contents

Non-Financial Assets Measured at Fair Value on a Non-Recurring Basis

Non-financial assets, such as property, equipment and leasehold improvements is required to be measured at fair value only when acquired or when an impairment loss is recognized. See “Note 12 - Property, Equipment and Leasehold Improvements, Net” for further information on impairment of fixed assets.

Financial Liabilities Measured at Fair Value on a Recurring Basis

As of June 30, 2022, the Company has an insufficient number of authorized shares available for issuance for the conversion of Series C Preferred Stock and any remaining associated warrants for common stock. Therefore, these financial instruments meet the definition of a derivative until MAI stockholders approve the increase in authorized common and preferred shares. The MAI Board of Directors approve this measure on July 26, 2022. The remaining Series C preferred stock and warrants are valued using the Black Scholes option valuation model. The estimated fair value of the Common Stock warrants was $1,233,025. the Company also recognized a liability to issue shares related to convertible preferred stock, which was $6,394,543.

On July 26, 2022, an increase in the Company’s authorized number of shares was approved and the Company filed the Certificate of Amendment to the Company’s Certificate of Incorporation with the Delaware Secretary of State accordingly. Refer to Note 19, Subsequent Events for further details.

The fair value of the warrants and other convertible instruments includes inputs that are not observable in the market and thus represents a Level III financial liability. The assumptions used that represent management’s best estimates of the fair value of the Company’s warrants and other convertible instruments issued and outstanding were as follows:


	June 30, 2022
Expected term (in years)		4.75 - 9.97
Volatility		152	%
Dividend yield		0.00	%
Risk-free interest rate		2.98 - 3.01	%
Exercise price	$	8.834

Financial Liabilities Measured at Fair Value on a Non-Recurring Basis

The Company must estimate the fair value of the Series E Preferred Stock commitment from the Drawbridge-DBI transaction. Based on the Option Pricing Model and the implied equity value as of June 17, 2022, we determined the fair value of the Series E option to be $23,085,886. The fair value of the Series E option includes inputs that are not observable in the market and thus represents a Level III financial liability. The assumptions used that represent management’s best estimates of the fair value of the Series E option were as follows:


Unobservable Inputs	June 17, 2022
Expected term (in years)		5.0
Volatility		151.8	%
Annual Rate of Quarterly Dividends		—	%
Discount Rate - Bond Equivalent Yield		3.34	%
Stock Price	$	1.52
Conversion Price	$	1.32

Financial instruments for which carrying value approximates fair value

Certain financial instruments that are not carried at fair value on the condensed consolidated balance sheets are carried at amounts that approximate fair value, due to their short-term nature and credit risk. These instruments include cash and cash equivalents, accounts payable, accrued liabilities, and debt. We believe that the carrying value of term debt

Table of Contents

approximates fair value due to the variable rates associated with these obligations. Accounts payable are short-term in nature and generally terms are due upon receipt or within 30 to 90 days.

NOTE 7 – STOCKHOLDERS’ EQUITY

The accompanying financial statements include a retrospective recapitalization to reflect the composition of stockholder’s equity, as if they had existed for the periods presented.

Preferred Stock

On November 5, 2021, we filed an Amended and Restated Articles of Incorporation which included the rights and privileges of Preferred Stock Series A, Series B, and Series C. Under the terms of our Articles of Incorporation, the Board of Directors may determine the rights, preferences and terms of our authorized but unissued shares of preferred stock. At June 30, 2022, the Company had 58,000,000 shares of Preferred Stock authorized with $0.001 par value per share. There were zero and 5,667,683 shares of Preferred Stock issued and outstanding at June 30, 2022 and September 30, 2021, respectively.

Dividends

The holders of Preferred Stock are entitled to non-cumulative dividends if declared by the Board of Directors. The holders of the Preferred Stock Series A and Series B shall participate on a pro rata basis (on an “as converted” basis to common stock) in any cash dividend paid on common stock. No dividends have been declared or paid during the three and nine months ended June 30, 2022 and 2021.

The Series C Preferred Stock bears a cumulative 15.0% per annum fixed dividend payable no later than the 5^th day after the end of each month on the Series C Original Issue Price plus unpaid accrued and accumulated dividends. Dividends on the Series C Preferred Stock are payable prior to any dividends on any other series of Preferred Stock or the Common Stock.

The Company may elect to pay dividends for any month with a paid-in-kind election (“PIK”) if (i) the shares issuable further to the PIK are subject to an effective registration statement, (ii) the Company is then in compliance with all listing requirements of NASDAQ and (iii) the average daily trading dollar volume of the Company’s Common Stock for 10 trading days in any period of 20 consecutive trading days on the NASDAQ is equal to or greater than $2.0 million. There is no mandatory redemption date, but, subject to the conditions set forth below, all, but not less than all, of the shares are redeemable by the Company at any time, provided that if the Company issues notice to redeem, holders of Series C Preferred shall have 15 days to convert such shares to Common Stock prior to the date of redemption.

In addition to the above, the shares are also redeemable by the Company in accordance with the following schedule provided the issuance of shares of Common Stock underlying the shares has been registered and the registration statement remains effective:

Year 1: No Redemption

Year 2: Redemption at 120% of the Series C Redemption Price

Year 3: Redemption at 115% of the Series C Redemption Price

Year 4: Redemption at 110% of the Series C Redemption Price

Year 5: Redemption at 105% of the Series C Redemption Price

Year 6 and thereafter: Redemption at 100% of the Series C Redemption Price

Table of Contents

Liquidation

Based on a reverse ratio of one share of the Company for 12.8485 shares of Mullen Technologies (the “Reverse Ratio”): (i) the liquidation preference for the Series A Preferred to $1.29 per share from $0.10 per share as set forth in Section 2(c) of Article III(B) of the Certificate, and (ii) the “Series B Original Issue Price” of the Series B Preferred and the “Series C Original Issue Price” of the Series C Preferred to $8.84 per share from $0.6877 per share as set forth in Section 2(a) and Section 2(b), respectively, of Article III(B) of the Certificate.

Subject to applicable law, in the event of any Liquidation Event, the holders of the Series B Preferred will be entitled to receive, prior and in preference to any distribution of the proceeds to the holders of the other series of Preferred Stock or the Common Stock by reason of their ownership thereof, an amount per share equal to the Series B Original Issue Price plus declared but unpaid dividends. The holders of the Series C Preferred will then be entitled to receive, prior and in preference to any distribution of the proceeds to the holders of the Series A Preferred or the Common Stock by reason of their ownership thereof, an amount per share equal to the Series C Original Issue Price plus declared but unpaid dividends. Thereafter, any remaining proceeds will be distributed to holders of the Series A Preferred and Common Stock ratably in proportion to the number of shares of the Series A Preferred and Common Stock held by them, on a fully converted basis.

Conversion

Preferred Stock Series A is convertible at any time at the option of the holder into Common Stock at a conversion rate of one for one hundred basis with common shares of at any time after the date of issuance of such shares into such number of fully paid and non-accessible shares of Common Stock. Preferred Stock Series B and Preferred Stock Series C are convertible at any time at the option of the holder into Common Stock at a conversion rate of one for one basis with common shares at any time after the date of issuance of such shares into such number of fully paid and non-accessible shares of Common Stock.

Additionally, all outstanding shares of the Preferred Stock shall automatically convert into shares of the underlying Common Stock upon the Company’s sale of its Common Stock in a firm commitment underwritten public offering pursuant to a registration statement under the Securities Act, the public offering price of which results in aggregate cash proceeds to the Company of not less than $50 million, net of underwriting discounts and commissions (a “Qualified IPO”).

Voting Rights

The holders of shares of Common Stock and Preferred Stock shall at all times vote together as a single class on all matters (including the election of directors) submitted to a vote of the stockholders; provided, however, that, any proposal which adversely affects the rights, preferences and privileges of the Series A Preferred, Series B Preferred, or Series C Preferred, as applicable, must be approved by a majority in interest of the affected Series of Preferred Stock, as the case may be. Each holder of Common Stock, Series B Preferred and Series C Preferred to have the right to one vote per share (on a fully converted basis) held of record by such holder and each holder of Series A Preferred have the right to 1,000 votes per share (on a fully converted basis) held of record by such holder.

Common Stock

At June 30, 2022, the Company had 500,000,000 shares of common stock authorized with $0.001 par value per share. There were 498,694,481 and 7,048,387 shares of common stock issued and outstanding at June 30, 2022 and September 30, 2021, respectively.

Table of Contents

The holders of Common Stock are entitled to one vote for each share of Common Stock held at all meetings of stockholders. In the event of a liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, the common stockholders are entitled to receive the remaining assets following distribution of liquidation preferences, if any, to the holders of our preferred stock. The holders of common stock are not entitled to receive dividends unless declared by our Board of Directors. To date, no dividends were declared or paid to the holders of common stock.

Warrants

The Company issued pre-merger Warrants at an initial exercise price of $0.6877 per share, which were immediately exercisable and have a five-year term. The exercise price was adjusted as provided in the warrants and further in accordance with the Merger Agreement such that the exercise price is now $8.834 per share. The Warrants were exercisable for an aggregate of 1,579,631 shares of Common Stock as of June 30, 2022.

The Warrants provide that if the Company issues or sells, enters into a definitive, binding agreement pursuant to which he Company is required to issue or sell or is deemed, pursuant to the provisions of the Warrants, to have issued or sold, any shares of Common Stock for a price per share lower than the exercise price then in effect (a “Dilutive Issuance”), subject to certain limited exceptions, then the exercise price of the Warrants shall be reduced to such lower price per share. In addition, the exercise price and the number of shares of Common Stock issuable upon exercise of the Warrants are subject to adjustment in connection with stock splits, dividends or distributions or other similar transactions.

The following table summarizes warrant activity for the nine months ended June 30, 2022:


		Weighted Average
	MAI shares	Exercise Price
Warrants outstanding at September 30, 2021	4,924,447	$	8.834
Warrants exercised	(28,420,265)	$	8.834
Warrants granted	25,075,449	$	8.834
Warrants expired	—	$	—
Warrants outstanding at June 30, 2022	1,579,631	$	8.834

2020-2021 Warrants

The warrants are exercisable for a five-year period commencing upon issuance. The estimated fair value of the MAI warrants was valued using the Black-Scholes option valuation model. The assumptions used that represent management’s best estimates of the fair value of the Company’s warrants issued and outstanding were as follows:


	June 30, 2022
Expected term (in years)		5.0
Volatility		135	%
Dividend yield		0.00	%
Risk-free interest rate		0.98% - 1.17	%
Common stock price	$	4.16

The allocation of the fair value of these warrants was included as a debt discount on the consolidated balance sheet and amortized to interest expense over the scheduled maturity dates of the various promissory notes. All unamortized debt discount was charged to interest at the time of merger on November 5, 2021.

Registration Rights and Registration Statement Form S-3

At the effective time of the Merger, various agreements that Mullen Technologies entered into were assumed by the Company, including the Exchange Agreement, the $20 Million SPA and the Registration Rights Agreement. These agreements caused the Company to be obligated to file one or more registration statements to register the resale of our Common Stock.

Table of Contents

On April 15, 2022, the Securities and Exchange Commission (“SEC”) deemed the Registration Statement Form S-3 (File No. 333-263880) effective. The Company registered the resale of Conversion Shares and the Warrant Shares as required by that certain Registration Rights Agreement, entered into among Mullen Technologies, Inc (“Mullen Technologies”) and certain of the Selling Stockholders (the “Registration Rights Agreement”) and that certain Exchange Agreement, entered into among Mullen Technologies and certain of the Selling Stockholders (the “Exchange Agreement”). The Offered Shares consisted solely of 51,622,489 shares of our Common Stock, 4,969,357 shares of our Common Stock (the “Conversion Shares”) issuable upon conversion of our preferred stock, and up to 196,517,186 shares of our Common Stock (the “Warrant Shares”) issuable upon exercise of outstanding warrants to purchase shares of our Common Stock.

Equity Transactions

$30 Million Esousa Equity Line of Credit

On September 1, 2021, Mullen Technologies and Esousa Holdings LLC (“Esousa”) entered into a Securities Purchase Agreement (the “Equity Line of Credit”) whereby the Esousa Holdings, LLC committed to purchase shares up to an aggregate of $30,000,000. At the effective time of the Merger, the obligations under the Equity Line of Credit were assumed by the Company.

As a condition to the obligation of the investor to fund the Equity Line of Credit, the Company was required to file a registration statement with the SEC covering the sale of the Common Stock issued under the Equity Line of Credit and such registration statement must be declared effective. The Registration Statement was filed on February 1, 2022 and was declared effective on February 3, 2022.

As of June 30, 2022, MAI has received net proceeds of approximately $29.6 million from the Equity Line of Credit and Esousa has received 54,811,504 shares of common stock.

NOTE 8 – LOSS PER SHARE

Earnings per common share (“EPS”) is computed by dividing net income allocated to common stockholders by the weighted-average common shares outstanding, excluding unvested common shares subject to repurchase or cancellation. Diluted EPS is computed by dividing income allocated to common stockholders plus dividends on dilutive convertible preferred stock and preferred stock that can be tendered to exercise warrants, by the weighted-average common shares outstanding plus amounts representing the dilutive effect of outstanding warrants and the dilution resulting from the conversion of convertible preferred stock, if applicable.

For the three and nine months ended June 30, 2022 and 2021, the convertible debt and shares of Preferred Stock were excluded from the diluted share count because the result would have been antidilutive under the “if-converted method.” The warrants to purchases common shares of stock also were excluded from the computation because the result would have been antidilutive.

The following table presents the reconciliation of net income attributable to common stockholders to net income used in computing basic and diluted net income per share of common stock:


	Three months ended June 30,				Nine months ended June 30,
	2022		2021		2022		2021
Net income attributable to common stockholders	$	(59,471,560)	$	(15,251,402)	$	(128,508,884)	$	(29,545,621)
Less: Accumulated Preferred Stock Dividends		(2,285,792)		—		(4,805,740)		-
Net income used in computing basic net income per share of common stock	$	(61,757,352)	$	(15,251,402)	$	(133,314,624)	$	(29,545,621)

Table of Contents

NOTE 9 – MAI SHARE- BASED COMPENSATION

MAI has a share incentive plan as part of its annual discretionary share-based compensation programs. The plan includes consultants and employees, including directors and officers. For employees, they are notified of company share incentives during the onboarding process. The employee’s offer letter briefly describes the plan. Subject to the approval of MAI’s Board of Directors or its Compensation Committee and following the adoption of an equity incentive plan, employees are issued a specified number of shares of the MAI Common Shares. Employees are vested in 100% of the MAI shares after 12 months of continuous service. Additional MTI shares may be issued to employees over the next two years at anniversary date. Any disruption or separation of service results in the forfeiture of common shares. The total expense recognized for share awards represents the grant date fair value of such awards, which is generally recognized as a charge to income ratably over the vesting period. Since Mullen Automotive is a publicly reporting company, the employee shares are valued each month, using the MULN closing stock price on the NASDAQ CM.

Consulting agreements or MAI shares for services are determined by the number of MAI shares granted within the individual contracts, as well as the services provided by the consultant. The MAI shares specified within the individual agreements are negotiated and approved by our Chief Executive Officer. The consultant earns the MAI shares over the service period. The MAI shares are accounted for as professional fees within G&A expenses. Employee share issuances are part of Salaries expense. The expense recognized for share awards represents the grant date fair value of such awards, which is generally recognized as a charge to income ratably over the vesting period.


	For the three months ended June 30,				For the nine months ended June 30,
Composition of Stock-Based Compensation Expense	2022		2021		2022		2021
Employee MAI share issuance	$	1,721,434	$	1,091,554	$	5,014,421	$	2,024,426
MAI shares for services		3,381,301		440,650		27,423,361		1,731,779
MAI Share-Based compensation expense	$	5,102,735	$	1,532,204	$	32,437,782	$	3,756,205

NOTE 10 – ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES


	June 30, 2022		September 30, 2021
Accrued Expenses and Other Liabilities
Accrued expense - other	$	5,618,811	$	2,051,696
Accrued payroll		3,576,061		4,586,057
Accrued interest		4,716,469		12,489,012
Total	$	13,911,341	$	19,126,765

Accrued payroll represents salaries and benefits that are owed to employees, including payroll tax liabilities. Accrued interest relates to finance charges on debt financing, including $3,495,000 payable due to insufficient shares being available for conversion, and represents interest on loans, and convertible notes payable throughout 2021. See Note 5, Debt. Accrued expense – other includes $4,805,739 in accrued accumulated preferred stock dividends.

NOTE 11 – NOTE RECEIVABLE

On October 8, 2021, MAI (through MTI) and CEOcast, Inc. entered into an agreement, whereby CEOcast, Inc. irrevocably committed to purchase, and MAI irrevocably committed to sell $15 million in warrants to acquire shares of common stock.

In late April and early May 2022, MAI received $15 million in three $5 million cash increments from CEOcast, Inc. In return, CEOcast, Inc. received warrants to acquire shares of common stock. As of this June 30, 2022, CEOcast, Inc. has exercised its warrants for 14,343,550 MAI common shares.

Table of Contents

NOTE 12 – LIABILITY TO ISSUE STOCK

Liability represents stock payable that is accrued for and issuable at a future date for certain convertible securities and warrants and was $14,118,227 as of June 30, 2022. The liability to issue stock to consultants and employees as compensation and was zero and $7,027,500 as of June 30, 2022 and September 30, 2021, respectively.

NOTE 13 – PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET

Property, equipment, and leasehold improvements, net consists of the following:


	June 30,		September 30,
	2022		2021
Building	$	8,078,757	$	804,654
Furniture and Equipment		490,823		111,102
Vehicles		45,887		45,887
Computer Hardware and Software		350,083		139,742
Machinery and Equipment		6,929,731		2,597,654
Construction-in-progress		280,844		—
Leasehold Improvements		40,096		66,379
Subtotal		16,216,221		3,765,418
Less: Accumulated Depreciation		(2,773,150)		(2,583,941)
Property, Equipment and Leasehold Improvements, Net	$	13,443,071	$	1,181,477

Depreciation expense related to property, equipment and leasehold improvements for the three-and-nine months ended June 30, 2022 was $86,598 and $251,780, and was $109,058 and $320,525 for the three and nine months ended June 30, 2021, respectively.

On November 12, 2021, Mullen Investment Properties, LLC, MAI real estate wholly owned subsidiary, completed the $12,000,000 purchase of the Tunica County, MS property ("Advanced Manufacturing and Engineering Center" or "AMEC"). The property is located at 1 Greentech Drive, in the City of Robinsonville, MS. AMEC will be used to class 1 and class 2 EV cargo vans and the Mullen FIVE Crossover. The facility currently occupies 124,000 square feet of manufacturing space. The total available land on the property is over 100 acres. On the expanded site, Mullen plans to build a body shop, fully automated paint shop and a general assembly shop. Construction-in-progress includes development and construction that is currently in progress at the AMEX facility.

NOTE 14 – OTHER ASSETS

Other assets consist of the following:


	June 30, 2022		September 30, 2021
Other Assets
Coda Materials	$	76,588	$	76,587
Show Room Cars		3,349,545		2,739,995
Security Deposits		186,641		186,640
Deposit on Property (See Note 16)		—		1,240,000
Total Other Assets	$	3,612,774	$	4,243,222

Table of Contents

NOTE 15 – OPERATING EXPENSES

General and Administrative Expenses consists of the following:


	Three months ended June 30,				Nine months ended June 30,
	2022		2021		2022		2021
Professional fees	$	4,908,855	$	1,458,969	$	31,773,409	$	4,858,544
Salaries		3,177,790		2,125,097		10,556,783		4,359,245
Depreciation and amortization		308,297		114,991		918,855		338,321
Lease		474,032		513,169		1,493,150		1,248,573
Settlements and penalties		169,607		57,017		1,054,439		136,515
Employee benefits		639,779		82,092		1,552,939		253,638
Utilities and office expense		202,652		99,475		428,565		239,709
Advertising and promotions		644,423		17,104		3,570,016		270,320
Taxes and licenses		8,805		33,744		25,926		45,248
Repairs and maintenance		167,173		66,501		246,875		166,836
Other		195,387		357,995		1,446,359		638,623
Total	$	10,896,800	$	4,926,154	$	53,067,316	$	12,555,572

Research and development consist of the following:


	Three months ended June 30,				Nine months ended June 30,
	2022		2021		2022		2021
Research & Development
Professional fees	$	7,324,365	$	1,479,399	$	9,665,126	$	2,535,693
Total	$	7,324,365	$	1,479,399	$	9,665,126	$	2,535,693

Research and development costs are expensed as incurred. Research and development expenses primarily consist of Mullen Five EV and Mullen One EV cargo van development and are primarily comprised of engineering, homologation, and prototyping costs and personnel-related costs for employees and consultants.

Table of Contents

NOTE 16 – LEASES

MTI (now assumed by MAI due to the merger) has entered into various operating lease agreements for certain of its offices, manufacturing and warehouse facilities, and corporate jet. We have implemented the provisions of ASC 842, on October 1, 2019. Operating leases are included in right-of-use assets, and current and noncurrent portion of lease liabilities, as appropriate. These right-of-use assets also includes any lease payments made and initial direct costs incurred at lease commencement and excludes lease incentives. The lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. We have lease agreements which require payments for both lease and non-lease components and has elected to account for these as a single lease component. Certain leases provide for annual increases to lease payment based on an index or rate. We calculate the present value of future lease payments based on the index or at the lease commencement date for new leases.

The table below presents information regarding our lease assets and liabilities.


	June 30, 2022			September 30, 2021
Assets:
Operating lease right-of-use assets	$	1,939,829		$	2,350,929
Liabilities:
Operating lease liabilities, current		(680,185)			(599,898)
Operating lease liabilities, non-current		(1,334,518)			(1,857,894)
Total lease liabilities	$	(2,014,703)		$	(2,457,792)
Weighted average remaining lease terms:
Operating leases		2.75 years			3.34 years
Weighted average discount rate:
Operating leases		28	%		28	%


Operating lease costs:	For the three months ended June 30,				For the nine months ended June 30,
	2022		2021		2022		2021
Fixed lease cost	$	327,409	$	280,169	$	1,066,680	$	765,409
Variable lease cost		158,399		126,218		418,999		362,817
Short-term lease cost		34,473		127,795		160,250		183,386
Sublease income		(46,144)		(21,013)		(152,431)		(63,039)
Total operating lease costs	$	474,137	$	513,169	$	1,493,498	$	1,248,573

Operating Lease Commitments

Our leases primarily consist of land, land and building, or equipment leases. Our lease obligations are based upon contractual minimum rates. Most leases provide that we pay taxes, maintenance, insurance and operating expenses applicable to the premises. The initial term for most real property leases is typically 1 to 3 years, with renewal options of 1 to 5 years, and may include rent escalation clauses. For financing obligations, a portion of the periodic lease payments is recognized as interest expense and the remainder reduces the obligations. For operating leases, rent is recognized on a straight-line basis over the lease term, including scheduled rent increases and rent holidays.

Table of Contents

The following table reflects maturities of operating lease liabilities at June 30, 2022:


Years ending
June 30,
2022 (3 months)	$	294,069
2023		1,157,693
2024		824,287
2025		436,156
2026		222,787
Thereafter		—
Total lease payments	$	2,934,992
Less: Imputed interest		(920,289)
Present value of lease liabilities	$	2,014,703

NOTE 17 – CONTINGENCIES AND CLAIMS

ASC 450 governs the disclosure and recognition of loss contingencies, including potential losses from litigation, regulatory, tax and other matters. The accounting standard defines a “loss contingency” as “an existing condition, situation, or set of circumstances involving uncertainty as to possible loss to an entity that will ultimately be resolved when one or more future events occur or fail to occur.” ASC 450 requires accrual for a loss contingency when it is “probable that one or more future events will occur confirming the fact of loss” and “the amount of the loss can be reasonably estimated.”

From time to time, we are subject to asserted and actual claims and lawsuits arising in the ordinary course of business. Company management reviews any such legal proceedings and claims on an ongoing basis and follows appropriate accounting guidance when making accrual and disclosure decisions. We establish accruals for those contingencies where the incurrence of a loss is probable and can be reasonably estimated, and it discloses the amount accrued and the amount of a reasonably possible loss in excess of the amount accrued, if such disclosure is necessary for our consolidated financial statements to not be misleading. To estimate whether a loss contingency should be accrued by a charge to income, management evaluates, among other factors, the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of the loss. We do not record liabilities when the likelihood is probable, but the amount cannot be reasonably estimated.

Series D Preferred Stock Commitment

On June 7, 2022, we entered into a securities purchase agreement, which was amended on June 23, 2022 (the “Securities Purchase Agreement”), with certain investors, pursuant to which upon the terms and subject to the conditions contained therein and solely upon the request of the Company, the investors will be required to purchase an aggregate of $275 million (the “Commitment Amount”) of the Company’s yet to be created Series D Preferred Stock, par value $0.001 per share (the “Series D Preferred Stock”), and five-year warrants exercisable for shares of Common Stock (the “Warrants”). The number of Warrants that may be issued will equal 110% of the shares of Series D Preferred Stock purchased by the investors. The purchase price per share of Series D Preferred Stock will be the lower of (i) $1.27, the closing price of the Company’s stock on the date the Securities Purchase Agreement was executed, or (ii) the closing price of the Common Stock on the trading day immediately preceding the Purchase Date (as defined below), subject to a floor price of $0.10 per share.

Series E Preferred Stock Purchase Option

On June 17, 2022, we entered into a Series E Preferred Stock Purchase Option with Drawbridge to purchase up to $25 million worth of MAI shares. The purchase price per share of Series E Preferred Stock will be the lower of (x) the closing market price of the Company’s common stock on the effective date of the Option Agreement for the Series E Preferred Stock and (y) the closing market price of the Company’s common stock on the date shares of Series E Preferred Stock are issued by the Company in accordance with the terms of the Option Agreement. Shares of Series E Preferred Stock will be convertible into shares of the Company’s common stock on a 1-to-1 basis, subject to adjustment for stock splits and other

Table of Contents

events. Shares of Series E Preferred Stock may be purchased in one or more transactions with a minimum of $5,000,000 per purchase, until December 31, 2024, at which point the Series E Purchase Option shall expire. The Company will be obligated to file a registration statement for the resale of the Company’s common stock issuable upon conversion of shares of Series E Preferred Stock and shall use reasonable best efforts to obtain and maintain the effectiveness of such registration statement during the term of the Option Agreement.

In connection with the exercise of the Series E Purchase Option, Drawbridge will receive warrants to purchase three shares of common stock (“Common Stock Warrants”) for each share of Series E Preferred Stock purchased. The Common Stock Warrants will have terms and conditions similar to those warrants included in the purchase of the Company’s Series D Preferred Stock. The Common Stock Warrants will have a term of five years from the date of grant and an exercise price equal to the applicable purchase price for the shares of Series E Preferred Stock. The Common Stock Warrants will also permit cashless exercise to be calculated as a function of the warrant’s Black-Scholes value plus an additional $1.25 per warrant exercised.

International Business Machines (“IBM”)

We previously recorded a $4.5 million liability associated with a lawsuit with IBM, in which IBM contended that we had not fulfilled our obligations pursuant to a contract entered into during 2017. On April 28, 2020, the Supreme Court of the State of New York granted summary judgment in favor of IBM’s claim for breach of contract. The Court, however, found that a trial (inquest) was required to determine the damages to which IBM is entitled. We proposed an offer in settlement to resolve the matter, with the parties proceeding under the Joint Development and Technology License Agreement and all rights restored to us under the Trademark License Agreement. On December 1, 2021, the Supreme Court of the State of New York entered a judgment of $5.6 million to IBM. On December 2, 2021, we filed a Notice of Appeal. As a result, we recorded an additional charge, increasing the liability to the adjudicated amount.

In May 2022, we transferred $5.6 million cash to a surety bond to cover this liability while our appeal is in process.

Federal and State Tax Liabilities

We have recorded a liability associated with past due amounts owed to the Internal Revenue Service (“IRS”) and the Employment Development Department of California (“EDD”) for failing to remit payroll taxes associated with MTI and the Company’s employees. As of June 30, 2022, we had an accrued liability of $0.3 million of accrued payroll taxes related to EDD liabilities. This was subsequently paid off in full during July 2022.

On April 14, 2022, the Company entered into an instalment with the IRS to pay $45,000 per month related to unpaid federal payroll liabilities plus accrued interest and penalties. As of June 30, 2022 we had an accrued liability of $2.6 million of accrued payroll taxes related to IRS liabilities.

Raymond James and Associates (“RJA”) – Investment Banking Services Agreement

On May 5, 2020, MTI entered into an agreement with Raymond James & Associates for public offering and placement agent services. The agreement called for payment of a cash retainer of $50,000, which remains unpaid. Upon the closing of any public offering, regardless of whether RJA procured the agreement regarding the offering, we are obligated to pay a financing fee of equal to the greater of a) 6.0% of aggregate gross proceeds and b) $3,000,000.

Linghang Guochang Holding Group Co. (a/k/a “Linghang Boao Group, LTD”)

In November 2019, we entered into a three-year Strategic Cooperation Agreement (“SCA”) with Linghang Boao Group LTD to co-develop a Solid- State Battery Management system with a 480 - 720-mile Driving Range. The Company’s total financial commitment under the SCA is $2,196,000. On December 3, 2019, we paid the first installment of $390,000. The remaining installments are payable upon the earlier of certain dates or the achievement of defined milestones.

The contractual target dates and milestones have been severely disrupted due to the occurrence COVID-19. As a result, our management believes the COVID-19 pandemic represents a Force Majeure event (that is, the pandemic has impacted

Table of Contents

our and Linghang Boao Group LTD’s ability to meet their respective contractual obligations due to restriction in movement, stoppage of production, increase in costs due to scarcity of raw materials components, labor shortages, shortage of funds, disruption in the supply chains, U.S. governmental closures of ports/borders and travel restrictions). Based on the foregoing, we believe there is no breach of contract due to our failure of performance. We sustained a loss of $390,000 at September 30, 2020 due to contract nonperformance and force majeure. There are no accrued liabilities recorded for any remaining milestone payments at June 30, 2022.

On May 12, 2022, the Company received official notification that the 2019 contractual arrangement will resume under the original contractual terms. They acknowledge that the COVID-19 pandemic had delayed the original plan, and Linghang Boao Group LTD looks forward to resuming the battery partnership with Mullen Automotive.

ASC GEM Equity Line Financing

This claim arises out an alleged breached Securities Purchase Agreement dated November 13, 2020. On November 9, 2021, the parties appointed an arbitrator. On January 7, 2022, GEM filed a letter brief with the arbitrator requesting leave to file a dispositive motion addressing a threshold legal issue regarding a defined term within a contract executed by the parties. Mullen filed a response to the letter brief on January 12, 2022.

On January 21, 2022, the arbitrator issued a procedural order granting GEM’s request to file a dispositive motion. GEM filed its dispositive motion is on February 14, 2022. Mullen’s filed its opposition to the dispositive motion on March 3, 2022. On April 4, 2022, the court denied GEM’s dispositive motion. The parties exchanged discovery requests on May 10, 2022. Responses were served on June 14, 2022. The follow up hearing with the arbitrator set for June 22, 2022 was adjourned. The parties recently served amended responses along with supplemental document productions on August 2, 2022 as required by the arbitrator at the July 27, 2022 hearing related to ongoing discovery issues. The parties expect a ruling from the arbitrator regarding same shortly. All party depositions have been scheduled.

Odyssey Group Settlement

On August 13, 2021, MTI and Odyssey Group reached a settlement concerning disputes and differences that arose from collections on invoices and liens pending pursuant to Odyssey’s Client Account and the Odyssey Group Consulting Agreement. Odyssey alleged that the MTI owed $503,637 at June 30, 2021. The parties agreed that Odyssey would receive $50,000 and 500,000 shares of MTI common stock (pre-merger). Additionally, Odyssey will receive an equivalent of $10,000 in cash or common stock from MAI. The obligation to pay Odyssey may be terminated upon 30-days’ notice by either party. A release of liability for the amounts owed on the Consulting arrangement was signed and executed on the settlement date. The Company has issued Odyssey the 500,000 common shares worth $1.25 million and paid $50,000 in cash and common stock. The $10,000 in cash or common stock provision has not been terminated by either party. Odyssey/Adam Grill’s contract was terminated on March 31st and the last effective date of the Consulting Contract was April 30, 2022.

TOA Trading LLC Litigation

This claim arises out of an alleged breach of contract related to an unpaid finder’s fee. On April 11, 2022, Plaintiffs TOA Trading LLC and Munshibari LLC filed a complaint against Mullen Automotive, Inc. and Mullen Technologies, Inc. in the United States District Court for the Southern District of Florida. On May 18, 2022, the Company filed a Motion to Dismiss or in the Alternative, Transfer Venue. Plaintiffs filed their opposition on June 3, 2022. The Company filed its reply on June 8, 2022. The court has taken the motions under submission. The Company expects a ruling in two-to-three months.

Based upon information presently known to management, the Company believes that the potential liability from this claim, if any, will not have a material adverse effect on its financial condition, cash flows or results of operations. Therefore, no liability has been reflected on the condensed consolidated financial statements.

Table of Contents

Net Element Stockholder Litigation

On May 28, 2021, a Net Element stockholder filed a complaint against Net Element and Mullen Acquisition, Inc., and certain named individuals regarding the proposed merger transaction. The complaint alleges, among other things, a potential dilution of the value of Net Elements stock and a failure to act in a fiduciary duty to its stakeholders. On September 3, 2021, a Net Element stockholder filed a lawsuit against Net Element, Mullen Technologies, Inc. and Mullen Acquisition, Inc., and certain individuals regarding the proposed merger agreement. The lawsuit alleges material omissions regarding the merger transaction and seeks to prevent the consummation of the merger agreement, as well as certain other equitable relief.

Based upon information presently known to management, the Company believes that the potential liability from the May 2021 complaint and September 2021 lawsuit, if any, will not have a material adverse effect on its financial condition, cash flows or results of operations. Therefore, no liability has been reflected on the condensed consolidated financial statements.

Mullen Stockholder Litigation

Margaret Schaub v. Mullen Automotive, Inc.

On May 5, 2022, Plaintiff Margaret Schaub filed a complaint against Mullen Automotive, Inc. f/k/a Net Element, Inc, David Michery, and Oleg Firer in the United States District Court Central District of California on (Case No. 2:22-cv-03026). The complaint alleges violation of section 10(b) of the Exchange Act and Rule 10b-5 against all defendants and violation of section 20(a) of the Exchange Act arising out of claims made in the Hindenburg article. On June 16, 2022, the Company’s insurance company (AXIS) accepted coverage for this lawsuit. The Company engaged King & Spaulding as defense counsel.

On July 5, 2022, movants Duy Nguyen, Mejgan Mirbaz, and David Reed filed motions to consolidate this matter and the Gru matter (see below) into once case and for appointment of lead plaintiff/lead counsel. Subsequently, Plaintiff Nguyen withdrew his motion and Plaintiff Reed filed notice that he did not oppose Plaintiff Mirbaz’ motion. On August 4, 2022, the court granted Plaintiff Mirbaz’ unopposed motion to consolidate the case and for appointment as lead plaintiff/counsel. The court further vacated the August 5, 2022, hearing on the motions to consolidate.

The Company was served with the complaint on August 1, 2022. Its response is due filed on or before August 22, 2022.

David Gru v. Mullen Automotive, Inc.

On May 12, 2022, Plaintiff David Gru filed a complaint against Mullen Automotive, Inc. f/k/a Net Element, Inc, David Michery, and Oleg Firer in the United States District Court Central District of California (Case No. 8:22-cv-976). The complaint alleges violation of section 10(b) of the Exchange Act and Rule 10b-5 against all defendants and violation of section 20(a) of the Exchange Act arising out of claims made in the Hindenburg article. On June 16, 2022, the Company’s insurance company (AXIS) accepted coverage for this lawsuit. The Company has not been served with the complaint. The Company engaged King & Spaulding as defense counsel. On August 4, 2022, the court consolidated this action into the Schaub action (see above). As a result, the court ordered this matter to administratively closed.

Ram Hari Khadka v. Mullen Automotive, Inc.

This claim was filed on June 23, 2022 in the Court of the Chancery of the State of Delaware (Case No. Case No. 2022-0542) by Plaintiff Ram Hari Khadka against Mullen Automotive, Inc., David Michery, Jerry Alban, Kent Puckett, Mary Winter, Mark Betor, William Miltner, and Jonathan New . The matter arises out of an alleged breach of fiduciary duty related to a grant of performance equity awards to the Company’s Chief Executive Officer pursuant to a performance stock award agreement, which was recommended for approval by the Company’s Compensation Committee on April 29, 2022 and approved by its Board of Directors on May 5, 2022. The Company engaged McDermott Will & Emery LLP as defense counsel. The Company finalized and issued a supplemental disclosure to its June 10, 2022 proxy statement to its

Table of Contents

stockholders in advance of its July 26, 2022, annual meeting of stockholders. The supplemental disclosure provides additional information to stockholders regarding the performance stock award agreement.

On July 29, 2022, Plaintiff filed a notice and proposed order voluntarily dismissing the action and moot and retaining jurisdiction to determine Plaintiff's counsel's application for an award of attorney's fees and reimbursement of expenses. The order was entered by the court on August 5, 2022.

Jeff Witt v. Mullen Automotive, Inc.

On August 1, 2022, Plaintiffs Jeff Witt and Joseph Birbigalia, derivatively on behalf of nominal defendant Mullen Automotive, Inc. f/k/a Net Element, Inc. filed a derivative complaint on August 1, 2022 in the United States District Court Central District of California (Case No. Case No. 2:22-cv-05336) against David Michery, Ignacio Novoa, Mary Winter, Kent Puckett, Mark Betor, William Miltner, Jonathan New, Mullen Automotive, Inc. f/k/a Net Element, Inc.. The matter arises out of an alleged breach of fiduciary duty, unjust enrichment, abuse of control, waste of corporate assets, and violation of Section 14 of the Exchange Act related to claims made in the Hindenburg article. The lawsuit further alleges that all defendants caused the Company to issue the false and misleading statements that were outlined in the Hindenburg piece. The Company has engaged King & Spaulding as defense counsel. Once the Company has been served, it anticipates filing a motion to stay this matter pending the outcome of the Schaub matter.

On August 3, 2022, the Company reported this matter to its insurance carrier. The Company is awaiting a coverage determine from its carrier.

NOTE 18 – RELATED PARTY TRANSACTIONS

At June 30, 2022 and September 30, 2021, respectively, the Drawbridge Investments, LLC relationship comprised various loans and advances, common shares, and preferred shares. The Common and Preferred Shares presented are shares in MAI, since issued MTI shares were exchanged due to the merger.


Drawbridge Related Transactions
(Cumulative)	June 30, 2022					September 30, 2021
Description	Loan Principal		# of Shares	FV of Shares		Loan Principal		# of Shares	FV of Shares
Various Notes	$	—	—	$	—	$	23,831,554	—	$	—
Common Shares		—	13,931,103		14,209,725		—	8,130,384		66,994,364
Preferred Shares - Series A		—	—		—		—	2,335		3,012
Preferred Shares - Series B		—	—		—		—	5,567,319		49,215,100
Total Related Party Transactions	$	—	13,931,103	$	14,209,725	$	23,831,554	13,700,038	$	116,212,476

* Shares are MAI common and preferred shares.

Chief Executive Officer Loans to MAI

From time to time, the Company’s CEO provides loans to the Company. The outstanding balances for these loans were zero and $479,914 at June 30, 2022 and September 30, 2021. During the three and nine months ended June 30, 2022, the Company repaid the outstanding loan balances in full.

William Miltner

William Miltner is a litigation attorney who provides legal services to Mullen Technologies and its subsidiaries. Mr. Miltner also is an elected Director for MAI, beginning his term in August 2021. For the three and nine months ended June 30, 2022, Mr. Miltner received $178,640 and $804,120, respectively, for legal services rendered to us. Mr. Miltner has been providing legal services to the Company since 2020.

Table of Contents

Mary Winters

On October 26, 2021, MAI entered into a 1-year consulting agreement with Mary Winters, Corporate Secretary and Director, to compensate for Corporate Secretary Services and director responsibilities for the period from October 1, 2021 to September 30, 2022, in the amount of $60,000 annually or $5,000 per month. As of June 30, 2022, Ms. Winter has received $30,000 in consulting payments.

Short-Term Financing

On January 14, 2022, MAI executed a Letter of Intent (“LOI”) with Mark Betor, MAI Director, for a 90-day $1,000,000 loan. The loan was be evidenced by a Promissory Note with a maturity date for full repayment of loan no later than April 11, 2022. Total agreed repayment amount was $1,150,000, which included an interest charge of $150,000. Collateral included a first lien position 1 Greentech Drive, Tunica, MS. MAI Board of Directors approved transaction on January 18, 2022. Mr. Betor abstained from voting. On March 3, 2022 this loan was repaid in full.

Ignacio Novoa

On June 9, 2022, the board of directors of the Company appointed Ignacio Novoa as a director effective as of the Effective Date. The Company and Mr. Novoa entered into a 1-year Consulting Agreement, dated January 12, 2022, whereby Mr. Novoa provides electric vehicle market research, analysis of market trends in the electric vehicle industry and other research and services. Mr. Novoa was issued an aggregate of 255,500 shares of Common Stock pursuant to the terms of the Consulting Agreement. Other than as described above, Mr. Novoa does not have a direct or indirect material interest in any “related party” transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K. There are no family relationships between Mr. Novoa and any director or executive officer of the Company.

Jerry Alban

On June 7, 2022, Jerry Alban notified the Company that he will retiring effective June 30, 2022 (“Effective Date”). Accordingly, he will no longer be Chief Operating Officer or a member of the board of directors of the Company as of the Effective Date. Mr. Alban’s decision to retire was not the result of any dispute or disagreement with the Company on any matter relating to the Company’s operation, policies (including accounting or financial policies) or practices.

On June 27, 2022, the Company entered into a 1-year consulting agreement with Mr. Alban, who is expected to consult on organizational, financial, and operational matters concerning MAI. The agreement is $60,000 per annum with $5,000 monthly installments. The first payment begins on August 1, 2022 with successive payments due on the first day each month thereafter. On June 27, 2022, the Company and Mr. Alban also entered into an Employment Separation Agreement pursuant to which the Company agreed to pay Mr. Alban a single lump sum of $53,846.15 and issue to Mr. Alban 250,000 shares of common stock.

NOTE 19 – SUBSEQUENT EVENTS

Company management has evaluated subsequent events through August 12, 2022, which is the date these condensed consolidated financial statements were available to be issued. Except as discussed below, management has determined that there were no subsequent events which required recognition, adjustment to or disclosure in the carve-out financial statements:

Registered Filing

Registration Statement Form S-3

On August 5, 2022, the Company filed Registration Statement Form S-3. The Company registered the resale of Conversion Shares and the Warrant Shares as required by that certain Registration Rights Agreement, entered into among Mullen Technologies, Inc (“Mullen Technologies”) and certain of the Selling Stockholders and that certain Exchange Agreement, entered into among Mullen Technologies and certain of the Selling Stockholders. The Offered Shares consisted solely of

Table of Contents

4,533,353 shares of our Common Stock, 11,139,665 shares of our Common Stock issuable upon conversion of our preferred stock, and up to 508,394,030 shares of our Common Stock issuable upon exercise of outstanding warrants to purchase shares of our Common Stock”.

Annual Meeting of Stockholders

Authorized Increase in Common and Preferred Stock

On July 26, 2022, at the 2022 Annual Meeting, the Company’s stockholders approved an amendment (the “Amendment”) to Section A of Article III of the Company’s Second Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) to increase the Company’s number of shares of authorized common stock, par value $0.01 per share, from 500,000,000 shares to 1,750,000,000 shares and increase the number of shares of Preferred Stock that we are authorized to issue from 58,000,000 shares of Preferred Stock to 500,000,000 shares of Preferred Stock, with a corresponding increase in our total authorized capital stock, which includes Common Stock and Preferred Stock, from 558,000,000 shares to 2,250,000,000 shares.

On July 26, 2022, the Company filed the Certificate of Amendment to the Company’s Certificate of Incorporation with the Delaware Secretary of State implementing the Amendment.

Performance Stock Award Agreement

On May 5, 2022, the Company’s Board of Directors (1) determined that the grant of performance equity awards to the Chief Executive Officer (“CEO Performance Award”) pursuant to the Performance Stock Award Agreement (the “PSA Agreement”) was advisable and in the best interests of the Company and its stockholders and (2) approved entering into the PSA Agreement and the grant of the CEO Performance Award.

On July 26, 2022, at the 2022 Annual Meeting, the Company’s stockholders approved, for purposes of complying with Nasdaq Listing Rule 5635(c), of the issuance of shares of common stock to the Company’s Chief Executive Officer, David Michery, pursuant to the PSA Agreement. The CEO Performance Award represents the right of Mr. Michery to receive shares of common stock of the Company based on the achievement of milestones, subject to the terms and conditions set forth in the PSA Agreement.

2022 Equity Incentive Plan

On July 26, 2022, at the 2022 Annual Meeting of Stockholders (“2022 Annual Meeting”) of the Company, the Company’s stockholders approved the 2022 Equity Incentive Plan (the “2022 Plan”). Additional details about the 2022 Plan are set forth in the Company’s Definitive Proxy Statement on Schedule 14A, as filed with the SEC on June 24, 2022 and the Supplement to the Proxy Statement filed with the SEC on July 13, 2022.

The 2022 Plan provides for grants of stock options, stock appreciation rights , stock awards and restricted stock units, all of which are sometimes referred to individually, to employees, consultants, non-employee directors of the Company and its subsidiaries. Stock options may be either incentive stock options, as defined in Section 422 of the Internal Revenue Code, or non-qualified stock options. The 2022 Plan authorizes the grant of awards relating to up to 175,000,000 shares of the Company’s common stock.

Class 1 Directors

On July 26, 2022, the following individuals were elected as Class 1 Directors:

David Michery

Ignacio Novoa

Mary Winter

The nominees have been elected to serve as Class I director on the Board of Directors for a three-year term ending as of the annual meeting in 2025 or until their respective successors are elected and qualify.

Table of Contents

Ratification of Independent Auditor

MAI stockholders approved the appointment of Daszkal Bolton LLP as the independent registered public accounting firm of the Company for the fiscal year ending September 30, 2022.

Binding Agreement

Del Pack Logistics, LLC

On July 11, 2022, the Company signed a binding agreement (the “Agreement”) with DelPack Logistics, LLC (“DPL”), an Amazon Delivery Service Partner, for DPL to purchase up to 600 Mullen Class 2 EV cargo vans over the next 18 months.

Conditions to the Agreement between Mullen and DPL include the following:

•

DPL will place a purchase order for up to 600 Mullen Class 2 Electric Cargo Vans over the next 18 months

•

The 600 Class 2 EV Cargo Vans will be fully homologated for the United States

•

The first 300 fully homologated for the United States Mullen Class 2 EV Cargo Vans can be delivered to DPL

by Nov. 30, 2022, at the request of DPL

All Mullen Class 2 Electric Cargo Vans will be equipped with all airbags as required by United States standards and a cabin comfort package, including adjustable seats, cup holders, an infotainment system, and comfortable passenger seat. In addition, the Mullen Class 2 Electric Cargo Vans will carry a minimum of an 80 kilowatt per hour battery pack.

Business Operations and Plans

Irvine Automotive Development Center

Beginning August 1, 2022, the Company plans to move into the newly leased space. Various departments will be relocated to the new office space, Engineering Design and Development, Styling, Program Management, Marketing, and Finance teams.

Detroit EV Technology Team

On August 3, 2022 the Company announced plans to open a new location in Pontiac, Michigan and the hiring of approximately 11 new hires. The planned “Detroit Tech Center” will be home to a new division of engineers and technology developers focused on Mullen’s Class 1 – 5 commercial vehicle development. At the proposed new location, the Company plans to hire a total of 50 employees by the end of 2022.

Tax Liabilities

Repayment of State Tax Liabilities

On July 19, 2022, the Company repaid its state tax liability of $334,358.11 with the Employment Development Department of California.

Table of Contents

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion in conjunction with the financial statements and other financial information included elsewhere in this Quarterly Report on Form 10-Q (this “Report”) and with our audited financial statements and other information presented in our Annual Report on Form 10-K filed with the SEC for the year ended September 30, 2021. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward- looking statements as a result of many factors, including but not limited to those under the heading “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K filed with the SEC for the year ended September 30, 2021.

In connection with the Merger Agreement (as defined below), and as disclosed in our Current Report on Form 8-K filed with the SEC on November 12, 2021, our fiscal year end has changed from March 31 to September 30, effective for our fiscal year ended September 30, 2021. As a result, and unless otherwise indicated, references to our fiscal year 2021 and prior years mean the fiscal year ended on September 30 of such year.

Basis of Presentation

As a pre-revenue company with no commercial operations, our activities to date have been limited and were conducted primarily in the United States and our historical results are reported under accounting principles generally accepted in the United States ("GAAP" or "U.S. GAAP") and in United States ("U.S.") dollars. Upon commencement of commercial operations, we expect to expand our operations substantially into the European Union ("E.U.") and, as a result, we expect our future results to be sensitive to foreign currency transaction and translation risks and other financial risks that are not reflected in our historical financial statements. As a result, we expect that the financial results our reports for periods after we begin commercial operations will not be comparable to the financial results included in this Quarterly Report.

Components of Results of Operations

We are an early-stage company, and our historical results may not be indicative of our future results for reasons that may be difficult to anticipate. Accordingly, the drivers of our future financial results, as well as the components of such results, may not be comparable to our historical or projected results of operations.

Revenues

We have not begun commercial operations and do not currently generate any revenue. Once we commence production and commercialization of our vehicles, we expect that the significant majority of our revenue will be initially derived from direct sales of Sport Utility Vehicles ("SUVs") and, subsequently, from flexible leases of our electric vehicles ("EVs").

Cost of Goods Sold

To date, we have not recorded cost of goods sold, as we have not recorded commercial revenue. Once we commence the commercial production and sale of our EVs, we expect cost of goods sold to include mainly vehicle components and parts, including batteries, direct labor costs, amortized tooling costs, and reserves for estimated warranty expenses.

General and Administrative Expense

General and administrative (“G&A”) expenses include all non-production expenses incurred by us in any given period. This includes expenses such as professional fees, salaries, rent, repairs and maintenance, utilities and office expense, employee benefits, depreciation and amortization, advertising and marketing, settlements and penalties, taxes, licenses, and other expenses. Advertising costs are expensed as incurred and are included in G&A expenses. We expense advertising costs as incurred in accordance with ASC 720-35, “Other Expenses – Advertising Cost.”

Table of Contents

Research and Development Expense

To date, our research and development expenses have consisted primarily of external engineering services in connection with the design of our initial EV and development of the first prototype. As we ramp up for commercial operations, we anticipate that research and development expenses will increase for the foreseeable future as we expand our hiring of engineers and designers and continues to invest in new vehicle model design and development of technology.

Income Tax Expense / Benefit

Our income tax provision consists of an estimate for U.S. federal and state income taxes based on enacted rates, as adjusted for allowable credits, deductions, uncertain tax positions, changes in deferred tax assets and liabilities, and changes in the tax law. We maintain a valuation allowance against the full value of our U.S. and state net deferred tax assets because we believe the recoverability of the tax assets is not more likely than not.

Results of Operations

Comparison of the Three Months Ended June 30, 2022 to the Three Months Ended June 30, 2021

The following table sets forth our historical operating results for the periods indicated:


	Three Months Ended
	June 30,
	2022		2021		$ Change		% Change

	(dollar amounts, except percentages)
Operating costs and expenses:
General and administrative	$	10,896,800	$	4,926,154	$	5,970,646	121	%
Research & development		7,324,365		1,479,399		5,844,966	395	%
Total operating costs and expenses		18,221,165		6,405,553		11,815,612	184	%
Loss from operations	$	(18,221,165)		(6,405,553)		(11,815,612)	184	%

Other income (expense):
Interest expense		(5,346,766)		(8,339,195)		2,992,429	(36)	%
Other financing costs		—		(506,654)		506,654	(100)	%
Incentive fee to creditor for transfer of note payable		(23,085,886)		—		(23,085,886)	100	%
Loss on disposal of fixed assets		(50,574)		—		(50,574)	100	%
Penalty for insufficient authorized shares		(3,495,000)		—		(3,495,000)	100	%
Revaluation of Liability to Issue Shares		3,045,000		—		3,045,000	100	%
Other income (expense), net		(12,317,169)		—		(12,317,169)	100	%
Total other income (expense)		(41,250,395)		(8,845,849)		(32,404,546)	366	%
Net loss	$	(59,471,560)	$	(15,251,402)	$	(44,220,158)	290	%

General and Administrative

General and administrative expenses increased by $5.9 million or 121% to $10.8 million in the three months ended June 30, 2022 from $4.9 million in the three months ended June 30, 2021, primarily due to increases in professional services, marketing, and compensation related expenses associated with the growth of personnel and resources.

Research and Development

Research and development expenses increased by $5.8 million or 395% to $7.3 million in the three months ended June 30, 2022 from $1.5 million in the three months ended June 30, 2021. Research and development expenses primarily consist of engineering, homologation, and prototyping costs as well as personnel-related costs for employees and consultants. These costs are expected to rise in the future with continuing development of the Mullen FIVE car and Mullen One van programs.

Table of Contents

Interest Expense

Interest expense decreased by $3.0 million or (36)% to $5.3 million in the three months ended June 30, 2022 from $8.3 million in the three months ended June 30, 2021, primarily due to the decrease in the convertible debt portfolio, as well as the paydown of debt principal during the current fiscal year.

Incentive fee to creditor for transfer of note payable

During June 2022, Incentive fee to creditor for transfer of note payable increased by $23.1 million due to the valuation of the Series E option, which had been issued in connection to the extinguishment of a promissory note with DBI-Drawbridge.

Penalty for insufficient authorized shares

Penalty for insufficient authorized shares increased $3.5 million, compared to the same period in 2021, due to additional charges the Company has committed to pay, in cash or stock, related to the insufficient number of shares authorized.

Revaluation of Liability to Issue Shares

Revaluation of Liability to Issue Shares increased $3.0 million, compared to the same period in 2021, due to a positive change in the liability to issue 10,500,000 shares related to the conversion of a convertible note.

Other income (expense), net

Other expense, net increased by $12.3 million, compared to the same period in 2021, due to the valuation of derivatives and the liability to issue shares in connection with other convertible instruments.

Net Loss

Net loss was $59.5 million for the three months ended June 30, 2022, an increase of $44.2 million or 290% from $15.3 million in the three months ended June 30, 2021, mainly for the reasons discussed above.

Table of Contents

Comparison of the Nine Months Ended June 30, 2022 to the Nine Months Ended June 30, 2021

The following table sets forth our historical operating results for the periods indicated:


	Nine Months Ended
	June 30,
	2022		2021		$ Change		% Change

	(dollar amounts, except percentages)
Operating costs and expenses:
General and administrative	$	53,067,316	$	12,555,572	$	40,511,744	323	%
Research & development		9,665,126		2,535,693		7,129,433	281	%
Total operating costs and expenses		62,732,442		15,091,265		47,641,177	316	%
Loss from operations		(62,732,442)		(15,091,265)		(47,641,177)	316	%

Other income (expense):
Interest expense		(29,906,225)		(13,784,976)		(16,121,249)	117	%
Other financing costs		—		(1,559,961)		1,559,961	(100)	%
Loss on debt settlement		(41,096)		—		(41,096)	100	%
Gain (loss) on extinguishment of indebtedness, net		74,509		890,581		(816,072)	(92)	%
Incentive fee to creditor for transfer of note payable		(23,085,886)		—		(23,085,886)	100	%
Loss on disposal of fixed assets		(50,574)		—		(50,574)	100	%
Penalty for insufficient authorized shares		(3,495,000)		—		(3,495,000)	100	%
Revaluation of Liability to Issue Shares		3,045,000		—		3,045,000	100	%
Other income (expense), net		(12,317,170)		—		(12,317,170)	100	%
Total other income (expense)		(65,776,442)		(14,454,356)		(51,322,086)	355	%
Net loss	$	(128,508,884)	$	(29,545,621)	$	(98,963,263)	335	%

General and Administrative

General and administrative expenses increased by $40.5 million or 323% from $12.6 million in the nine months ended June 30, 2021 to $53.1 million in the nine months ended June 30, 2022, primarily due to increases in professional services, marketing, and compensation related expenses associated with the growth of personnel and resources.

Research and Development

Research and development expenses increased by $7.1 million or 281% from $2.5 million through the nine months ended June 30, 2021 to $9.7 million through the nine months ended June 30, 2022. During the nine month period ended June 30, 2022, the Engineering Team has been working on battery development and various stages of program car development.

Research and development costs are expensed as incurred. Research and development expenses primarily consist of engineering, homologation, and prototyping costs as well as personnel-related costs for employees and consultants. These costs are expected to rise in the future with continuing development of the Mullen FIVE car and Mullen One van programs.

Interest Expense

Interest expense increased by $16.1 million or 117% from $13.8 million through the nine months ended June 30, 2021 to $29.9 million through the nine months ended June 30, 2022, primarily due to the significant increase in the convertible debt portfolio, coupled with the conversion of these financial instruments to equity due to merger with Net Element. The conversion to preferred C stock increased the amortization expense.

Table of Contents

Gain (loss) on extinguishment of debt

During November 2020, the U.S. Small Business Administration approved the CARES Act loan forgiveness amount of $0.9 million in principal and accrued interest on November 20, 2020.

Incentive fee to creditor for transfer of note payable

Penalty for insufficient authorized shares

Revaluation of Liability to Issue Shares

Other income (expense), net

Net Loss

Net loss was $128.5 million for the nine months ended June 30, 2022, an increase of $98.9 million or 335% from $29.6 million in the nine months ended June 30, 2021, mainly for the reasons discussed above.

Liquidity and Capital Resources

As of the date of this Quarterly Report, we have yet to generate any revenue from our business operations. To date, we have funded our capital expenditure and working capital requirements through equity and debt capital, as further discussed below. Our ability to successfully commence commercial operations and expand our business will depend on many factors, including our working capital needs, the availability of equity or debt financing and, over time, our ability to generate cash flows from operations.

As of June 30, 2022, our cash and cash equivalents amounted to $61.1 million primarily due to $43.9 million from the issuance of 4,974,214 Series C Preferred Stock and 14,922,667 in associated warrants to the selling stockholders that were listed within the S-3 Registration Statement, deemed effective on April 15, 2022. Additionally, the Company received $29.6 million in net proceeds under the $30 million Esousa Equity Line, dated September 1, 2021. We also received additional financing in the amount of $15.0 million in equity issuances.

Total debt of $8.9 million continues its downward trend. Debt has decreased significantly from September 30, 2021 due to principal paydowns, debt payoffs, and conversion of convertible debt to equity.

Table of Contents

We expect our capital expenditures and working capital requirements to increase substantially in the near term, as we seek to produce our initial EVs, develop our customer support and marketing infrastructure and expand our research and development efforts. We may need additional cash resources due to changed business conditions or other developments, including unanticipated delays in negotiations with OEMs and tier-one automotive suppliers or other suppliers, supply chain challenges, disruptions due to COVID-19, competitive pressures, and regulatory developments, among other developments. See Note 1 to the condensed consolidated financial statements included elsewhere in this Quarterly Report.

Debt

To date, our current working capital and development needs have been primarily funded through the issuance of convertible indebtedness and Common Stock. Short-term debt comprises a significant component of our funding needs. Short-term debt is generally defined as debt with principal maturities of one-year or less. Long-term debt is defined as principal maturities of one year of more.

Short and Long-Term Debt

The short-term debt classification primarily is based upon loans due within twelve-months from the balance sheet date, in addition to loans that have matured and remain unpaid. Management plans to renegotiate matured loans with creditors for favorable terms, such as reduce interest rate, extend maturities, or both; however, there is no guarantee favorable terms will be reached. Until negotiations with creditors are resolved, these matured loans remain outstanding and will be classified within short-term debt on the balance sheet. Interest and fees on loans are being accounted for within accrued interest. The loans are secured by substantially all the Company’s assets. Several principal stockholders have provided loans to and hold convertible debt of the Company and are related parties.

The following is a summary of our debt as of June 30, 2022:


	Net Carrying Value
	Unpaid Principal								Contractual
Type of Debt	Balance		Current		Long-Term		Interest Rate		Maturity
Matured Notes	$	3,049,955	$	3,049,955	$	—	0.00% - 15.00	%	Past Due
Promissory Notes		5,000,000		—		5,000,000	9	%	2024
Demand Note		—		—		—	27	%	2020
Convertible Unsecured Notes		1,096,787		—		1,096,787	28	%	2024
Real Estate Note		256,850		37,651		219,199	5	%	2023
Loan Advances		558,158		558,158		—	0.00% - 10.00	%	Past Due
Less: Debt Discount		(1,059,375)		—		(1,059,375)	NA		NA
Total Debt	$	8,902,375	$	3,645,764	$	5,256,611	NA		NA

The following is a summary of our debt as of September 30, 2021:


	Net Carrying Value
	Unpaid Principal						Contractual		Contractual
Type of Debt	Balance		Current		Long-Term		Interest Rate		Maturity
Matured Notes	$	5,838,591	$	5,838,591	$	—	0.00% - 15.00	%	2016 - 2021
Promissory Notes		23,831,912		23,831,912		—	28.00	%	2021 – 2022
Demand Note		500,000		500,000		—	27.00	%	2020
Convertible Unsecured Notes		15,932,500		15,932,500		—	15.00%-20.00	%	2021 - 2022
Real Estate Note		283,881		36,269		247,612	5.00	%	2023
Loan Advances		1,122,253		1,122,253		—	0.00% - 10.00	%	2019 – 2020
Less: Debt Discount		(8,060,555)		(8,060,555)		—	NA		NA
Total Debt	$	39,448,582	$	39,200,970	$	247,612	NA		NA

Table of Contents

Cash Flows

The following table provides a summary of Mullen’s cash flow data for the nine months ended June 30, 2022 and 2021:


	Nine Months Ended June 30,
Net cash provided by (used in):	2022		2021
Operating activities	$	(43,220,594)	$	(13,037,107)
Investing activities		(11,273,433)		(141,439)
Financing activities		115,563,116		13,809,405

Cash Flows used in Operating Activities

Our cash flow used in operating activities to date has been primarily comprised of costs related to research and development, payroll, and other general and administrative activities. As we continue to ramp up hiring ahead of starting commercial operations, we expect our cash used in operating activities to increase significantly before we start to generate any material cash flow from our business.

Net cash used in operating activities was $43.2 million in the nine months ended June 30, 2022, an increase from $13.0 million net cash used in activities in the nine months ended June 30, 2021.

Cash Flows used in Investing Activities

Our cash flows used in investing activities increased due to the purchase of the Tunica, MS manufacturing plant in November 2021 by our wholly owned subsidiary, Mullen Investment Properties, LLC. We expect these costs to increase substantially in the near future as we ramp up activity ahead of commencing commercial operations and build out the manufacturing facility.

Net cash used in investing activities was $11.2 million in the nine months ended June 30, 2022, an increase from $0.1 million used in investing activities in the nine months ended June 30, 2021.

Cash Flows provided by Financing Activities

Through June 30, 2022, we have financed our operations primarily through the issuance of convertible notes equity securities, and warrants registered under the S-3 Registration Statements deemed effective February 3, 2022 and April 15, 2021, respectively.

Net cash provided by financing activities was $115.6 million for the nine months ended June 30, 2022 primarily due to issuance of equity, as compared to $13.8 million net cash provided by financing activities for the nine months ended June 30, 2021, which included (i) $12.1 million net proceeds from issuance of notes payable, which was partially offset by $15.1 million of payments of notes payable; (ii) $40.1 million in net proceeds from issuance of Common Stock; (iii) $15 Million in proceeds from a Note Receivable and (iv) $63.9 million in proceeds to issue preferred C shares.

Table of Contents

Contractual Obligations and Commitments

The following tables summarizes our contractual obligations and other commitments for cash expenditures as of June 30, 2022, and the years in which these obligations are due:

Operating Lease Commitments


	Scheduled
Years Ended June 30,	Payments
2022 (6 months)	$	294,069
2023		1,157,693
2024		824,287
2025		436,156
2026		222,787
2027 and Thereafter		—
Total Future Minimum Lease Payments	$	2,934,992

We currently lease our headquarters space in the Los Angeles area under a single lease classified as an operating lease expiring in March 2026. We have not executed any binding agreement for leases beyond 2026.

Scheduled Debt Maturities

The following are scheduled debt maturities:


	Years Ended June 30,
	2022 (6 months)		2023		2024		2025		2026		2027		Thereafter		Total
Total Debt	$	3,645,764	$	219,199	$	5,037,412	$	—	$	—	$	—	$	—	$	8,902,375

Off-Balance Sheet Arrangements

We are not a party to any off-balance sheet arrangements, as defined under SEC rules.

Critical Accounting Policies and Estimates

Our financial statements have been prepared in accordance with U.S. GAAP. In the preparation of these financial statements, our management is required to use judgment in making estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements, as well as the reported expenses incurred during the reporting periods. Management considers an accounting judgment, estimate or assumption to be critical when (1) the estimate or assumption is complex in nature or requires a high degree of judgment and (2) the use of different judgments, estimates and assumptions could have a material impact on the consolidated financial statements.

Our significant accounting policies are described in Note 3 to the condensed consolidated financial statements included elsewhere in this Quarterly Report. Because we are a pre-revenue company without commercial operations, management

Table of Contents

believes it does not currently have any critical accounting policies or estimates. Management believes that the accounting policies most likely to become critical in the near future are those described below.

Stock-Based Compensation

We recognize the cost of share-based awards granted to employees and directors based on the estimated grant-date fair value of the awards. Cost is recognized on a straight-line basis over the service period, which is generally the vesting period of the award. Our management reverses previously recognized costs for unvested options in the period that forfeitures occur. Mullen determines the fair value of stock options using the Black-Scholes option pricing model, which is impacted by the following assumptions:

●

Expected Term—We use the simplified method when calculating the expected term due to insufficient historical exercise data.

●

Expected Volatility—As our shares were not actively traded during the periods presented, the volatility is based on a benchmark of comparable companies within the automotive and energy storage industries.

●

Expected Dividend Yield—The dividend rate used is zero as we have never paid any cash dividends on Common Stock and does not anticipate doing so in the foreseeable future.

●

Risk-Free Interest Rate—The interest rates used are based on the implied yield available on U.S. Treasury zero-coupon issues with an equivalent remaining term equal to the expected life of the award.

Recent Accounting Pronouncements

In May 2021, the FASB issued ASU No. 2021-04, Earnings Per Share (Topic 260), Debt – Modifications and Extinguishments (Subtopic 470-50), Compensation – Stock Compensation (Topic 718) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40). The ASU will be effective for fiscal years beginning after December 15, 2021, (December 15, 2023 for smaller reporting companies). We have issued debt and equity instruments, the accounting for which could be impacted by this update. Company management is evaluating the impact this guidance on our financial condition and results of operations.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

Not applicable.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost benefit relationship of possible controls and procedures. Management has designed disclosure controls and procedures that reasonably enable the management including the CEO and CFO to deliberate and take timely decisions regarding required disclosure.

As required by the SEC Rules 13a-15(b) and 15d-15(b), we are obligated to conduct an evaluation under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of

Table of Contents

the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on our evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were not effective.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the three months ended June 30, 2022, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations of Disclosure Controls and Internal Control over Financial Reporting

Because of their inherent limitations, our disclosure controls and procedures and our internal control over financial reporting may not prevent material errors or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. The effectiveness of our disclosure controls and procedures and our internal control over financial reporting is subject to risks, including that the controls may become inadequate because of changes in conditions or that the degree of compliance with our policies or procedures may deteriorate.

Table of Contents

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Information with respect to this item may be found in Note 17 – Contingencies and Claim of the “Notes to Unaudited Consolidated Financial Statements” included in Part I, Item 1 of this Quarterly Report on Form 10-Q, which is incorporated herein by reference.

Item 1A. Risk Factors

In addition to the information set forth in this Report, you should read and consider the risk factors discussed in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended September 30, 2021 filed with the SEC, which could materially affect our business, financial condition, or future results of operation. The risks described in such report are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may eventually prove to have a material adverse effect on our business, financial condition and/or future operating results.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

In connection the retirement by Jerry Alban from the Company as Chief Operating Officer and a director effective June 30, 2022 (as previously reported in a Current Report on Form 8-K filed with the SEC on June 10, 2022) (“Effective Date”), on June 27, 2022, the Company and Mr. Alban entered into an Employment Separation Agreement pursuant to which the Company agreed to pay Mr. Alban a single lump sum of $53,846.15 and issue to Mr. Alban 250,000 shares of common stock.

On June 29, 2022, the Company signed a lease with the Lakeview Business Center, LLC. The leased property is located at Suite 100, 100 Technology Drive, Irvine, CA 92618. The approximate rentable space is 31,603 rentable square feet of office space. The new lease will expire in July 2025, with an option to renew for a further 36 months. Under this lease arrangement, the present value of future lease payments is $654,636. Beginning August 1, 2022, the Company plans to move into the newly leased space. Various departments will be relocated to the new office space, Engineering Design and Development, Styling, Program Management, Marketing, and Finance teams.

Table of Contents

Item 6. Exhibits


Exhibit		Description
3.1		Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation of Mullen Automotive, Inc., dated March 8, 2022 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the SEC on March 10, 2022).
10.1		Securities Purchase Agreement dated June 7, 2022 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on June 10, 2022).
10.1(a)		Amendment No. 1 dated June 23, 2022 to Securities Purchase Agreement dated June 7, 2022 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on June 24, 2022).
10.2		Amended and Restated Secured Convertible Note and Security Agreement dated June 17, 2022 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on June 21, 2022).
10.3		Letter Agreement dated June 17, 2022 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on June 21, 2022).
10.4#		Mullen Automotive Inc. 2022 Equity Incentive Plan (incorporated by reference to Appendix B to the Company’s Definitive Proxy Statement (Schedule 14A) filed with the SEC on June 24, 2022).
10.5#		CEO Performance Stock Award Agreement dated May 5, 2022 between Mullen Automotive Inc. and David Michery (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on July 27, 2022).
10.6*		Employment Separation Agreement between the Company and Jerry Alban dated June 27, 2022
10.7*		Lease dated June 29, 2022 between the Company and with the Lakeview Business Center, LLC.
10.8*		Consulting Agreement dated January 12, 2022 between the Company and Ignacio Novoa.
31.1*		Certification of Principal Executive Officer, pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities and Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of Principal Financial Officer, pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities and Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (embedded within the Inline XBRL Document and include in Exhibit 101)

# Indicates management contract or compensatory plan or arrangement.

* Filed herewith (furnished herewith with respect to Exhibit 32.1).

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	Mullen Automotive Inc.

August 12, 2022	By:	/s/ David Michery
		David Michery
		Chief Executive Officer, President and Chairman of the Board
		(Principal Executive Officer)

		/s/ Kerri Sadler
		Kerri Sadler
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

Exhibit 10.6

EMPLOYMENT SEPARATION AGREEMENT

I. THE PARTIES. This Employment Separation Agreement (“Agreement”) is made and entered into on June ___, 2022 (“Effective Date”) by:

Employer: Mullen Automotive, Inc. and Mullen Technologies, Inc. (collectively “Employer”), both with a mailing address of 1405 Pioneer Street Brea, CA 92821

and

Employee: Jerry Alban (“Employee”) with a mailing address of 36 Oak Tree Lane Irvine, CA 92612

Collectively, the Employer and Employee shall be referred to as the “Parties.” It is known that the Parties wish to separate and discontinue their employment relationship in an amicable manner. Now, therefore, in consideration of the mutual promises and covenants contained herein, it is agreed as follows:

II. EMPLOYMENT STATUS. The Parties acknowledge that Employee’s the last day of employment shall be July 1^st, 2022 (“Employee’s Last Day”). The Employer has paid the Employee all payments due through July 1^st, 2022, and all standard deductions and regular payroll tax withholdings have been made. These payments shall be reflected in the IRS W-2 form that the Employer shall issue for the fiscal year.

III. SEVERANCE. In consideration of the promises set forth in this Agreement, the Employer agrees to issue to Employee, 250,000 restricted shares of its publicly traded stock MULN (the “Severance Payment”). The Severance Payment shall not be delivered to the Employee until this Agreement becomes effective as described in Section I of this Agreement. The Severance Payment(s) shall be subject to the appropriate taxes and other payroll deductions required by law, and these monies shall be included in the IRS W-2 form the Employer shall issue to the Employee for the fiscal year. Employee agrees that, to the extent that any Federal, State, or Local taxes may be or become due or payable as part of the Severance Payment(s), that the Employee shall be fully responsible for paying such taxes. Employee further agrees to indemnify the Employer, and its agents, employees, members, former employees, partners, directors, officers, trustees, consultants, shareholders, attorneys and insurers, both past and present, from, and hold them harmless against any claim, liability, penalty or tax consequence made by any Local, State, or Federal administrative agency or court of competent jurisdiction for such unpaid taxes, including costs and counsel fees incurred by the Employer as a result of such claims.

IV. RETURN OF PROPERTY.

If the Employee has not done so already, the following property shall be returned to the Employer: office and door keycard.

V. Post-Employment Noncompetition and Non-solicitation Covenant.

In consideration of the Severance Payment, Employee agrees that for a period of two (2) years subsequent to Employee’s withdrawal from employment with the Company Employee will not, without the express prior written approval of the Board, (i) engage in competitive business activity in the USA either on Employee’s own behalf or that of any other business organization,

Page 1 of 5

(ii) directly or indirectly, in one or a series of transactions, recruit, solicit or otherwise induce or influence any proprietor, partner, stockholder, lender, director, officer, employee, sales agent, joint venturer, investor, lessor, supplier, customer, agent, representative or any other person who has a business relationship with the Company or had a business relationship with the Company within the twenty-four (24) month period preceding the date of the incident in question, to discontinue, reduce, or modify such employment, agency, or business relationship with the company or (iii) employ or seek to employee or cause any business organization engaged in competitive business activity to employ or seek to employ any person or agency who is then (or was at any time within six months prior to the date of Employee or such business employs or seeks to employ such person) employed or retained by the Company or its affiliates. Notwithstanding the foregoing, nothing herein shall prevent the Employee from providing a letter of recommendation to another Company employee or consultant with respect to a future employment opportunity.

VI. EMPLOYEE’S BENEFITS. Employer agrees that any and all benefits that were provided to the Employee shall continue until July 1, 2022. In addition, the Employer shall assist the Employee in the transfer, change, or termination to employment benefits, including, but not limited to, health insurance plans, dental insurance plans, vision insurance plans, life insurance plans, disability insurance, childcare benefits, wellness programs, retirement plans, government assistance programs, and/or any other program or benefit that was readily accessible and being used by the Employee.

VII. INDEMNIFICATION. Under this Agreement, the Employer agrees to indemnify and release the Employee from any and all actions during their employment and the Employee agrees to indemnify and release the Employer and any of its predecessors, successors, parents, affiliated or subsidiary companies, and its present or former officers, directors, agents, board members, representatives, or employees, and the various Employer benefit plans, committees, trustees, fiduciaries, trusts and their respective successors and assigns, heirs, executors and persona or legal representatives (“Releasees”) from any and all claims or causes of action the Employee may have or claim to have against the Releasees including any claims arising out of or relating in any way to the Employee’s employment with the Employer and/or the termination of such employment. The claims released include, but are not limited to:

a.)

Statutory Claims. All statutory claims related to laws including, but not limited to, discrimination, civil rights, family leave, workers’ benefits, disability, rehabilitation, retirement, fair labor standards, labor rights, equal pay, minimum wage, or any other Local, State, or Federal act, code, statute, or law related to employment;

b.)

Constitutions. All claims arising under the United States or State constitutions;

c.)

Executive Orders. All claims arising under any executive order or derived from or based upon any State or Federal regulations;

d.)

Common Law. All common law claims, including but not limited to any and all rights to discovery, claims for wrongful discharge, constructive discharge, violation of public policy, breach of an express or implied contract, breach of an implied covenant of good faith and fair dealing, negligent or intentional infliction of emotional distress, defamation, conspiracy, tortious interference with contract or prospective economic advantage, promissory estoppel, equitable estoppel, fraud, misrepresentation , detrimental reliance, retaliation, and negligence;

Page 2 of 5

e.)

Claims for Compensation. All claims for any compensation including commissions, back wages, front pay, punitive damages, pay increases, bonuses or awards, fringe benefits, disability benefits, severance benefits, reinstatement, retroactive seniority, pension benefits, contributions to retirement plans, or any other form of economic loss;

f.)

Injury. All claims for personal injury, including physical injury, mental anguish, emotional distress, pain and suffering, embarrassment, humiliation, damage to name or reputation, interest, liquidated damages, and punitive damages; and

g.)

Fees. All claims for costs, interest, and attorneys’ fees.

Nothing contained in this paragraph is intended, nor shall be construed; (i) to waive or release any future claim arising after the date of this Agreement is signed by the Employee; or (ii) to limit the Employee’s right to enforce the terms of this Agreement. The Employee understands that any offer by the Employer to offer Severance Payment(s) or any other payment not mentioned in this Agreement does not constitute an admission by the Employer that is has conducted any misconduct or violated any statute, law, regulation, or ordinance or have any other legal obligation that it may owe to the Employee with respect to any aspect of their employment with the Employer or their separation therefrom.

VIII. LITIGATION. Employee represents that he has not, and agrees to not, file any lawsuit or claim against the Releasees based on any events, whether known or unknown, occurring prior to the date of the execution of this Agreement, including, but not limited to, any events related to, arising out of, or in connection with, their employment with the Employer, or the termination of such employment, in any court or tribunal of the United States, with the State of employment, or any other State, City, County, or Local jurisdiction. Employee also acknowledges and agrees that while this release does not preclude the Employee from filing a charge with the National Labor Relations Board, the Equal Opportunity Commission or a similar State or Local agency, or from participating in any investigation or proceeding with such an agency, he will not personal recover monies, and expressly waives the right to recover such monies, for any complaint or charge filed against the Employer with any Federal, State, or Local board, agency, or court.

IX. PRIOR AGREEMENTS. Any prior agreements between the Employee and the Employer that impose confidentiality, non-disclosure, non-competition, non-solicitation and/or other post-employment upon him shall remain in force and effect. In addition, from and after the Effective Date, the Employee agrees not to divulge or use to the detriment of the Employer, the Employee's benefit, or the benefit of any other person or entity, any proprietary or confidential information or trade secrets related to the Employer, including, without limitation, the Employer's trade secrets or other intellectual property rights, personnel information, know-how, customer lists, pricing information or other confidential or proprietary data, including data acquired in connection with their employment by the Employer, collectively this shall be referred to as "Confidential Information". On or before the Effective Date or the Employee’s Last Day, whichever is later, the Employee shall immediately deliver to the Employer all property that may contain Confidential Information, including, but not limited to, memoranda, books, papers, letters, and other data and all copied thereof, whether or not such materials contain Confidential Information, then in the possessions or control of the Employee. Confidential Information does not include information which (i) has become publicly known and generally made available through no wrongful act of the Employee, or (ii) has been rightfully received by the Employee from a third (3^rd) party who is authorized to make such disclosure.

X. CONFIDENTIALITY. The Parties agree to maintain in confidence and not to disclose the terms of this Agreement, including, but not limited to, the Employee's employment and the separation from the Employer. It shall not be considered a breach of the obligation of confidentiality

Page 3 of 5

for the Employee to make disclosure of the settlement terms to their immediate family, who shall be first to expressly be advised of, and also be bound by, the sale requirement of confidentiality, or to make disclosure of the settlement terms and the underlying events in order to obtain private or confidential legal, tax, or financial advice, or to respond to any inquiry from any private or governmental entity or agency a tax filing in response to a court order. Employee agrees that if he is served or otherwise receives notice of any such court order, or if he believes such disclosure is required by any State or Federal law, he shall immediately provide written notice to the Employer so that it may be afforded the opportunity to oppose the same prior such disclosure. It shall not be considered a breach of the obligation of confidentiality for the Employer to make disclosure of the terms of this Agreement to the extent necessary to obtain approval for, and as required for implementation of, the terms, or for purposes of reporting this Agreement internally, or as part of the normal external disclosure of financial information to an auditor, or as required by taxing or other governmental authorities. The Parties represent that no unauthorized disclosures concerning the terms of this Agreement were made prior to signing this Agreement. In the vent the Employee is asked about the terms of this Agreement, he may state that their employment with the Employer has been terminated and that the relationship ended in an amicable manner.

XI. BREACH. Any breach by the Employee of the obligations under this Agreement shall be considered a material breach of this Agreement. The Employee acknowledges and understands that, in the event of such a breach or threatened by breaching this Agreement, the Employer, in addition to any other rights and remedies it may possess, shall be entitled to appropriate injunctive relief, and shall be further entitled to recover its reasonable costs and attorneys’ fee incurred in seeking relief for any such breach or threat by the Employee.

XII. DISPARAGING REMARKS. The Parties agree that they will not criticize, denigrate, or disparage each other as set forth herein. Employee agrees to not make any comments or statements to the media, the Employer’s current and former employees, any individual or entity with whom the Employer has a business relationship, or any other individual or entity if such comment or statement could be likely to adversely affect the conduct of the Employer’s business with that of such third (3^rd) party, or any of the Employer’s plans, prospects, or business reputation of the Employer. This shall be to the extent that either Employee or Employer are legally required to disclose to a governmental entity or other third (3^rd) party the reason(s) for the Employee’s separation from the Employer, the Employer or the Employee shall provide only their dates of employment and the positions held during such time. Any prospective employer of the Employee shall be informed that such limited information is disclosed in accordance with the Employer’s standard policy. Employee is instructed to direct any inquiries to Human Resources. By agreeing to this provision, the Employer is not accepting liability for statements made by current or former employees made outside the scope of employment.

XIII. OTHER AGREEMENTS. The Employee acknowledges that the only consideration he has received for authorizing this Agreement is that set forth herein. No other promise, inducement, threat, agreement or understanding of any kind or description has been made with the Employee to cause him to enter into this Agreement. The Employee further acknowledges that the consideration he is receiving from the Employer through this Agreement is greater than any amount otherwise entitled to from the Employer.

XIV. REVIEW. Employee agrees and recognizes that he has had the opportunity to review this Agreement with legal counsel and that the Employer recommends that this Agreement is reviewed with a licensed attorney in the State that practices employment or specializes in employment matters. Nevertheless, the Employee acknowledges that he understands the language of this Agreement and accepts its terms freely, voluntarily, and without duress or coercion.

Page 4 of 5

a.)

Revocation Period. In order to promote the best interests of the Employee, the Employer allows the unrestricted revocation of this Agreement within seven (7) days of its Effective Date or twenty-one (21) days if the Employee of over the age of forty (40) years at the time of the Effective Date (“Revocation Period”). Such revocation shall be known to the Employer immediately and, in order to successfully revoke this Agreement, any payment made to the Employee must be returned to the Employer within such time-frame. If any Federal, State or Local laws, regulations, or ordinances require that the Revocation Period is for more time than stated, this Agreement shall adhere to any minimum required time-period and the Employee shall have the same rights to revoke this Agreement.

XV. SEVERABILITY. Should any provision of this Agreement be declared or determined by any court of competent jurisdiction to be illegal, invalid, or unenforceable, the legality, validity, and enforceability of the remaining parts, terms or provisions, shall not be affected thereby and said illegal, unenforceable or invalid part, term or provisions shall be deemed not to be part of this Agreement.

XVI. GOVERNING LAW. This Agreement shall be governed by the State of California and its courts shall have the jurisdiction to be the proper venue for any disputes that may arise out of this Agreement.

XVII. ENTIRE AGREEMENT. This Agreement sets forth the entire understanding and agreement between the Parties and, fully supersedes any and all prior contracts or agreements between the Parties pertaining to compensation or severance, and it likewise fully supersedes any and all other conflicting agreements or understandings between the Parties.

I, THE EMPLOYEE, ACKNOWLEDGE THAT I HAVE CAREFULLY READ THIS AGREEMENT AND UNDERSTAND ALL OF ITS TERMS, INCLUDING THE FULL AND FINAL RELEASE AND WAIVER OF CLAIMS SET FORTH ABOVE. I FURTHER ACKNOWLEDGE THAT I HAVE VOLUNTARILY ENTERED INTO THIS SEVERANCE AGREEMENT AND GENERAL RELEASE, THAT I HAVE NOT RELIED UPON ANY REPRESENTATION OR STATEMENT, WRITTEN OR ORAL, NOT SET FORTH IN THIS AGREEMENT AND THAT I HAVE BEEN GIVEN THE OPPORTUNITY AND BEEN ENCOURAGED TO HAVE THIS AGREEMENT REVIEWED BY AN ATTORNEY.

Employee’s Signature ____________________________ Date _________________

Print Name: Jerry Alban

Employer’s Signature ____________________________ Date _________________

For: Mullen Automotive, Inc. and Mullen Technologies, Inc

Print Name David Michery, CEO

Page 5 of 5

Exhibit 10.7

LEASE

BETWEEN

LAKEVIEW BUSINESS CENTER LLC

AND

MULLEN AUTOMOTIVE INC.

LEASE

(Short Form)

THIS LEASE is made as of June 29, 2022 , by and between LAKEVIEW BUSINESS CENTER LLC, a Delaware limited liability company, hereafter called “Landlord,” and MULLEN AUTOMOTIVE INC., a Delaware corporation, hereafter called “Tenant.”

ARTICLE 1. BASIC LEASE PROVISIONS

Each reference in this Lease to the “Basic Lease Provisions” shall mean and refer to the following collective terms, the application of which shall be governed by the provisions in the remaining Articles of this Lease.

1.	Tenant’s Trade Name: N/A

2.Premises:Suite No. 100 (The Premises are more particularly described in Section 2.1.)

Building:100 Technology Drive, Irvine, CA 92618

Project:Lakeview Business Center (as shown on Exhibit Y to this Lease)

3.	Permitted Use: General office and for no other use.

4.	Commencement Date: August 1, 2022

5.	Lease Term: 36 months, plus such additional days as may be required to cause this Lease to expire on the final day of the calendar month.

6.	Basic Rent:


Months of Term or Period	Monthly Rate Per Rentable Square Foot	Monthly Basic Rent
1 to 12	$1.85	$29,231.85
13 to 24	$1.91	$30,179.91
25 to 36	$1.98	$31,285.98

Notwithstanding the above schedule of Basic Rent to the contrary, as long as Tenant is not in Default (as defined in Section 14.1) under this Lease, Tenant shall be entitled to an abatement of 2 full calendar months of Basic Rent in the aggregate amount of $58,463.70 (i.e. $29,231.85 per month) (the “Abated Basic Rent”) for the first 2 full calendar months of the Term (the “Abatement Period”). In the event Tenant Defaults at any time during the Term, all Abated Basic Rent shall immediately become due and payable. The payment by Tenant of the Abated Basic Rent in the event of a Default shall not limit or affect any of Landlord’s other rights, pursuant to this Lease or at law or in equity. Only Basic Rent shall be abated during the Abatement Period and all other additional rent and other costs and charges specified in this Lease shall remain due and payable pursuant to the provisions of this Lease.

7.	Expense Recovery Period: Every twelve-month period during the Term (or portion thereof during the first and last Lease years) ending June 30.

8.	Floor Area of Premises: approximately 15,801 rentable square feet

Floor Area of Building: approximately 31,603 rentable square feet

9.	Security Deposit: $60,000.00

10.	Broker(s): Irvine Management Company (“Landlord’s Broker”) is the agent of Landlord exclusively and Kidder Mathews of California, Inc. (“Tenant’s Broker”) is the agent of Tenant exclusively.

11.	Parking: 57 parking spaces in accordance with the provisions set forth in Exhibit F to this Lease.

12.	Address for Payments and Notices:

LANDLORD		TENANT

Payment Registration Address:

Email tenantportal@irvinecompany.com to request an account for the Tenant Payment Portal.		MULLEN AUTOMOTIVE INC. 100 Technology Drive, Suite 100 Irvine, CA 92618

Notice Address:

THE IRVINE COMPANY LLC
550 Newport Center Drive Newport Beach, CA 92660
Attn: Executive Vice President, Operations Office Properties

LIST OF LEASE EXHIBITS (All exhibits, riders and addenda attached to this Lease are hereby incorporated into and made a part of this Lease):

Exhibit ADescription of Premises

Exhibit BOperating Expenses

Exhibit CUtilities and Services

Exhibit DTenant’s Insurance

Exhibit ERules and Regulations

Exhibit FParking

Exhibit GAdditional Provisions

Exhibit G-1Existing Furniture

Exhibit HLandlord’s Disclosures

Exhibit XWork Letter

Exhibit YProject Description

ARTICLE 2. PREMISES

2.1.LEASED PREMISES. Landlord leases to Tenant and Tenant leases from Landlord the Premises shown in Exhibit A (the “Premises”), containing approximately the floor area set forth in Item 8 of the Basic Lease Provisions (the “Floor Area”). The Premises are located in the building identified in Item 2 of the Basic Lease Provisions (the “Building”), which is a portion of the project described in Item 2 (the “Project”). Landlord and Tenant stipulate and agree that the Floor Area of Premises set forth in Item 8 of the Basic Lease Provisions is correct.

2.2.ACCEPTANCE OF PREMISES. Tenant acknowledges that neither Landlord nor any representative of Landlord has made any representation or warranty with respect to the Premises, the Building or the Project or the suitability or fitness of either for any purpose, except as set forth in this Lease. Tenant acknowledges that the flooring materials which may be installed within portions of the Premises located on the ground floor of the Building may be limited by the moisture content of the Building slab and underlying soils. The taking of possession or use of the Premises by Tenant for any purpose other than construction shall conclusively establish that the Premises and the Building were in satisfactory condition and in conformity with the provisions of this Lease in all respects. Nothing contained in this Section 2.2 shall affect the commencement of the Term or the obligation of Tenant to pay rent.

ARTICLE 3. TERM

3.1.GENERAL. The term of this Lease (“Term”) shall commence on the date as set forth in Item 4 of the Basic Lease Provisions (“Commencement Date”) and shall end upon the expiration of the period set forth in Item 5 of the Basic Lease Provisions (“Expiration Date”).

3.2.DELAY IN POSSESSION. If Landlord, for any reason whatsoever, cannot deliver possession of the Premises to Tenant on or before the Commencement Date, this Lease shall not be void or voidable nor shall Landlord be liable to Tenant for any resulting loss or damage.

ARTICLE 4. RENT AND OPERATING EXPENSES

4.1.BASIC RENT. From and after the Commencement Date, Tenant shall pay to Landlord without deduction or offset a Basic Rent for the Premises in the total amount shown (including subsequent adjustments, if any) in Item 6 of the Basic Lease Provisions (the “Basic Rent”). If the Commencement Date is other than the first day of a calendar month, any rental adjustment shown in Item 6 shall be deemed to occur on the first day of the next calendar month following the specified monthly anniversary of the Commencement Date. The Basic Rent shall be due and payable in advance commencing on the Commencement Date and continuing thereafter on the first day of each successive calendar month of the Term, as prorated for any partial month. No demand, notice or invoice shall be required. An installment in the amount of 1 full month’s Basic Rent at the initial rate specified in Item 6 of the Basic Lease Provisions, and 1 month’s estimated Tenant’s Share of Operating Expenses shall be delivered to Landlord concurrently with Tenant’s execution of this Lease.

4.2.OPERATING EXPENSES. Tenant shall pay Tenant’s Share of Operating Expenses in accordance with Exhibit B of this Lease.

4.3.SECURITY DEPOSIT. Concurrently with Tenant’s delivery of this Lease, Tenant shall deposit with Landlord the sum, if any, stated in Item 9 of the Basic Lease Provisions (the “Security Deposit”), to be held by Landlord as security for the full and faithful performance of Tenant’s obligations under this Lease, to pay any rental sums, including without limitation such additional rent as may be owing under any provision hereof, and to maintain the Premises as required by this Lease. Upon any Default by Tenant, Landlord may apply all or part of the Security Deposit as full or partial compensation. If any portion of the Security Deposit is so applied, Tenant shall within 5 days after written demand by Landlord deposit cash with Landlord in an amount sufficient to restore the Security Deposit to its original amount. Landlord shall not be required to keep the Security Deposit separate from its general funds, and Tenant shall not be entitled to interest on the Security Deposit. In no event may Tenant utilize all or any portion of the Security Deposit as a payment toward any Rent due under this Lease. Any unapplied balance of the Security Deposit shall be returned to Tenant or, at Landlord’s option, to the last assignee of Tenant’s interest in this Lease within 30 days following the termination of this Lease and Tenant’s vacation of the Premises. Tenant hereby waives the provisions of Section 1950.7 of the California Civil Code, or any similar or successor laws now or hereafter in effect.

ARTICLE 5. USES

5.1.USE. Tenant shall use the Premises only for the purposes stated in Item 3 of the Basic Lease Provisions and for no other use whatsoever. Tenant shall not do or permit anything to be done in or about the Premises which will in any way interfere with the rights or quiet enjoyment of other occupants of the Building or the Project, or use or allow the Premises to be used for any unlawful purpose, nor shall Tenant permit any nuisance in the Premises or the Project. Tenant shall comply at its expense with all present and future laws, ordinances and requirements of all governmental authorities that pertain to Tenant or its use of the Premises, and with all energy usage reporting requirements of Landlord. Pursuant to California Civil Code § 1938, Landlord hereby states that the Premises have not undergone inspection by a Certified Access Specialist (CASp) (defined in California Civil Code § 55.52(a)(3)). Pursuant to Section 1938 of the California Civil Code, Landlord hereby provides the following notification to Tenant: “A Certified Access Specialist (CASp) can inspect the subject premises and determine whether the subject premises comply with all of the applicable construction-related accessibility standards under state law. Although state law does not require a CASp inspection of the subject premises, the commercial property owner or lessor may not prohibit the lessee or tenant from obtaining a CASp inspection of the subject premises for the occupancy or potential occupancy of the lessee or tenant, if requested by the lessee or tenant. The parties shall mutually agree on the arrangements for the time and manner of the CASp inspection, the payment of the fee for the CASp inspection, and the cost of making any repairs necessary to correct violations of construction related accessibility standards within the premises.”

5.2.SIGNS. Provided Tenant continues to occupy the entire Premises, Tenant shall have the non-exclusive right to one (1) exterior building top sign on the Building for Tenant’s name and graphics in a mutually agreed upon location, subject to Landlord's right of prior approval that such exterior signage is in compliance with the Signage Criteria (defined below). Except as provided in the foregoing and except for Landlord’s standard suite signage identifying Tenant’s name and/or logo, Tenant shall have no right to maintain signs in any location in, on or about the Premises, the Building or the Project and shall not place or erect any signs that are visible from the exterior of the Building. The size, design, graphics, material, style, color and other physical aspects of any permitted sign shall be subject to Landlord's written determination, as determined solely by Landlord, prior to installation, that signage is in compliance with any covenants, conditions or restrictions encumbering the Premises and Landlord's signage program for the Project, as in effect from time to time and approved by the City in which the Premises are located ("Signage Criteria"). Prior to placing or erecting any such signs, Tenant shall obtain and deliver to Landlord a copy of any applicable municipal or other governmental permits and approvals, except to Landlord’s standard suite signage. Tenant shall be responsible for all costs of any permitted sign, including, without limitation, the fabrication, installation, maintenance and removal thereof and the cost of any permits therefor, except that Landlord shall pay for the initial installation costs only of the standard suite signage. If Tenant fails to maintain its sign in good condition, or if Tenant fails to remove same upon termination of this Lease and repair and restore any damage caused by the sign or its removal, Landlord may do so at Tenant's expense. Landlord shall have the right to temporarily remove any signs in connection with any repairs or maintenance in or upon the Building. The term "sign" as used in this Section shall include all signs, designs, monuments, displays, advertising materials, logos, banners, projected images, pennants, decals, pictures, notices, lettering, numerals or graphics. Tenant’s exterior signage rights under this Section 5.2 belong solely to Mullen Automotive, Inc., a Delaware corporation, and any attempted assignment or transfer of such rights shall be void and of no force and effect. Should Tenant fail to have the exterior signage installed on or before October 1, 2022, then Tenant’s right to install same thereafter shall be deemed null and void.

5.3.HAZARDOUS MATERIALS. Tenant shall not generate, handle, store or dispose of hazardous or toxic materials (as such materials may be identified in any federal, state or local law or regulation) in the Premises or Project without the prior written consent of Landlord. Tenant acknowledges that it has read, understands and, if applicable, shall comply with the provisions of Exhibit H to this Lease, if that Exhibit is attached.

ARTICLE 6. LANDLORD SERVICES

6.1.UTILITIES AND SERVICES. Landlord and Tenant shall be responsible to furnish those utilities and services to the Premises to the extent provided in Exhibit C, subject to the conditions and payment obligations and standards set forth in this Lease. Landlord’s failure to furnish, or any interruption, diminishment or termination of, services due to the application of laws, the failure of any equipment, the performance of repairs, improvements or alterations, utility interruptions or the occurrence of an event of force majeure (defined in Section 20.7) shall not render Landlord liable to Tenant, constitute a constructive eviction of Tenant, give rise to an abatement of Rent, nor relieve Tenant from the obligation to fulfill any covenant or agreement.

6.2.OPERATION AND MAINTENANCE OF COMMON AREAS. During the Term, Landlord shall operate all Common Areas within the Building and the Project. The term “Common Areas” shall mean all areas within the Building, Project and other buildings in the Project which are not held for exclusive use by persons entitled to occupy space.

6.3.COMMON AREAS. The occupancy by Tenant of the Premises shall include the use of the Common Areas in common with Landlord and with all others for whose convenience and use the Common Areas may be provided by Landlord, subject, however, to compliance with Rules and Regulations set forth in Exhibit E. Landlord shall at all times during the Term have exclusive control of the Common Areas, and may restrain or permit any use or occupancy. Landlord may temporarily close any portion of the Common Areas for repairs, remodeling and/or alterations, to prevent a public dedication or the accrual of prescriptive rights, or for any other reasonable purpose.

ARTICLE 7. REPAIRS AND MAINTENANCE

7.1.TENANT’S MAINTENANCE AND REPAIR. Subject to Articles 11 and 12, Tenant at its sole expense shall make all repairs necessary to keep the Premises and all improvements and fixtures therein in good condition and repair. Tenant’s maintenance obligation shall include without limitation all appliances, interior glass, doors, door closures, hardware, fixtures, electrical, plumbing, fire extinguisher equipment and other equipment installed in the Premises, together with any supplemental HVAC equipment servicing only the Premises. Should Landlord or its management agent agree to make a repair on behalf of Tenant and at Tenant’s request, Tenant shall promptly reimburse Landlord as additional rent for all reasonable costs incurred (including the standard supervision fee) upon submission of an invoice.

7.2.LANDLORD’S MAINTENANCE AND REPAIR. Subject to Articles 11 and 12, Landlord shall provide service, maintenance and repair with respect to the heating, ventilating and air conditioning (“HVAC”) equipment of the Building (exclusive of any supplemental HVAC equipment servicing only the Premises) and shall maintain in good repair the Common Areas, roof, foundations, footings, the exterior surfaces of the exterior walls of the Building (including exterior glass), and the structural, electrical, mechanical and plumbing systems of the Building (including elevators, if any, serving the Building), except to the extent provided in Section 7.1 above. Notwithstanding any provision of the California Civil Code or any similar or successor laws to the contrary, Tenant understands that it shall not make repairs at Landlord’s expense or by rental offset. Except as provided in Section 11.1 and Article 12 below, there shall be no abatement of rent and no liability of Landlord by reason of any injury to or interference with Tenant’s business arising from the making of any repairs, alterations or improvements to any portion of the Building, including repairs to the Premises, nor shall any related activity by Landlord constitute an actual or constructive eviction. Tenant hereby waives any and all rights under and benefits of subsection 1 of Section 1932, and Sections 1941 and 1942 of the California Civil Code, or any similar or successor laws now or hereafter in effect.

7.3.ALTERATIONS. Tenant shall make no alterations, additions, decorations, or improvements (collectively referred to as “Alterations”) to the Premises without the prior written consent of Landlord. Landlord may impose, as a condition to its consent, any requirements that Landlord in its discretion may deem reasonable or desirable. Tenant shall use Landlord’s designated mechanical and electrical contractors, obtain all required permits for the Alterations and shall perform the work in compliance with all applicable laws, regulations and ordinances with contractors reasonably acceptable to Landlord. Landlord shall be entitled to a supervision fee in the amount of 5% of the cost of the Alterations. Landlord may elect to cause its architect to review Tenant’s architectural plans, and the reasonable cost of that review shall be reimbursed by Tenant. Should the Alterations proposed by Tenant and consented to by Landlord change the floor plan of the Premises, then Tenant shall, at its expense, furnish Landlord with as-built drawings and CAD disks compatible with Landlord’s systems. Unless Landlord otherwise agrees in writing, all Alterations affixed to the Premises, including without limitation all Tenant Improvements constructed pursuant to the Work Letter (except as otherwise provided in the Work Letter), but excluding moveable trade fixtures and furniture, shall become the property of Landlord and shall be surrendered with the Premises at the end of the Term, except that Landlord may, by notice to Tenant given at the time of Landlord’s approval, require Tenant to remove by the Expiration Date or sooner termination date of this Lease, all or any Alterations (including without limitation any Tenant Improvements constructed pursuant to the Work Letter) installed either by Tenant or by Landlord at Tenant’s request (collectively, the “Required Removables”). In connection with its removal of Required Removables, Tenant shall repair any damage to the Premises arising from that removal and shall restore the affected area to its pre-existing condition, reasonable wear and tear excepted.

7.4.MECHANIC’S LIENS. Tenant shall keep the Premises free from any liens arising out of any work performed, materials furnished, or obligations incurred by or for Tenant. In the event that Tenant shall not, within 15 days following the imposition of any lien, cause the lien to be released of record by payment or posting of a proper bond in accordance with California Civil Code Section 8424 or any successor statute, Landlord shall have, in addition to all other available remedies, the right to cause the lien to be released by any means it deems proper, including payment of or defense against the claim giving rise to the lien. All expenses so incurred by Landlord shall be reimbursed by Tenant promptly following Landlord’s demand. Tenant shall give Landlord no less than 20 days’ prior notice in writing before commencing construction of any kind on the Premises.

7.5.ENTRY AND INSPECTION. Landlord shall at all reasonable times and with reasonable prior verbal notice, except in emergencies or to provide Building services, have the right to enter the Premises to inspect them, to supply services in accordance with this Lease, to make repairs and renovations as reasonably deemed necessary by Landlord, and to submit the Premises to prospective or actual purchasers or encumbrance holders (or, during the final twelve months of the Term or when an uncured Default exists, to prospective tenants), all without being deemed to have caused an eviction of Tenant and without abatement of rent except as provided elsewhere in this Lease.

ARTICLE 8. SPACE PLANNING AND SUBSTITUTION

Landlord shall have the right, upon providing not less than 45 days’ prior written notice, to move Tenant to other space of comparable size in the Building or in the Project or in other space owned by Landlord or its affiliate(s) within 3 miles of the Building. The new space shall be provided with improvements of comparable quality to those within the Premises. Landlord shall pay the reasonable out-of-pocket costs to relocate and reconnect Tenant’s personal property and equipment within the new space. Landlord shall also reimburse Tenant for such other reasonable out-of-pocket costs that Tenant may incur in connection with the relocation. Within 10 days following request by Landlord, Tenant shall execute an amendment to this Lease prepared by Landlord to memorialize the relocation.

ARTICLE 9. ASSIGNMENT AND SUBLETTING

9.1.RIGHTS OF PARTIES. Tenant shall not, directly or indirectly, assign, sublease, transfer or encumber any interest in this Lease or allow any third party to use any portion of the Premises (collectively or individually, a “Transfer”) without the prior written consent of Landlord, which consent shall not be unreasonably withheld if Landlord does not exercise its recapture rights. Tenant agrees that it is not unreasonable for Landlord to withhold consent to a Transfer to a proposed assignee or subtenant who is an existing tenant or occupant of the Building or Project or to a prospective tenant with whom Landlord or Landlord’s affiliate has been actively negotiating. Any attempted Transfer in violation of this Article shall be a Default by Tenant and shall, at Landlord’s option, be void. Within 30 days after receipt of executed copies of the transfer documentation and such other information as Landlord may request, Landlord shall either: (a) consent to the Transfer by execution of a consent agreement in a form reasonably designated by Landlord; (b) refuse to consent to the Transfer; or (c) recapture the portion of the Premises that Tenant is proposing to Transfer. Tenant hereby waives the provisions of Section 1995.310 of the California Civil Code, or any similar or successor Laws, now or hereinafter in effect, and all other remedies, including, without limitation, any right at law or equity to terminate this Lease, on its own behalf and, to the extent permitted under all applicable laws, on behalf of the proposed transferee. In no event shall any Transfer release or relieve Tenant from any obligation under this Lease, as same may be amended. Tenant shall pay Landlord a review fee of $1,000.00 for Landlord’s review of any requested Transfer. Tenant shall pay Landlord, as additional Rent, 50% of all rent and other consideration which Tenant receives as a result of a Transfer that is in excess of the Rent payable to Landlord for the portion of the Premises and Term covered by the Transfer. If Tenant is in Default, Landlord may require that all sublease payments be made directly to Landlord, in which case Tenant shall receive a credit against Rent in the amount of Tenant’s share of payments received by Landlord.

9.2.PERMITTED TRANSFER. Notwithstanding the foregoing, Tenant may assign this Lease to a successor to Tenant by merger, consolidation or the purchase of substantially all of Tenant’s assets, or assign this Lease or sublet all or a portion of the Premises to an Affiliate (defined below), without the consent of Landlord, provided that all of the following conditions are satisfied (a “Permitted Transfer”): (i) Tenant is not then in Default hereunder; (ii) Tenant gives Landlord written notice prior to such Permitted Transfer; and (iii) if Tenant ceases to exist as a going concern as a result of any merger or consolidation of Tenant or the sale of all or substantially all of the assets of Tenant, the resulting successor entity has a tangible net worth not less than the tangible net worth of Tenant immediately before the Permitted Transfer. “Affiliate” shall mean an entity controlled by, controlling or under common control with Tenant.

ARTICLE 10. INSURANCE AND INDEMNITY

10.1.TENANT’S INSURANCE. Tenant, at its sole cost and expense, shall provide and maintain in effect the insurance described in Exhibit D. Evidence of that insurance must be delivered to Landlord prior to the Commencement Date.

10.2.TENANT’S INDEMNITY. To the fullest extent permitted by law, but subject to Section 10.4 below, Tenant shall defend, indemnify and hold harmless Landlord and Landlord’s agents, employees, lenders, and affiliates, from and against any and all negligence, claims, liabilities, damages, costs or expenses arising either before or after the Commencement Date which arise from or are caused by Tenant’s use or occupancy of the Premises, the Building or the Common Areas of the Project, or from the conduct of Tenant’s business, or from any activity, work, or thing done, permitted or suffered by Tenant or Tenant’s agents, employees, subtenants, vendors, contractors, invitees or licensees in or about the Premises, the Building or the Common Areas of the Project, or from any Default in the performance of any obligation on Tenant’s part to be performed under this Lease, or from any act, omission or negligence on the part of Tenant or Tenant’s agents, employees, subtenants, vendors, contractors, invitees or licensees. Landlord may, at its option, require Tenant to assume Landlord’s defense in any action covered by this Section 10.2 through counsel reasonably satisfactory to Landlord. Notwithstanding the foregoing, Tenant shall not be obligated to indemnify Landlord against any liability or expense to the extent it is ultimately determined that the same was caused by the sole negligence or willful misconduct of Landlord, its agents, contractors or employees.

10.3.WAIVER OF CLAIMS. Landlord shall not be liable to Tenant, its employees, agents and invitees, and Tenant hereby waives all claims against Landlord, its employees and agents for loss of or damage to any property, or any injury to any person, resulting from any condition including, but not limited to, acts or omissions (criminal or otherwise) of third parties and/or other tenants of the Project, or their agents, employees or invitees, fire, explosion, falling plaster, steam, gas, electricity, water or rain which may leak or flow from or into any part of the Premises or from the breakage, leakage, obstruction or other defects of the pipes, sprinklers, wires, appliances, plumbing, air conditioning, electrical works or other fixtures in the Building, whether the damage or injury results from conditions arising in the Premises or in other portions of the Building, regardless of the negligence of Landlord, its agents or any and all affiliates of Landlord in connection with the foregoing. Notwithstanding anything to the contrary contained in this Lease, in no event shall Landlord be liable for Tenant’s loss or interruption of business or income (including without limitation, Tenant’s consequential damages, lost profits or opportunity costs), or for interference with light or other similar intangible interests.

10.4.WAIVER OF SUBROGATION. Landlord and Tenant waive all rights of recovery against the other on account of loss and damage to the property of such waiving party to the extent that the waiving party is entitled to proceeds for such loss and damage under any property insurance policies carried or otherwise required to be carried by this Lease.

ARTICLE 11. DAMAGE OR DESTRUCTION

11.1.RESTORATION.

(a)If the Building of which the Premises are a part is damaged as the result of an event of casualty, then subject to the provisions below, Landlord shall repair that damage as soon as reasonably possible unless Landlord reasonably determines that: (i) the Premises have been materially damaged and there is less than 1 year of the Term remaining on the date of the casualty; (ii) any Mortgagee (defined in Section 13.1) requires that the insurance proceeds be applied to the payment of the mortgage debt; or (iii) proceeds necessary to pay the full cost of the repair are not available from Landlord’s insurance, including without limitation earthquake insurance. Should Landlord elect not to repair the damage for one of the preceding reasons, Landlord shall so notify Tenant in the “Casualty Notice” (as defined below), and this Lease shall terminate as of the date of delivery of that notice.

(b)As soon as reasonably practicable following the casualty event but not later than 60 days thereafter, Landlord shall notify Tenant in writing (“Casualty Notice”) of Landlord’s election, if applicable, to terminate this Lease. If this Lease is not so terminated, the Casualty Notice shall set forth the anticipated period for repairing the casualty damage. If the anticipated repair period exceeds 270 days and if the damage is so extensive as to reasonably prevent Tenant’s substantial use and enjoyment of the Premises, then either party may elect to terminate this Lease by written notice to the other within 10 days following delivery of the Casualty Notice.

(c)In the event that neither Landlord nor Tenant terminates this Lease pursuant to Section 11.1(b), Landlord shall repair all material damage to the Premises or the Building as soon as reasonably possible and this Lease shall continue in effect for the remainder of the Term. Upon notice from Landlord, Tenant shall assign or endorse over to Landlord (or to any party designated by Landlord) all property insurance proceeds payable to Tenant under Tenant’s insurance with respect to any Alterations. Within 15 days of demand, Tenant shall also pay Landlord for any additional excess costs that are determined during the performance of the repairs to such Alterations.

(d)From and after the 6th business day following the casualty event, the rental to be paid under this Lease shall be abated in the same proportion that the Floor Area of the Premises that is rendered unusable by the damage from time to time bears to the total Floor Area of the Premises.

(e)Notwithstanding the provisions of subsections (a), (b) and (c) of this Section 11.1, but subject to Section 10.4, the cost of any repairs shall be borne by Tenant, and Tenant shall not be entitled to rental abatement or termination rights, if the damage is due to the fault or neglect of Tenant or its employees, subtenants, contractors, invitees or representatives.

11.2.LEASE GOVERNS. Tenant agrees that the provisions of this Lease, including without limitation Section 11.1, shall govern any damage or destruction and shall accordingly supersede any contrary statute or rule of law.

ARTICLE 12. EMINENT DOMAIN

Either party may terminate this Lease if any material part of the Premises is taken or condemned for any public or quasi-public use under Law, by eminent domain or private purchase in lieu thereof (a “Taking”). Landlord shall also have the right to terminate this Lease if there is a Taking of any portion of the Building or Project which would have a material adverse effect on Landlord’s ability to profitably operate the remainder of the Building or Project. The termination shall be effective as of the effective date of any order granting possession to, or vesting legal title in, the condemning authority. All compensation awarded for a Taking shall be the property of Landlord. Tenant agrees that the provisions of this Lease shall govern any Taking and shall accordingly supersede any contrary statute or rule of law.

ARTICLE 13. SUBORDINATION; ESTOPPEL CERTIFICATE

13.1.SUBORDINATION. Tenant accepts this Lease subject and subordinate to any mortgage(s), deed(s) of trust, ground lease(s) or other lien(s) now or subsequently arising upon the Building or the Project, and to renewals, modifications, refinancings and extensions thereof (collectively referred to as a “Mortgage”). The party having the benefit of a Mortgage shall be referred to as a “Mortgagee.” This clause shall be self-operative, but upon request from a Mortgagee, Tenant shall execute a commercially reasonable subordination and attornment agreement in favor of the Mortgagee, provided such agreement provides a non-disturbance covenant benefitting Tenant. Alternatively, a Mortgagee shall have the right at any time to subordinate its Mortgage to this Lease. Upon request, Tenant, without charge, shall attorn to any successor to Landlord’s interest in this Lease in the event of a foreclosure of any Mortgage. Tenant agrees that any purchaser at a foreclosure sale or lender taking title under a deed in lieu of foreclosure shall not be responsible for any act or omission of a prior landlord, shall not be subject to any offsets or defenses Tenant may have against a prior landlord, and shall not be liable for the return of the Security Deposit not actually recovered by such purchaser nor bound by any rent paid in advance of the calendar month in which the transfer of title occurred; provided that the foregoing shall not release the applicable prior landlord from any liability for those obligations. Tenant acknowledges that Landlord’s Mortgagees and their successors-in-interest are intended third party beneficiaries of this Section 13.1.

13.2.ESTOPPEL CERTIFICATE. Tenant shall, within 10 days after receipt of a written request from Landlord, execute and deliver a commercially reasonable estoppel certificate in favor of those parties as are reasonably requested by Landlord (including a Mortgagee or a prospective purchaser of the Building or the Project).

ARTICLE 14. DEFAULTS AND REMEDIES

14.1.TENANT’S DEFAULTS. In addition to any other event of default set forth in this Lease, the occurrence of any one or more of the following events shall constitute a “Default” by Tenant:

(a)The failure by Tenant to make any payment of Rent required to be made by Tenant, as and when due, where the failure continues for a period of 3 days after written notice from Landlord to Tenant. The term “Rent” as used in this Lease shall be deemed to mean the Basic Rent and all other sums required to be paid by Tenant to Landlord pursuant to the terms of this Lease.

(b)Except where a specific time period is otherwise set forth for Tenant’s performance in this Lease (in which event the failure to perform by Tenant within such time period shall be a Default), the failure or inability by Tenant to observe or perform any of the covenants or provisions of this Lease to be observed or performed by Tenant, other than as specified in any other subsection of this Section 14.1, where the failure continues for a period of 30 days after written notice from Landlord to Tenant.

The notice periods provided herein are in lieu of, and not in addition to, any notice periods provided by law, and Landlord shall not be required to give any additional notice under California Code of Civil Procedure Section 1161, or any successor statute, in order to be entitled to commence an unlawful detainer proceeding.

14.2.LANDLORD’S REMEDIES. In addition to all other rights or remedies of Landlord set forth in this Lease, if a Default occurs, Landlord shall have all rights available to Landlord under California law, without further notice or demand to Tenant, including, without limitation, the right to terminate this Lease. In addition, Landlord has the remedy described in California Civil Code Section 1951.4 (Landlord may continue this Lease in effect after Tenant's breach and abandonment and recover Rent as it becomes due, if Tenant has the right to sublet or assign, subject only to reasonable limitations). In any case in which Landlord re-enters and occupies the Premises, by unlawful detainer proceedings or otherwise, Landlord, at its option, may repair, alter, subdivide or change the character of the Premises as Landlord deems best, relet all or any part of the Premises and receive the rents therefor, and none of these actions shall constitute a termination of this Lease, a release of Tenant from any liability, or result in the release of any Guarantor. Landlord shall not be deeme d to have terminated this Lease or the liability of Tenant to pay any Rent or other charges later becoming due by any re- entry of the Premises pursuant to this Section 14.2, or by any action in unlawful detainer or otherwise to obtain possession of the Premises, unless Landlord has first given Tenant notice that it is terminating this Lease. Any notice given by Landlord pursuant to Section 14.1 shall be in lieu of, and not in addition to, any notice required by Section 1161 of the California Code of Civil Procedure or superseding statute. Any payment of Rent following Landlord’s delivery of notice to Tenant pursuant to Section 14.1 shall not constitute acceptance of Rent. If Landlord elects to terminate this Lease pursuant to the provisions of this Section 14.2, damages shall include, without limitation, the remedy and measure of damages specified pursuant to California Civil Code Section 1951.2, which shall include the worth at the time of award of the amount by which the unpaid Rent for the balance of the Term after the time of award exceeds the amount of Rent loss Tenant proves could have been reasonably avoided.

14.3.LATE PAYMENTS. Any Rent due under this Lease that is not paid to Landlord within 5 days of the date when due shall bear interest at the maximum rate permitted by law from the date due until fully paid and if any Rent due from Tenant shall not be received by Landlord or Landlord’s designee within 5 days after the date due, then Tenant shall pay to Landlord, in addition to the interest, a late charge for each delinquent payment equal to the greater of (i) 5% of that delinquent payment or (ii) $100.00.

14.4.DEFAULT BY LANDLORD. Landlord shall not be deemed to be in default in the performance of any obligation under this Lease unless and until it has failed to perform the obligation within 30 days after written notice by Tenant to Landlord specifying in reasonable detail the nature and extent of the failure; provided, however, that if the nature of Landlord’s obligation is such that more than 30 days are required for its performance, then Landlord shall not be deemed to be in default if it commences performance within the 30 day period and thereafter diligently pursues the cure to completion.

14.5.EXPENSES AND LEGAL FEES. Should either Landlord or Tenant bring any action in connection with this Lease, the prevailing party shall be entitled to recover as a part of the action its reasonable attorneys’ fees, and all other reasonable costs. The prevailing party for the purpose of this paragraph shall be determined by the trier of the facts.

14.6.JUDICIAL REFERENCE/ WAIVER OF JURY TRIAL. Landlord and Tenant agree that any disputes arising in connection with this Lease (including but not limited to a determination of any and all of the issues in such dispute, whether of fact or of law) shall be resolved (and a decision shall be rendered) by way of a general reference as provided for in Part 2, Title 8, Chapter 6 (§§ 638 et. seq.) of the California Code of Civil Procedure, or any successor California statute governing resolution of disputes by a court appointed referee. Nothing within this Section 14.6 shall apply to an unlawful detainer action. LANDLORD AND TENANT EACH ACKNOWLEDGES THAT IT IS AWARE OF AND HAS HAD THE ADVICE OF COUNSEL OF ITS CHOICE WITH RESPECT TO ITS RIGHT TO TRIAL BY JURY, AND, TO THE EXTENT PERMITTED BY LAW, EACH PARTY DOES HEREBY EXPRESSLY AND KNOWINGLY WAIVE AND RELEASE ALL SUCH RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS LEASE.

14.7.SATISFACTION OF JUDGMENT. The obligations of Landlord do not constitute the personal obligations of the individual partners, trustees, directors, officers, members or shareholders of Landlord or its constituent partners or members. Should Tenant recover a money judgment against Landlord, such judgment shall be satisfied only from the interest of Landlord in the Project and out of the rent or other income from such property receivable by Landlord, and no action for any deficiency may be sought or obtained by Tenant.

ARTICLE 15. END OF TERM

15.1.HOLDING OVER. If Tenant holds over for any period after the Expiration Date (or earlier termination of the Term), such tenancy shall constitute a tenancy at sufferance only and possession shall be subject to all of the terms of this Lease, except that the monthly rental shall be 150% of the total monthly rental for the month immediately preceding the date of termination. The acceptance by Landlord of monthly hold-over rental in a lesser amount shall not constitute a waiver of Landlord’s right to recover the full amount due unless otherwise agreed in writing by Landlord. If Tenant fails to surrender the Premises upon the expiration of this Lease despite demand to do so by Landlord, Tenant shall indemnify and hold Landlord harmless from all loss or liability, including without limitation, any claims made by any succeeding tenant relating to such failure to surrender. The foregoing provisions of this Section 15.1 are in addition to and do not affect Landlord’s right of re-entry or any other rights of Landlord under this Lease or at law.

15.2.SURRENDER OF PREMISES; REMOVAL OF PROPERTY. Upon the Expiration Date or upon any earlier termination of this Lease, Tenant shall quit and surrender possession of the Premises to Landlord in as good order, condition and repair as when received or as hereafter may be improved by Landlord or Tenant, reasonable wear and tear and repairs which are Landlord’s obligation excepted, and shall remove or fund to Landlord the cost of removing all wallpapering, voice and/or data transmission cabling installed by or for Tenant and Required Removables, together with all personal property and debris, and shall perform all work required under Section 7.3 of this Lease. If Tenant shall fail to comply with the provisions of this Section 15.2, and remove any personal property within 10 days following the expiration or earlier termination of this Lease, such personal property shall be conclusively deemed to have been abandoned, then Landlord may effect the removal and/or make any repairs, without notice and without incurring any liability to Tenant, and the cost to Landlord shall be additional rent payable by Tenant upon demand. Tenant hereby waives all rights under and benefits of Section 1993.03 of the California Civil Code, or any similar or successor laws now or hereafter in effect and authorizes Landlord to dispose of any personal property remaining at the Premises following the expiration or earlier termination of this Lease without further notice to Tenant.

ARTICLE 16. PAYMENTS AND NOTICES

All sums payable by Tenant to Landlord shall be paid, without deduction or offset, in lawful money of the United States to Landlord at its address set forth in Item 12 of the Basic Lease Provisions, or at any other place as Landlord may designate in writing. Unless this Lease expressly provides otherwise, all payments shall be due and payable within 5 days after demand. All payments requiring proration shall be prorated on the basis of the number of days in the pertinent calendar month or year, as applicable. Any notice, election, demand, consent, approval or other communication to be given or other document to be delivered by either party to the other may be delivered to the other party, at the address set forth in Item 12 of the Basic Lease Provisions, by personal service or by any courier or “overnight” express mailing service. Either party may, by written notice to the other, served in the manner provided in this Article, designate a different address. The refusal to accept delivery of a notice, or the inability to deliver the notice (whether due to a change of address for which notice was not duly given or other good reason), shall be deemed delivery and receipt of the notice as of the date of attempted delivery. If more than one person or entity is named as Tenant under this Lease, service of any notice upon any one of them shall be deemed as service upon all of them.

ARTICLE 17. RULES AND REGULATIONS

Tenant agrees to comply with the Rules and Regulations attached as Exhibit E, and any reasonable and nondiscriminatory amendments, modifications and/or additions as may be adopted by Landlord from time to time.

ARTICLE 18. BROKER’S COMMISSION

The parties recognize as the broker(s) who negotiated this Lease the firm(s) whose name(s) is (are) stated in Item 10 of the Basic Lease Provisions, and agree that Landlord shall be responsible for the payment of brokerage commissions to those broker(s) unless otherwise provided in this Lease. Tenant agrees to indemnify and hold Landlord harmless from any cost, expense or liability (including reasonable attorneys’ fees) for any compensation, commissions or charges claimed by any other real estate broker or agent employed or claiming to represent or to have been employed by Tenant in connection with the negotiation of this Lease.

ARTICLE 19. TRANSFER OF LANDLORD’S INTEREST

Landlord shall have the right to transfer and assign, in whole or in part, all of its ownership interest, rights and obligations in the Building, Project or Lease, including the Security Deposit, and upon transfer Landlord shall be released from any further obligations hereunder, and Tenant agrees to look solely to the successor in interest of Landlord for the performance of such obligations and the return of any Security Deposit.

ARTICLE 20. INTERPRETATION

20.1.JOINT AND SEVERAL LIABILITY. If more than one person or entity is named as Tenant, the obligations imposed upon each shall be joint and several and the act of or notice from, or notice or refund to, or the signature of, any one or more of them shall be binding on all of them with respect to the tenancy of this Lease, including, but not limited to, any renewal, extension, termination or modification of this Lease.

20.2.SUCCESSORS. Subject to Sections 13.1 and 22.3 and to Articles 9 and 19 of this Lease, all rights and liabilities given to or imposed upon Landlord and Tenant shall extend to and bind their respective heirs, executors, administrators, successors and assigns.

20.3.TIME OF ESSENCE. Time is of the essence with respect to the performance of every provision of this Lease in which time of performance is a factor.

20.4.CONTROLLING LAW. This Lease shall be governed by and interpreted in accordance with the laws of the State of California.

20.5.SEVERABILITY. If any term or provision of this Lease, the deletion of which would not adversely affect the receipt of any material benefit by either party or the deletion of which is consented to by the party adversely affected, shall be held invalid or unenforceable to any extent, the remainder of this Lease shall not be affected and each term and provision of this Lease shall be valid and enforceable to the fullest extent permitted by law.

20.6.WAIVER. One or more waivers by Landlord or Tenant of any breach of any term, covenant or condition contained in this Lease shall not be a waiver of any subsequent breach of the same or any other term, covenant or condition. Consent to any act by one of the parties shall not be deemed to render unnecessary the obtaining of that party’s consent to any subsequent act. No breach of this Lease shall be deemed to have been waived unless the waiver is in a writing signed by the waiving party.

20.7.INABILITY TO PERFORM. In the event that either party shall be delayed or hindered in or prevented from the performance of any work or in performing any act required under this Lease by reason of any cause beyond the reasonable control of that party, then the performance of the work or the doing of the act shall be excused for the period of the delay and the time for performance shall be extended for a period equivalent to the period of the delay. The provisions of this Section 20.7 shall not operate to excuse Tenant from the prompt payment of Rent.

20.8.ENTIRE AGREEMENT. This Lease constitutes the entire agreement between the parties and supersedes all prior agreements and understandings related to the Premises. This Lease may be modified only by a written agreement signed by Landlord and Tenant.

20.9.QUIET ENJOYMENT. Upon the observance and performance of all the covenants, terms and conditions on Tenant’s part to be observed and performed, and subject to the other provisions of this Lease, Tenant shall have the right of quiet enjoyment and use of the Premises for the Term without hindrance or interruption by Landlord or any other person claiming by or through Landlord.

20.10.SURVIVAL. All covenants of Landlord or Tenant which reasonably would be intended to survive the expiration or sooner termination of this Lease, including without limitation any warranty or indemnity hereunder, shall so survive and continue to be binding upon and inure to the benefit of the respective parties and their successors and assigns.

ARTICLE 21. EXECUTION

21.1.COUNTERPARTS; DIGITAL SIGNATURES. This Lease may be executed in one or more counterparts, each of which shall constitute an original and all of which shall be one and the same agreement. The parties agree to accept a digital image (including but not limited to an image in the form of a PDF, JPEG, GIF file, or other e-signature) of this Lease, if applicable, reflecting the execution of one or both of the parties, as a true and correct original.

21.2.CORPORATE AND PARTNERSHIP AUTHORITY. Tenant and each individual executing this Lease represents and warrants to Landlord, and agrees, that such individual executing this Lease on behalf of Tenant is authorized to do so on behalf of Tenant.

21.3.EXECUTION OF LEASE; NO OPTION OR OFFER. The submission of this Lease to Tenant shall be for examination purposes only, and shall not constitute an offer to or option for Tenant to lease the Premises. Execution of this Lease by Tenant and its return to Landlord shall not be binding upon Landlord, notwithstanding any time interval, until Landlord has in fact executed and delivered this Lease to Tenant, it being intended that this Lease shall only become effective upon execution by Landlord and delivery of a fully executed counterpart to Tenant.

21.4.BROKER DISCLOSURE. By the execution of this Lease, each of Landlord and Tenant hereby acknowledge and confirm (a) receipt of a copy of a Disclosure Regarding Real Estate Agency Relationship conforming to the requirements of California Civil Code 2079.16, and (b) the agency relationships specified in Item 10 of the Basic Lease Provisions, which acknowledgement and confirmation is expressly made for the benefit of Tenant’s Broker identified in Item 10 of the Basic Lease Provisions. If there is no Tenant’s Broker so identified in Item 10 of the Basic Lease Provisions, then such acknowledgement and confirmation is expressly made for the benefit of Landlord’s Broker. By the execution of this Lease, Landlord and Tenant are executing the confirmation of the agency relationships set forth in Item 10 of the Basic Lease Provisions.

ARTICLE 22. MISCELLANEOUS

22.1.NONDISCLOSURE OF LEASE TERMS. Except to the extent disclosure is required by law, Tenant shall keep the content of this Lease and any related documents confidential and shall not disclose such confidential information to any person or entity other than Tenant’s financial, legal and space-planning consultants, provided, however, that Tenant may disclose the terms to prospective subtenants or assignees under this Lease or pursuant to legal requirement.

22.2.TENANT’S FINANCIAL STATEMENTS. The application, financial statements and tax returns, if any, submitted and certified to by Tenant as an accurate representation of its financial condition have been prepared, certified and submitted to Landlord as an inducement and consideration to Landlord to enter into this Lease. Tenant shall during the Term furnish Landlord with current annual financial statements accurately reflecting Tenant’s financial condition upon written request from Landlord within 10 days following Landlord’s request; provided, however, that so long as Tenant is a publicly traded corporation on a nationally recognized stock exchange, the foregoing obligation to deliver the statements shall be waived.

22.3.MORTGAGEE PROTECTION. No act or failure to act on the part of Landlord which would otherwise entitle Tenant to be relieved of its obligations hereunder or to terminate this Lease shall result in such a release or termination unless (a) Tenant has given notice by registered or certified mail to any Mortgagee of a Mortgage covering the Building whose address has been furnished to Tenant and (b) such Mortgagee is afforded a reasonable opportunity to cure the default by Landlord. Tenant shall comply with any written directions by any Mortgagee to pay Rent due hereunder directly to such Mortgagee without determining whether a default exists under such Mortgagee’s Mortgage.

22.4.SDN LIST. Tenant hereby represents and warrants that neither Tenant nor any officer, director, employee, partner, member or other principal of Tenant (collectively, “Tenant Parties”) is listed as a Specially Designated National and Blocked Person (“SDN”) on the list of such persons and entities issued by the U.S. Treasury Office of Foreign Assets Control (OFAC). In the event Tenant or any Tenant Party is or becomes listed as an SDN, Tenant shall be deemed in breach of this Lease and Landlord shall have the right to terminate this Lease immediately upon written notice to Tenant.

[Signature page follows]

IN WITNESS WHEREOF, the parties have executed this Lease as of the day and year first above written.


LANDLORD:		TENANT:

LAKEVIEW BUSINESS CENTER LLC,		MULLEN AUTOMOTIVE INC.,
a Delaware limited liability company		a Delaware corporation

By:		By:

	Steven M. Case		David Michery
	Executive Vice President		CEO and Founder
	Office Properties

By:

	Holly McManus
	Vice President, Operations
	Office Properties

Exhibit 10.8

CONSULTING
AGREEMENT

This Consulting Agreement (this “Agreement”) is made and entered into this 12th day of January 2022, by and between Mullen Automotive , Inc., a Delaware corporation located at 1405 Pioneer Street, Brea, CA 92821 (the “Company”) and Ignacio Novoa, an individual residing at 10443 Boxwood Terrace, Santa Fay Springs, CA 90670 (the “Consultant”).

In consideration of the mutual benefits and obligations set forth in this Agreement, the receipt and sufficiency of which consideration is hereby acknowledged, the Company and the Consultant (individually “Party” and collectively “Parties”) agree as follows:

SERVICES PROVIDED

The Company hereby agrees to engage the Consultant to provide Electric Vehicle market research, analysis of market trends in the Electric vehicle industry and such other research and services as may be required by the Company during the Term (the “Services”). The Services being rendered hereunder (i) shall be rendered by the Consultant, who is a natural person, (ii) are bona fide services and (iii) are not in connection with the offer or sale of securities in a capital raising transaction, and do not directly or indirectly promote or maintain a market for the Company’s securities.

The Services may also include any other consulting tasks which the Parties may agree on. The Consultant hereby agrees to provide such Services to the Company.

TERMS OF THE AGREEMENT

The term of the Agreement (“Term”) will begin on the date of this Agreement and will remain in full force and effect for one year from the execution of this Agreement, unless extended in writing by the Parties hereto.

PERFORMANCE

4.The Consultant agrees devote such time, attention and energy as reasonably necessary to perform the Services.

COMPENSATION

5.As compensation for entering into this Agreement and providing the Services to the Company, the Company will compensate the Consultant with 100,000- (One Hundred Thousand) unrestricted shares of the Company’s common stock registered on Form S-8, (the “Compensation”). In the event that this Agreement is terminated by the Company for any reason whatsoever, the Compensation shall be due and pay able to the Consultant prior to any such termination.

REIMBURSEMENT OF EXPENSES

The Company will not be responsible for any expenses of the Consultant and all fees and expenses Consultant incurs while providing the Services will be the sole responsibility of the Consultant.

CONFIDENTIALITY

Confidential information (“Confidential Information”) refers to any data or any information relating to the Company, whether business or personal, which would reasonably be considered to be private or proprietary to the Company and that is not generally known and where the release of that Confidential Information could reasonably be expected to cause harm to the Company.

The Consultant agrees that they will not disclose, divulge, reveal, report or use, for any purpose, any Confidential Information which the Consultant has obtained, except as authorized by the Company or as required by law. The obligations of confidentiality will apply during the term of this Agreement and will survive indefinitely upon termination of this Agreement.

All written and oral information and material disclosed or provided by the Company to the Consultant under this Agreement is Confidential Information regard less of whether it was provided before or after the date of this Agreement or how it was provided to the Consultant.

OWNERSHIP OF INTELLECTUAL PROPERTY

10.

All intellectual property and related material, including any trade secrets, moral rights, goodwill, relevant registrations or applications for registration, and rights in any patent, copyright, trademark, trade dress, industrial design and trade name (“Intellectual Property”) that is developed or produced under this Agreement, is a “work made for hire” and will be the sole property of the Company.

RETURN OF PROPERTY

11.

Upon the expiration of this Agreement, the Consultant will return to the Company any property, documentation, records, or Confidential Information which is the property of the Company.

CAPACITY/INDEPENDENT CONTRACTOR

12.

In providing the Services under this Agreement it is expressly agreed that the Consultant is acting as an independent contractor and not as an employee. The

Consultant and the Company acknowledge that this Agreement does not create a partnership or joint venture between them, and is exclusively a contract for service. The Company is not required to pay, or make contributions to, any social security local, state or federal tax, unemployment compensation, workers’ compensation, insurance premium, profit-sharing, pension or any other employee benefit for the Consultant during the term of this Agreement. The Consultant is responsible for paying, and complying with reporting requirements for, all local, state and federal taxes related to payments made to the Consultant under this Agreement.

Consultant’s engagement does not involve the promotion or marketing of the Company’s securities (including its common stock), nor does it involve raising money for the Company

RIGHT OF SUBSTITUTION

13.

Except as otherwise provided in this Agreement, Consultant may not engage a third-party subcontractor to perform any of the obligations of the Consultant un der this Agreement unless authorized in writing by the Company.

14.

In the event the Consultant, with the consent of the Company, hires a sub-contractor:

The Consultant shall pay the sub-contractor for its services and the compensation shall remain payable by the Company to the Consultant.

For the purposes of indemnification, the sub-contractor is an agent of the Consultant.

AUTONOMY

15.

Except as otherwise provided in this Agreement, the Consultant shall have full control over working time, methods, and decision making in relation to provisions of the Services in accordance with the Agreement. The Consultant will work

autonomously and not at the direction of the Company. However, the Consultant will be responsive to the reasonable needs and concerns of the Company.

EQUIPMENT

16.

Except as otherwise provided in this Agreement, the Consultant will provide at the Consultant’s own expense, any and all equipment, software, materials, and any other supplies necessary to deliver the Services in accordance with the Agreement.

NO EXCLUSIVITY

17.

The Parties acknowledge that this Agreement is non-exclusive and either Party will be free, during and after the term of this Agreement, to engage or contract with third-parties for the provision of services similar to the Services.

NOTICE

18.

Any notice or other communication required under this Agreement shall be in writing and sent to the address set forth as follows:

If to Company:

Mullen Automotive, Inc.
1405 Pioneer Street

Brea, CA 92821

If to Consultant:

Ignacio Novoa

10443 Boxwood Terrace

Santa Fay Springs, CA 90670

Notices or communications to or between the Parties shall be deemed to have been delivered when mailed by first class mail, provided that notice of default or termination shall be sent by registered or certified mail, or, if personally

delivered, when received by such party.

INDEMNIFICATION

19.

Expect to the extent paid in settlement from any applicable insurance policies, and to the extent permitted by applicable law, each Party agrees to indemnify and hold harmless the other Party, and its respective affiliates, officers, agents, employees, and permitted successors and assigns against any and call claims, losses, damages, liabilities, penalties, punitive damages, expenses, reasonable legal fees and costs of any kind or amount whatsoever, which result from or arise out of any act or omission of the indemnifying party, its respective affiliates, officers, agents, employees, and permitted successors and assigns that occurs in connection with this Agreement. This indemnification will survive the termination of this Agreement.

MODIFICATION OF AGREEMENT

20.

Any amendment or modification of this Agreement or additional obligation assumed by either Party in connection with this Agreement will only be binding if evidenced in writing signed by each Party or an authorized representative of each Party.

ASSIGNMENT

21.

The Consultant will not voluntarily, or by operation of law, assign or otherwise transfer its obligations under this Agreement without the prior written consent of the Company.

ENTIRE AGREEMENT

22.

All other prior discussions, communications and representations concerning the subject matter of this Agreement are superseded by the terms of this Agreement, and except as specifically provided herein, this Agreement constitutes the entire agreement with respect to the subject matter hereof.

GOVERNING LAW

23.

This Agreement will be governed by and construed in accordance with the laws of the State of California.

SEVERABILITY

24.

In the event that any court of competent jurisdiction shall hold any provision of this Agreement unenforceable or invalid, such holding shall not invalidate or ren der unenforceable any other provision hereof.

WAIVER

25.

The waiver by either Party of a breach, default, delay or omission of any of the provisions of this Agreement by the other Party will not be construed as a waiver of any subsequent breach of the same or other provisions.

DISPUTES

26.

Any controversy or claim by Consultant against the Company or any of its parent companies, subsidiaries, affiliates (and/or officers, directors, employees, representatives or agents of the Company and such parent companies, subsidiaries and/or affiliates), including any controversy or claim arising from, out of or relating to this Agreement, the breach thereof, or the Services or termination thereof of Consultant by the Company which would give rise to a claim under federal, state or local law (including, but not limited to, claims based in tort or contract, claims for discrimination under state or federal law, and/or claims for violation of any federal, state or local law, statute or regulation), or any claim against Consultant by the Company (individually and/or collectively, “Claim[s]”) shall be submitted to an impartial mediator (“Mediator”) selected jointly by the Parties. Both Parties shall attend a mediation conference and attempt to resolve any and all Claims. If the Parties are not able to resolve all Claims, then upon written demand for arbitration to the other Party, which demand shall be made within a reasonable time after the Claim has arisen, any unresolved Claims shall be determined by final and

binding arbitration in California, in accordance with the provisions of the Ameri can Arbitration Association (collectively, “Rules”) by a neutral arbitrator experienced in employment law, licensed to practice law in California. In no event shall the demand for arbitration be made after the date when the institution of legal and/or equitable proceedings based upon such Claim would be barred by the applicable statute of limitations. Each Party to the arbitration will be entitled to be represented by counsel and will have the opportunity to take depositions in California, of any opposing Party or witnesses selected by such Party and/or request production of documents by the opposing Party before the arbitration hearing. By mutual agreement of the Parties, additional depositions may be taken at other lo cations. In addition, upon a Party’s showing of need for additional discovery, the arbitrator shall have discretion to order such additional discovery. Consultant acknowledges and agrees that Consultant is familiar with and fully understands the need for preserving the confidentiality of the Company’s agreements with third parties and compensation of the Company’s employees. Accordingly, Consultant hereby agrees that to the extent the arbitrator determines that documents, correspondence or other writings (or portions thereof) whether internal or from any third party, relating in any way to Consultant’s agreements with third parties and/or compensation of other employees are necessary to the determination of any Claim, Consultant and/or Consultant’s representatives may discover and examine such documents, correspondence or other writings only after execution of an ap propriate confidentiality agreement. Each Party shall have the right to subpoena witnesses and documents for the arbitration hearing. A court reporter shall record all arbitration proceedings. With respect to any Claim brought to arbitration here under, either Party may be entitled to recover whatever damages would otherwise be available to that Party in any legal proceeding based upon the federal and/or state law applicable to the matter. The arbitrator shall issue a written decision set ting forth the award and the findings and/or conclusions upon which such award is based. The decision of the arbitrator may be entered and enforced in any court of competent jurisdiction by either the Company or Consultant. Notwithstanding the foregoing, the result of any such arbitration shall be binding but shall not be made public (including by filing a petition to confirm the arbitration award), un less necessary to confirm such arbitration award after non-payment of the award for a period of at least fifteen (15) days after notice to the Company of the arbitrators decision or otherwise required by law. Each Party shall pay the fees of their respective attorneys (except as otherwise awarded by the arbitrator), the expenses of their witnesses, and all other expenses connected with presenting their Claims or defense(s). Other costs of arbitration shall be borne by the Company. Except as set forth herein, should the Consultant or Company pursue any Claim by any method other than said arbitration, the responding Party shall be entitled to re cover from the other Party all damages, costs, expenses, and reasonable outside attorneys’ fees incurred as a result of such action. The provisions contained in this paragraph shall survive the termination of the Consultant’s Services to the Company. Notwithstanding anything set forth above, Consultant agrees that any breach or threatened breach of this Agreement may result in irreparable injury

to the Company, and therefore, in addition to the procedures set forth above, the Company may be entitled to file suit in a court of competent jurisdiction to seek a Temporary Restraining Order and/or preliminary or permanent injunction or other equitable relief to prevent a breach or contemplated breach of such provisions.

IN WITNESS THEREOF, the parties signify their agreement effective the date above first written by the signatures affixed below.


COMPANY		CONSULTANT

Mullen Automotive , Inc.		Ignacio Novoa

/s/ David Michery, CEO		/s/ Ignacio Novoa


By : David Michery, CEO
Date: 1/12/2022		Date: 1/12/2022

Exhibit 31.1

CEO Certification

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, David Michery, certify that:

I have reviewed this report on Form 10-Q of Mullen Automotive Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a

material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date:	August 12, 2022	By:	/s/ David Michery
			David Michery
			Chief Executive Officer

Exhibit 31.2

CFO Certification

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Kerri Sadler, certify that:

I have reviewed this report on Form 10-Q of Mullen Automotive Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a

material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date:	August 12, 2022	By:	/s/ Kerri Sadler
			Kerri Sadler
			Chief Financial Officer

Exhibit 32.1

CERTIFICATION

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 10-Q for the period ended June 30, 2022 of Mullen Automotive Inc. (the “Company”) as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned, in the capacities and on the dates indicated below, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the periods presented in the Report.

XX
By:	/s/ David Michery
	David Michery
	Chief Executive Officer
	August 12, 2022


By:	/s/ Kerri Sadler
	Kerri Sadler
	Chief Financial Officer
	August 12, 2022