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 December 31, 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	86-3289406
(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 February 9, 2023 a total of 1,747,209,236 shares of the Registrant’s common stock, par value $0.001 per share, (“Common Stock”) were issued and outstanding.

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 December 31, 2022 (unaudited) and September 30, 2022	2
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended December 31, 2022 and 2021 (unaudited)	3
	Condensed Consolidated Statements of Stockholders Equity (Deficit) for the three months ended December 31, 2022 and 2021 (unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the three months ended December 31, 2022 and 2021 (unaudited)	6
	Notes to Unaudited Condensed Consolidated 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	40
Item 4.	Controls and Procedures	40
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	42
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42
Item 3.	Defaults Upon Senior Securities	42
Item 4.	Mine Safety Disclosures	42
Item 5.	Other Information	42
Item 6.	Exhibits	43
SIGNATURES		44

1

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

MULLEN AUTOMOTIVE INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

	December 31, 2022		September 30, 2022
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	68,071,635	$	54,085,685
Restricted cash		39,357,576		30,289,400
Receivable for over issuance of shares		17,909,254		—
Inventory		6,958,158		—
Prepaid expenses and other current assets		3,260,726		1,958,759
TOTAL CURRENT ASSETS		135,557,349		86,333,844
Property, equipment and leasehold improvements, net		89,796,658		14,803,716
Intangible assets, net		113,377,931		93,947,018
Deposit on ELMS purchase		—		5,500,000
Accounts receivable from related party		1,232,387		1,232,387
Right-of-use assets		4,763,589		4,597,052
Goodwill		92,834,832		92,834,832
Other assets		3,389,293		3,345,631
TOTAL ASSETS	$	440,952,039	$	302,594,479
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable	$	14,123,277	$	6,398,425
Accrued expenses and other current liabilities		6,225,969		7,185,881
Dividends payable		8,400,933		7,762,255
Derivative liabilities		261,480,084		84,799,179
Liability to issue shares		11,599,598		10,710,000
Lease liabilities, current portion		1,696,626		1,428,474
Notes payable, current portion		93,837,257		3,856,497
Other current liabilities		103,372		90,372
TOTAL CURRENT LIABILITIES		397,467,116		122,231,083
Notes payable, net of current portion		4,890,475		5,164,552
Lease liabilities, net of current portion		3,381,024		3,359,354
Deferred tax liability		14,463,705		14,882,782
TOTAL LIABILITIES		420,202,320		145,637,771
Commitments and contingencies (Note 17)
STOCKHOLDERS' EQUITY
Preferred stock, $0.001 par value, 500,000,000 preferred shares authorized
Preferred Series A; 200,000 shares authorized; 1,924 and 1,924 shares issued and outstanding at December 31, 2022 and September 30, 2022 respectively.		2		2
Preferred Series C; 40,000,000 shares authorized; 1,210,056 and 1,360,321 shares issued and outstanding at December 31, 2022 and September 30, 2022 respectively.		1,210		1,360
Preferred Series D; 437,500,001 shares authorized; 363,098 and 4,359,652 shares issued and outstanding at December 31, 2022 and September 30, 2022 respectively.		363		4,359
Preferred Series AA; 1 share authorized; 1 and zero shares issued and outstanding at December 31, 2022 and September 30, 2022 respectively.		—		—
Common Stock; $0.001 par value; 1,750,000,000 shares authorized; 1,693,663,180 and 833,468,180 shares issued and outstanding at December 31, 2022 and September 30, 2022 respectively.		1,693,663		833,468
Additional Paid-in Capital		1,189,162,862		947,765,155
Accumulated Deficit		(1,266,183,241)		(889,907,455)
Non-controlling interest		96,074,860		98,259,819
TOTAL STOCKHOLDERS' EQUITY		20,749,719		156,956,708
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	440,952,039	$	302,594,479

See accompanying notes to condensed consolidated financial statements.

2

MULLEN AUTOMOTIVE INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

	Three months ended December 31,
	2022		2021
OPERATING EXPENSES
General and administrative	$	64,996,011	$	12,901,084
Research and development		8,622,009		1,157,323
Total Operating Expense		73,618,020		14,058,407
Loss from Operations		(73,618,020)		(14,058,407)
Other financing costs - initial recognition of derivative liabilities		(255,960,025)		(108,979,229)
Gain / (loss) extinguishment of debt, net		(6,412,170)		74,509
Revaluation of derivative liabilities		(40,781,976)		(10,618,382)
Interest expense		(2,828,089)		(3,226,769)
Loan amortization expense		—		(19,212,176)
Deferred tax benefit		493,654		—
Other income (expense), net		645,881		(41,096)
Net loss before accrued preferred dividends and noncontrolling interest		(378,460,745)		(156,061,550)
Net loss attributable to noncontrolling interest		2,184,959		—
Net loss attributable to shareholders		(376,275,786)		(156,061,550)
Accrued preferred dividends		(638,677)		—
Net Loss attributable to common shareholders	$	(376,914,463)	$	(156,061,550)
Net loss per share	$	(0.28)	$	(8.93)
Weighted average shares outstanding, basic and diluted		1,360,570,075		17,471,173

See accompanying notes to condensed consolidated financial statements.

3

MULLEN AUTOMOTIVE INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(unaudited)

	Three Months Ended December 31, 2021
	Preferred Stock																									Deficiency in
	Series A			Series B			Series C			Series D			Series AA			Common Stock				Paid-in		Accumulated		Non-controlling		Stockholders'
	Shares	Amount		Shares	Amount		Shares		Amount	Shares		Amount	Shares		Amount	Shares		Amount		Capital		Deficit		Interest		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	—		—	—		—	—		—	—		—	—		—	—		—		—		—		—		—
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		(150,374,649)		—		25,972,468

4

	Three Months Ended December 31, 2022
	Preferred Stock
	Series A			Series B			Series C			Series D			Series AA			Common Stock				Paid-in		Accumulated		Non-controlling		Stockholders'
	Shares	Amount		Shares	Amount		Shares		Amount	Shares		Amount	Shares		Amount	Shares		Amount		Capital		Deficit		Interest		Equity
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	$	(150,374,649)	$	—	$	25,972,468
Balance, September 30, 2022	1,924		2	—		—	1,360,321		1,360	4,359,652		4,360	—		—	833,468,180		833,467		947,765,156		(889,907,455)		98,259,819		156,956,709
Share-based compensation issued to management, directors, employees, and consultants	—		—	—		—	—		—	—		—	—		—	113,890,600		113,891		30,153,769		—		—		30,267,660
Shares issued to extinguish penalty	—		—	—		—	—		—	—		—	—		—	23,000,000		23,000		5,497,000		—		—		5,520,000
Cashless Warrant exercise - C	—		—	—		—	—		—	—		—	—		—	128,463,567		128,464		39,059,514		—		—		39,187,978
Cashless Warrant exercise - D	—		—	—		—	—		—	—		—	—		—	229,098,769		229,099		70,910,165		—		—		71,139,264
Surplus common stock issued on cashless warrant exercise	—		—	—		—	—		—	—		—	—		—	78,718,040		78,718		26,656,760		—		—		26,735,478
Issuance of common stock for conversion of preferred stock	—		—	—		—	(150,265)		(150)	(3,996,554)		(3,997)	—		—	4,146,819		4,147		—		—		—		0
Dividends accumulated on preferred stock	—		—	—		—	—		—	—		—	—		—	—		-		(638,677)		—		—		(638,677)
Other transactions	—		—	—		—	—		—	—		—	—		—	—		-		(3,122,227)		—		—		(3,122,227)
Shares issued to settle note payable	—		—	—		—	—		—	—		—	—		—	62,048,666		62,049		13,674,354		—		—		13,736,403
Shares issued for convertible notes	—		—	—		—	—		—	—		—	—		—	220,828,539		220,828		59,182,048		—		—		59,402,876
Preferred shares issued to officers	—		—	—		—	—		—	—		—	1		—	—		-		25,000		—		—		25,000
Net loss allocable to non-controlling interest												—	—		—	—		-		—		—		(2,184,959)		(2,184,959)
Net Loss	—		—	—		—	—		—	—		—	—		—	—		—		—		(376,275,786)		—		(376,275,786)
Balance, December 31, 2022	1,924		2	—		—	1,210,056		1,210	363,098		363	1		—	1,693,663,180		1,693,663		1,189,162,862		(1,266,183,241)		96,074,860		20,749,719

See accompanying notes to condensed consolidated financial statements.

5

MULLEN AUTOMOTIVE INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

	Three Months Ended December 31,
	2022		2021
Cash Flows from Operating Activities
Net loss before accrued preferred dividends and noncontrolling interest	$	(378,460,745)	$	(156,061,550)
Adjustments to reconcile net loss attributable to shareholders to net cash used in operating activities:
Depreciation and amortization		4,794,327		307,699
Officer and employee stock compensation		36,305,972		1,604,293
Revaluation of derivative liabilities		40,781,976		10,618,382
Issuance of shares for services		4,376,438		2,495,487
Issuance of stock to directors		71,000		—
Gain on conversion of derivative liabilities to common stock		(9,965,728)		—
Non-cash financing loss on over-exercise of warrants		8,934,892		—
Other financing costs - initial recognition of derivative liabilities		255,960,025		108,979,229
Non-cash interest and other operating activities		—		3,062,048
Non-cash lease expense		—		136,938
Amortization of debt discount		—		19,212,176
Loss on asset disposal		—		1,298
Loss/(gain) on extinguishment of debt		6,412,171		(74,509)
Loss on debt settlement		—		41,096
Changes in operating assets and liabilities:
Other current assets		(8,260,125)		(1,226,376)
Other assets		(197,199)		(1,225,252)
Accounts payable		7,724,852		(977,783)
Accrued expenses and other liabilities		(1,576,292)		(1,468,751)
Deferred tax liability		(419,077)		—
Lease liabilities		289,821		(137,228)
Net cash used in operating activities		(33,227,692)		(14,712,803)
Cash Flows from Investing Activities
Purchase of equipment		(726,482)		(10,462,219)
Purchase of intangible assets		(74,826)		—
ELMS asset purchase		(92,916,874)		—
Net cash used in investing activities		(93,718,182)		(10,462,219)
Cash Flows from Financing Activities
Proceeds from issuance of notes payable		150,000,000		7,300,000
Proceeds from issuance of common stock		—		10,894,659
Proceeds from issuance of preferred stock		—		20,000,000
Payment of notes payable		—		(13,000,351)
Net cash provided by financing activities		150,000,000		25,194,308
Increase in cash		23,054,126		19,286
Cash, cash equivalents and restricted cash, beginning of period		84,375,085		42,174
Cash, cash equivalents and restricted cash, ending of period	$	107,429,211	$	61,460
Supplemental disclosure of Cash Flow information:
Cash paid for interest	$