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QuarterlyReportonForm10-QMULLEN AUTOMOTIVE INC.

Table ofQUARTERLY REPORT ON FORM 10-Q

ContentsTABLE OF CONTENTS

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​	​ Page ​ Page No.​ ​ ​ ​ PART I — FINANCIAL INFORMATIONI. Item 1.​ Financial StatementsFINANCIAL INFORMATION 3​ ​ ​ ​ ​ ​ ​ Item 1. ​ Unaudited Financial Statements: ​ 2 ​ ​ ​ ​ ​ ​ ​ Condensed Consolidated Balance Sheets – at Marchas of December 31, 2021 (unaudited) and December 31, 2020September 30, 2021 3​ 2 ​ ​ ​ ​ ​ ​ ​ Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss – for the Three Months Ended Marchthree months ended December 31, 2021 and 2020 (unaudited) 4​ 3 ​ ​ ​ ​ ​ ​ ​ Unaudited Condensed Consolidated Statements of Stockholders Equity for the three months ended December 31, 2021 and 2020 (unaudited) ​ 4 ​ ​ ​ ​ ​ ​ ​ Condensed Consolidated Statements of Cash Flows – for the Three Months Ended Marchthree months ended December 31, 2021 and 2020 (unaudited) ​ 5 ​ ​ ​ ​ ​ ​ ​ Notes to Unaudited Condensed Consolidated Interim Financial Statements ​ 6 ​ ​ ​ ​ ​ Item 2. ​ Management’s Discussion and Analysis of Financial Condition and Results of Operations 21​ 38 ​ ​ ​ ​ ​ Item 3. ​ Quantitative and Qualitative Disclosures About Market Risk ​ 44 ​ ​ ​ ​ ​ Item 4. ​ Controls and Procedures ​ 44 ​ ​ ​ ​ ​ PART II. 31 Item 4.​ Controls and Procedures 31 PART II — OTHER INFORMATION 32​ ​ ​ ​ ​ ​ ​ Item 1. ​ Legal Proceedings ​ 46 ​ ​ ​ ​ ​ Item 1A. ​ Risk Factors ​ 46 ​ ​ ​ ​ ​ Item 2. ​ Unregistered Sales of Equity Securities and Use of Proceeds ​ 46 ​ ​ ​ ​ ​ Item 3. ​ Defaults Upon Senior Securities ​ 46 ​ ​ ​ ​ ​ Item 4. ​ Mine Safety Disclosures ​ 46 ​ ​ ​ ​ ​ Item 5. ​ Other Information ​ 46 ​ ​ ​ ​ ​ Item 6. ​ Exhibits ​ 48 ​ ​ ​ ​ ​ SIGNATURES 32 Item 1A.​ Risk Factors 32 Item 6. Exhibits 32 Signatures 3349 ​ ​ ​ F-1 Table of Contents PART I. FINANCIAL INFORMATION PART I — FINANCIAL INFORMATION Item 1 — Item 1. Financial Statements NET ELEMENT, INC. CONDENSEDCONSOLIDATEDBALANCESHEETS (UNAUDITED)​ MULLEN AUTOMOTIVE, INC.     March 31, 2021   December 31, 2020 ASSETS                 Current assets:                 Cash   $ 4,102,887   $ 4,541,013 Accounts receivable, net   8,918,185   7,109,173 Due from Mullen Technologies, Inc.   1,479,975   480,000 Prepaid expenses and other assets   1,245,783   1,837,972 Total current assets, net   15,746,830   13,968,158 Intangible assets, net   3,078,168   3,595,326 Goodwill   7,681,186   7,681,186 Operating lease right-of-use asset   767,047   801,062 Other long term assets   1,017,401   780,998 Total assets   $ 28,290,632   $ 26,826,730                   LIABILITIES AND STOCKHOLDERS' EQUITY                 Current liabilities:                 Accounts payable   $ 8,850,045   $ 7,171,376 Accrued expenses   2,836,955   4,604,097 Deferred revenue   1,126,500   1,607,329 Notes payable (current portion)   1,093,288   1,330,018 Operating lease liability (current portion)   107,355   140,973 Due to related party   214,778   216,657 Total current liabilities   14,228,921   15,070,450 Operating lease liability (net of current portion)   660,622   660,621 Notes payable (net of current portion)   8,598,754   8,613,587 Total liabilities   23,488,297   24,344,658                   STOCKHOLDERS' EQUITY                 Series A Convertible Preferred stock ($.0001 par value, 1,000,000 shares authorized, no shares issued and outstanding at March 31, 2021 and December 31, 2020)   -   - Common stock ($.0001 par value, 100,000,000 shares authorized and 5,198,156 and 4,997,349 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively)   519   499 Paid in capital   191,711,341   189,700,103 Accumulated other comprehensive loss   (2,240,828 )   (2,259,410 ) Accumulated deficit   (184,387,504 )   (184,692,067 ) Non-controlling interest   (281,193 )   (267,053 ) Total stockholders' equity   4,802,335   2,482,072 Total liabilities and stockholders' equity   $ 28,290,632   $ 26,826,730 CONDENSED CONSOLIDATED BALANCE SHEETS ​ ​ ​ ​ ​ ​ ​ ​ ​      December 31, 2021      September 30, 2021 ​ ASSETS   ​      ​    ​ CURRENT ASSETS   ​      ​    ​ Cash and cash equivalents ​ $ 360 ​ $ 42,174 ​ Restricted Cash ​ ​ 61,100 ​ ​ — ​ Materials and supplies ​   55,753 ​   55,753 ​ Deferred advertising ​   — ​   261,550 ​ Prepaid Expenses ​   6,526,737 ​   6,201,247 ​ Other current assets ​   1,738,256 ​   250,331 ​ Notes Receivable ​   15,090,552 ​   90,552 ​ TOTAL CURRENT ASSETS ​   23,472,760 ​   6,901,607 ​ Property, equipment and leasehold improvements, net ​   13,103,704 ​   1,181,477 ​ Intangibles assets, net ​   2,276,943 ​   2,495,259 ​ Right-of-use assets ​   2,213,991 ​   2,350,929 ​ Other assets ​   4,345,893 ​   4,243,222 ​ TOTAL ASSETS ​ $ 45,413,291 ​ $ 17,172,494 ​ ​ ​ ​ ​ ​ ​ ​ ​ LIABILITIES AND SHAREHOLDERS' EQUITY ​      ​      ​ CURRENT LIABILITIES ​      ​      ​ Accounts payable ​ $ 4,228,527 ​ $ 5,206,310 ​ Accrued expenses and other current liabilities ​   18,272,697 ​   19,126,765 ​ Liability to issue shares ​   6,322,500 ​   7,027,500 ​ Lease liabilities, current portion ​   623,343 ​   599,898 ​ Notes payable, current portion ​   18,905,021 ​   39,200,970 ​ TOTAL CURRENT LIABILITIES ​   48,352,088 ​   71,161,443 ​ Notes payable, net of current portion ​   238,259 ​   247,612 ​ Lease liabilities, net of current portion ​   1,697,222 ​   1,857,894 ​ Other liabilities ​   5,617,192 ​   5,617,192 ​ TOTAL LIABILITIES ​   55,904,761 ​   78,884,141 ​ Commitments and Contingencies (Note 18) ​      ​      ​ ​ ​ ​ ​ ​ ​ ​ ​ DEFICIENCY IN STOCKHOLDERS' EQUITY ​      ​      ​ Preferred Stock; $0.001 par value; 58,000,000 shares authorized; 10,760,585 and 5,667,682 shares issued and outstanding at December 31, 2021 and September 30, 2021 respectively. ​   10,760 ​   5,668 ​ Common Stock; $0.001 par value; 500,000,000 shares authorized; 23,936,162 and 7,048,387 issued and outstanding at December 31, 2021 and September 30, 2021 respectively. ​   23,935 ​   7,048 ​ Additional Paid-in Capital ​   176,312,422 ​   88,650,286 ​ Accumulated Deficit ​   (186,838,587) ​   (150,374,649) ​ TOTAL DEFICIENCY IN STOCKHOLDERS' EQUITY ​   (10,491,470) ​   (61,711,647) ​ TOTAL LIABILITIES AND DEFICIENCY IN STOCKHOLDERS' EQUITY ​ $ 45,413,291 ​ $ 17,172,494 ​ ​ See Accompanying Notesaccompanying notes to the Condensed Consolidated Unaudited Financial Statements.condensed consolidated interim financial statements. ​ ​ F-2 3 Table of Contents MULLEN AUTOMOTIVE, INC. NET ELEMENT, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED) CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS     Three Months Ended March 31,     2021   2020                   Net revenues                 Service fees   $ 23,785,346   $ 15,842,567 Total Revenues   23,785,346   15,842,567                   Costs and expenses:                 Cost of service fees   20,786,445   13,300,805 Selling, general and administrative   1,911,850   2,319,911 Non-cash compensation   11,258   38,400 Bad debt expense   694,678   442,778 Depreciation and amortization   735,678   779,443 Total costs and operating expenses   24,139,909   16,881,337 Loss from operations   (354,563 )   (1,038,770 ) Interest expense   (356,281 )   (348,414 ) Gain on disposition   13,500   - Other income   987,766   9,740 Net income (loss) from continuing operations before income taxes   290,422   (1,377,444 ) Income taxes   -   - Net income (loss) from continuing operations   290,422   (1,377,444 ) Net income attributable to the non-controlling interest   14,140   11,228 Net income (loss) attributable to Net Element, Inc. stockholders   304,562   (1,366,216 ) Foreign currency translation   18,583   130,813 Comprehensive income (loss) attributable to common stockholders   $ 323,145   $ (1,235,403 )                   Income (loss) per share - basic and diluted   $ 0.05   $ (0.33 )                   Weighted average number of common shares outstanding - basic and diluted   5,970,583   4,117,643 ​ ​ ​ ​ ​ ​ ​ ​      Three months ended December 31, ​ ​ 2021      2020 OPERATING EXPENSES ​ ​      ​    General and administrative ​ $ 12,901,084 ​ $ 2,952,678 Research and development ​   1,157,323 ​   518,023 Total Operating Expense ​   14,058,407 ​   3,470,701 Loss from Operations ​   (14,058,407) ​   (3,470,701) ​ ​ ​ ​ ​ ​ ​ Interest expense ​   (22,438,945) ​   (2,406,330) Loss on debt settlement ​   (41,096) ​   — Gain on extinguishment of indebtedness, net ​   74,509 ​   880,581 Net Loss ​ $ (36,463,938) ​ $ (4,996,450) ​ ​ ​ ​ ​ ​ ​ Net Loss per Share ​ $ (2.09) ​ $ (0.98) ​ ​ ​ ​ ​ ​ ​ Weighted average shares outstanding, basic and diluted ​   17,471,173 ​   5,099,218 ​ See Accompanying Notesaccompanying notes to the Unaudited Condensed Consolidated Financial Statements.condensed consolidated interim financial statements. ​ ​ ​ ​ F-3 4 Table of Contents MULLEN AUTOMOTIVE, INC. NET ELEMENT, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) CONDENSED CONSOLIDATED STATEMENTS OF DEFICENCY IN STOCKHOLDERS’ EQUITY     Three Months Ended March 31,     2021   2020 Cash flows from operating activities                 Net income (loss) attributable to Net Element, Inc. stockholders   $ 304,562   $ (1,366,216 ) Adjustments to reconcile net loss to net cash (used in) operating activities:                 Non-controlling interest   (14,140 )   (11,228 ) Share based compensation   11,258   38,400 Deferred revenue   (480,829 )   (470,205 ) Provision for bad debt   648   485 Depreciation and amortization   735,678   779,443 Non cash interest   -   12,294 Changes in assets and liabilities:                 Accounts receivable   (2,075,791 )   2,520,395 Due from Mullen Technologies, Inc.   (999,975 )   - Prepaid expenses and other assets   (162,100 )   364,019 Accounts payable and accrued expenses   425,421   (1,419,019 ) Net cash (used in) provided by operating activities   (2,255,268 )   448,368                   Cash flows from investing activities:                 Client acquisition costs   (148,192 )   (427,031 ) Purchase of equipment and changes in other assets   418,612   6,049 Net cash provided by (used in) investing activities   270,420   (420,982 )                   Cash flows from financing activities:                 Proceeds from indebtedness   2,000,000   155,206 Repayment of indebtedness   (251,547 )   (145,040 ) Lease liability   (33,618 )   (31,950 ) Related party advances   (52,590 )   133,743 Net cash provided by financing activities   1,662,245   111,959                   Effect of exchange rate changes on cash   (20,120 )   5,969 Net (decrease) increase in cash and restricted cash   (342,723 )   145,314                   Cash and restricted cash at beginning of period   5,322,011   1,116,255 Cash and restricted cash at end of period   $ 4,979,288   $ 1,261,569                   Supplemental disclosure of cash flow information                 Cash paid during the period for:                 Interest   $ 1,446,640   $ 730,993 Taxes   $ 266,559   $ 120,544 Non Cash activities:                 Shares issued for redemption of indebtedness   $ 3,822,290   $ - ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​      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 ​ $ (111,130,518) ​ $ (43,994,064) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​      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) ​ See Accompanying Notesaccompanying notes to the Unaudited Condensed Consolidated Financial Statements.condensed consolidated interim financial statements. ​ ​ F-4 5 Table of Contents MULLEN AUTOMOTIVE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended December 31,  ​      2021      2020 Cash Flows from Operating Activities   ​      ​    Net Loss ​ $ (36,463,938) ​ $ (4,996,450) Adjustments to reconcile net loss to net cash used in operating activities: ​      ​      Depreciation and amortization ​   307,699 ​   108,427 Employee stock compensation ​   1,604,293 ​   566,179 Issuance of shares for services ​   2,495,487 ​   26,162 Non-cash interest and other operating activities ​   3,062,048 ​   1,918,453 Non-cash lease expense ​   136,938 ​   77,644 Amortization of debt discount ​   19,212,176 ​   487,876 Loss on asset disposal ​   1,298 ​   — (Gain) on extinguishment of debt ​   (74,509) ​   (880,581) Loss on debt settlement ​   41,096 ​   — ​ ​ ​ ​ ​ ​ ​ Changes in operating assets and liabilities: ​      ​      Other current assets ​   (1,226,376) ​   161,959 Other assets ​   (1,225,252) ​   40,629 Accounts payable ​   (977,783) ​   (31,563) Accrued expenses and other liabilities ​   (1,468,751) ​   2,679,880 Lease liabilities ​   (137,228) ​   (73,303) Net cash (used) provided by operating activities ​   (14,712,802) ​   85,312 ​ ​ ​ ​ ​ ​ ​ Cash Flows from Investing Activities ​      ​      Purchase of equipment ​   (10,462,219) ​   (31,335) Purchase of intangible assets ​   — ​   (41,250) Net cash (used) in investing activities ​   (10,462,219) ​   (72,585) ​ ​ ​ ​ ​ ​ ​ Cash Flows from Financing Activities ​      ​      Changes in net parent investment ​   — ​   (1,997,844) Proceeds from issuance of notes payable ​   7,300,000 ​   2,265,000 Proceeds from issuance of common stock ​   10,894,659 ​   — Proceeds from shares issued for cash ​   — ​   — Proceeds from liability to issue preferred C shares ​   20,000,000 ​   — Payment of notes payable ​   (13,000,351) ​   (88,964) Net cash provided by financing activities ​   25,194,308 ​   178,192 ​ ​ ​ ​ ​ ​ ​ Increase (decrease) in cash ​   19,286 ​   190,919 ​ ​ ​ ​ ​ ​ ​ Cash, beginning of period ​   42,174 ​   33,368 Cash, ending of period ​ $ 61,460 ​ $ 224,287 ​ ​ ​ ​ ​ ​ ​ Supplemental disclosure of Cash Flow information: ​      ​      Cash paid for interest ​ $ 1,424,345 ​ $ 3,945 Supplemental disclosure for non-cash activities: ​      ​      Refinance of existing debt ​ $ — ​ $ 1,560,235 Preferred shares issued in exchange for convertible debt ​ $ 24,991,755 ​ $ — See accompanying notes to condensed consolidated interim financial statements. ​ ​ ​ F-5 NET ELEMENT,MULLEN AUTOMOTIVE, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 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 shareholders, followed by a reverse merger with and into Net Element, Inc. (“NETE”). Basis of Presentation and Principles of Consolidation The accompanying March 31, 2021 interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the "Commission""Commission"). Certain information and note disclosures normally included in the annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”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 December 31, 2020.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 unaudited financial statements contained in this report include the accounts of Net Element, Inc.,the Company and its wholly owned subsidiaries.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 December 31, 2021, 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 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 months ended December 31, 2021 and 2020, reflect all expenses and activities directly attributable to MAI, and an allocation of MTI’s general and administrative expenses incurred 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 significant intercompanyinter-entity balances and transactions have been eliminated in consolidation.eliminated. NOTE 2. ORGANIZATION AND OPERATIONS Net Element, Inc. (collectively with its subsidiaries, “Net Element”, “we”, “us”, “our” or the “Company”) is a financial technology-driven group specializing in payment acceptance and value-added solutions across multiple channelsThe equity capital presented in the United Statesfinancial statements reflect the retrospective application of the November 5, 2021 capitalization and selected international markets. We are differentiatedcorporate reorganization arising from the merger transaction with NETE. These financial statements have been prepared based upon the historical cost amounts recorded by our proprietary technology which enables us to provide a broad suiteMTI. These financial statements may not be indicative of payment productsMAI financial performance and end-to-end transaction processing services. Our transactional services business enables merchants to accept credit cardsdo not necessarily reflect what its financial position, results of operations, and cash flows would have been had Mullen operated as well as other forms of payment, including debit cards, checks, gift cards, loyalty programs and alternative payment methods in traditional card-present or swipe transactions, as well as card-not-present transactions, such as those conducted overan independent entity during the phone or through the Internet or a mobile device. We operate in two reportable business operating segments: (i) North American Transaction Solutions, and (ii) International Transaction Solutions.years presented. F-6 We are able to deliver our services across multiple points of access, or “multi-channel,” including brick and mortar locations, software integration, e-commerce, mobile operator billing, mobile and tablet-based solutions. In the United States, via our U.S. based subsidiaries, we generate revenues from transactional services and other payment technologies for small and medium-sized businesses. Through PayOnline, we provide transactional services, mobile payment transactions, online payment transactions and other payment technologies in emerging countries in the Eurasian Economic Community ("EAEC"), Europe and Asia. Our transactional services business enables merchants to accept credit cards as well as other forms of payment, including debit cards, checks, gift cards, loyalty programs and alternative payment methods in traditional card-present or swipe transactions, as well as card-not-present transactions, such as those conducted over the phone or through the Internet or a mobile device. We market and sell our services through both independent sales groups (“ISGs”), which are non-employee, external sales organizations and other third-party resellers of our products and services, and directly to merchants through electronic media, telemarketing and other programs, including utilizing partnerships with other companies that market products and services to local and international merchants. We have agreements with several banks that sponsor us for membership in the Visa ®, MasterCard ®, American Express ®, and Discover ® card associations and settle card transactions for our merchants. These sponsoring banks include Esquire Bank, N.A. and Wells Fargo Bank, N.A. From time to time, we may enter into agreements with additional banks. We perform core functions for merchants such as application processing, underwriting, account set-up, risk management, fraud detection, merchant assistance and support, equipment deployment and chargeback services. Our Mobile Solutions business, PayOnline, provides relationships and contracts with mobile operators that gives us the ability to offer our clients in-app, premium SMS (short message services, which is a text messaging service), Wireless Application Protocol (WAP)-click, one click and other carrier billing services. PayOnline provides flexible high- tech payment solutions to companies doing business on the Internet or in the mobile environment. PayOnline specializes in integration and customization of payment solutions for websites and mobile apps. In particular, PayOnline arranges payment on the website of any commercial organization, which increases the convenience of using the website and helps maximize the number of successful transactions. In addition, PayOnline is focused on providing online and mobile payment acceptance services to the travel industry through direct integration with leading Global Distribution Systems (“GDS”), which include Amadeus® and Sabre®. Key geographic regions that PayOnline serves include Eastern Europe, Central Asia, Western Europe, North America and Asia major sub regions. The PayOnline office is located in Moscow, Russia. Also part of our transactional services business, Aptito is a proprietary, cloud-based payments platform for the hospitality industry, which creates an online consumer experience in offline commerce environments via tablet, mobile and all other cloud-connected devices. Aptito’s easy to use point-of-sale (“POS”) system makes things easier by providing a comprehensive solution to the hospitality industry to help streamline management and operations. Orders placed tableside by customers directly speed up the ordering process and improve overall efficiency. Aptito's mobile POS system provides portability to the staff while performing all the same functions as a traditional POS system. 6 Table of Contents ​ NOTE 3.2 – LIQUIDITY, CAPITAL RESOURCES, AND GOING CONCERN CONSIDERATIONS Our consolidatedThe accompanying financial statements have been prepared on the basis that the Company will continue as a going concern basis, which contemplates the realizationconcern. Our principal source of assetsliquidity consists of existing cash and the settlement of liabilities and commitments in the normal course of business. We had net incomerestricted cash of approximately $305,000 for the three months ended March 31, 2021 and a net loss of approximately $5.9 million for the year ended$61,000 at December 31, 2020 and have an accumulated deficit of approximately $184.4 million and a positive working capital of approximately $1.5 million at March 31, 2021. The majority of this positive working capital at March 31, 2021 relates to amounts due from Mullen Technologies (See Note 5 - Due from Mullen). The unprecedented and rapid spread of COVID-19 as well as the shelter-in place orders, promotion of social distancing measures, restrictions to businesses deemed non-essential, and travel restrictions implemented throughout the United States have significantly impacted the restaurant and hospitality industries. As a result, the Company’s revenues, which are largely tied to processing volumes in these verticals, were materially impacted beginning in the final two weeks of March 2020. Since the last quarter ended December 31, 2020, the Company has seen a significant recovery in its end-to-end payment volumes as some merchants began resuming their normal operations. While end-to-end volumes for the three months ended March 31, 2021 have exceeded those for both the three months ended March 31, 2020 andDuring the three months ended December 31, 2020,2021, the ultimateCompany used $14.7 million of cash for operating activities and had a working capital deficiency of approximately $24.9 million  at December 31, 2021. During the three months ended December 31, 2021, the Company obtained additional financing in the amount of $7.26 million in unsecured convertible notes; $10 million in equity from Net Element merger; and $20 million in equity commitments (See Note 5, Debt). The Coronavirus (“COVID-19”) continues to impact that thecountries, communities, supply chains and markets, global financial markets, and various industries. To date, COVID-19 pandemic will havehas had a material and disruptive impact on the Company’s consolidated results of operationsour strategy in future periods remains uncertain and will depend on future developments, which are continuously evolving and cannot be predicted.  This includes, but is not limited to, the duration and spread of the COVID-19 pandemic, its severity, the emergence and severity of its variants, the availabilityEV product development and the efficacy of vaccines (particularly with respectability to emerging strains ofobtain external financing to fund its development activities. Company management is unable to predict whether the virus), other protective actions taken to contain the virus or treat its impact, such as restrictions on travel and transportation, and how quickly and to what extent normal economic and operating conditions can resume. The Companyglobal pandemic will continue to evaluate the naturehave a material impact on our future financial condition and extent of these potential impacts to its business, consolidated results of operations,operations. Going Concern As an early-stage development company, our ability to access capital is critical. Our management plans to raise additional capital through a combination of equity and liquidity. During March 2020, ourdebt 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 liquidity position, future operating plans, and its labor force, which included a reduction in the labor force and compensation to executives and other employees, in order to maintain current payment processing functions, capabilities, and continued customer service to its merchants. We are also seeking sources of capital to pay our contractual obligations as they come due, in light of these uncertain times. Management believes that its operating strategy will provide the opportunity for usability to continue as a going concern as long asover the next twelve months from the date of filing this report. Since inception, we have incurred significant accumulated losses of approximately $186.8 million, and management expects to continue to incur operating losses over the near future. Proceeds from the business combination with Net Element, the exercise of warrants, and a qualified public offering, should they materialize, are ableexpected to obtain additional financing. At this time, due to the unprecedentedprovide Mullen with sufficient liquidity and rapid spread of COVID-19 pandemic, we cannot predict the impact of these conditions on our ability to obtain financing necessary for the Companycapital resources to fund its future workingoperating expenses and capital requirements.  Our Company has also decided to explore strategic alternatives and potential optionsrequirements for its business, including sale ofat least the Company or certain assets, licensing of technology, spin-offs, or a business combination. Accordingly, the Company has entered into a merger agreement in connection with the contemplated merger with Mullen Automotive (as defined below) and certain related transactions, including a divestiture of the Company’s existing business operations. See below and Note 14 – Subsequent Events for additional information. There can be no assurance, at this time, regarding the eventual outcome of our planned strategic alternatives, including such merger and the related transactions. On March 27, 2020, our Company entered into a Master Exchange Agreement (the “ESOUSA Agreement”) with ESOUSA Holdings, LLC ("ESOUSA"), a related party. Prior to entering into the ESOUSA Agreement, ESOUSA agreed to acquire an existing promissory note that had been previously issued by the Company, of up to $2,000,000 in principal amount outstanding plus interest due to RBL Capital Group, LLC ("RBL"). Pursuant to the ESOUSA Agreement, the Company had the right, at any time prior to March 27, 2021, to request ESOUSA, and ESOUSA agreed upon each such request, to exchange this promissory note in tranches on the dates when the Company instructs ESOUSA, for such number of shares of the Company’s common stock (“Common Stock”) as determined under the ESOUSA Agreement based upon the number of shares of Common Stock (already in ESOUSA’s possession) that ESOUSA sold in order to finance its purchase of such tranche of the promissory note from RBL Capital Group, LLC. ESOUSA will purchase each tranche of the promissory note equal to 88% of the gross proceeds from the shares of Common Stock sold by ESOUSA to finance the purchase of such Exchange Amount from RBL Capital Group, LLC. Each such tranche to be $148,000 unless otherwise agreed to by the Company and ESOUSA. On April 23, 2020 and August 3, 2020, the Company entered into certain amendments to the ESOUSA Agreement, which together increased from $2,000,000 to $15,000,000 the principal amount and unpaid interest of one or more promissory notes of the Company or its direct or indirect subsidiaries that ESOUSA either purchased in whole or has an irrevocable right to purchase in tranches from RBL in connection with the ESOUSA Agreement. On March 27, 2020, the Company received its first tranche of RBL promissory notes in the aggregate amount of $148,000, less any fees, from ESOUSA to be exchanged for Common Stock pursuant to the ESOUSA Agreement. Included in other accrued expenses at March 31, 2021 is approximately $145,000 in connection with this first tranche for which shares of Common Stock have not yet been issued. Concurrently with this transaction, the Company received an equivalent aggregate amount of $148,000 from RBL under the Loan and Security Agreement (“Credit Facility”) with RBL. On April 28, 2020, the Company received its second tranche of RBL promissory notes in the aggregate amount of $143,000, less any fees, from ESOUSA to be exchanged for Common Stock pursuant to the ESOUSA Agreement.next 12 months. The Company issued 65,862 shares of Common Stock to ESOUSA in connection with this exchange.  Concurrently with this transaction, the Company received an equivalent aggregate amount of $143,000 from RBL under the Credit Facility.  On August 11, 2020, the Company received its third tranche of RBL promissory notes in the aggregate amount of $707,000, less any fees, from ESOUSA to be exchanged for Common Stock pursuant to the ESOUSA Agreement.  The Company issued 66,190 shares of Common Stock to ESOUSA in connection with this exchange.  Concurrently with this transaction, the Company received an equivalent aggregate amount of $707,000 from RBL under the Credit Facility.  On August 21, 2020, the Company received its fourth tranche of RBL promissory notes in the aggregate amount of $401,000, less any fees, from ESOUSA to be exchanged for Common Stock pursuant to the ESOUSA Agreement.  The Company issued 45,654 shares of Common Stock to ESOUSA in connection with this exchange.  Concurrently with this transaction, the Company received an equivalent aggregate amount of $401,000 from RBL under the Credit Facility.  On September 25, 2020, the Company received its fifth tranche of RBL promissory notes in the aggregate amount of $426,000, less any fees, from ESOUSA to be exchanged for Common Stock pursuant to the ESOUSA Agreement.  The Company issued 50,000 shares of Common Stock to ESOUSA in connection with this exchange.  Concurrently with this transaction, the Company received an equivalent aggregate amount of $426,000 from RBL under the Credit Facility.  On December 30, 2020, the Company received its sixth tranche of RBL promissory notes in the aggregate amount of $1,960,000, less any fees, from ESOUSA to be exchanged for Common Stock pursuant to the ESOUSA Agreement. The Company issued 200,000 shares of Common Stock to ESOUSA in connection with this exchange. Concurrently with this transaction, the Company received an equivalent aggregate amount of $1,960,000 from RBL under the Credit Facility. On August 4, 2020, the Company entered into an Agreement and Plan of Merger with Mullen Technologies, Inc., a California corporation (“Mullen”), and Mullen Acquisition, Inc., a California corporation and wholly owned subsidiary of the Company (“Merger Sub”), which was amended on December 29, 2020, March 30, 2021 and April 30, 2021 (as amended, the “Original Merger Agreement”).  Pursuant to, and on the terms and subject to the conditions of, the Original Merger Agreement, Merger Sub was to be merged with and into Mullen, with Mullen continuing as the surviving corporation in such merger. On May 14, 2021, the Company entered into an Amended and Restated Agreement and Plan of Merger (the “Restated Merger Agreement”) with Mullen, Merger Sub and Mullen Automotive, Inc. (“Mullen Automotive”), a California corporation and a wholly-owned subsidiary of Mullen.  Pursuant to, and on the terms and subject to the conditions of, the Restated Merger Agreement, Merger Sub will be merged with and into Mullen Automotive (the “Merger”), with Mullen Automotive continuing as the surviving corporation in the Merger.  See Note 14 – Subsequent Events for additional information. As was contemplated by the Original Merger Agreement, on August 11, 2020, the Company as lender, entered into an unsecured Promissory Note, dated August 11, 2020 (the “Note”), with Mullen. Pursuant to the Note, Mullen borrowed from the Company $500,000. Prior to maturity of the loan, the principal amount of the loan will carry an interest rate of 14% per annum compounded monthly and payable upon demand. This loan will mature on the earlier of (i) the date that the merger agreement is terminated for any reason by any party thereto and (ii) the Merger effective time. In addition, pursuant to the Original Merger Agreement, the Company, Mullen and Merger Sub agreed that, if the registration statement on Form S-4 (with the merger proxy statement included as part of the prospectus) was not filed with U.S. Securities and Exchange Commission (the “SEC”) on or prior to January 15, 2021, then Mullen would pay the Company an agreed sum of $13,333 per day (the “Late Fee”) until the such registration statement (with the merger proxy statement included as part of the prospectus) is filed with the SEC. All accumulated Late Fees will be due and payable by Mullen on the 5th day of each calendar month commencing February 5, 2021 and on the 5th day of each month thereafter until the above-refenced filing has occurred.  The Form S-4 registration statement was filed on May 14, 2021.  At March 31, 2021, the Company is owed approximately $1.0 million from Mullen in connection with Late Fees. Consummation of the Merger, the Divestiture (as defined below), the Private Placement (as defined below) and the other transactions contemplated in the Restated Merger Agreement, is subject to customary conditions including, among others, the approval of the Company’s stockholders. There is no guarantee that the Merger, the Divestiture, the Private Placement or the other transactions contemplated in the Restated Merger Agreement will be completed. These conditions raise substantial doubt about our ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might be necessary ifresult from the Company is unable to continue as a going concern.outcome of this uncertainty. NOTE 4.3 – 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. The Company’s significant accounting policies are described below. Basis of Presentation Push-Down Accounting The accompanyingcarve-out financial statements 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 as the equivalent of Mullen Automotive, Inc. issuing stock for the net assets of Net Element, accompanied by a recapitalization. Accordingly, these 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. F-7 Table of Contents ​ NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued 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 been prepareda 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 0 cash equivalents at December 31, 2021 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 December 31, 2021, the restricted cash balance was $61,000. Customer deposits are accounted for within other liabilities Deferred Advertising At December 31, 2021 and September 30, 2021, deferred advertising was 0 and $261,550, respectively. The cost 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. F-8 Table of Contents ​ NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued 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 GAAPthe provisions of ASC 360, “Property, Plant, and pursuant to the reporting and disclosure rules and regulations of the Commission. Principles of Consolidation These consolidated financial statements include the accounts of Net Element, Inc. and our subsidiary companies. All significant intercompany accounts and transactions have been eliminated in consolidation. Cash We maintain our U.S. dollar-denominated cash in several non-interest bearing bank deposit accounts. All U.S. non-interest bearing transaction accounts are insured up to a maximum of $250,000 at FDIC insured institutions. The bank balances exceeded FDIC limits by approximately $3.1 million and $3.7 million at March 31, 2021 and December 31, 2020, respectively. We maintained approximately $33,000 and $43,000 in uninsured bank accounts in Russia and the Cayman Islands at March 31, 2021 and December 31, 2020, respectively. Restricted Cash Restricted cash represents funds held-on-deposit with processing banks pursuant to agreements to cover potential merchant losses. It is presented as other long-term assets on the accompanying consolidated balance sheets since the related agreements extend beyond the next twelve months. Following the adoption of ASU 2016-18, Statement of Cash Flows: Restricted CashEquipment.” (Topic 230), the Company includes restricted cash along with the cash balance for presentation in the consolidated statements of cash flows. The reconciliation between the consolidated balance sheet and the consolidated statement of cash flows is as follows:     March 31, 2021   December 31, 2020 Cash on consolidated balance sheet   $ 4,102,887   $ 4,541,013 Restricted cash   876,401   780,998 Total cash and restricted cash   $ 4,979,288   $ 5,322,011 Accounts Receivable and Credit Policies Accounts receivable consist primarily of uncollateralized credit card processing residual payments due from processing banks requiring payment within thirty days following the end of each month. Accounts receivable also include amounts due from the sales of our technology solutions to our customers. The carrying amount of accounts receivable is reduced by an allowance for doubtful accounts, if necessary, which reflects management’s best estimate of the amounts that will not be collected. The allowance is estimated based on management’s knowledge of its customers, historical loss experience and existing economic conditions. Accounts receivable and the allowance are written-off when, in management’s opinion, all collection efforts have been exhausted. Other Current Assets Other current assets consist of point-of-sale equipment which we use to service both merchants and independent sales agents ("ISG"). Often, we will provide the equipment as an incentive for merchants and independent sales agents to enter into a merchant contracts with us. The term of these contracts have an average length of three years and the cost of the equipment plus any setup fees will be amortized over the contract period. If the merchants terminate their contract with us early, they are obligated to either return the equipment or pay for it. 7 Table of Contents Intangible Assets Intangible assets acquired, either individually or with a group of other assets (but not those acquired in a business combination), are initially recognized and measured based on fair value. Goodwill acquired in business combinations is initially computed as the amount paid in excess of the fair value of the net assets acquired. We did not acquire any businesses during the year ended December 31, 2020 or the three months ended March 31, 2021. The cost of internally developing, maintaining and restoring intangible assets (including goodwill) that are not specifically identifiable, that have indeterminate lives, or that are inherent in a continuing business and related to an entity are recognized as an expense when incurred. Intangible assets include acquired merchant relationships, recurring cash flow portfolios, referral agreements, trademarks, tradenames, website development costs and non-compete agreements. Merchant relationships represent the fair value of customer relationships purchased by us. Recurring cash flow portfolios give us the right to retain a greater share of the cash flow, in the form of paying less commissions to an independent sales agent, related to certain future transactions with the agent referred sales partners. Referral agreements represent the right to exclusively obtain referrals from a partner for their customers' credit card processing services. We amortize definite lived identifiable intangible assets using a method that reflects the pattern in which the economic benefits of the intangible asset are expected to be consumed or otherwise utilized. The estimated useful lives of our customer-related intangible assets approximate the expected distribution of cash flows on a straight- line basis from each asset. The useful lives of contract-based intangible assets are equal to the terms of the agreement. Management evaluates the remaining useful lives and carrying values of long-lived assets, including definite lived intangible assets, at least annually, or when events and circumstances warrantWhen such a review, to determine whether significant events or changes in circumstances indicate that a change inare present, we assess the useful life or impairment in value may have occurred. There were no impairment charges duringrecoverability of long-lived assets by determining whether the three months ended March 31, 2021 and 2020. Goodwill In accordance with ASC 350, Intangibles—Goodwill and Other, we test goodwill for impairment for each reporting unit on an annual basis, or when events or circumstances indicate the faircarrying value of a reporting unitsuch assets will be recovered through undiscounted expected future cash flows. If the total of the future cash flows is below itsless than the carrying value. Our goodwill representsamount of those assets, we recognize an impairment loss based on the excess of the purchase pricecarrying amount over the fair value of the net identifiable assets acquired in business combinations. The goodwill generated from the business combinations is primarily relatedassets. Income Taxes Prior to the value placed on the employee workforceMullen’s capitalization and expected synergies. Judgment is involved in determining if an indicator or change in circumstances relating to impairment has occurred. Such changes may include, among others, a significant decline in expected future cash flows, a significant adverse changecorporate reorganization, our operations were included in the business climate,tax filings of MTI. The cash and unforeseen competition. We have the option of performing a qualitative assessment of impairment to determine whether any further quantitative testing for impairment is necessary. The option of whether or not to perform a qualitative assessment is made annuallydeferred tax positions between us and may vary by reporting unit. Factors we consider in the qualitative assessment include general macroeconomic conditions, industryMTI and market conditions, cost factors, overall financial performance of our reporting units, events or changes affecting the composition or carrying amount of the net assets of its reporting units, sustained decrease in its share price, and other relevant entity specific events. If the management determines on the basis of qualitative factors that the fair value of the reporting unit is more likely than not less than the carrying value, then we perform a quantitative test for that reporting unit. The fair value of each reporting unit is compared to the reporting unit’s carrying value, including goodwill. Subsequent to the adoption on January 1, 2017 of Accounting Standards Update (“ASU”) No. 2017-04, Intangibles—Goodwill and Other: Simplifying the Test for Goodwill Impairment, if the fair value of a reporting unit is less than its carrying value, we recognize an impairment equal to the excess carrying value, not to exceed the total amount of goodwill allocated to that reporting unit. We did not recognize any impairment charge to goodwill during the three months ended March 31, 2021 and 2020. For a discussion of the estimate methodology and the significance of various inputs, please see the subheading below titled “Use of Estimates.” Capitalized Customer Acquisition Costs, Net Capitalized customer acquisition costs consist of up-front cash payments made to ISG’s for the establishment of new merchant relationships. Capitalized customer acquisition costs represent incremental, direct customer acquisition costs that are recoverable through gross margins associated with merchant contracts. The up-front cash payment to the ISG is based on the estimated gross margin for the first year of the merchant contract. The deferred customer acquisition cost asset is recorded at the time amounts are receivable but not yet earned and the capitalized acquisition costs are amortized on a straight-line basis over a period of approximately four years. These capitalized costs, net of amortization expense, are included in intangible assets on the accompanying consolidated balance sheets (See Note 6 – item labeled “Client AcquisitionCosts”). 8 Table of Contents Accrued Residual Commissions We record commissions as a cost of revenues in the accompanying consolidated statement of operations and comprehensive loss. We pay agent commissions to ISGs and independent sales agents based on the processing volume of the merchants enrolled. The commission obligations are based on varying percentages of the volume processed by us on behalf of the merchants. Percentages vary based on the program type and transaction volume of each merchant. Fair Value Measurements Our financial instruments consist primarily of cash, accounts receivables, accounts payables, and a note payable. The carrying values of these financial instruments are considered to be representative of their fair values due to the short-term nature of these instruments. The carrying amount of notes payable of approximately $9.7 million and $9.9 million at March 31, 2021 and December 31, 2020, respectively, approximates fair value because current borrowing rates do not materially differ from market rates for similar bank borrowings. The notes payable are classified as a Level 2 item within the fair value hierarchy. We measure certain nonfinancial assets and liabilities at fair value on a nonrecurring basis. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. We use a three-level fair value hierarchy to prioritize the inputs used to measure fair value and maximizes the use of observable inputs and minimizes the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: Level 1 — Quoted market prices in active markets for identical assets or liabilities as of the reporting date Level 2 — Observable market based inputs or unobservable inputs that are corroborated by market data Level 3 — Unobservable inputs that are not corroborated by market data These non-financial assets and liabilities include intangible assets and liabilities acquiredformalized in a business combination as well as impairment calculations, when necessary. The fair value of the assets acquired and liabilities assumed in connection with the PayOnline acquisition, were measured at fair value by us at the acquisition date. The fair values of our merchant portfolios are primarily based on Level 3 inputs and are generally estimated based upon independent appraisals that include discounted cash flow analyses based on our most recent cash flow projections, and, for years beyond the projection period, estimates based on assumed growth rates. Assumptions are also made regarding appropriate discount rates, perpetual growth rates, and capital expenditures, among others. In certain circumstances, the discounted cash flow analyses are corroborated by a market-based approach that utilizes comparable company public trading values, and, where available, values observed in private market transactions. The inputs used by management for the fair value measurements include significant unobservable inputs, and therefore, the fair value measurements employed are classified as Level 3. Goodwill impairment is primarily based on observable inputs using company specific information and is classified as Level 3. Leases Effective January 1, 2019, we adopted Accounting Standards Update (ASU) 2016-02, Leases (Topic 842) which supersedes the lease accounting requirements in Accounting Standards Codification (ASC) 840, Leases (Topic 840). Please refer to Recent Accounting Pronouncements below for additional information on the adoption of Topic 842 and the impact upon adoption to the Company’s consolidated financial statements. Under Topic 842, we applied a dual approach to all leases whereby we are a lessee and classify leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the Company. Lease classification is evaluated at the inception of the leasetax sharing agreement. Regardless of classification, we record a right-of-use asset and a lease liability for all leases with a term greater than 12 months. Our lease, for the premises we occupy for the North American Transaction Solutions segment's U.S. headquarters, was classified as an operating lease as of January 1, 2019. Operating lease expense is recognized on a straight-line basis over the term of the lease. We identify leases in our contracts if the contract conveys the right to control the use of identified property or equipment for a period of time in exchange for consideration. We do not allocate lease consideration between lease and non-lease components and record a lease liability equal to the present value of the remaining fixed consideration under the lease. Any interest rate implicit in our leases are generally not readily determinable. Accordingly, we use our estimated incremental borrowing rate at the commencement date of the lease to determine the present value discount of the lease liability. We estimate the incremental borrowing rate for each lease based on an evaluation of our expected credit rating and the prevailing market rates for collateralized debt in a similar economic environment with similar payment terms and maturity dates commensurate with the term of the lease. The right-of-use asset for each lease is equal to the lease liability, adjusted for unamortized initial direct costs and lease incentives. We exclude options to extend or terminate leases from the calculation of the lease liability unless it is reasonably certain the option will be exercised. 9 Table of Contents Revenue Recognition and Deferred Revenue We recognize revenue when all of the following criteria are met: (1) the parties to the contract have approved the contract and are committed to perform their respective obligations, (2) we can identify each party’s rights regarding the goods or services to be transferred, (3) we can identify the payment terms for the goods or services to be transferred, (4) the contract has commercial substance, and (5) it is probable that we will collect substantially all of the consideration to which we will be entitled in exchange for the goods or services that will be transferred to the customer. We consider persuasive evidence of a sales arrangement to be the receipt of a billable transaction from aggregators, signed contract or the processing of a credit card transaction. Collectability is assessed based on a number of factors, including transaction history with the customer and the credit worthiness of the customer. If it is determined that the collection is not reasonably assured, revenue is not recognized until collection becomes reasonably assured, which is generally upon receipt of cash. We record cash received in advance of revenue recognition as deferred revenue. Revenue consists primarily of fees generated through the electronic processing of payment transactions and related services and is recognized as revenue during the period the transactions are processed or when the related services are performed. Our transactional processing fees are generated primarily from TOT Payments doing business as Unified Payments, which is our North American Transaction Solutions segment, PayOnline, which is our International Transaction Solutions segment, and Aptito, which is our point of sale solution for restaurants. We work directly with payment card networks and banks so that our merchants do not need to manage the complex systems, rules, and requirements of the payments industry. We satisfy our performance obligations and therefore recognize the transactional processing service fees as revenue upon authorization of a transaction by the merchant’s customer’s bank. The majority of our revenues is derived from volume-based payment processing fees ("discount fees”) and other related fixed transaction or service fees. Discount fees represent a percentage of the dollar amount of each credit or debit transaction processed. Discount fees are recognized at the time the merchants’ transactions are processed. Generally, where we have control over merchant pricing, merchant portability, credit risk and ultimate responsibility for the merchant relationship, revenues are reported at the time of sale on a gross basis equal to the full amount of the discount charged to the merchant. This amount includes interchange fees paid to card issuing banks and assessments paid to payment card networks pursuant to which such parties receive payments based primarily on processing volume for particular groups of merchants. Revenues generated from merchant portfolios where we do not have control over merchant pricing, liability for merchant losses or credit risk or rights of portability are reported net of interchange and other fees. Revenues are also derived from a variety of fixed transaction or service fees, including authorization fees, convenience fees, statement fees, annual fees, and fees for other miscellaneous services, such as handling chargebacks. Revenues derived from service fees are recognized at the time the services are performed and there are no further performance obligations. Revenue from the sale of equipment is recognized upon transfer of ownership and delivery to the customer, after which there are no further performance obligations. We primarily report revenues gross as a principal versus net as an agent. Although some of our processing agreements vary with respect to specific terms, the transactional processing service fees collected from merchants generally are recognized as revenue on a gross basis as we are the principal in the delivery of the managed payments solutions to the sellers. The gross fees we collect are intended to cover the interchange, assessments and other processing and non-processing fees which are included and are part of our gross margin. We have primary responsibility for providing end-to-end payment processing services for our clients. Our clients contract us for all credit card processing services, including transaction authorization, settlement, dispute resolution, data/transmission security, risk management, reporting, technical support and other value-added services. We have concluded that we are the principal because we control the services before delivery to the merchant, and are primarily responsible for the delivery of the services, have discretion in setting prices charged to merchants, and are responsible for losses. We also have pricing latitude and can provide services using several different network options. Net Income (Loss) per Share Basic net income (loss) per common share is computed by dividing net income (loss) applicable to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted net loss per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents, consisting of shares issuable upon exercise of common stock options or warrants. In periods when losses are reported, the weighted-average number of common shares outstanding excludes common stock equivalents because their inclusion would have an anti-dilutive effect. 10 Table of Contents Income taxes are recorded in accordance with ASC 740, Income Taxes We account (“ASC 740”), which provides for incomedeferred taxes under theusing an asset and liability method, which requires the recognition ofapproach. We recognize deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements. Under this method, deferredstatements or tax returns. Deferred tax assets and liabilities are determined based on the basis of the differencesdifference between the consolidated financial statementsstatement and tax basisbases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. We recognize net deferred tax assets to the extent that we believe these assetsValuation allowances are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If we determine that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. We account for uncertainty in income taxes using a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determiningprovided, if based upon the weight of available evidence, indicates that it is more likely than not that some or all of the positiondeferred tax assets will not be sustainedrealized. There are transactions that occur during the ordinary course of business for which the ultimate tax determination may be uncertain. At December 31, 2021 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 audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefitenacted rates, as the largest amount that is more than 50% likely of being realized upon settlement. We classify the liabilityadjusted for unrecognized tax benefits as current to the extent we anticipate payment (or receipt) of cash within one year. Interest and penalties related toallowable credits, deductions, uncertain tax positions, are recognizedchanges in deferred tax assets and recorded as necessaryliabilities, and changes in the provision for income taxes. The open United States tax yearslaw. 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 December 31, 2021 and September 30, 2021. F-9 Table of Contents ​ NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued 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 examinationamortization but are tested for impairment annually or whenever events or changes in circumstances indicate that the asset might be impaired. Intangible assets with respect to our operationsdeterminate lives are 2017, 2018 and 2019. Interchange, Network Fees and Other Cost of Services Interchange and network fees consist primarily of feesevaluated for impairment whenever events or changes in circumstances indicate that are directly related to discount fee revenue. These include interchange fees paid to issuers and assessment fees payable to card associations, which are a percentage of the processing volume we generate from Visa and Mastercard, AMEX, and Discover, as well as fees charged by card-issuing banks. Other costs of services include costs directly attributable to processing and bank sponsorship costs, whichcarrying amount may not be based on a percentage of volume. These costs also include related costs such as residual payments to sales groups, whichrecoverable. Amortizable intangible assets generally are based on a percentage of the net revenues generated from merchant referrals. In certain merchant processing bank relationships we are liable for chargebacks against a merchant equal to the volume of the transaction. Losses resulting from chargebacks against a merchant are included in other cost of services or as a bad debt expense, determined on the timing and nature of the specific transaction, on the accompanying consolidated statement of operations. We evaluate the risk for such transactions and our potential loss from chargebacks based primarily on historical experience and other relevant factors. Equity-based Compensation We account for grants of equity awards to employees in accordance with ASC 718, Compensation—Stock Compensation. This standard requires compensation expense to be measured based on the estimated fair value of the share-based awards on the date of grant and recognized as expenseamortized on a straight-line basis over the requisite service period, which is generally the vesting period.periods up to 36 months. The costs to periodically renew our intangible assets are expensed as incurred. Other Assets Foreign Currency Transactions WeOther assets are subject to exchange rate risk in our foreign operations in Russia, the functional currencycomprised primarily of which is the Russian ruble, where we generate service fee revenues, interest income or expense, incur product development, engineering, website development,Coda electric vehicles, related parts and selling, general and administrative costs and expenses. Our Russian subsidiaries pay a majority of their operating expenses in their local currencies, exposing us to exchange rate risk. Use of Estimates The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses for the reporting period. Such estimates include, but are not limitedsecurity deposits related to the value of purchase consideration paid and identifiable assets acquired and assumed in acquisitions, amortization of intangible assets, goodwill and asset impairment review, valuation reserves for accounts receivable, valuation of acquired or current merchant portfolios, incurred but not reported claims, revenue recognition for multiple element arrangements, loss reserves, assumptions used in the calculation of equity-based compensation and in the calculation of income taxes, and certain tax assets and liabilities, as well as, theCompany’s property leases related valuation allowances. Actual results could differ from those estimates. Below is a summary of the Company’s critical accounting estimates for which the nature of management’s assumptions are material due to the levelsEV business. Extinguishment of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change, and for which the impact of the estimates and assumptions on financial condition or operating performance is material. Goodwill Liabilities The Company tests goodwill for impairment using a fair value approach at least annually, absent some triggering event that would require an interim impairment assessment.derecognizes financial liabilities when the Company’s obligations are discharged, cancelled, or expired. Significant estimates and assumptions are used in our goodwill impairment review and include the identification of reporting units, assigning assets and liabilities to reporting units, assigning goodwill to reporting units and determining the fair value of each reporting unit. Our assessment of qualitative factors involves significant judgments about expected future business performance, general market conditions, and regulatory changes. In a quantitative assessment, the fair value of each reporting unit is determined based largely on the present value of projected future cash flows, growth assumptions regarding discount rates, estimated growth rates and our future long-term business plans. Changes in any of these estimates or assumptions could materially affect the determination of fair value and the associated goodwill impairment charge for each reporting unit. 11 Table of Contents Recent Accounting Pronouncements Adoption of ASU 2016-02, Leases In February 2016, the FinancialFASB issued Accounting Standards Board ("FASB") issuedUpdate (ASU) No. 2016-02, “Leases” (ASU 2016-02). The core principle of ASU 2016-02 “Leases (Topic 842)” which, for operating leases,is that lessees should recognize on its balance sheet, assets and liabilities arising from a lease. In accordance with that principle, ASU 2016-02 requires that a lessee recognize a liability to recognizemake lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying leased asset for the lease term. Lessees shall classify all leases as finance or operating leases. The Company adopted ASU 2016-02, on October 1, 2019, which resulted in the recognition of the right-of-use assets and related obligations on its carve-out financial statements. 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 and includes impairment charges in the amounts of $1,157,323 and $518,023 for the three months ended December 31, 2021 and 2020, respectively. Research and development expenses primarily consist of costs associated with the development of our Mullen Five show car. F-10 Table of Contents ​ NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued 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 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 months ended December 31, 2021 and 2020. Other Financing Costs Pursuant to the terms of the First Amendment to the Company’s Agreement and Plan of Merger with Net Element, we incurred a leasedaily $13,333 penalty for delays in the consummation of the merger transaction. We recorded charges of 0 for the three months ended December 31, 2021 associated with these delays, which charges are included in the condensed consolidated statement of operations and are included in accounts payable in the consolidated balance sheet at December 31, 2021 and September 30, 2021. Related Party Transactions We have related party transactions with certain of our directors, officers, and principal shareholders. 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 initially measuredin an orderly transaction between market participants at the presentmeasurement 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. F-11 Table of Contents ​ NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued 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. There were no amounts in excess of insured limitations at December 31, 2021 and September 30, 2021. Recently Issued and Adopted Accounting Standards In January 2017, the FASB issued Accounting Standards Update No. 2017-04 (ASU 2017-04) (Topic 350), “Intangibles - Goodwill and Others.” ASU 2017-04 simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the lease payments, in its balance sheet. The standard also requires a lessee to recognize a single lease cost, calculated socarrying amount of that the cost of the lease is allocated over the lease term, on a generally straight-line basis. Thegoodwill. ASU 2017-04 is effective for public companies for fiscal yearsannual periods beginning after December 15, 2018,2019 including interim periods within those fiscal years. Effective Januaryperiods. We adopted ASU 2017-04, on October 1, 2019, we adopted Topic 842 using the modified retrospective transition method. Under this method, we applied Topic 842 to the lease for the premises we occupy for our North American Transaction Solutions segment's U.S. headquarters. There was no cumulative impact adjustment necessary with the adoption to our accumulated deficit on January 1, 2019. Our consolidated financial statements for periods ending after January 1, 2019 are presented in accordance with the requirements of Topic 842, while comparative prior period amounts have not been adjusted and continue to be reported in accordance with Topic 840. Please refer to "Leases" above for a description of our lease accounting policies upon the adoption on Topic 842. Adoption of ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The amendments in this update changed how companies measure and recognize credit impairment for many financial assets. The new expected credit loss model will require companies to immediately recognize an estimate of credit losses expected to occur over the remaining life of the financial assets (including trade receivables) that are within the scope of the update. The update also made amendments to the current impairment model for held-to-maturity and available-for-sale debt securities and certain guarantees. The guidance was effective for us on January 1, 2020. The adoption of this guidance2020, which did not have a material impact on our consolidated balance sheets. In September 2018, the FASB issued Accounting Standards Update No. 2018-07 (ASU 2018-07) ASU No. 2018-07 (Topic 718), “Compensation—Stock Compensation: Improvements to Nonemployee Share-Based Payment Accounting.” ASU 2018-07 expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. The amendments also clarify that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Topic 606. We adopted ASU 2018-07, on October 1, 2020, which did not have a material impact on our consolidated statements of operations. 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 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. NOTE 4 – INTANGIBLE ASSETS For the three months ended December 31, 2021 and 2020, we incurred website development and trademark costs of $5,361 and $0, respectively. These costs historically have been capitalized, as the website is in the development stage, resulting 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. Legal fees incurred for registration of trademarks account for all of the costs of trademark at December 31, 2021. Amortization of these costs will commence when the trademark application and registration process has been completed. F-12 12 Table of Contents ​ NOTE 5. DUE FROM MULLEN 4 – INTANGIBLE ASSETS – Continued As contemplated by the Original Merger Agreement referred to in Note 3, on August 11, 2020, our Company as lender, borrowed an additional $500,000 from RBL and entered into an unsecured Promissory Note, dated August 11, 2020 (the “Note”), with Mullen. Pursuant to the Note, Mullen borrowed $500,000 from the Company.. Prior to maturityThe weighted average useful life of the loan,intellectual property is 3.0 years. Identifiable intangible assets with definite lives are amortized over the principal amountperiod 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 loan will carry an interest ratedistribution of 14% per annum compounded monthly and payable upon demand. This loan will mature on the earliereconomic value of (i) the date thatidentifiable intangible assets. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​      December 31, 2021      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 ​ $ (443,399) ​ $ 2,216,992 ​ $ 2,660,391 ​ $ (221,699) ​ $ 2,438,692 Intellectual property ​   71,182 ​   (71,182) ​   — ​   71,182 ​   (69,205) ​   1,977 Trademark ​   59,951 ​   — ​   59,951 ​   54,590 ​   — ​   54,590 Total Finite-Lived Intangible Assets ​ $ 2,791,524 ​ $ (514,581) ​ $ 2,276,943 ​ $ 2,786,163 ​ $ (290,904) ​ $ 2,495,259 ​ Total future amortization expense for finite-lived intellectual property is as follows: ​ ​ ​ ​ ​ Years Ended December 31,       Future Amortization 2022 (nine months) ​ $ 670,458 2023 ​   886,797 2024 ​   719,688 Total Future Amortization Expense ​ $ 2,276,943 ​ For the merger agreement is terminated for any reason by any party thereto and (ii) the Merger effective time. At Marchthree months ended December 31, 2021 the Company is also owed approximately $1.0 million from Mullen in connection with Late Fees, pursuant to the Original Merger Agreement with Mullen. NOTE 6. INTANGIBLE ASSETS The Company had approximately $3.1 million and $3.6 million in intangible assets, net of2020, amortization at March 31, 2021 and December 31, 2020, respectively. Shown below are the details of the components that represent these balances. Intangible assets consisted of the following as of March 31, 2021     Cost   Accumulated Amortization   Carrying Value Amortization Life and Method                             IP Software   $ 2,378,248   $ (2,367,723 )   $ 25,137 3 years - straight-line Portfolios and Client Lists   7,714,665   (7,066,676 )   647,989 4 years - straight-line Client Acquisition Costs   8,988,102   (6,583,059 )   2,405,042 4 years - straight-line PCI Certification   449,000   (449,000 )   - 3 years - straight-line Trademarks   703,586   (703,586 )   - 3 years - straight-line Domain Names   437,810   (437,810 )   - 3 years - straight-line Total   $ 20,671,410   $ (17,607,854 )   $ 3,078,168   Intangible assets consisted of the following as of December 31, 2020     Cost   Accumulated Amortization   Carrying Value Amortization Life and Method                             IP Software   $ 2,378,248   $ (2,321,843 )   $ 40,185 3 years - straight-line Portfolios and Client Lists   7,714,665   (6,776,317 )   938,348 4 years - straight-line Client Acquisition Costs   8,841,617   (6,224,824 )   2,616,794 4 years - straight-line PCI Certification   449,000   (449,000 )   - 3 years - straight-line Trademarks   703,586   (703,586 )   - 3 years - straight-line Domain Names   437,810   (437,810 )   - 3 years - straight-line Total   $ 20,524,925   $ (16,913,379 )   $ 3,595,326   Amortization expense for the intangible assets was approximately $663,000$223,676 and $680,000$5,932 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. Short and Long-Term Debt The following is a summary of our indebtedness at December 31, 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Carrying Value ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Unpaid Principal  ​ ​ ​ ​ ​ ​ ​ Contractual ​ Contractual  Type of Debt      Balance      Current      Long-Term       Interest Rate      Maturity Matured Notes ​ $ 3,718,585 ​ $ 3,718,585 ​ $ —   0.00% - 15.00 %   2016 - 2021 Promissory Notes ​   14,531,554 ​   14,531,554 ​   —   28.00 %   2021 – 2022 Real Estate Note ​   274,983 ​   36,724 ​   238,259   5.00 %   2023 Loan Advances ​   618,158 ​   618,158 ​   —   0.00% - 10.00 %   2019 – 2020 Less: Debt Discount ​   — ​   — ​   —   NA   NA Total Debt ​ $ 19,143,280 ​ $ 18,905,021 ​ $ 238,259   NA   NA F-13 Table of Contents ​ NOTE 5 – DEBT – Continued 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 December 31, 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​   Years Ended December 31,  ​      2022 (9 months)      2023      2024      Total Total Debt ​ $ 18,905,021 ​ $ 238,259 ​ $ — ​ $ 19,143,280 ​ 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%. Company management is working with the creditors to remediate the $3,718,585 in promissory notes and loan advances that are in default. Promissory notes and loan advances that are in default still accrue interest after their scheduled maturity date. 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 months ended December 31, 2021 and 2020, we recorded interest expense of $22,438,945 and $2,406,330, 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 three months ended MarchDecember 31, 2021 and 2020,, was $19,212,176 and $486,876, respectively. The following table presentsDuring 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 estimated aggregate future amortization expensethree months ended December 31, 2021 and 2020, the carrying amount of intangible assets:indebtedness that was settled via issuance of MTI shares was $23,192,500 and $0, respectively. F-14 2021 (remainder of year)   $ 555,830 2022   741,106 2023   741,106 2024   734,822 2025   305,303 Balance March 31, 2021   $ 3,078,168 13 Table of Contents ​ NOTE 7. ACCRUED EXPENSES 5 – DEBT – Continued Convertible Debt Issuances and Warrants At March 31,TDR Relationship On May 16, 2021, we received debt financing through MTI entering into an unsecured $4.4 million convertible note agreement with TDR Capital. The convertible note was issued with OID of 10% ($0.4 million); carries an interest rate of 15% and December 31, 2020, accrued expenses amountedhas a maturity date of one year. The convertible note is unsecured and includes detached warrants to approximately $2.8 millionacquire up to 17,446,000 shares of MTI common stock (1,358,112 MAI warrants). The MTI warrant exercise price is $0.6877 (MAI exercise price is $8.84) per common share and $4.6 million, respectively. Accrued expenses represent expenses thatexpires five years from the date of issuance. The value ascribed to the warrants was $24,358,875, resulting in an additional debt discount of $3,726,816 and a beneficial conversion discount of $673,184. These discounts are owed atbeing amortized over the end12-month term of the period ordebt. The number of shares issuable upon conversion are estimates of services provided that have not been billed bydetermined according to the provider or vendor. The following table reflects the balances outstanding as of March 31, 2021 and December 31, 2020.     March 31, 2021   December 31, 2020 Accrued professional fees   $ 220,140   $ 268,435 PayOnline accrual   -   61,719 Accrued interest   581,042   409,525 Accrued bonus   1,777,430   1,690,556 Accrued foreign taxes   (14,084 )   (12,336 ) Other accrued expenses   272,427   2,186,197 Total accrued expenses   $ 2,836,955   $ 4,604,097 Included in accrued bonus are non-discretionary compensation due to our Chairman and CEO, which was approximately $1.4 million and $1.3 million at March 31, 2021 and December 31, 2020, respectively, and approximately $398,000 and $386,000 at March 31, 2021 and December 31, 2020, respectively, for discretionary performance bonuses dueformula: Conversion Amount/Conversion Price, subject to certain employees. Included in other accrued expenses at December 31, 2020adjustments. On November 4, 2021, the merger effective date, TDR Capital (together with their affiliates) is approximately $2.0 million which was duelimited to ESOUSA for the sixth tranche received on December 30, 2020, which was subsequently paid bya 9.9% ownership cap common stock then outstanding after giving effect to the issuance of 200,000common stock issuable upon exercise of the warrants. On July 26, 2021, we received debt financing through MTI entering into an unsecured $1.1 million convertible note agreement with TDR Capital. The convertible note is issued with OID of 10% or $0.1 million; carries an interest rate of 15% and has a maturity date of one year. The convertible note is unsecured and includes detached warrants to acquire up to 4,361,500 shares of MTI common stock (339,528 MAI warrants). The MTI warrant exercise price is $0.6877(MAI exercise price is $8.84) per common share and expires five years from the date of issuance. The number of conversion shares issuable upon conversion is determined according to the formula: Conversion Amount/Conversion Price, subject to certain adjustments. On November 4, 2021, the merger effective date, TDR Capital (together with their affiliates) is limited to a 9.9% ownership cap common stock then outstanding after giving effect to the issuance of common stock in January of 2021. NOTE 8. NOTES PAYABLE  Notes payable consistissuable upon exercise of the following at March 31,warrants. On September 3, 2021, we received debt financing through MTI entering into an unsecured $6.6 million convertible note agreement with TDR Capital. The initial sale and purchase is $550,000 principal and detached warrants to acquire up to 2,180,750 shares of MTI stock (169,764 MAI warrants). The second sale and purchase is $6,050,000 principal and detached warrants to acquire up to 23,988,500 shares of MTI stock (1,867,423 MAI warrants). The combined convertible notes are issued with OID of 10% ($0.66 million); carries an interest rate of 15% and has a maturity date of one year. The MTI warrant exercise price is $0.6877 (MAI exercise price is $8.84) per common share and expires five years from the date of issuance. The number of conversion shares issuable upon conversion is determined according to the formula: Conversion Amount/Conversion Price of $0.6877, subject to certain adjustments. On November 4, 2021, the merger effective date, TDR Capital (together with their affiliates) is limited to a 9.9% ownership cap common stock then outstanding after giving effect to the issuance of common stock issuable upon exercise of the warrants. Digital Power Lending, LLC On July 22, 2021, the Company received debt financing through MTI entering into an unsecured $2.42 million convertible note agreement with Digital Power Lending, LLC. The convertible note is issued with OID of 10% or $0.242 million; carries an interest rate of 15% and has a maturity date of one year. The convertible note is unsecured and includes detached warrants to acquire up to 9,595,300 shares of MTI common stock (746,961 MAI warrants). The MTI warrant exercise price is $0.6877 (MAI exercise price is $8.84) per common share and expires five years from the date of issuance. The number of conversion shares issuable upon conversion of the conversion amount shall be determined according to the formula: Conversion Amount/Conversion Price, subject to certain adjustments. On November 5, 2021, the merger effective date, Digital Power Lending, LLC (together with their affiliates) is limited to a 9.9% ownership cap in common stock then outstanding after giving effect to the issuance of common stock issuable upon exercise of the warrants. F-15 Table of Contents ​ NOTE 5 – DEBT – Continued On August 19, 2021, the Company received debt financing through MTI entering into an unsecured $1.1 million convertible note agreement with Digital Power Lending, LLC. The convertible note is issued with OID of 10% or $0.1 million; carries an interest rate of 15% and has a maturity date of one year. The convertible note is unsecured and includes detached warrants to acquire up to 4,361,500 shares of MTI common stock (339,528 MAI warrants). The MTI warrant exercise price is $0.6877 (MAI exercise price is $8.84) per common share and expires five years from the date of issuance. The number of conversion shares issuable upon conversion of the conversion amount shall be determined according to the formula: Conversion Amount/Conversion Price, subject to certain adjustments. On November 5, 2021, the merger effective date, Digital Power Lending, LLC. (together with their affiliates) is limited to a 9.9% ownership cap in common stock then outstanding after giving effect to the issuance of common stock issuable upon exercise of the warrants. On October 25, 2021, MTI amended the exchange agreement to include the $1,100,000 debt financing and detached warrants with JADR Consulting Group PTY Limited. The agreement represents Amendment No. 6 and Joinder to the Exchange Agreement that was originally signed on May 7, 2021 and December 31, 2020:amended on May 20, 2021. On November 5, 2021, the merger effective date, the investors exchanged the convertible debt for shares of MAI's Series C Preferred Stock, par value $0.001 per share. The right to additional purchases of preferred stock expires 12 months from the merger close date between Net Element and MAI.     March 31, 2021   December 31, 2020 RBL Capital Group, LLC   $ 9,194,427   $ 9,431,157 SBA Loan - EIDL   159,899   159,899 SBA Loan - PPP   491,493   491,493 Subtotal   9,845,819   10,082,549 Less: deferred loan costs   (153,777 )   (138,944 ) Subtotal   9,692,042   9,943,605 Less: current portion   (1,093,288 )   (1,330,018 ) Long term debt   $ 8,598,754   $ 8,613,587 On November 5, 2021, the Company received debt financing through MTI entering into an unsecured $110,000 convertible note agreement with Michael Friedlander. The convertible note is issued with OID of 10% or $10 thousand; carries an interest rate of 15% and has a maturity date of one year. On November 5, 2021, the merger effective date, the investors exchanged the convertible debt for shares of MAI’s Series C Preferred Stock, par value $0.001 per share. The right to additional purchases of preferred stock expires 12 months from the merger close date between Net Element and MAI. RBLAssignment and Assumption of Rights On October 25, 2021, JADR Consulting Group PTY Limited and TDR Capital Group, LLC Effective June 30, 2014, TOT Group, Inc. and its subsidiaries as co-borrowers, TOT Payments, LLC, TOT BPS, LLC, TOT FBS, LLC, Process Pink, LLC, TOT HPS, LLC and TOT New Edge, LLC (collectively, the “co-borrowers”), entered into a Loanagreement of Assignment and Security Agreement (“Credit Facility”Assumption of Rights. On September 3, 2021, the Assignor ("TDR Capital") agreed to purchase $6,600,000 in convertible debt and warrants to acquire 2,037,164 shares of MAI common stock. The Assignor has agreed with RBL Capitalthe Assignee ("JADR Consulting Group LLC (“RBL”PTY Limited"), as lender (the “RBL Loan Agreement”). The original terms provided us with an 18-month, $10 million credit facility with interest at the higher of 13.90% per annum or the prime rate plus 10.65%. On May 2, 2016, we renewed our Credit Facility with RBL, increasing the facility from $10 million to $15 million and extending the term through February 2019. The co-borrowers’ obligations to RBL pursuant to the RBL Loan Agreement are secured by a first priority security interest inassign all of the co-borrowers’ tangible and intangible assets, including but not limited to their merchants, merchant contracts and proceeds thereof, and all rightrights, title and interest in co-borrowers’ processing contracts, contract rights,the aggregate original amount of $3,300,000 and portfolio cash flows with all processorswarrants to acquire 1,201,521 shares of MTI common stock for the aggregate purchase price of $3,000,000. The Company received funding between October 27, 2021 and November 4, 2021. On October 27, 2021, Amendment No. 6 and Joinder to the Exchange Agreement was modified to reflect the changes of the co-borrowers.Assignment and Assumption of Rights document. Convertible Debt to Equity Conversion (Exchange Agreements) On December 19, 2019,The Notes described above were issued pursuant to Prior SPAs with the various Noteholders in connection with an addendum2020 and 2021 generally to those certain term notes made by TOT Group, Inc.in favor of RBL, the Credit Facility referred to above, we received funding of $1,000,000 and new terms were negotiatedfinance Mullen Technologies’ electric vehicle business. The Prior SPAs provided for the total outstanding notes payable amount of $9,431,157. This total loan amount bears interest at 14.19%. On January 20, 2020, we were required to make one (1) payment of interest only for $117,329, followed by five (5) payments of interest only in the amount of $111,523. Effective July 20, 2020, we were required to make forty-eight (48) monthly payments, which includes principal and interest for $258,620, until March 20, 2024 the date this term note matures. In the event anyissuance of the installments or other payment requiredNotes and a specified number of warrants allowing the Noteholders to be made is not received by or on behalfpurchase common stock at an exercise price of RBL in full within ten (10) days after the due date thereof, and the same subsequently is received and accepted by or on behalf of RBL, the Company shall pay on demand a late charge in the amount of five percent (5%) of the amount of the delinquent payment. In the event of the occurrence of an Event of Default (as defined in the Loan Agreement), the entire unpaid balance of principal and interest of the Loan shall become due and payable immediately, without notice or demand, at the election of the Note holder, provided that the holder shall endeavor (but is not required) to provide notice to the Company of any such acceleration. The Company waives demand, presentment for payment, protest, notice of protest and notice of nonpayment or dishonor of the Note. The Company shall not have any right to prepay this loan except as expressly provided in the Loan Agreement. On June 20, 2020, in connection with those certain term notes made by TOT Group, Inc.in favor of RBL, the Credit Facility referred to above, the Company executed two (2) promissory term notes, totaling $9,431,157, which replaces all previous outstanding term notes with RBL.The first term note is for $4,432,157 and bears interest at 14.19%. On December 20, 2021, we are required to make one (1) payment of interest only for $67,746, followed by eight (8) payments of interest only for the same amount, followed by a balloon payment for any outstanding principal and accrued interest of approximately $5,540,128. The second  term note is for $5,000,000 and bears interest at 14.19%. On June 20, 2020, we are required to make one (1) payment of interest only for $59,125 followed by six (6) payments of interest only for the same amount. Starting on January 20,2021, the Company shall make twenty (20) equal monthly payments of principal and interest of $137,109, followed by one (1) payment of principal and interest for approximately $3,290,475.In connection with this term note, the Company agreed to pay a financing fee of $894,311. Such financing fee will be due and payable as follows; $25,000 on February 20, 2021; $25,000 on June 20, 2021; $94,311 on August 20, 2022; and $750,000 on September 20, 2022. The Company waives demand, presentment for payment, protest, notice of protest and notice of nonpayment or dishonor of the Note. The Company shall not have any right to prepay this loan except as expressly provided in the Loan Agreement. The Company waives demand, presentment for payment, protest, notice of protest and notice of nonpayment or dishonor of the Note. The Company shall not have any right to prepay this loan except as expressly provided in the Loan Agreement.  On March 27, 2020, our Company entered into a Master Exchange Agreement (the “ESOUSA Agreement”) with ESOUSA Holdings, LLC ("ESOUSA"), a related party. Prior to entering into the ESOUSA Agreement, ESOUSA agreed to acquire an existing promissory note that had been previously issued by the Company, of up to $2,000,000 in principal amount outstanding plus interest due to RBL Capital Group, LLC ("RBL"). Pursuant to the ESOUSA Agreement, the Company had the right,$0.6877 per share, at any time prior to March 27,an expiration date that is generally 5 years after the date of issuance. At the effective time of the Merger, each of the warrants to purchase Mullen Technologies common stock were canceled and converted automatically into a Warrant. F-16 Table of Contents ​ NOTE 5 – DEBT - Continued Mullen Technologies and the holders (“Noteholders”) of $10,762,500 in aggregate principal amount of 15% unsecured convertible notes (the “Notes”) previously issued pursuant to certain Securities Purchase Agreements between Mullen Technologies and the Noteholders (“Prior SPAs”) entered into an Exchange Agreement (the “Exchange Agreement”) dated as of May 7, 2021, as amended, pursuant to request ESOUSA, and ESOUSA agreed upon each such request,which the Noteholders exchanged their Notes for Series C Preferred Stock of Mullen Technologies (the “Exchange Shares”). A condition to the Noteholders’ obligation to exchange this promissory note in tranchesthe Notes included that the Company had received conditional approval for listing our Common Stock on the dates whenNasdaq Capital Market and all conditions for closing the Company instructs ESOUSA, for such numberMerger had been met. In connection with the initial issuance of the Notes and further to the Exchange Agreement, the Noteholders also received a total of 42,759,290 additional warrants to purchase Mullen Technologies common stock at a purchase price of $0.6877 per share. The Exchange Agreement requires Mullen Technologies to file a registration statement with the SEC under the Securities Act to register the sale of shares of the Company’s common stock (“Common Stock”issuable upon conversion of the Exchange Shares by the Noteholders (the “Registration Statement”) as determined. On February 1, 2022, the S-3 Registration Statement was filed with the SEC and became effective on February 3, 2022. At the effective time of the Merger, (i) each of the Exchange Shares were canceled and converted automatically into the right to receive 0.078 shares of the Series C Preferred Stock, (ii) each of the warrants to purchase Mullen Technologies common stock were canceled and converted automatically into a Warrant and (iii) the obligations under the ESOUSAExchange Agreement based uponwere assumed by the numberCompany. 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 shares$49,500,000 was replaced by a new note with a face value of Common Stock (already$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 $25,367,925 and $33,296,648 as of December 31, 2021 and September 30, 2021, respectively, and are in ESOUSA’s possession) that ESOUSA sold in orderdefault. The amounts owed to finance its purchaseother DBI-affiliated entities is $524,911 and $982,500 and $1,082,500, as of such trancheDecember 31, 2021 and September 30, 2021, respectively. The 2020 Drawbridge loan is currently recognized within the current portion of debt on the promissory note from RBL Capital Group, LLC. ESOUSA will purchase each tranche of the promissory note equal to 88% of the gross proceeds from the shares of Common Stock sold by ESOUSA to finance the purchase of such Exchange Amount from RBL Capital Group, LLC. Each such tranche to be $148,000 unless otherwise agreed to byconsolidated balance sheet. On July 16, 2021, the Company and ESOUSA. 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 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 and includes a waiver of default. The principal pay down to Drawbridge occurred on November 15, 2021. F-17 Table of Contents ​ NOTE 5 – DEBT - Continued SBA Loans On April 23,14, 2020, and August 3, 2020, the CompanyMTI entered into certain amendments to the ESOUSA Agreement, which together increased from $2,000,000 to $15,000,000 the principal amount and unpaid interest of one or more promissory notes of the Company or its direct or indirect subsidiaries that ESOUSA either purchased in whole or has an irrevocable right to purchase in tranches from RBL in connection with the ESOUSA Agreement. On March 27, 2020, the Company received its first tranche of RBL promissory notes in the aggregate amount of $148,000, less any fees, from ESOUSA to be exchanged for Common Stock pursuant to the ESOUSA Agreement.  Included in other accrued expenses at March 31, 2021 is approximately $145,000 in connection with this first tranche for which shares of Common Stock have not yet been issued.  Concurrently with this transaction, the Company received an equivalent aggregate amount of $148,000 from RBL under the Credit Facility.  On April 28, 2020, the Company received its second tranche of RBL promissory notes in the aggregate amount of $143,000, less any fees, from ESOUSA to be exchanged for Common Stock pursuant to the ESOUSA Agreement.  The Company issued 65,862 shares of Common Stock to ESOUSA in connection with this exchange.  Concurrently with this transaction, the Company received an equivalent aggregate amount of $143,000 from RBL under the Credit Facility. On August 11, 2020, the Company received its third tranche of RBL promissory notes in the aggregate amount of $707,000, less any fees, from ESOUSA to be exchanged for Common Stock pursuant to the ESOUSA Agreement.  The Company issued 66,190 shares of Common Stock to ESOUSA in connection with this exchange.  Concurrently with this transaction, the Company received an equivalent aggregate amount of $707,000 from RBL under the Credit Facility.  On August 21, 2020, the Company received its fourth tranche of RBL promissory notes in the aggregate amount of $401,000, less any fees, from ESOUSA to be exchanged for Common Stock pursuant to the ESOUSA Agreement.  The Company issued 45,654 shares of Common Stock to ESOUSA in connection with this exchange.  Concurrently with this transaction, the Company received an equivalent aggregate amount of $401,000 from RBL under the Credit Facility.  On September 25, 2020, the Company received its fifth tranche of RBL promissory notes in the aggregate amount of $426,000, less any fees, from ESOUSA to be exchanged for Common Stock pursuant to the ESOUSA Agreement.  The Company issued 50,000 shares of Common Stock to ESOUSA in connection with this exchange.  Concurrently with this transaction, the Company received an equivalent aggregate amount of $426,000 from RBL under the Credit Facility.     On December 30, 2020, the Company received its sixth tranche of RBL promissory notes in the aggregate amount of $1,960,000, less any fees, from ESOUSA to be exchanged for Common Stock pursuant to the ESOUSA Agreement. The Company issued 200,000 shares of Common Stock to ESOUSA in connection with this exchange. Concurrently with this transaction, the Company received an equivalent aggregate amount of $1,960,000 from RBL under the Credit Facility. SBA Loans On May 7, 2020, the Company entered into a promissory note (the “Note”“Note”) evidencing an unsecured loan (the “Loan”“Loan”) in the amount of $491,493$885,426 made to the Company under the Paycheck Protection Program (the “PPP”“PPP”). The Note matures on May 7,April 14, 2022 and bears interest at a rate of 1% per annum. Beginning December 7, 2020, the Company is required to make 17 monthly payments of principal and interest, with the principal component of each such payment based upon the level amortization of principal over a two-year period from May 7, 2020. Pursuant to the terms of the Coronavirus, Aid, Relief and Economic Security Act (“CARES Act”) and the PPP, the Company may applyapplied to the Lender for forgiveness for the amount due on the Loan. The amount eligible for forgiveness is based on the amount of Loan proceeds used by the Company (during the eight-week period after the Lender makes the first disbursement of Loan proceeds) for the payment of certain covered costs, including payroll costs (including benefits), interest on mortgage obligations, rent and utilities, subject to certain limitations and reductions in accordance with the CARES Act and the PPP. On May 9, 2021, our Company was informed byDuring November 2020, the Small Business Administration thatSBA approved the loan forgiveness applicationamount of $875,426 in principal and $5,155 in interest on November 20, 2020. The loan forgiveness was approved. The Company will reverse the amount due and reflect itaccounted for as a gain on debt extinguishment of debt$890,581 in the next reporting period.Consolidated Statement of Operations for the year ended September 30, 2021. On May 18,In September 2020, the CompanyMTI entered into a promissory note (the "Note""Note") in the amount of $159,899 made to the Company$10,000 by the U.S. Small Business AdministrationSBA under the Economic Injury Disaster LoanEIDL program. Monthly installment payments on the Note will begin twelve months from the date of the Note, with the balance of any accrued principal and interest at 3.75% annually, payable thirty years from the date of the Note. An application was submitted to the Lender for loan forgiveness, which was approved for the full amount on February 18, 2021. Loss on Debt Settlement Scheduled notes payable principal repayment at MarchThe Company incurred a $41,904 loss on debt settlement for the $540K CarMoxy Loan. Release of Liability, Debt Paydowns and Payoffs On December 27, 2021, the Par Funding/CBSG debt of $74,509 has been deemed satisfied by the authorized agent for the trustee of the creditor. As result of the trustee’s actions, the Company recorded an extinguishment of $74,509. On November 29, 2021, MAI (through MTI) repaid the $140,000 loan from the NY Group, which had matured on January 24, 2021. On November 29, 2021, MAI (through MTI) repaid the $25,000 loan from MABM Holdings loan, which matured on January 13, 2021. On November 11, 2021, the Company executed a release of liability for the EXIM relationship. MAI (through MTI) paid $1,750,000 to EXIM USA to dismiss or release any and all claims, causes of action, lawsuits or other demands upon MTI. The loan matured on October 31, 2021 is as follows:2019, and the then current balance on the loan was $700,000 plus interest. On November 9, 2021, the Company executed a release of liability for the Elegant Funding relationship. The lending relationship covered two transactions: 1. $458,000 loan dated May 23, 2018, which had matured on November 23, 2018. The current principal balance was $438,000, and the payoff amount was $604,770. 2. $185,000 dated September 29, 2018, which had matured on March 29, 2019. The current principal balance is $185,000, and the payoff amount is $222,426. On November 9, 2021, MAI (through MTI) repaid a loan from John Gordon, which had matured on May 7, 2019. In consideration for the settlement, MAI (through MTI) received the title to one (1) Qiantu Dragonfly K50 EV car. 2021 (remainder of year)   $ 1,093,288 2022   8,574,057 2023   5,514 2024   5,514 thereafter   167,446           Balance March 31, 2021   $ 9,845,819 F-18 14 Table of Contents ​ NOTE 9. CONCENTRATIONS5 – DEBT - Continued Convertible Notes Our credit card processing revenues are from merchant customer transactions,Between August 2020 and December 2021, MTI issued unsecured convertible notes totaling $23,192,500, of which $7,260,000 were processed primarily by two third-party processors (greater than 5%) and our own dedicated bank identification number ("BIN")/Interbank Card Association ("ICA") numberissued during the three months ended MarchDecember 31, 2021 and 2020. During2021. The unsecured convertible notes issued during the three months ended MarchDecember 31, 2021 bear interest at 15%, mature in one year, and included warrants to acquire shares of common stock based on a specified formula. Interest is accrued in arrears until the last business day of each calendar year quarter. The default rate on the note increases to 20% when quarterly interest payments are not timely made by MTI. Convertible Notes ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ��� ​ ​      Convertible      Interest      Default       Maturity       Warrants       Exercise       Exercise  Date of Issuance ​  Note ($) ​  Rate ​ Interest Rate ​ Date ​ (#) ​ Date ​ Price ($) 8/26/2020 ​ $ 1,000,000 ​ 15 %   20 %   8/26/2021 ​ 226,397 ​ 8/26/2025 ​ $ 8.84 8/26/2020   ​ 200,000   15 %   20 %   8/26/2021   45,279   8/26/2025 ​ $ 8.84 8/26/2020   ​ 200,000   15 %   20 %   8/26/2021   45,279   8/26/2025 ​ $ 8.84 8/26/2020   ​ 100,000   15 %   20 %   8/26/2021   22,640   8/26/2025 ​ $ 8.84 9/25/2020   ​ 105,000   15 %   20 %   9/25/2021   29,715   9/25/2025 ​ $ 8.84 9/25/2020   ​ 157,500   15 %   20 %   9/25/2021   44,572   9/25/2025 ​ $ 8.84 9/25/2020   ​ 105,000   15 %   20 %   9/25/2021   29,715   9/25/2025 ​ $ 8.84 10/12/2020   ​ 660,000   15 %   20 %   10/12/2021   203,757   10/12/2025 ​ $ 8.84 10/12/2020   ​ 33,000   15 %   20 %   10/12/2021   10,188   10/12/2025 ​ $ 8.84 10/12/2020   ​ 27,500   15 %   20 %   10/12/2021   8,490   10/12/2025 ​ $ 8.84 11/9/2020   ​ 660,000   15 %   20 %   11/9/2021   203,757   11/9/2025 ​ $ 8.84 11/9/2020   ​ 33,000   15 %   20 %   11/9/2021   10,188   11/9/2025 ​ $ 8.84 11/9/2020   ​ 27,500   15 %   20 %   11/9/2021   8,490   11/9/2025 ​ $ 8.84 12/7/2020   ​ 660,000   15 %   20 %   12/7/2021   203,756   12/7/2025 ​ $ 8.84 12/7/2020   ​ 33,000   15 %   20 %   12/7/2021   10,188   12/7/2025 ​ $ 8.84 12/7/2020   ​ 27,500   15 %   20 %   12/7/2021   8,490   12/7/2025 ​ $ 8.84 12/15/2020   ​ 157,500   15 %   20 %   12/15/2021   44,572   12/15/2025 ​ $ 8.84 12/15/2020   ​ 157,500   15 %   20 %   12/15/2021   44,572   12/15/2025 ​ $ 8.84 1/7/2021   ​ 660,000   15 %   —   1/7/2022   203,757   1/7/2026 ​ $ 8.84 1/7/2021   ​ 33,000   15 %   —   1/7/2022   10,188   1/7/2026 ​ $ 8.84 1/7/2021   ​ 27,500   15 %   —   1/7/2022   8,490   1/7/2026 ​ $ 8.84 1/7/2021   ​ —   —   —   —   2,038  * 1/7/2026 ​ $ 8.84 1/7/2021   ​ 192,500   15 %   —   1/7/2022   59,429   1/7/2026 ​ $ 8.84 1/7/2021   ​ 82,500   15 %   —   1/7/2022   25,470   1/7/2026 ​ $ 8.84 1/7/2021   ​ 192,500   15 %   —   1/7/2022   59,429   1/7/2026 ​ $ 8.84 1/7/2021   ​ 110,000   15 %   —   1/7/2022   33,960   1/7/2026 ​ $ 8.84 3/10/2021   ​ 660,000   15 %   —   3/10/2022   203,757   3/10/2026 ​ $ 8.84 3/10/2021   ​ 33,000   15 %   —   3/10/2022   10,188   3/10/2026 ​ $ 8.84 3/10/2021   ​ 27,500   15 %   —   3/10/2022   8,490   3/10/2026 ​ $ 8.84 5/7/2021   ​ —   —   —   —   82,326 ** 5/7/2026 ​ $ 8.84 5/7/2021   ​ —   —   —   —   33,316 ** 5/7/2026 ​ $ 8.84 5/7/2021   ​ —   —   —   —   10,504 ** 5/7/2026 ​ $ 8.84 5/7/2021   ​ —   —   —   —   19,167 ** 5/7/2026 ​ $ 8.84 5/16/2021   ​ 4,400,000   15 %   20 %   5/16/2022   1,358,112   5/16/2026 ​ $ 8.84 7/22/2021   ​ 2,420,000   15 %   20 %   7/22/2022   746,961   7/22/2026 ​ $ 8.84 7/26/2021   ​ 1,100,000   15 %   20 %   7/26/2022   339,528   7/26/2026 ​ $ 8.84 8/19/2021   ​ 1,100,000   15 %   20 %   8/19/2022   339,528   8/19/2026 ​ $ 8.84 9/3/2021   ​ 550,000   15 %   20 %   9/3/2022   169,764   9/3/2026 ​ $ 8.84 10/5/2021 ​ ​ 1,100,000 ​ 15 %   20 %   10/5/2022 ​ 395,712 ​ 10/5/2026 ​ $ 8.84 10/18/2021 ​ ​ 385,000 ​ 15 %   20 %   10/18/2022 ​ 138,500 ​ 10/18/2026 ​ $ 8.84 10/19/2021 ​ ​ 1,265,000 ​ 15 %   20 %   10/19/2022 ​ 455,068 ​ 10/19/2026 ​ $ 8.84 10/27/2021 ​ ​ 550,000 ​ 15 %   20 %   10/27/2022 ​ 197,857 ​ 10/27/2026 ​ $ 8.84 10/27/2021 ​ ​ 1,100,000 ​ 15 %   20 %   10/27/2022 ​ 395,712 ​ 10/27/2026 ​ $ 8.84 11/4/2021 ​ ​ 2,750,000 ​ 15 %   20 %   11/4/2022 ​ 989,277 ​ 11/4/2026 ​ $ 8.84 11/5/2021 ​ ​ 110,000 ​ 15 %   20 %   11/5/2022 ​ 37,356 ​ 11/5/2026 ​ $ 8.84 11/5/2021*** ​ ​ — ​ — ​ — ​ — ​ 490,030 ​ 11/5/2026 ​ $ 8.84 Total ​ $ 23,192,500   —   —   —   7,876,068   — ​   — * As part of placement agent, Cambria received five-year warrants to purchase 6% of the MTI common shares issuable under convertible notes sold in the Regulation D offering to investors introduced by the firm. F-19 Table of Contents ​ NOTE 5 – DEBT - Continued ** On May 7, 2021, MTI issued additional warrants of 1,866,665 (MAI - 145,313) that were added to the Exchange Agreement for no additional consideration to acquire additional common shares of common stock to 4 convertible debt holders given changes in the exchange share calculation, which will be consistent with the exchange share calculation of other convertible debt holders. The Exchange Agreement supersedes the original agreements that were issued by MTI and allows the convertible debt holder to exchange their debt for the newly created Series C Preferred Stock, par value of $0.001. The new series of preferred stock was created upon the merger effectiveness date between Net Element and MAI. *** Additional warrants granted to investors granted to for no additional consideration to acquire additional common shares of common stock to 4 convertible debt holders given changes in the exchange share calculation, which will be consistent with the exchange share calculation of other convertible debt holders. Convertible Notes 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 December 31, 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 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 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 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 – DEFICIENCY IN 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 processed 20%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 total revenue with Priority Payment Systems, 68% fromArticles of Incorporation, the Board of Directors may determine the rights, preferences and terms of our own dedicated BIN/ICA with Esquire Bank,authorized but unissued shares of preferred stock. F-20 Table of Contents ​ 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 8% with First Data Corp.  DuringSeries B shall participate on a pro rata basis (on an “as converted” basis to common stock) in any cash dividend paid on common stock. NaN dividends have been declared or paid during the three months ended MarchDecember 31, 2021, we processed 37% and 2020. The Series C Preferred Stock bears a cumulative 15.0% per annum fixed dividend payable no later than the 5th day after the end of our total revenueeach month on the Series C Original Issue Price plus unpaid accrued and accumulated dividends. Dividends on the Series C Preferred Stock are 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 Priority Payment Systems, 43% from our own dedicated BIN/ICAa 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 Esquire Bank,all listing requirements of NASDAQ and 10%(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 First Data Corp. 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: NaN 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 NOTE 10. COMMITMENTS AND CONTINGENCIES 7 – DEFICIENCY IN STOCKHOLDERS’ EQUITY – Continued Liquidation Employment Agreement On February 25, 2020, as per approvalBased on a reverse ratio of the Compensation Committee (the “Committee”) of the board of directorsone 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 F-21 Table of Contents ​ 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 1 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 We have 500,000,000 shares of common stock authorized with $0.001 par value per share. There were 23,936,162 and 7,048,387 shares of common stock issued and outstanding at December 31, 2021 and September 30, 2021. NOTE 7 – DEFICIENCY IN STOCKHOLDERS’ EQUITY – Continued The holders of Common Stock are entitled to 1 vote for each share of Common Stock held at all meetings of shareholders. In the event of a liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, the common shareholders 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, 0 dividends were declared or paid to the holders of common stock. Warrants The Warrants were issued at an initial exercise price of $0.6877 per share, were immediately exercisable upon issuance and have a term of five years from the date of issuance. 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 $8.84 per share. The Warrants were exercisable for an aggregate of 15,075,707 shares of Common Stock as of December 31, 2021. 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. F-22 Table of Contents ​ The following table summarizes warrant activity for the three months ended December 31, 2021 and 2020: ​ ​ ​ ​ ​ ​ ​ ​      ​      Weighted Average  ​ ​ MAI shares ​ Exercise Price Warrants outstanding at September 30, 2021   4,924,447 ​ $ 8.84 Warrants exercised   — ​ $ — Warrants granted   10,151,260 ​ $ 8.84 Warrants expired   — ​ $ — Warrants outstanding at December 31, 2021   15,075,707 ​ $ 8.84 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Average ​      MAI shares      Exercise Price Warrants outstanding at September 30, 2020 ​ 540,905 ​ $ 8.84 Warrants exercised ​ — ​ $ — Warrants granted ​ 756,448 ​ $ 8.84 Warrants expired ​ (97,308) ​ $ 8.84 Warrants outstanding at December 31, 2020 ​ 1,200,045 ​ $ 8.84 ​ NOTE 7 – DEFICIENCY IN STOCKHOLDERS’ EQUITY – Continued 2020-2021 Warrants The warrants are exercisable for a five-year period commencing upon issuance . The estimated fair value of the MAI warrants issued and outstanding as of December 31, 2021 is $133,269,241 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: ​ ​ ​ ​ ​ ​ ​      December 31, 2021   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 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. Equity Transactions Acuitas $20 Million Equity Purchase On May 7, 2021, MTI executed a $20,000,000 equity purchase agreement with the Acuitas Group Holdings, who committed to purchase shares of the MAI Series C Preferred Stock at a price of $8.84 per share. Upon NASDAQ uplifting and trading volume of stock, this equity commenced funding. On November 4, 2021, Acuitas Group Holdings wired $20,000,000 to MTI before the merger effective date with Net Element that occurred on November 5, 2021. As part of the merger transaction, Acuitas Group Holdings received 6,793,051 warrants with an adjusted exercise price of $8.84 and F-23 Table of Contents ​ matures in five years. The investor also received 2,767,745 shares of Series C Preferred Stock. The preferred shares and warrants have been registered for sale via the S-3 Registration Statement that became effective on February 3, 2022. Cambria – Investment Banking Services Agreement On July 16, 2021 and September 8, 2021, MTI agreed to a proposal with Cambria a placement agent services for investment offerings up to $3,000,000. As a result of the agreement, MTI is obligated to pay a financing fee of 6.0% of aggregate gross proceeds and warrants equal to 6.0% of the offering. To date, Cambria has raised $750,000 in equity financing. The equity purchases of Series C Preferred Stock have detached warrants with strike price of $8.84. The warrants have a five-year maturity. On November 5, 2021, the merger effective date, investors received e Series C Preferred Stock. NOTE 7 – DEFICIENCY IN STOCKHOLDERS’ EQUITY – Continued The table below represents the post-merger shares for equity capitalization. As of December 31, 2021, MAI issued Series C Preferred Stock and associated warrants to the investors within the Cambria relationship ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Date      Series C Preferred Stock      Warrants      Additional Warrants      Maturity Date      Exercise Price 7/23/2021 ​ ​ 8,490 ​ 25,470 ​ — ​ 7/23/2026 ​ $ 8.84 7/23/2021 ​ ​ 5,660 ​ 16,980 ​ — ​ 7/23/2026 ​ $ 8.84 7/23/2021   ​ 11,320   33,960   —   7/23/2026 ​ $ 8.84 7/23/2021   ​ 8,490   25,470   —   7/23/2026 ​ $ 8.84 7/23/2021   ​ —   — ​ 9,016 * 7/23/2026 ​ $ 8.84 9/8/2021   ​ 19,810   59,429   —   9/8/2026 ​ $ 8.84 9/8/2021   ​ 19,810   59,429   —   9/8/2026 ​ $ 8.84 9/8/2021   ​ 11,320   33,960   —   9/8/2026 ​ $ 8.84 Total ​ ​ 84,900   254,698   9,016   — ​   — ● Represents placement agent fees to Cambria. ​ NOTE 8 – LOSS PER SHARE Earnings per common share (“EPS”) is computed by dividing net income allocated to common shareholders 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 shareholders 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 months ended December 31, 2021 and 2020, the Series A 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. 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 we are public company, the employee shares are valued each month, using the MULN closing stock price on the NASDAQ CM. F-24 Table of Contents ​ NOTE 9 – MAI SHARE- BASED COMPENSATION – Continued 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 December 31,  Composition of Stock-Based Compensation Expense      2021      2020 Employee MAI share issuance ​ $ 1,604,293 ​ $ 566,179 MAI shares for services ​   2,495,487 ​   26,162 MAI Share-Based compensation expense ​ $ 4,099,780 ​ $ 592,341 ​ ​ NOTE 10 – ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES ​ ​ ​ ​ ​ ​ ​ ​ ​      December 31, 2021      September 30, 2021 Accrued Expenses and Other Liabilities   ​      ​    Accrued expense - other ​ $ 1,229,929 ​ $ 2,051,696 Accrued payroll ​   4,596,272 ​   4,586,057 Accrued interest ​   12,446,496 ​   12,489,012 Total ​ $ 18,272,697 ​ $ 19,126,765 ​ Accrued payroll represents salaries and benefits that are owed to employees, including payroll tax liabilities. Delinquent IRS and state tax liabilities as of December 31, 2021 and September 30, 2021 are $4,277,297 and $3,904,720, respectively. These tax liabilities have priority liens over MTI assets due to nonpayment of tax debt. The lien protects the government’s interest in all MTI property, including real estate, personal property and financial assets. See Note 18, Contingencies and Claims. Accrued interestrelates to finance charges on debt financing and represents interest on loans, and convertible notes payable throughout 2021. See Note 5, Debt. 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. The aggregate purchase price will be paid to MTI at closing by means of a full recourse promissory note. MAI will issue pre-funded warrants that are registered in the name of CEOcast, Inc. The investor is committed to pay to MAI (through MTI) in the principal amount of $15 million. The note receivable bears no interest, and the payment of principal will be made in 6 equal monthly installments beginning on the first business day of the calendar month . Before payments begin to the Company, the shares underlying the warrants must be registered via an effective registration statement filed with the U.S. Securities and Exchange Commission. ​ NOTE 12 –LIABILITY TO ISSUE STOCK Liability represents stock payable that is accrued for and issuable at a future date for Preferred Management Partners and Cambria Investment Banking Services. See Note 18, Commitments and Contingencies, and Note 20, Subsequent Events. ​ ​ F-25 Table of Contents ​ NOTE 13 – PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET Property, equipment, and leasehold improvements, net consists of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​      December 31,       September 30,  ​ ​ 2021 ​ 2021 Building ​ $ 8,078,757 ​ $ 804,654 Furniture and Equipment ​   485,534 ​   111,102 Vehicles ​   45,887 ​   45,887 Computer Hardware and Software ​   172,505 ​   139,742 Machinery and Equipment ​   6,946,019 ​   2,597,654 Leasehold Improvements ​   40,367 ​   66,379 Subtotal ​   15,769,069 ​   3,765,418 Less: Accumulated Depreciation ​   (2,665,364) ​   (2,583,941) Property, Equipment and Leasehold Improvements, Net ​ $ 13,103,705 ​ $ 1,181,477 ​ Depreciation expense related to property, equipment and leasehold improvements for the three months ended December 31, 2021, and 2020 was $84,022 and $102,495, 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 approximately 127,400sf EV manufacturing facility and a small shed for storage. 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. NOTE 14 – OTHER ASSETS Other assets consist of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​      December 31, 2021      September 30, 2021 Other Assets   ​      ​    Coda Materials ​ $ 76,588 ​ $ 76,587 Show Room Cars ​   4,082,665 ​   2,739,995 Security Deposits ​   186,640 ​   186,640 Deposit on Property (See Note 16) ​   — ​   1,240,000 Total Other Assets ​ $ 4,345,893 ​ $ 4,243,222 ​ ​ F-26 Table of Contents ​ NOTE 15 – OPERATING EXPENSES General and Administrative Expenses consists of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended December 31, ​      2021      2020 Professional fees ​ $ 5,139,332 ​ $ 941,728 Salaries ​   3,161,920 ​   1,151,668 Depreciation and amortization ​   307,699 ​   108,427 Lease ​   459,535 ​   356,168 Settlements and penalties ​   294,812 ​   54,588 Employee benefits ​   368,052 ​   83,293 Utilities and office expense ​   179,028 ​   67,457 Advertising and promotions ​   2,452,790 ​   29,541 Taxes and licenses ​   72,279 ​   5,130 Repairs and maintenance ​   19,220 ​   41,880 Other ​   446,416 ​   112,798 Total ​ $ 12,901,084 ​ $ 2,952,678 ​ Within professional fees is MTI shares for services, which is the issuance of MTI shares for services rendered to consultants and professional service firms. The expense is recorded at fair value of MTI shares issued (see Note 15, Other Assets). For the three months ended December 31, 2021 and 2020, the Company recorded $916,295 and $26,162, respectively, for shares for services. Research and development consist of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended December 31 ​      2021      2020 Research & Development ​ ​ ​ ​ ​ ​ Professional fees ​ $ 1,157,323 ​ $ 518,023 Total ​ $ 1,157,323 ​ $ 518,023 ​ Research and development costs are expensed as incurred. Research and development expenses primarily consist of Mullen Five EV show car development and are primarily comprised of personnel-related costs for employees and consultants. In December 2020, the Company entered into an employment agreement (the “Agreement”) with Steven Wolberg,Thurner, Inc. to design and develop two show electric vehicles. The car design was completed during Q3 2021. The total cost for Phase 1 is $483,254. In December 2020, MTI entered into a Statement of Work with Phiaro, Inc. for its show car development for approximately $1.6 million. The show car project program started in December 2020 and completed November 2021. The program is for the Company's Chief Legal Officer and Corporate Secretary. The Agreement provides for continuationinitial show car development of the current base salaryMullen Five, which is a mid-size electric SUV. The program start began in January 2021. The initial show cars in development consist of $250,000. The termtwo mid-size electric SUVs. F-27 Table of the Agreement is 5 years, with subsequent 1-year renewals. The Agreement provides for a sign-on bonus of 10,000 shares of Company’s common stock, to be granted to Mr. Wolberg pursuantContents ​ NOTE 16 – LEASES MTI (now assumed by MAI due to the Company’s equity incentive plan,merger) has entered into various operating lease agreements for certain of its offices, manufacturing and warehouse facilities, and corporate jet. We have implemented the severanceprovisions 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 amountlease 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 two times annual base salary of Mr. Wolberg if Mr. Wolberg’s employment is terminated byfuture lease payments based on the Company without “cause” (as defined in the Agreement) or Mr. Wolberg terminates the employment for “good reason” (as defined in the Agreement). For each fiscal year during the term of the Agreement, the Agreement provides for a bonus arrangement equal to 50% of Mr. Wolberg’s base salary, payable in the Company’s shares of common stockindex or at the Company’s discretion, in cash. Further,lease commencement date for each fiscal year duringnew leases. The table below presents information regarding our lease assets and liabilities. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​      December 31, 2021      September 30, 2021   Assets:   ​      ​    ​ Operating lease right-of-use assets ​ $ 2,213,991 ​ $ 2,350,929 ​ Liabilities: ​      ​      ​ Operating lease liabilities, current ​   (623,343) ​   (599,898) ​ Operating lease liabilities, non-current ​   (1,697,222) ​   (1,857,894) ​ Total lease liabilities ​ $ (2,320,565) ​ $ (2,457,792) ​ Weighted average remaining lease terms: ​      ​      ​ Operating leases ​   3.14 years ​   3.34 years ​ Weighted average discount rate: ​      ​      ​ Operating leases ​   28 %     28 % Cash paid for amounts included in the measurement of lease liabilities for the fiscal year ended September 30, 2021, and 2020 ​ $ 293,387 ​ $ 1,057,438 ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating lease costs: ​ For the three months ended December 31,  ​      2021      2020 Fixed lease cost ​ $ 286,482 ​ $ 150,235 Variable lease cost ​   129,605 ​   199,367 Short-term lease cost ​   96,592 ​   27,795 Sublease income ​   (53,144) ​   (21,229) Total operating lease costs ​ $ 459,535 ​ $ 356,168 ​ 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 Agreement, Mr. Wolberg will be eligible to receive long-term equity incentive awards,periodic lease payments is recognized as determined byinterest expense and the Committee atremainder reduces the time of grant, pursuant to the Company’s equity incentive plan. Minimum Billing Processing Fees Commitment We have non-exclusive agreements with two of our processors to provide services related to processing. The agreements require us to submitobligations. For operating leases, rent is recognized on a minimum number of  billable processing fees. If we submit an amount that is lower than the minimum, we are required to pay to each processor the fees it would have received if we had submitted the required minimum number of billable processing fees. As of March 31, 2021, the aggregate minimum monthly processing fees for these processors amounts to approximately $150,000 per month. Leases North American Transaction Solutions During May 2013, we entered into a lease agreement, for approximately 4,101 square feet of office space located at 3363 N.E. 163rd Street, Suites 705 through 707, North Miami Beach, Florida 33160. The term ofstraight-line basis over the lease agreement was from May 1, 2013 throughterm, including scheduled rent increases and rent holidays. F-28 Table of Contents ​ NOTE 16 – LEASES – Continued The following table reflects maturities of operating lease liabilities at December 31, 2016, with monthly rent increasing from $16,800 per month at inception to $19,448 per month (or $233,377 per year) for the period from January 1, 2016 through December 31, 2016. The lease was extended for a period of five years commencing August 1, 2017 and expiring July 31, 2022 with equal monthly base rent installments of $14,354 ($172,248 per year) plus sales tax. In September 2020, we entered into an agreement with the Landlord modifying this existing lease. In consideration of payment to Landlord of the sum of $65,600, the Company surrendered all existing premises occupied by it and entered into a new 4 year lease for a smaller premises at Unit #707 in the same building for a monthly rent of $2,954. There will be a $65,600 payment payable as follows: (1) $22,700 due upon the execution of the Modification of Lease Agreement; (2) $20,100 due on or before December 31, 2020; and (3) $22,800 due on or before March 31, 2021. Except as previously mentioned, all other terms and conditions of the initial lease agreement continues to remain in effect. 2021: ​ ​ ​ ​ ​ Years ending      ​      December 31,       ​ ​ 2022 (9 months) ​ $ 908,149 2023 ​   1,157,693 2024 ​   824,287 2025 ​   436,155 2026 ​   222,787 Thereafter ​   — Total lease payments ​ $ 3,549,071 Less: Imputed interest ​   (1,228,506) Present value of lease liabilities ​ $ 2,320,565 ​ ​ NOTE 17 – INCOME TAXES ​ On September 26,December 2, 2019, we entered into a lease for additional office spacetax sharing agreement with Mullen Technologies Inc. Although our results are included in the building thatMullen Technologies consolidated tax return for U.S. federal income tax purposes, our current office spacetax provision is locatedcalculated primarily as though MAI was a separate taxpayer. However, under certain circumstances, transactions between us and Mullen Technology are assessed using consolidated tax return rules. Tax sharing agreement governs the payment of tax liabilities and entitlement to refunds thereof, allocate responsibility for, our North American Transactions Solutions. The space isand cooperation in, the filing of tax returns, and provide for 5,875 square feetcertain other matters relating to taxes ​ For the quarter ended December 31, 2021 and the term is for 5 years commencing on September 23, 2019 and expiring onended September 30, 2024. The monthly base rent is $16,156 ($193,875 per year) plus sales tax. In consideration2021 and 2020, we had income tax NOL carryforwards of our Company foregoing its rightsapproximately $193 million for Federal and $192 million for California, which will expire as follows: ​ ​ ​ ​ ​ ​ ​ ​ NOL Carryforward ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ September 30, ​      2021 ​ 2021 Federal ​ ​ ​ ​ ​ ​ 2034-2037 ​ $ 36,566,294 ​ $ 29,838,716 Indefinite ​ $ 199,385,113 ​ $ 162,818,819 ​ ​ ​ ​ ​ ​ ​ Total Federal ​ $ 235,951,407 ​ $ 192,657,535 ​ ​ ​ ​ ​ ​ ​ California ​   ​ ​      2034-2040 ​ $ 194,955,026 ​ $ 191,722,566 ​ ​ ​ ​ ​ ​ ​ Total California ​ $ 194,955,026 ​ $ 191,722,566 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ September 30, ​ September 30, ​ ​      2021      2021 - %      2021      2021 - % ​ Income tax benefit at statutory rate ​ $ (7,657,427) ​ 21.00 % $ (9,247,200)   21.00 % State income taxes ​   — ​ — %   800   — % Permanent Differences ​   430,252 ​ (0.35) %   158,166   (0.36) % Valuation Allowance ​   7,229,304 ​ (20.65) %   9,091,163   (20.65) % Other ​   (2,129) ​ — %   (2,129)   — % Total (benefit) provision for income taxes ​ $ — ​ — % $ 800   — % ​ We record deferred income taxes using enacted tax laws and rates for the years in which the taxes are expected to credits frombe paid. Deferred income tax assets and liabilities are recorded based on the landlord towardsdifferences between the cubicle installationfinancial reporting and foregoing its rights to one (1)income tax bases of assets and liabilities. F-29 Table of Contents ​ NOTE 17 – INCOME TAXES – Continued Significant components of the (2) month rent deposits prepaid toCompany’s net deferred tax assets as of December 31, 2021 and September 30, 2021 and 2020 are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​      December 31,  ​ September 30,       September 30,  ​      2021      2021      2020 Deferred tax assets:   ​ ​ ​ ​      ​    Net Operating loss carryforwards   ​ 66,000,217 ​ ​ 38,676,405   ​ 31,413,378 Charitable Contributions   ​ — ​ ​ 894   ​ 1,176 Accrued Expenses   ​ 226,308 ​ ​ 315,555   ​ 104,164 Impairment Other   ​ — ​ ​ —   ​ 83,845 Other Assets   ​ — ​ ​ 364,419   ​ 261,842 163(j) Limitation   ​ 19,203,511 ​ ​ 14,491,332   ​ 4,178,291 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total gross deferred tax assets   ​ 85,430,036 ​ ​ 53,848,604   ​ 36,042,696 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less valuation allowance   ​ (85,430,036) ​ ​ (53,416,875)   ​ (35,747,087) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total net deferred tax assets   ​ 332,578 ​ ​ 431,729   ​ 295,609 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Deferred tax liabilities:   ​ ​ ​ ​      ​    ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Intangibles   ​ (223,676) ​ ​ (146,639)   ​ (157,641) Fixed Assets   ​ (108,902) ​ ​ (284,922)   ​ (137,632) Other   ​ — ​ ​ (168)   ​ (336) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total deferred tax liabilities   ​ (332,578) ​ ​ (431,729)   ​ (295,609) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net deferred tax assets ​ $ — ​ $ — ​ $ — ​ For the landlord, the lease was amended. The amended lease requires the Company to begin paying $11,500 effective July 7,quarter ended December 31, 2021 and years ended September 30, 2021 and 2020, with the original monthly rent payment of $16,156 commencing on January 1, 2021. In addition, commencing on March 1, 2021, our Company will begin making up the difference between the original monthly lease payment of $16,156 and the amended monthly lease payment of $11,500,we recorded a full valuation allowance against the deferred monthly rent, by paying the landlord an additional $2,000 per month untiltax assets because we do not believe that the deferred portiontax assets recorded in 2021 and 2020 are more likely than not to be realizable. ​ ​ NOTE 18 – 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 rent is fully repaid. All outstanding amountsfact of deferred rent shall be subject to interest at an annual the rate of 4%. The Company occupied the space in July of 2020. Net Element Software, our subsidiary, currently leases approximately 1,654 square feet of office space in Yekaterinburg, Russia, where we develop value added services, mobile applications, smart terminals applications, sales central ERP system developmentloss” and marketing activities, at an annual rent of approximately $21,000.The lease term expired on June 1, 2019 and was renewed with indefinite terms. 15 International Transaction Solutions The Company occupies an office in Moscow, Russia with approximately 1600 square feet at an annual rent of $50,900, which lease expired on February 10, 2020. This lease was renewed with indefinite terms. We believe that our current facilities are suitable and adequate for our present purposes, and we anticipate that we will be able to extend our existing leases on terms satisfactory to us or move to new facilities on acceptable terms. The following table presents a reconciliation of the undiscounted future minimum lease payments, under the lease for the premises we occupy for our North American Transaction Solutions segment's U.S. headquarters, to the amounts reported as operating lease liabilities on the consolidated balance sheet as of March 31, 2021:     Total Undiscounted future minimum lease payments:         2021 (remainder of year)   $ 172,258 2022   230,660 2023   231,764 2024   222,926 2025   129,250 Total   $ 986,858 Amount representing imputed interest   (218,882 ) Total operating lease liability   767,977 Current portion of operating lease liability   (107,355 ) Operating Lease Liability, non-current   $ 660,622 As of March 31, 2021 Remaining term on Leases 4.00 Incremental borrowing rate 12 % As of March 31, 2021, the future minimum lease payments under other operating leases, not subject to Topic 842, are approximately $19,000 for the remainder of the year. 16 Table of Contents Litigation, Claims, and Assessments  With respect to all legal, regulatory and governmental proceedings, and in accordance with ASC 450-20, Contingencies—LossContingencies, we consider the likelihood of a negative outcome. If we determine the likelihood of a negative outcome with respect to any such matter is probable and the“the amount of the loss can be reasonably estimated, we record an accrual for the estimated amount of loss for the expected outcome of the matter. If the likelihood of a negative outcome with respectestimated.” From time to material matters is reasonably possible andtime, we are ablesubject to determine an estimate of the amount of possible loss or a range of loss, whether in excess of a related accrued liability or where there is no accrued liability, we disclose the estimate of the amount of possible loss or range of loss. However, management in some instances may be unable to estimate an amount of possible loss or range of loss based on the significant uncertainties involved in, or the preliminary nature of, the matter,asserted and in these instances we will disclose the nature of the contingencyactual claims and describe why we are unable to determine an estimate of possible loss or range of loss. In addition, we are involved in ordinary course legal proceedings, which include all claims, lawsuits investigations and proceedings, including unasserted claims, which are probable of being asserted, arising in the ordinary course of business and otherwise not described below. We have considered allbusiness. Company management reviews any such ordinary course 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 formulating our disclosures and assessments, which are not expected to have a material adverse effect onexcess of the amount accrued, if such disclosure is necessary for our consolidated financial statements. Aptito.com, Inc. On August 6, 2014, our subsidiary (Aptito, LLC) filedstatements to not be misleading. To estimate whether a lawsuit against Aptito.com, Inc.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 shareholders of Aptito.com, Inc., in state court in the 11th Judicial Circuit in and for Miami-Dade County. This is an interpleader action in regardsability to 125,000 shares of our stock. Aptito, LLC acquired Aptito.com, Inc. in exchange for, among other things, 125,000 shares (prior to adjustment for two one-for-ten reverse stock splits) of our stock. There has been disagreements among the Aptito.com, Inc. shareholders as to proper distributionmake a reasonable estimate of the 125,000 shares (prior to adjustment for two one-for-ten reverse stock splits). To avoid any liability in regards to improper distribution, Aptito, LLC filed the interpleader action so as to allow the Defendants to litigate amongst themselves as to how the shares (prior to adjustment for two one- for-ten reverse stock splits) should be distributed. Aptito.com, Inc. opposed the motion to interplead and filed counterclaims relative to Aptito, LLC for non-deliveryamount of the 125,000 shares (prior to adjustment for two one-for-ten reverse stock splits). On July 18, 2017,loss. We do not record liabilities when the Court granted Aptito LLC’s motion to interplead and also indicated that Aptito, LLC could not be held liable for any alleged damages relative to the purported non- delivery of the 125,000 shares after the interpleader action was filed on August 6, 2014. In March 2018, a new Judge in the case ruled that Aptito.com, Inc. was entitled to receive 125,000 newly issued shares of our common stock, but indicated that he was not ruling that we were required to issue such shares. We plan to appeal this ruling, and our legal counsellikelihood is addressing the counterclaims filed by Aptito.com, Inc. in this matter. In July 2018, our counsel was disqualified due to a conflict of interest. We engaged a new law firm to represent our ongoing interests in this case. Since that time, there have been multiple Motions and claims brought by Aptito.com, Inc., including the request for rescission of the asset purchase agreement that gave rise to the share issuance obligation. All of these Motions and claims are being vigorously defended. A court ordered mediation conference was held on April 24, 2019probable, but the parties were unable to reach a settlement. On May 1, 2019 the Court denied Aptito.com, Inc.’s Motion for Summary Judgement and further hearings on a varietyamount cannot be reasonably estimated. F-30 Table of Motions were scheduled in this matter.Contents ​ On August 14, 2019, the court granted final Summary Judgment in favor of the Company, removing Net Element as a party to the lawsuit and denying Aptito.com, Inc’s Motion for rehearing and reconsideration of this matter. Aptito, LLC, in which the Company has a majority ownership interest, remains a Defendant in this litigation. On September 17, 2019, the court granted the Company’s Motion for sanctions against the attorney representing Aptito.com, Inc. in this matter. The Company is pursuing collection of legal fees incurred from the Plaintiff and their attorney. This matter was pending a special set hearing to be held on March 23, 2020. That hearing was postponed and rescheduled for hearing in July 2020. On July 23, 2020, the Court entered a judgement against the attorney representing Aptito.com and awarded attorney fees to the Company. The attorney stated on the record he will be filing for bankruptcy. In August 2020, Plaintiffs attorney, filed an appeal against the Judgement. This matter is still proceeding. The Company intends pursuing recovery from the attorney. Gene ZellNOTE 18 – CONTINGENCIES AND CLAIMS – Continued In June 2014, we, as plaintiff, commenced an action in the Miami-Dade Circuit Court, Florida against Gene Zell ("Zell") for defamation of our Company and CEO and tortious interference with our business relationships. In October 2014, the court granted a temporary injunction against Zell enjoining him from posting any information about our Company and/or CEO on any website and enjoining him from contacting our business partners or investors. Zell violated the Court Order and the Court granted a Motion imposing sanctions against Zell. We continue to seek enforcement of the Court Order. In April 2015, Zell filed a Motion to set aside the Court Order alleging he was unaware of the Court Proceedings. The Court, on August 26, 2015, dismissed Zell’s Motion to dissolve the injunction. In March 2017 the Court dismissed another Motion brought by Zell to dissolve the injunction. Accordingly, the injunction order prohibiting Zell from making further defamatory posts remains in place. In 2018, we filed a motion to enforce the injunction and contempt orders against Zell. The court upheld the injunction and we continue to vigorously protect its interests. We are pursuing an action for damages sustained as a result of the defamation. Preferred Management Partners, Inc. – Consulting Agreement On September 20, 2019, the Court granted a Permanent Injunction against Zell. The Company is evaluating pursuing actions against Zell for collection of legal fees and damages. A trial was scheduled for April 2020 on the issue of Net Element’s damages. However, Zell recently filed bankruptcy, so that trial and all further legal proceedings involving Zell will be stayed as a result of the automatic bankruptcy stay. Georgia Notes 18, LLC On March 22,23, 2021, the Company was notified that one of its shareholder, Georgia Notes 18, LLC, filed an action in the Delaware Chancery Court to compel inspection of the Company’s books and records pertaining to a 2014 transaction in which the shareholder had an interest. The Company has engaged counsel to protect its interests in this matter. A hearing on this matter is scheduled for August 31, 2021. At this time, the Company cannot predict the eventual outcome of this matter. 17 Table of Contents NOTE 11. RELATED PARTY TRANSACTIONS  During the three months ended March 31, 2021 and 2020, agent commissions resulting from merchant processing of approximately $11,000 and $40,000, respectively, were paid to Prime Portfolios, LLC, an entity owned by Oleg Firer, our Chairman and CEO, and Steven Wolberg, our Chief Legal Officer. In addition, key members of management owned companies received similar commissions and/or reimbursement for equipment purchased on the Company’s behalf, which amounted to approximately $346,000 and $226,000 for the three months ended March 31, 2021 and 2020, respectively. At March 31, 2021 and December 31, 2020, we had accrued expenses of approximately $209,000 and $122,000, respectively, which consisted primarily of various travel, professional fees, and other expenses paid and charged for by our CEO on his personal credit cards. This is reflected as due to related party on the accompanying consolidated balance sheets.  On March 27, 2020, our CompanyMAI entered into a Master Exchange Agreement, (the “ESOUSA Agreement”)consulting arrangement with ESOUSA Holdings, LLC ("ESOUSA"), aPreferred Management Partners, Inc. The Company hereby engages Preferred Management, Inc. to resume negotiations between MAI and Qiantu Motor Cars to enable the Company to procure the intellectual property ownership rights related party. Prior to the K-50 automobile. As compensation for entering into this agreement and providing services to MAI, the ESOUSA Agreement, ESOUSA agreed to acquire an existing promissory note that had been previously issued by the Company, of up to $2,000,000 in principal amount outstanding plus interest due to RBL Capital Group, LLC ("RBL"). Pursuant to the ESOUSA Agreement, the Company had the right, at any time prior to March 27, 2021, to request ESOUSA, and ESOUSA agreed upon each such request, to exchange this promissory note in tranches on the dates when the Company instructs ESOUSA, for such number ofconsultant will receive 750,000 unrestricted publicly traded shares of the Company’s common stock (“Common Stock”) as determined underregistered on Form S-8 registration statement. If the ESOUSA Agreement based upon the number of shares of Common Stock (already in ESOUSA’s possession) that ESOUSA sold in order to finance its purchase of such tranche of the promissory note from RBL Capital Group, LLC. ESOUSA will purchase each tranche of the promissory note equal to 88% of the gross proceeds from the shares of Common Stock sold by ESOUSA to finance the purchase of such Exchange Amount from RBL Capital Group, LLC. Each such tranche to be $148,000 unless otherwise agreed to byconsultant is successful, the Company and ESOUSA.  On March 27, 2020,will pay the Company received its first tranche of RBL promissory notes in the aggregate amount of $148,000, less any fees, from ESOUSA to be exchanged for Common Stock pursuant to the ESOUSA Agreement.  Included in other accrued expenses at September 30, 2020 is approximately $145,000 in connection with this first tranche for which shares of Common Stock have not yet been issued.  Concurrently with this transaction, the Company receivedconsultant an equivalent aggregate amount of $148,000 from RBL under the Credit Facility.  On April 28, 2020, the Company received its second tranche of RBL promissory notes in the aggregate amount of $143,000, less any fees, from ESOUSA to be exchanged for Common Stock pursuant to the ESOUSA Agreement.  The Company issued 65,862 shares of Common Stock to ESOUSA in connection with this exchange.  Concurrently with this transaction, the Company received an equivalent aggregate amount of $143,000 from RBL under the Credit Facility. On August 11, 2020, the Company received its third tranche of RBL promissory notes in the aggregate amount of $707,000, less any fees, from ESOUSA to be exchanged for Common Stock pursuant to the ESOUSA Agreement.  The Company issued 66,190 shares of Common Stock to ESOUSA in connection with this exchange.  Concurrently with this transaction, the Company received an equivalent aggregate amount of $707,000 from RBL under the Credit Facility.  On August 21, 2020, the Company received its fourth tranche of RBL promissory notes in the aggregate amount of $401,000, less any fees, from ESOUSA to be exchanged for Common Stock pursuant to the ESOUSA Agreement.  The Company issued 45,654 shares of Common Stock to ESOUSA in connection with this exchange.  Concurrently with this transaction, the Company received an equivalent aggregate amount of $401,000 from RBL under the Credit Facility.  On September 25, 2020, the Company received its fifth tranche of RBL promissory notes in the aggregate amount of $426,000, less any fees, from ESOUSA to be exchanged for Common Stock pursuant to the ESOUSA Agreement.  The Company issued 50,000 shares of Common Stock to ESOUSA in connection with this exchange.  Concurrently with this transaction, the Company received an equivalent aggregate amount of $426,000 from RBL under the Credit Facility.  On December 30, 2020, the Company received its sixth tranche of RBL promissory notes in the aggregate amount of $1,960,000, less any fees, from ESOUSA to be exchanged for Common Stock pursuant to the ESOUSA Agreement. The Company issued 200,000 shares of Common Stock to ESOUSA in connection with this exchange. Concurrently with this transaction, the Company received an equivalent aggregate amount of $1,960,000 from RBL under the Credit Facility. 18 Table of Contents NOTE 12. STOCKHOLDERS’ EQUITY  On October 5, 2017, we effected a one-for-ten reverse stock split of our common stock. Our condensed consolidated financial statements and disclosures reflect these changes in capital structure for all periods presented. On June 12, 2015 and June 13, 2016, our shareholders approved 100,000,000 increases in our authorized common stock to 300,000,000 and 400,000,000, respectively. On October 2, 2017, our shareholders approved a 300,000,000 decrease in our authorized common stock to 100,000,000. The following table represents the change in our stockholders' equity for the three months ended March 31, 2021 and 2020:     Three Months Ended March 31, 2020     Common Stock   Paid in   Accumulated Other   Non-controlling   Accumulated   Total     Shares   Amount   Capital   Comprehensive Loss   interest   Deficit   Stockholder's Equity Balance December 31, 2019   4,111,082   $ 410.66   $ 185,297,069   $ (2,274,187 )   $ (231,999 )   $ (178,750,633 )   $ 4,040,659 Share based compensation   14,672   1.47   45,896   -   -   -   45,897 Expenses paid in connection with ESOUSA transaction   -   -   (5,000 )   -   -   -   (5,000 ) Net income (loss)   -   -   -   -   (11,228 )   (1,366,216 )   (1,377,444 ) Comprehensive income - foreign currency translation   -   -   -   130,813   -   -   130,813 Balance March 31, 2020   4,125,754   $ 412.13   $ 185,337,965   $ (2,143,374 )   $ (243,227 )   $ (180,116,849 )   $ 2,834,927     Three Months Ended March 31, 2021     Common Stock   Paid in   Accumulated Other   Non-controlling   Accumulated   Total     Shares   Amount   Capital   Comprehensive Loss   interest   Deficit   Stockholder's Equity Balance December 31, 2020   4,997,349   $ 499.28   $ 189,700,103   $ (2,259,410 )   $ (267,053 )   $ (184,692,067 )   $ 2,482,072 Share based compensation   807   0.08   11,258   -   -   -   11,258 ESOUSA transaction   200,000   20.00   1,999,980   -   -   -   2,000,000 Net income (loss)   -   -   -   -   (14,140 )   304,562   290,422 Comprehensive loss - foreign currency translation   -   -   -   18,583   -   -   18,583 Balance March 31, 2021   5,198,156   $ 519.37   $ 191,711,341   $ (2,240,828 )   $ (281,193 )   $ (184,387,504 )   $ 4,802,335 Equity Incentive Plan Activity On December 5, 2013, our shareholders approved the Net Element International, Inc. 2013 Equity Incentive Plan (as amended to date, the “2013 Plan”). Awards under the 2013 Plan may be granted in any one or all of the following forms: (i) incentive stock options meeting the requirements of Section 422 of the Internal Revenue Code of 1986, as amended; (ii) non-qualified stock options (unless otherwise indicated, references to “Options” include both Incentive Stock Options and Non-Qualified Stock Options); (iii) stock appreciation rights, which may be awarded either in tandem with Options or on a stand-alone basis; (iv)additional 750,000 unrestricted shares of common stock that are restricted; (v) units representingregistered on Form S-8 registration statement. As of this date, the Form S-8 registration statement has been filed but not declared effective until January 11, 2022. The Company has recognized an obligation to issue these shares of common stock; (vi) units that do not represent shares ofand a related deferred charge for these consulting services on the condensed consolidated balance sheet. Equity Financing Transactions $30M common stock but which may be paid in the form of common stock; and (vii) shares of common stock that are not subject to any conditions to vesting. purchase On DecemberSeptember 1, 2020, our shareholders approved2021, 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 up to an amendment to the 2013 Plan to increase the number of shares of the Company’s common stock available for issuance by 219,500 shares resulting in the aggregate of 1,160,500 shares authorized for issuance under the 2013 Plan. The maximum aggregate number of shares of common stock available for award under the 2013 Plan at March 31, 2021 and December 31, 2020 was 209,693 and 210,500, respectively. The 2013 Plan is administered by the compensation committee. 19 Table of Contents 2013 Equity Incentive Plan - Shares andup to $30,000,000, or $2.5 million per month, in Common Stock Options During the three months ended March 31, 2021 and 2020, we issued common stock pursuant to the 2013 Plan to the members of our Board of Directors and recordedover a compensation charge of $11,258 and $7,500, respectively. During the three months ended March 31, 2021, our Board of Directors approved and authorized the issuance of 10,000 shares of our common stock pursuant to the 2013 Plan which were allocated to the Company's chief legal officer and we recorded compensation expense of $31,000. twelve-month period. At March 31, 2021 and December 31, 2020 we had 200,648 incentive stock options outstanding, with a weighted average exercise price of  $10.73 at March 31, 2021 and December 31, 2020 and a weighted average remaining contract term of 6.83 years at March 31, 2021 and 7.07 years at December 31, 2020. All of the stock options were anti-dilutive at March 31, 2020 and December 31, 2020. NOTE 13. WARRANTS AND OPTIONS Options At March 31, 2021 and December 31, 2020, we had fully vested options outstanding to purchase 200,648, respectively, of shares of common stock at exercise prices ranging from $6.29 to $134.00 per share. Due to the high level of volatility in the stock price of our common stock, our management determined the grant date fair value of the options using the then quoted stock price at the grant date. Warrants At March 31, 2021 and December 31, 2020, we had warrants outstanding to purchase 404,676 shares of common stock, respectively. At March 31, 2021 the warrants had a weighted average exercise price of $11.12 per share purchased and a weighted average remaining contractual term of 1.75 years. At December 31, 2020, the warrants had a weighted average exercise price of $6.18 per share purchased and a weighted average remaining contractual term of 3.00 years. Non-Incentive Plan Options At March 31, 2021 and December 31, 2020, we had 46,643 non-incentive options outstanding with a weighted-average exercise price of $21.46. The non-incentive options have a remaining contract term of 0.20 years at March 31, 2021. These options were out of the money at March 31, 2021 and December 31, 2020 and had no intrinsic value. NOTE 14. SUBSEQUENT EVENTS On May 14, 2021, the Company entered into the Restated Merger Agreement with Mullen, Merger Sub and Mullen Automotive.  Pursuant to, and on the terms and subject to the conditions of, the Restated Merger Agreement, Merger Sub will be merged with and into Mullen Automotive, with Mullen Automotive continuing as the surviving corporation in the Merger. On May 12, 2021, (i) Mullen assigned and transferred to Mullen Automotive all of its electric vehicle business related assets, business and operations, and Mullen Automotive assumed certain debt and liabilities of Mullen.   Prior to the effective time of the Merger, Mullen is contemplating a spin off, via share dividend, of all of the capital stock of Mullen Automotive to the stockholders of Mullen as of the effective date of such spin off.  After such spin off and immediately prior to the effective time of the Merger, the capital structure (includingobligations under the Equity Line of Credit were assumed by the Company. The number of shares of Common Stock issued by the Company at each draw down date is calculated by multiplying 125% by the amount of each draw down (up to $2,500,000) and then dividing by the closing sale price of the Common Stock on the principal securities exchange or trading market on which the Common Stock is listed or trading on the trading day immediately prior to the draw down. The number of Common Shares issued is then subject to adjustment and will be issued at a purchase price per share equal to 95% of the dollar volume-weighted average price per share of Common Stock during the 10 trading days following the draw down date. As a condition to the obligation of the investor to fund the Equity Line of Credit, the Company must file an SEC registration statement covering the sale of the Common Stock issued under the Equity Line of Credit and such registration statement must be declared effective. The Company shall not issue any Common Stock under the Equity Line of Credit if that would result in Esousa’s beneficial ownership equaling more than 9.9% of the Company’s outstanding Common Stock. 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. Federal and State Tax Liabilities We have recorded a $4.2 million liability at December 31, 2021 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. F-31 Table of Contents ​ NOTE 18 – CONTINGENCIES AND CLAIMS – Continued The IRS has filed a lien on substantially all of our assets. On April 28, 2021, MTI entered into an installment agreement with the EDD to pay $10,000 per month related to unpaid state payroll tax liabilities of $370,067 plus accrued interest. Monthly payments of $10,000 are being made and will continue until paid in full. 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 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 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. Unfortunately, we have sustained a loss of $390,000 at September 30, 2020 due to contract nonperformance and force majeure. There are 0 accrued liabilities recorded for any remaining milestone payments at December 31, 2021. Our management has notified Linghang Boao Group of the decision to invoke the force majeure provision of the Strategic Cooperation Agreement due to the inability of the parties to perform caused by the global Pandemic. ASC GEM Equity Line Financing On January 4, 2021, MTI entered into a $350,000,000 equity line financing agreement with GEM Global Yield LLC (“Purchaser”) and GEM Yield Bahamas Limited (“GEM”). MAI plans to issue and sell common shares to GEM up to the number of common shares having an aggregate value of $350,000,000. The Purchaser will buy MAI shares based on the operational needs and/or drawdowns of the Company. If the aggregate limit has been reached, the Purchaser will increase the aggregate limit in an amount up to $150,000,000. The commitment fee, equal to 2% of the Aggregate Limit, will be charged for each draw-down. The fee may be paid in cash or freely tradeable common shares of the Company. The commitment begins when we effect the public listing of MAI common stock for trading on a U.S. national securities exchange. The agreement matures in 36 months after the public listing of MAI common shares. Pursuant to the GEM Agreement, the commitment began on the “Public Listing Date”, defined as the date that we effected (i) a “Reverse Merger Transaction” (defined in the GEM Agreement as a reverse merger of a similar transaction between MAI and a special purpose acquisition company whose securities are publicly traded) or (ii) the direct listing of the Company’s common stock on a public market. Further to the GEM Agreement, we are obligated to issue warrants providing GEM the right to purchase up to 6.6% of our common shares outstanding on the Public Listing Date. As the Company is not effecting a Reverse Merger Transaction (that is, Net Element is not a special purpose acquisition company) nor is the Company effecting a direct listing of its common shares, the Company does not believe it is obligated under the GEM Agreement to pay fees nor issue warrants to GEM. In addition, the Company has agreed with a lender of its convertible promissory notes that the Company would not initiate utilization of the GEM Agreement. F-32 Table of Contents ​ NOTE 18 – CONTINGENCIES AND CLAIMS – Continued As the Company did not effect a Reverse Merger Transaction as defined in the GEM agreement (that is, Net Element was not a special purpose acquisition company) nor did the Company effect a direct listing of its common shares, the Company does not believe it is obligated to pay fees nor issue warrants to GEM under the GEM Agreement. In addition, the Company has agreed with a lender of its convertible promissory notes that the Company would not initiate utilization of the GEM Agreement. Based upon information presently known to management, the Company believes that the potential liability 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. 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 March 31, 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 by either party 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 outstandingpaid $50,000 in cash and common stock. The $10,000 in cash or common stock provision has not been terminated by either party. Litigation On May 28, 2021, a Net Element shareholder 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 with a fiduciary duty to its stakeholders. On September 3, 2021, a Net Element shareholder 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, 0 liability has been reflected on the financial statements. NOTE 19 – RELATED PARTY TRANSACTIONS At December 31, 2021 and September 30, 2021, respectively, the Drawbridge Investments, LLC relationship comprised various loans and advances, common shares, and preferred shares. The Drawbridge loans are currently in default. The Common and Preferred Shares presented are shares in MAI, since issued MTI shares were exchanged due to the merger. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Drawbridge Related Transactions ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Cumulative) ​ December 31, 2021 ​ September 30, 2021 Description      Loan Principal      # of Shares      FV of Shares      Loan Principal      # of Shares      FV of Shares Various Notes ​ $ 13,831,554   — ​ $ — ​ $ 23,831,554   — ​ $ — Common Shares ​   —   8,130,384 ​   42,524,523 ​   —   8,130,384 ​   66,994,364 Preferred Shares - Series A ​   —   2,335 ​   3,012 ​   —   2,335 ​   3,012 Preferred Shares - Series B ​   —   5,567,319 ​   49,215,100 ​   —   5,567,319 ​   49,215,100 Total Related Party Transactions ​ $ 13,831,554   13,700,038 ​ $ 91,742,635 ​ $ 23,831,554   13,700,038 ​ $ 116,212,476 *    Shares are MTI common and preferred stock)shares. F-33 Table of Contents ​ NOTE 19 – RELATED PARTY TRANSACTIONS – Continued The default interest rate on the Drawbridge loans is 28% per annum, and accrued interest is $11,536,371 at December 31, 2021. 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 was 0 and $479,914 at September 30, 2021. During the three months ended December 31, 2021, the Company repaid the outstanding loan balance 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 months ended December 31, 2021, Mr. Miltner received $231,483 for services rendered to us. Mr. Miltner has been providing legal services to the Company since 2020. Consulting Agreement On October 26, 2021, MAI entered into a consulting agreement with Mary Winters, Corporate Secretary and Director, to compensate for Corporate Secretary Services and director responsibilities for the period of October 1, 2021, for one fiscal year ending September 30, 2022, in the amount of $60,000 annually or $5,000 per month. Equity Warrants (EXCHANGE AGREEMENT and EQUITY WARRANTS) During 2020 and 2021, as part of the merger with Net Element, we entered into an Exchange Agreement and subsequent amendments with certain holders of convertible debt as an incentive to convert their convertible debt into shares of our series C preferred stock. In connection with this agreement, the Company issued warrants to these investors, which represents a share-based equity incentive (“Series Preferred C Investors”). Series C Preferred Investors also purchased Series Preferred C Stock with detached warrants. The warrants have a fixed and determinable price of $8.84 per common share. The fair value of the MAI warrants is $133,269,241 as of December 31, 2021. NOTE 20 – SUBSEQUENT EVENTS Company management has evaluated subsequent events through February 14, 2022, which is the date these 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: Short-Term Financing On January 14, 2022, MAI executed a Letter of Intent (“LOI”) with Mark Betor, MAI Director, for a $1,000,000 loan. The loan terms are as follows: ● $250,000 loan advance upon the execution of LOI ● $750,000 remaining balance is paid to Mullen Automotive upon execution of transaction documents Loan will be evidenced by a Promissory Note with a maturity date for full repayment of loan no later than 90 days from January 11, 2022. Total agreed repayment amount is $1,150,000. Collateral is a first lien position 1 Greentech Drive, Tunica, MS. MAI Board of Directors approved transaction on January 18, 2022. Mr. Betor abstained from voting. F-34 Table of Contents ​ NOTE 20 – SUBSEQUENT EVENTS – Continued S-3 Registration Statement The SEC registration statement that became effective February 3, 2022, the Conversion Shares and Warrant Shares were included 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 securities that were registered for resale, in aggregate totaled 228,568,886 shares of common stock. ● 11,392,058 shares of our Common Stock issued to David Michery, our Chief Executive Officer and other stockholders, ● 148,139,757 shares of our Common Stock issuable upon exercise of the Warrants, ● 2,454,240 shares of our Common Stock issuable upon conversion of the Note Shares, ● 5,567,319 shares of our Common Stock issuable upon conversion of our Series B Preferred Stock, ● 30,087,677 shares of our Common Stock issuable upon conversion of our Series C Preferred Stock and, up to 30,927,835 shares of Common Stock issuable pursuant to the Equity Line of Credit. NaN proceeds are expected from the sale or disposition of the shares of common stock. However, proceeds may be received on the from the exercise of warrants and note shares. Warrant Exercises The table below reflects the number of warrant exercises and common shares granted since the warrant shares were registered under the SEC registration statement became effective on February 3, 2022. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ # of Warrants ​ # of Common Stock  Date      Registered Investor Name      Exercised      Requested 2/1/2022 ​ Acuitas Capital LLC ​ 259,033 ​ 709,217 2/1/2022   Esousa Holdings LLC   129,516   354,608 2/4/2022   JADR Consulting Limited PTY   50,000   126,558 2/4/2022   TDR Capital   50,000   126,558 2/4/2022   Friedlander, Michael   16,000   40,905 2/9/2022   Mogul, Jess   100,000   347,747 2/9/2022   Fallon, Jim   100,000   347,747 2/10/2022   TDR Capital   400,000   1,449,766 2/10/2022   JADR Consulting Limited PTY   400,000   1,449,766 2/10/2022   Acuitas Capital LLC   137,235   500,000 2/11/2022 ​ Mogul, Jess ​ 62,674 ​ 505,109 2/11/2022 ​ Fallon, Jim ​ 31,610 ​ 254,781 ​   Total   1,736,068   6,212,762 ​ $30 Million Esousa Equity Line of Credit – Drawdown 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 up to an aggregate of up to $30,000,000, or $2.5 million per month, in Common Stock over a twelve-month period. At the effective time of the Merger, the obligations under the Equity Line of Credit were assumed by the Company. F-35 Table of Contents ​ NOTE 20 – SUBSEQUENT EVENTS – Continued As a condition to the obligation of the investor to fund the Equity Line of Credit, the Company must file an SEC registration statement covering the sale of the Common Stock issued under the Equity Line of Credit and such registration statement must be declared effective. The Company shall not issue any Common Stock under the Equity Line of Credit if that would result in Esousa’s beneficial ownership equaling more than 9.9% of the Company’s outstanding Common Stock. The SEC Registration Statement was filed on February 1, 2022 and became effective on February 3, 2022. On February 4, 2022, MAI received $1,125,000 from the equity line of credit. As part of the transaction, Esousa Holdings, LLC received 1,144,688 common shares. The formula is based on $2.5 million divide by the daily closing price of the MAI, which was $2.73) multiplied by 125%. MAI expects to drawdown the remaining balance of the $2.5 million in mid to late February 2022. S-8 Registration Statement This Registration Statement on Form S-8 (the “Registration Statement”) registers an additional 5,979,500 shares (the “Shares”) of common stock, par value $0.001 per share (“Common Stock”), of Mullen Automotive shall mirrorInc. (the “Company”), issuable pursuant to the capital structure of Mullen. Accordingly,Company’s 2013 Equity Incentive Plan, as amended (the “2013 Plan”). Preferred Management Partners, Inc. – Consulting Agreement In September 2021, Preferred Management Partners entered into a consulting agreement to provide services to MAI. The compensation arrangement is as follows: ● Consultant will receive 750,000 unrestricted publicly traded shares of the Company’s common stock registered on Form S-8 Registration statement. For FYE 2021, the Restated Merger Agreement amends, restates and replaces in its entiretycommon shares were accounted for within Liability to Issue Stock since the Original Merger Agreement.  After Mullen Automotive’s completion and delivery to our Company, of the audited financial statements for Mullen Automotive and its subsidiaries and affiliates required to be included in a registration statement,S-8 Registration Statement had not been filed. On January 11, 2022, the Company prepared and filed with the Commission a registration statement on Form S-4 (together with all amendments thereto,SEC and Preferred Management Partners received their 750,000 common shares. The share issuance will now be accounted for within equity.   Sales of Unregistered Securities On January 18, 2022, MAI approved the “Registration Statement”) in which the proxy statement included as a partissuance of an aggregate of 1,908,000 shares of its common stock to certain employees of the prospectus,Company, including the executive officers listed below: ​ ​ ​ ​ Name Shares David Michery 1,000,000 Kerri Sadler 300,000 Jerry Alban 300,000 Calin Popa 50,000 ​ Such securities were issued in connection withreliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”). The issuance of such securities have not been registered under the Securities Act of the shares of Parent Shares toand may not be issued in connection with the transactions contemplated in the Restated Merger Agreement. The Restated Merger Agreement contains termination rights for each of the Company and Mullen Automotive, including, among others, (i) in the event that the Merger has not been consummated by August 31, 2021, (ii) in the event that the requisite approval of the Company’s stockholders is not obtained upon a vote thereon, (iii) in the event that any governmental authority shall have taken action to restrain, enjoinoffered or prohibit the consummation of the Merger, which action shall have become final and non-appealable and (iv) in the event that there is a breach by the other party of any of its representations, warranties, covenantssold absent registration or agreements, which breach is sufficiently material and not timely cured or curable. In addition, Mullen Automotive may terminate the Restated Merger Agreement if, prior to receipt of the requisite approval of the Company’s stockholders, the Company’s board of directors shall have changed their recommendation in respect of the Merger. Further, the Company may terminate the Restated Merger Agreement prior to receipt of the requisite approval of the Company’s stockholders to enter into a definitive agreement with respect to a Superior Proposal (as such term is defined in the Restated Merger Agreement). The consummation of the Merger is subject to (i) the Merger and the shares of Company common stock to be issued in connection with the Merger and other transactions contemplated by the Restated Merger Agreement being approved and authorized for the listing on Nasdaq and (ii) the Company’s and its subsidiaries aggregate cash and cash equivalents plus amounts lent by the Company to Mullen Automotive pursuant to the Restated Merger Agreement less accounts payable and debt (exclusive of unfunded warrant proceeds) is $10,000,000 less legal fees as set forth in the Restated Merger Agreement, the Late Fees, $500,000 previously lent by the Company to Mullen together with all accrued interested thereon (the “Net Cash Position”). The parties to the Restated Merger Agreement intend that the Company will effect a private placement of the Company common stock prior to the Merger Effective Time (the “Private Placement”) in order to raise sufficient capital for the Net Cash Position. The parties to the Restated Merger Agreement intend that, prior to the Merger effective time but, subject to and after the Company’s stockholders’ approval, the Company will divest itself of its existing business operations to another party, and will cause such party to assume all liabilities of the Company directly related to its operations of its existing business immediately prior to the closing of such divestiture (the “Divestiture”). The parties to the Restated Merger Agreement agreed that Mullen Automotive will pay the Late Fee as set forth in the Original Merger Agreement.   The Form S-4an applicable exemption from registration statement was filed on May 14, 2021. requirements. F-36 Consummation of the Merger, the Divestiture, the Private Placement and the other transactions contemplated in the Restated Merger Agreement, is subject to customary conditions including, among others, the approval of the Company’s stockholders. There is no guarantee that the Merger, the Divestiture, the Private Placement or the other transactions contemplated in the Restated Merger Agreement will be completed. 20 Table of Contents ​ NOTE 20 – SUBSEQUENT EVENTS – Continued Amendment to Convertible Preferred Security and Warrant Agreements On February 10, 2022, MAI and Esousa Holdings, LLC agreed to amend to provisions within the Securities Purchase Agreements: ● The Holders irrevocably and forever waive their rights under section 2 (c) and 2 (d) of the Warrant, and under section 4 (c) of the Series C Convertible Preferred. ● For purposes of section 1 (b), Exercise Price, in the Warrant, the exercise price shall be modified from 0.6877 to $8.834. ● Under Section 16 (b) of the Warrant, the definition of Black Scholes Value shall be modified so that the Black Scholes Value shall be increased by $3.00 per Warrant. For example, if the calculations under Section 16 resulted in a value of $7.72, as a result of this Amendment the Black Scholes Value would be increased to $10.72. ● Under 4(c) of the Convertible Note, the Company will not be subjected to a new issuance price due to subsequent financing less than a price equal to the Conversion Price in effect immediately prior to such issue or sale or deemed issuance or sale. ​ ​ ​ F-37 Table of Contents Item 2. Management’sManagement's Discussion and Analysis of Financial Condition and Results of Operations TheYou should read the following discussion should be read and evaluated in conjunction with the condensed consolidated financial statements and notes thereto containedother financial information included elsewhere in this Quarterly Report on Form 10-Q (this "Report"“Report”) and with our audited financial statements and other information presented in our Annual Report on Form 10-K filed with the Risk Factors set forthSEC 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 for the fiscal year ended December 31, 2020 (the "Annual Report") and in Part II, Item 1A of this Report. CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS As used in this Report, unless the context otherwise indicates, the references to “we”, “us,” “our” or the “Company” refers to Net Element, Inc. and its consolidated subsidiaries, unless the context suggests otherwise. This Report and other written or oral statements made from time to time by us may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. You can sometimes identify forward looking-statements by our use of the words “believes,” “anticipates,” “expects,” “intends,” “plans,” “forecast,” “guidance” and similar expressions. Some of the statements we use in this report contain forward-looking statements concerning our business operations, economic performance and financial condition, including in particular: our business strategy and means to implement the strategy; measures of future results of operations, such as revenue, expenses, operating margins, and earnings per share; other operating metrics such as shares outstanding and capital expenditures; our success and timing in developing and introducing new products or services and expanding our business, including with respect to joint ventures; the successful integration of future acquisitions; our future responses to and any future impact of novel coronavirus COVID-19 ("COVID-19"); and the potential Merger between the Company and Mullen Automotive and the related transactions, including the Divestiture. Although we believe that the plans and expectations reflected in or suggested by our forward-looking statements are reasonable, those statements are based on a number of assumptions and estimates that are inherently subject to significant risks and uncertainties, many of which are beyond our control, cannot be foreseen and reflect future business decisions that are subject to change. Accordingly, we cannot guarantee you that our plans and expectations will be achieved. Our actual results, including actual revenues, revenue growth rates and margins, other results of operations and shareholder values, could differ materially from those anticipated in our forward-looking statements as a result of known and unknown factors, many of which are beyond our ability to predict or control. These factors include, but are not limited to, those set forth in Part II, Item 1A - Risk Factors of this Report and in our Annual Report, those set forth elsewhere in this report and those set forth in our press releases, reports and other filings madefiled with the SEC including under “Cautionary Note Regarding Forward-looking Statements”for the year ended September 30, 2021. In connection with the Merger Agreement (as defined below), and as disclosed in the Company’sour Current Report on Form 8-K filed with the SEC on May 14,November 12, 2021, our fiscal year end has changed from December 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 amended.  In particular, these statements also depend on the duration, severity,a result, we expect our future results to be sensitive to foreign currency transaction and evolution of the COVID-19 pandemic and relatedtranslation risks and its effect onother financial risks that are not reflected in our business,historical financial condition,statements. As a result, we expect that the financial results ofour reports for periods after we begin commercial operations and cash flows. These cautionary statements qualify all of our forward-looking statements, and you are cautioned not to place undue reliance on these forward-looking statements. Our forward-looking statements speak only as of the date they are made and shouldwill not be relied upon as representing our plans and expectations ascomparable to the financial results included in this Quarterly Report. Components of any subsequent date. While we may elect to update or revise forward-looking statements at some time in the future, we specifically disclaim any obligation to publicly release the resultsResults of any revisions to our forward-looking statements. Company Overview Net Element is a global technology and value-added solutions group that supports electronic payments acceptance in a multi-channel environment including point-of- sale (POS), ecommerce and mobile devices. The Company operates two business segments as a provider of North American Transaction Solutions and International Transaction Solutions. We offer a broad range of payment acceptance and transaction processing services that enable merchants of all sizes to accept and process over 100 different payment options in more than 120 currencies, including credit, debit, prepaid and alternative payments. We also provide merchants with value-added services and technologies including integrated payment technologies, POS solutions, fraud management, information solutions and analytical tools. Operations We are differentiated by our technology-centered value-added service offerings built around our payments ecosysteman early-stage company, and our diversified business model, which enables us to provide our varied customer base with a broad range of transaction-processing services from a single source across numerous channels and geographic markets. We believe these capabilities provide several competitive advantages that will enable us to continue to penetrate our existing customer base with complementary new services, win new customers, develop new sales channels and enter new markets. We believe these competitive advantages include: ● Our ability to provide competitive products through use of proprietary technologies; ● Our ability to provide in one package a range of services that traditionally had to be sourced from different vendors; ● Our ability to provide a single agnostic on-boarding and merchant management platform to our indirect non-bank sales force ("Sales Partners"); ● Our ability to provide management and optimization tools to our Sales Partners amongst multiple networks and platforms; ● Our ability to serve customers with disparate operations in several geographies with technology solutions that enable them to manage their business as one enterprise; and ● Our ability to capture and analyze data across the transaction processing value chain and use that data to provide value-added services that are differentiated from those offered by pure-play vendors that serve only one portion of the transaction processing value chain (such as only merchant acquiring or POS). We have operations and offices located within the United States (“U.S.”) (domestic) and outside of the U.S. (international) where sales, customer service and/or administrative personnel are based. Through U.S. based subsidiaries, we generate revenues from transactional services, valued-added payment services and technologies that we provide to SMBs. Through wholly owned subsidiaries, we focus on transactional services, mobile payment transactions, online payment transactions, value-added payment services and technologies in selected international markets. Our business is characterized by transaction related fees, multi-year contracts, and a diverse client base, which allows us to grow alongside our clients. Our multi-year contracts allow us to achieve a high level of recurring revenues with the same clients. While the contracts typically dohistorical results may not specify fixed revenues to be realized thereunder, they do provide a framework for revenues to be generated based on volume of services provided during such contracts’ term. 21 Table of Contents Products and Services Information Our broad suite of services spans the entire transaction processing value chain of commerce enabling services and technologies and includes a range of front-end customer-facing solutions, as well as back-end support services and account reconciliation. We deliver our value-added solutions from a suite of proprietary technology products, software, cloud-based applications, processing services, fraud management offerings, and customer support programs that we configure to meet our client’s individual needs. Manyindicative of our payment solutions are technology-enabled infuture results for reasons that they incorporate or are incorporated into innovative, technology-driven solutions, including enterprise software solutions, designedmay be difficult to enable merchants to better manage their businesses. Integrated and Vertical Markets. Our integrated and vertical market solutions provide advanced payments technology that is deeply integrated into business enterprise software solutions either owned by us or byanticipate. Accordingly, the drivers of our partners. We grow our business when new merchants implement our enterprise software solutions and when new or existing merchants enable payments services through enterprise software solutions sold by us or by our partners. Our primary technology-enabled solutions include integrated and vertical markets, ecommerce and multi-channel solutions, each as described below: ● Unified Payments – doing business as Unified Payments, we provide businesses of all sizes and types throughout the United States with a wide range of fully- integrated payment acceptance solutions, value-added POS and business process management services; ● PayOnline – through our subsidiary, PayOnline Systems (“PayOnline”), we provide a wide range of value-added online solutions in the selected international markets utilizing our fully-integrated, agnostic electronic commerce platform that simplifies complex enterprise online transaction processing challenges from payment acceptance and processing through risk prevention and payment security via point-to-point encryption and tokenization solutions; ● Pay-Travel – integrated payment processing solutions to the travel industry, which includes integrations with various Global Distribution Systems (“GDS”) such as Amadeus®, Galileo®, Sabre®, additional geo filters and passenger name record (PNR) through Pay-Travel service offered by PayOnline; ● Aptito POS Platform – an integrated POS platform developed on Apple’s® iOS and Android® mobile operating systems for the hospitality, retail, service and on the go industries. Our goal with Aptito is to create an easy to use POS and business management solution, which incorporates everything a small business needs to help streamline every-day management, operations and payment acceptance; ● Restoactive – utilizing Aptito POS Platform architecture, we have developed and launched Restoactive, which seamlessly plugs into a current restaurant environment through integrations with some of the biggest POS and restaurant management platforms available on the market today; ● Unifiedm-POS– mobile POS application makes accepting payments on the go easy and secure. Mobile application is EMV-compliant, accepts traditional and contactless transactions such as Apple Pay®. Unified m-POS application is available for download in Apple’s App Store and Google Play; ● Zero Pay – zero-fee payment acceptance program for SMB merchants in the United States. Zero Pay program saves merchants costs involved in accepting credit and debit cards using mobile POS; ● Netevia – our internally developed future-ready multi-channel payments and merchant management platform. Connecting and simplifying payments across sales channels through a single integration point, Netevia delivers end-to-end payment processing through easy-to-use APIs. The Netevia platform is the core of the company’s technology stack; ● Blade-our internally developed, proprietary, fully automated, artificial intelligence powered underwriting solution with predictive scoring. Built for underwriting and on-boarding of new merchants, reducing potential risks and decision-making time while improving the customer experience; ● NeteviaMastercardforSMB- The Netevia Mastercard®, powered by Aliaswire’s patented technology, is part of a unique platform that combines efficient and low-cost payment processing with the ability to save money on credit and debit card payment acceptance fees. Recent Developments The unprecedented and rapid spread of COVID-19future financial results, as well as the shelter-in place orders, promotioncomponents of social distancing measures, restrictionssuch results, may not be comparable to businesses deemed non-essential,our historical or projected results of operations. Revenues We have not begun commercial operations and travel restrictions implemented throughoutdo not currently generate any revenue. Once we commence production and commercialization of our vehicles, we expect that the United Statessignificant 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 significantly impactednot recorded cost of goods sold, as we have not recorded commercial revenue. Once we commence the restaurantcommercial production and hospitality industries.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.” 38 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 a result,we ramp up for commercial operations, we anticipate that research and development expenses will increase for the Company’s revenues, which are largely tiedforeseeable future as we expand our hiring of engineers and designers and continues to processing volumesinvest in these verticals, were materially impacted beginningnew 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 final two weekstax law. We maintain a valuation allowance against the full value of March 2020. Sinceour U.S. and state net deferred tax assets because we believe the last quarter endedrecoverability of the tax assets is not more likely than not. Results of Operations Comparison of the Three Months Ended December 31, 2020,2021 to the Company has seen a significant recovery in its end-to-end payment volumes as some merchants began resuming their normal operations. While end-to-end volumesThree Months Ended December 31, 2020 The following table sets forth our historical operating results for the three months ended March 31, 2021 have exceeded those for both the three months ended March 31, 2020periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ ​ ​ ​   ​ ​ December 31,  ​ ​ ​ ​ ​ ​ ​      2021      2020      $ Change      % Change   ​      (dollar amounts in thousands, except percentages)   Operating costs and expenses: ​    ​ ​    ​ ​    ​ ​      General and administrative ​ $ 12,901,084 ​ $ 2,952,678 ​ $ 9,948,406   336.93 % Research & development ​   1,157,323 ​   518,023 ​   639,300   123.41 % Total operating costs and expenses ​   14,058,407 ​   3,470,701 ​   10,587,706   305.06 % Loss from operations ​ $ (14,058,407) ​   3,470,701 ​   (10,587,706)   305.06 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other income (expense): ​      ​      ​           ​ Interest expense ​   22,438,945 ​   2,406,330 ​   16,179,070   832.50 % Loss on debt settlement ​ ​ (41,096) ​ ​ — ​ ​ (41,096) ​ 100.00 % Gain on extinguishment of indebtedness, net ​   74,509 ​   880,581 ​   (806,072)   (91.54) % Total other income (expense) ​   (22,405,532) ​   (1,525,749) ​   (20,879,783)   1368.49 % Net loss ​ $ (36,463,938) ​ $ (4,996,450) ​ $ 31,467,489   482.63 % ​ General and Administrative General and administrative expenses increased by $9.9 million or 336.93% from $2.9 million in the three months ended December 31, 2020 the ultimate impact that the COVID-19 pandemic will have on the Company’s consolidated results of operationsto $12.9 million in future periods remains uncertain and will depend on future developments, which are continuously evolving and cannot be predicted.  This includes, but is not limited to, the duration and spread of the COVID-19 pandemic, its severity, the emergence and severity of its variants, the availability and the efficacy of vaccines (particularly with respect to emerging strains of the virus), other protective actions taken to contain the virus or treat its impact, such as restrictions on travel and transportation, and how quickly and to what extent normal economic and operating conditions can resume. The Company will continue to evaluate the nature and extent of these potential impacts to its business, consolidated results of operations, and liquidity. During March 2020, our Company evaluated its liquidity position, future operating plans, and its labor force, which included a reduction in the labor force and compensation to executives and other employees, in order to maintain current payment processing functions, capabilities, and continued customer service to its merchants. We are also seeking sources of capital to pay our contractual obligations as they come due, in light of these uncertain times. Management believes that its operating strategy will provide the opportunity for us to continue as a going concern as long as we are able to obtain additional financing. At this time, due to the unprecedented and rapid spread of COVID-19 pandemic, we cannot predict the impact of these conditions on our ability to obtain financing necessary for the Company to fund its future working capital requirements.  Our Company has also decided to explore strategic alternatives and potential options for its business, including sale of the Company or certain assets, licensing of technology, spin-offs, or a business combination. Accordingly, the Company has entered into a merger agreement in connection with the contemplated merger with Mullen Automotive and certain related transactions, including a divestiture of the Company’s existing business operations. See “—Recent Developments—Mullen Merger and Related Transactions” for additional information. There can be no assurance, at this time, regarding the eventual outcome of our planned strategic alternatives, including the Merger and the related transactions. Over the past year, we have taken initiatives to help minimize the risks to our business and protect our shareholders. Our management team’s experience during the 2008 financial crisis is proving to be very valuable in dealing with the current crisis. Our entire staff is fully committed and working diligently to support our merchants through these difficult times. Most of our merchants have contactless payment acceptance capabilities through their POS solutions, as well as, e-commerce and mobile contactless payment acceptance capabilities to eliminate the need for physical payments to help reduce the spread of the virus. The following initiatives, including an extensive business continuity plan, have been implemented: Risk Management: ● Enhanced risk controls and safeguards have been put in place for merchants that sell products with an extended delivery time frame, products paid in advance, catering, ticketing, transportation and travel related merchants ● For those employees that will be working from home, we have implemented a “remote work” policy and provided employees with the technology necessary to do so ● For those employees that require office attendance, we are taking significant steps to ensure seamless service delivery while safeguarding employees health Contactless Payments: ● Most of our merchants have contactless payment acceptance capabilities through their POS devices from equipment manufacturers such as PAX, Poynt and Verifone which are fully integrated into Netevia and Aptito platforms ● We launched an initiative to deploy contactless payment acceptance equipment to merchants that don’t currently have it ● Mobile contactless payment acceptance is available through our Unified mPOS App which can be downloaded from Apple’s App Store and Google’s Google Play Apps ● Online ecommerce payments through shopping carts allow our merchants to sell their products and services to customers that prefer to shop from the convenience of their homes As part of our Company's plan to obtain capital to fund future operations, on March 27, 2020, our Company entered into a Master Exchange Agreement, (the “ESOUSA Agreement”) with ESOUSA Holdings, LLC ("ESOUSA"), a related party. Prior to entering into the ESOUSA Agreement, ESOUSA agreed to acquire an existing promissory note that had been previously issued by the Company, of up to $2,000,000 in principal amount outstanding and unpaid interest due to RBL Capital Group, LLC ("RBL"). Pursuant to the ESOUSA Agreement, the Company had the right, at any time prior to March 27, 2021, to request ESOUSA, and ESOUSA agreed upon each such request, to exchange this promissory note in tranches on the dates when the Company instructs ESOUSA, for such number of shares of the Company’s common stock (“Common Stock”) as determined under the ESOUSA Agreement based upon the number of shares of Common Stock (already in ESOUSA’s possession) that ESOUSA sold in order to finance its purchase of such tranche of the promissory note from RBL.  ESOUSA will purchase each tranche of the promissory note equal to 88% of the gross proceeds from the shares of Common Stock sold by ESOUSA to finance the purchase of such exchange amount from RBL. Each such tranche shall be $148,000 unless otherwise agreed to by the Company and ESOUSA.  On April 23, 2020 and August 3, 2020, the Company entered into certain amendments to the ESOUSA Agreement, which together increased from $2,000,000 to $15,000,000 the principal amount and unpaid interest of one or more promissory notes of the Company or its direct or indirect subsidiaries that ESOUSA either purchased in whole or has an irrevocable right to purchase in tranches from RBL in connection with the ESOUSA Agreement. On May 7, 2020, the Company entered into a promissory note (the “Note”) evidencing an unsecured loan (the “Loan”) in the amount of $491,493 made to the Company under the Paycheck Protection Program (the “PPP”). The Note matures on May 7, 2022 and bears interest at a rate of 1% per annum. Beginning December 7, 2020, the Company is required to make 17 monthly payments of principal and interest, with the principal component of each such payment based upon the level amortization of principal over a two-year period from May 7, 2020. Pursuant to the terms of the CARES Act and the PPP, the Company may apply to the Lender for forgiveness for the amount due on the Loan. The amount eligible for forgiveness is based on the amount of Loan proceeds used by the Company (during the eight-week period after the Lender makes the first disbursement of Loan proceeds) for the payment of certain covered costs, including payroll costs (including benefits), interest on mortgage obligations, rent and utilities, subject to certain limitations and reductions in accordance with the CARES Act and the PPP. On May 9, 2021, our Company was informed by the Small Business Administration that the loan forgiveness application was approved. The Company will reverse the amount due and reflect it as other income in the next reporting period. Mullen Merger and Related Transactions On August 4, 2020, the Company entered into an Agreement and Plan of Merger with Mullen Technologies, Inc., a California corporation (“Mullen”), and Mullen Acquisition, Inc., a California corporation and wholly owned subsidiary of the Company (“Merger Sub”), which was amended on December 29, 2020, March 30, 2021 and April 30, 2021 (as amended, the “Original Merger Agreement”).  Pursuant to, and on the terms and subject to the conditions of, the Original Merger Agreement, Merger Sub was to be merged with and into Mullen, with Mullen continuing as the surviving corporation in such merger. On May 14, 2021, the Company entered into the Restated Merger Agreement (the “Restated Merger Agreement”) with Mullen, Merger Sub and Mullen Automotive.  Pursuant to, and on the terms and subject to the conditions of, the Restated Merger Agreement, Merger Sub will be merged with and into Mullen Automotive (the “Merger”), with Mullen Automotive continuing as the surviving corporation in the Merger. As was contemplated by the Original Merger Agreement, on August 11, 2020, the Company as lender, entered into an unsecured Promissory Note, dated August 11, 2020 (the “Note”), with Mullen. Pursuant to the Note, Mullen borrowed from the Company $500,000. Prior to maturity of the loan, the principal amount of the loan will carry an interest rate of 14% per annum compounded monthly and payable upon demand. This loan will mature on the earlier of (i) the date that the merger agreement is terminated for any reason by any party thereto and (ii) the Merger effective time. In addition, pursuant to the Original Merger Agreement, the Company, Mullen and Merger Sub agreed that, if the registration statement on Form S-4 (with the merger proxy statement included as part of the prospectus) was not filed with U.S. Securities and Exchange Commission (the “SEC”) on or prior to January 15, 2021, then Mullen would pay the Company an agreed sum of $13,333 per day (the “Late Fee”) until the such registration statement (with the merger proxy statement included as part of the prospectus) is filed with the SEC. All accumulated Late Fees will be due and payable by Mullen on the 5th day of each calendar month commencing February 5, 2021 and on the 5th day of each month thereafter until the above-refenced filing has occurred.  The Form S-4 registration statement was filed on May 14, 2021.  At March 31, 2021, the Company is owed approximately $1.0 million from Mullen in connection with Late Fees. On May 12, 2021, (i) Mullen assigned and transferred to Mullen Automotive all of its electric vehicle business related assets, business and operations, and Mullen Automotive assumed certain debt and liabilities of Mullen.   Prior to the effective time of the Merger, Mullen is contemplating a spin off, via share dividend, of all of the capital stock of Mullen Automotive to the stockholders of Mullen as of the effective date of such spin off.  After such spin off and immediately prior to the effective time of the Merger, the capital structure (including its issued and outstanding common and preferred stock) of Mullen Automotive shall mirror the capital structure of Mullen. Accordingly, the Restated Merger Agreement amends, restates and replaces in its entirety the Original Merger Agreement.  The parties to the Restated Merger Agreement intend that the number of shares of the Company’s common stock outstanding immediately after the Merger effective time on a fully diluted and fully converted basis will not exceed 75,000,000, with 15% of such common stock outstanding immediately after the Merger effective time on a fully diluted and fully converted basis to be allocated to the persons that hold shares of the Company common stock immediately prior to the Merger effective time (subject to upward adjustment described below). The Company and Mullen Automotive may agree that the Company may raise additional capital beyond the Net Cash Position (as defined below). In such event, Mullen Automotive and its pre-Merger shareholders shall solely absorb all of the dilution from such additional capital raise beyond the Net Cash Position for purposes of allocating ownership between the Company pre-Merger stockholders, on the one hand, and all other parties, on the other hand.  The parties to the Restated Merger Agreement intend that, prior to the Merger effective time but, subject to and after the Company’s stockholders’ approval, the Company will divest itself of its existing business operations to another party, and will cause such party to assume all liabilities of the Company directly related to its operations of its existing business immediately prior to the closing of such divestiture (the “Divestiture”). The consummation of the Merger is subject to (i) the Merger and the shares of Company common stock to be issued in connection with the Merger and other transactions contemplated by the Restated Merger Agreement being approved and authorized for the listing on Nasdaq and (ii) the Company’s and its subsidiaries aggregate cash and cash equivalents plus amounts lent by the Company to Mullen Automotive pursuant to the Restated Merger Agreement less accounts payable and debt (exclusive of unfunded warrant proceeds) is $10,000,000 less legal fees as set forth in the Restated Merger Agreement, the Late Fees, $500,000 previously lent by the Company to Mullen together with all accrued interested thereon (the “Net Cash Position”). The parties to the Restated Merger Agreement intend that the Company will effect a private placement of the Company common stock prior to the Merger Effective Time (the “Private Placement”) in order to raise sufficient capital for the Net Cash Position. The parties to the Restated Merger Agreement agreed that Mullen Automotive will pay the Late Fee as set forth in the Original Merger Agreement. The Form S-4 registration statement was filed on May 14, 2021.  Consummation of the Merger, the Divestiture, the Private Placement and the other transactions contemplated in the Restated Merger Agreement, is subject to customary conditions including, among others, the approval of the Company’s stockholders. There is no guarantee that the Merger, the Divestiture, the Private Placement or the other transactions contemplated in the Restated Merger Agreement will be completed. For additional information, see the Company’s Current Report on Form 8-K filed on May 14, 2021. Our Mission and Vision Our mission is to power global commerce and allow our clients to conduct business globally through a centralized solution. We believe that understanding consumer behavior and the needs of our merchants is the most effective and, ultimately, the most profitable means to accomplish our mission and create long-term value for all stakeholders. We drive client growth through our in-depth knowledge of global transactional services and related value-added service offerings which separate us from the competition. Our vision is to set the standard for multi-channel payments acceptance and value-added service offerings with focus on the creation of a unified global transaction acceptance ecosystem. We believe in disruptive emerging technologies and, as such, we have developed Netevia, our future-ready multi-channel payments platform to support development of value-added solutions designed for everyday commerce. Moving forward, we believe exciting projects and disruptive technologies like biometric payments and artificial intelligence will provide us the opportunity to continue developing innovative payments solutions, which will provide value to our clients. In order to achieve this vision, we seek to further develop single on-boarding, global transaction acceptance ecosystem. Manifesting this vision requires scaling our direct and indirect connectivity to multiple payment and mobile networks internationally. By implementing this vision, we believe that we will be able to provide centralized, global multi-channel transactional platform to our clients internationally. 23 Table of Contents Our Strategy Subject to the potential Merger between the Company and Mullen Automotive and the related transactions, including the Divestiture, our strategy is to capitalize on consumer appetite for digital payment methods, the perceived movement towards a cashless society. To continue to grow our business, our strategy is to focus on providing merchants with the ability to process a variety of electronic transactions across multiple channels. We seek to leverage the adoption of and transition to card, electronic and digital-based payments by expanding our market share through our distribution channels and services innovations. We also seek growth through strategic acquisitions to improve our offerings, scale and geography. We intend to continue to invest in and leverage our technology infrastructure and our people to increase our penetration in existing markets. Key elements of our business strategy include: ● Continued investment in our core technology and new technology offerings; ● Allocation of resources and expertise to grow in commerce and payments segments; ● Grow and control distribution by adding new merchants and partners; ● Leverage technology and operational advantages throughout our global footprint; ● Expansion of our cardholder and subscriber customer base; ● Continue to develop seamless multinational solutions for our clients; ● Increase monetization while creating value for our clients; ● Focus on continued improvement and operation excellence; and ● Pursue potential domestic and international acquisitions of, investments in, and alliances with companies that have high growth potential, significant market presence or key technological capabilities. With our existing infrastructure and supplier relationships, we believe that we can accommodate expected revenue growth. We believe that our available capacity and infrastructure will allow us to take advantage of operational efficiencies and increased margin as we grow our processing volume and expand to other geographical territories. Market Overview The financial technology and transaction processing industry is an integral part of today’s worldwide financial structure. The industry is continually evolving, driven in large part by technological advances. The benefits of card-based payments allow merchants to access a broader universe of consumers, enjoy faster settlement times and reduce transaction errors. By using credit or debit cards, consumers are able to make purchases more conveniently, whether in person, over the Internet, or by mail, fax or telephone, while gaining the benefit of loyalty programs, such as frequent flyer miles or cash back, which are increasingly being offered by credit or debit card issuers. In addition, consumers are also beginning to use card-based and other electronic payment methods for purchases at an earlier age in life, and increasingly for small dollar amount purchases. Given these advantages of card-based payment systems to merchants and consumers, favorable demographic trends, and the resulting proliferation of credit and debit card usage, we believe businesses will increasingly seek to accept card-based payment systems in order to remain competitive. We believe that cash transactions are becoming progressively obsolete. The proliferation of bankcards has made the acceptance of bankcard payments a virtual necessity for many businesses, regardless of size, in order to remain competitive. In addition, the advent and growth of e-commerce and crypto-currencies have marked a significant new trend in the way business is being conducted. E-commerce is dependent upon credit and debit cards, as well as other cashless payment processing methods. The payment processing industry continues to evolve rapidly, based on the application of new technology and changing customer needs. We intend to continue to evolve with the market to provide the necessary technological advances to meet the ever-changing needs of our market place. Traditional players in the industry must quickly adapt to the changing environment or be left behind in the competitive landscape. In most respects, the uncertainty surrounding the COVID-19 pandemic makes it difficult to be able to quantify or qualify the longer-term ramifications on our business and our merchants.  See “—Recent Developments” for additional information relating to the impact of the COVID-19 pandemic. 24 Table of Contents Business Segments We operate two reportable business operating segments: (i) North American Transaction Solutions and (ii) International Transaction Solutions. Our segments are designed to establish lines of businesses that support our client base and further globalize our solutions. Management determines the reportable segments based on the internal reporting used by our Chief Operating Decision Maker to evaluate performance and to assess where to allocate resources. The principal revenue stream for all segments comes from service and transaction related fees. North American Transaction Solutions North American Transaction Solutions is currently our largest segment, where through our subsidiary TOT Payments, LLC, doing business as Unified Payments, we provide businesses of all sizes and types with a wide range of fully-integrated payment acceptance solutions at the point of sale, including Merchant Acquiring, e-commerce, mobile commerce, POS and other business solutions. Our largest service in this segment is Merchant Acquiring, which facilitates the acceptance of cashless transactions at the POS, whether a retail transaction at a physical business location, a mobile commerce transaction through a mobile or tablet device, which includes m-POS acceptance, Android Pay™, Apple Pay™ and Samsung Pay or an electronic commerce transaction over the web. Geographical presence for this segment is North America. International Transaction Solutions Through our subsidiary, PayOnline, we provide a wide range of value-added online and mobile solutions utilizing our fully-integrated, platform agnostic electronic commerce offering that simplifies complex enterprise online transaction processing challenges from payment acceptance and processing through risk prevention and payment security via point-to-point encryption and tokenization solutions. Our proprietary SaaS suite of solutions for electronic and mobile commerce gateway and payment processing platform is compliant at Level 1 of PCI DSS, streamlines the order-to-cash process, improves electronic payment acceptance and reduces the scope of burden of PCI DSS compliance. PayOnline holds a potential leadership position in the Russian Federation as one of the largest independent Internet Payment Services Providers (“IPSP”). Segment Summary Information The following tables present financial information of the Company’s reportable segments at and for the three months ended MarchDecember 31, 2021, and 2020. The “corporate and eliminations” column includes corporate expenses and intercompany eliminations for consolidated purposes. Three months ended March 31, 2021   North American Transaction Solutions   International Transaction Solutions   Corp Exp & Eliminations   Total Net revenues   $ 22,891,309   $ 894,037   $ -   $ 23,785,346 Cost of revenues   20,123,147   663,298   -   20,786,445 Gross Margin   2,768,162   230,739   -   2,998,901 Gross margin %   12 %   26 %   -   13 % Selling, general and administrative   809,262   264,607   837,981   1,911,850 Non-cash compensation   -   -   11,258   11,258 Provision for bad debt   694,060   618   -   694,678 Depreciation and amortization   733,970   1,708   -   735,678 Interest expense   356,281   -   -   356,281 Gain on disposition   (13,500 )                   (13,500 ) Other expense (income)   10,653   (1,993 )   (996,425 )   (987,766 ) Net income (loss) for segment   $ 177,436   $ (34,201 )   $ 147,186   $ 290,422 Goodwill   6,671,750   1,009,436   -   7,681,186 Other segment assets   20,223,296   386,150   -   20,609,446 Total segment assets   $ 26,895,046   $ 1,395,586   $ -   $ 28,290,632 Three months ended March 31, 2020   North American Transaction Solutions   International Transaction Solutions   Corp Exp & Eliminations   Total Net revenues   $ 15,159,081   $ 683,486   $ -   $ 15,842,567 Cost of revenues   12,824,669   476,136   -   13,300,805 Gross Margin   2,304,622   378,328   -   2,541,762 Gross margin %   15 %   55 %   -   16 % Selling, general and administrative   869,943   410,975   1,038,993   2,319,911 Non-cash compensation   -   -   38,400   38,400 Provision for bad debt   443,263   (485 )   -   442,778 Depreciation and amortization   771,242   8,201   -   779,443 Interest expense   348,414   -   -   348,414 Other income   -   (9,740 )   -   (9,740 ) Net income (loss) for segment   $ 485,897   $ (30,623 )   $ (1,077,393 )   $ (1,377,444 ) Goodwill   6,671,750   1,009,436   -   7,681,186 Other segment assets   11,867,373   413,785   -   12,281,158 Total segment assets   $ 18,539,123   $ 1,423,221   $ -   $ 19,962,344 25 Table of Contents Results of Operations for the Three Months Ended March 31, 2021 Compared to the Three Months Ended March 31, 2020 We reported a net income attributable to common stockholders of approximately $0.3 million or $0.05 per share income for the three months ended March 31, 2021 as compared to a net loss of approximately $1.4 million or $0.33 per share loss for the three months ended March 31, 2020. The decrease in net loss attributable to stockholders of approximately $1.7 million was primarily due to an increaseincreases in net revenuesprofessional services, marketing, and approximately $1.0 million in late fees owedpayroll related expenses with the growth of personnel and resources. Research and Development Research and development expenses increased by Mullen. The following tables set forth our sources of revenues, cost of revenues and the respective gross margins for the three months ended March 31, 2021 and 2020.     Three           Three                     Months Ended           Months Ended           Increase / Source of Revenues   March 31, 2021   Mix   March 31, 2020   Mix   (Decrease) North American Transaction Solutions   $ 22,891,309   96.2 %   $ 15,159,081   95.7 %   $ 7,732,228 International Transaction Solutions   894,037   3.8 %   683,486   4.3 %   210,551 Total   $ 23,785,346   100.0 %   $ 15,842,567   100.0 %   $ 7,942,779     Three           Three                     Months Ended   % of     Months Ended   % of     Increase / Cost of Revenues   March 31, 2021   revenues   March 31, 2020   revenues   (Decrease) North American Transaction Solutions   $ 20,123,147   87.9 %   $ 12,824,669   84.6 %   $ 7,298,478 International Transaction Solutions   663,298   74.2 %   476,136   69.7 %   187,162 Total   $ 20,786,445   87.4 %   $ 13,300,805   84.0 %   $ 7,485,640     Three           Three                     Months Ended   % of     Months Ended   % of     Increase / Gross Margin   March 31, 2021   revenues   March 31, 2020   revenues   (Decrease) North American Transaction Solutions   $ 2,768,162   12.1 %   $ 2,334,412   15.4 %   $ 433,750 International Transaction Solutions   230,739   25.8 %   207,350   30.3 %   23,389 Total   $ 2,998,901   12.6 %   $ 2,541,762   16.0 %   $ 457,139 Net revenues consist primarily of service fees from transaction processing. Net revenues were approximately $23.8 million and $15.8 for the three months ended March 31, 2021 and 2020, respectively. The Company’s revenues, which are largely tied to processing volumes were materially impacted beginning in the final two weeks of March 2020. Since the last quarter ended December 31, 2020, the Company has seen a significant recovery in its end-to-end payment volumes as some merchants began resuming their normal operations.  Cost of revenues represents direct costs of generating revenues, including commissions, mobile operator fees, interchange expense, processing, and non-processing fees. Cost of revenues for the three months ended March 31, 2021 were approximately $20.8 million as compared to approximately $13.3 million for the three months ended March 31, 2020. The increase in cost of revenues was primarily due to the increase in net revenues. The gross margin for the three months ended March 31, 2021 was approximately $3.0$.63 million or 12.6% of net revenues, as compared to approximately $2.5123.41% from $.51 million or 16.0% of net revenues, for the three months ended March 31, 2020. The primary reason for the decrease in the overall gross margin percentage was primarily the result of the competitive pressure in our industry and a large wholesale client converting their merchant processing relationship to our platform. Our wholesale platform generally provides for lower margins compared to our other products and services. 26 Table of Contents Operating Expenses Analysis: Operating expenses were approximately $3.4 million for the three months ended March 31, 2021, as compared to $3.6 million for three months ended March 31, 2020. Operating expenses for the three months ended March 31, 2021 primarily consisted of selling, general and administrative expenses of approximately $1.9 million, bad debt expense of approximately $700,000 and depreciation and amortization expense of approximately $736,000. Operating expenses for the three months ended March 31, 2020 primarily consisted of selling, general and administrative expenses of approximately $2.3 million, bad debt expense of approximately $443,000, and depreciation and amortization expense of approximately $779,000. The net decrease was primarily due to the reduction of compensation of certain employees, consultants, and executives of the Company. The components of our selling, general and administrative expenses are reflected in the tables below. Selling, general and administrative expenses for the three months ended March 31, 2021 and 2020 consisted of operating expenses not otherwise delineated in our Condensed Consolidated Statements of Operations and Comprehensive Loss, as follows: Three months ended March 31, 2021                                                                   Category   North American Transaction Solutions   International Transaction Solutions   Corporate Expenses & Eliminations   Total Salaries, benefits, taxes and contractor payments   $ 444,148   $ 144,831   $ 320,263   $ 909,242 Professional fees   151,460   32,020   174,344   357,824 Rent   88,755   15,919   4,880   109,554 Business development   47,379   6,776   2,903   57,058 Travel expense   2,260   36,524   79,092   117,876 Filing fees   -   -   30,427   30,427 Transaction gains   -   (5,143 )   -   (5,143 ) Office expenses   50,474   5,469   28,037   83,980 Communications expenses   24,583   22,854   60,781   108,218 Insurance expense   -   -   42,000   42,000 Other expenses   203   5,357   95,254   100,814 Total   $ 809,262   $ 264,607   $ 837,981   $ 1,911,850 Three months ended March 31, 2020                                                                   Category   North American Transaction Solutions   International Transaction Solutions   Corporate Expenses & Eliminations   Total Salaries, benefits, taxes and contractor payments   $ 548,626   $ 113,142   $ 550,721   $ 1,212,489 Professional fees   106,242   48,891   259,198   414,331 Rent   4,573   16,833   52,414   73,820 Business development   79,201   17   2,102   81,320 Travel expense   4,708   25,123   55,632   85,463 Filing fees   -   -   21,813   21,813 Transaction losses   -   157,011   -   157,011 Office expenses   77,756   6,968   28,197   112,921 Communications expenses   48,702   42,990   20,008   111,700 Insurance expense   -   -   38,685   38,685 Other expenses   135   -   10,223   10,358 Total   $ 869,943   $ 410,975   $ 1,038,993   $ 2,319,911 Variance                                                                   Category   North American Transaction Solutions   International Transaction Solutions   Corporate Expenses & Eliminations   Total Salaries, benefits, taxes and contractor payments   $ (104,478 )   $ 31,689   $ (230,458 )   $ (303,247 ) Professional fees   45,218   (16,871 )   (84,854 )   (56,507 ) Rent   84,182   (914 )   (47,534 )   35,734 Business development   (31,822 )   6,759   801   (24,262 ) Travel expense   (2,448 )   11,401   23,460   32,413 Filing fees   -   -   8,614   8,614 Transaction gains/losses   -   (162,154 )   -   (162,154 ) Office expenses   (27,282 )   (1,499 )   (160 )   (28,941 ) Communications expenses   (24,119 )   (20,136 )   40,773   (3,482 ) Insurance expense   -   -   3,315   3,315 Other expenses   68   5,357   85,031   90,456 Total   $ (60,681 )   $ (146,368 )   $ (201,012 )   $ (408,061 ) Salaries, benefits, taxes and contractor payments decreased by approximately $0.4 million on a consolidated basis for the three months ended March 31, 2021 as compared to the three months ended March 31, 2020. This was primarily due to the reduction of  compensation of certain employees, consultants, and executives of the Company. Segment   Salaries and benefits for the three months ended March 31, 2021   Salaries and benefits for the three months ended March 31, 2020   Increase / (Decrease) North American Transaction Solutions   $ 444,148   $ 548,626   $ (104,478 ) International Transaction Solutions   144,831   113,142   31,689 Corporate Expenses & Eliminations   320,263   550,721   (230,458 ) Total   $ 909,242   $ 1,212,489   $ (303,247 ) Three months ended March 31, 2021                                                                   Professional Fees   North American Transaction Solutions   International Transaction Solutions   Corporate Expenses & Eliminations   Total General Legal   $ 2,625   $ 448   $ 2,430   $ 5,503 SEC Compliance Legal Fees   -   -   57,697   57,697 Accounting and Auditing   -   -   726   726 Consulting   148,835   31,572   113,491   293,898 Total   $ 151,460   $ 32,020   $ 174,344   $ 357,824 Three months ended March 31, 2020                                                                   Professional Fees   North American Transaction Solutions   International Transaction Solutions   Corporate Expenses & Eliminations   Total General Legal   $ 2,600   $ 64   $ 6,424   $ 9,088 SEC Compliance Legal Fees   -   -   45,386   45,386 Accounting and Auditing   -   -   98,357   98,357 Consulting   103,642   48,827   109,031   261,500 Total   $ 106,242   $ 48,891   $ 259,198   $ 414,331 Variance                                                                   Professional Fees   North American Transaction Solutions   International Transaction Solutions   Corporate Expenses & Eliminations   Increase / (Decrease) General Legal   $ 25   $ 384   $ (3,994 )   $ (3,585 ) SEC Compliance Legal Fees   -   -   12,311   12,311 Accounting and Auditing   -   -   (97,631 )   (97,631 ) Consulting   45,193   (17,255 )   4,460   32,398 Total   $ 45,218   $ (16,871 )   $ (84,854 )   $ (56,507 ) All other operating expenses were relatively in line with the previous comparable quarter. 28 Table of Contents Other Income and Expenses Delineated in the Condensed Consolidated Statements of Operations and Comprehensive Loss:  Bad Debt Expense Analysis: We reflected a bad debt expense on the accompanying consolidated statements of operations, which represents uncollected fees of approximately $695,000 for the three months ended March 31, 2021, compared to bad debt expense, representing uncollected fees of approximately $443,000 for the three months ended March 31, 2020. The increase in bad debt expense was primarily due to billing adjustments relating to chargebacks made by our processors due to the to the effects of the COVID-19 pandemic on our merchants, and a corresponding increase in our net revenues. Depreciation and Amortization Expense: Depreciation and amortization expense consists primarily of the amortization of merchant portfolios in connection with residual buyout arrangements and client acquisition costs.  Depreciation and amortization expense was approximately $736,000 for the three months ended March 31, 2021 and $779,000 for the three months March 31, 2020. Interest Expense: Interest expense for the three months ended March 31, 2021 compared to the three months ended March 31, 2020 is as follows; Funding Source   Three months ended March 31, 2021   Three months ended March 31, 2020   Increase / (Decrease) RBL Notes   $ 346,114   $ 338,247   $ 7,867 Other   10,167   10,167   - Total   $ 356,281   $ 348,414   $ 7,867 Other Income: Other income was approximately $1.0 million for the three months ended March 31, 2021 due to late fees owed by Mullen. For additional information see "Recent Developments-Mullen Merger and Related Transactions". 29 Table of Contents Liquidity and Capital Resources Total assets at March 31, 2021 were approximately $28.3 million compared to approximately $26.8 million at December 31, 2020. The net increase in total assets is primarily the result of an increase in accounts receivable due to an increase in revenues and the Late Fees due from Mullen. At March 31, 2021 we had total current assets of approximately $15.7 million and approximately $14.0 million at December 31, 2020. The primary reason for the increase in total current assets is primarily the result of an increase in accounts receivable due to an increase in revenues and the Late Fees due from Mullen. Our consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. We had net income of approximately $305,000 for the three months ended March 31, 2021 and a net loss of approximately $5.9 million for the year ended December 31, 2020 and have an accumulated deficit of approximately $184.4 million and a positive working capital of approximately $1.5 million at March 31, 2021. The majority of this positive working capital at March 31, 2021 relates to amounts due from Mullen Technologies (See Note 5 - Due from Mullen). The unprecedented and rapid spread of COVID-19 as well as the shelter-in place orders, promotion of social distancing measures, restrictions to businesses deemed non-essential, and travel restrictions implemented throughout the United States have significantly impacted the restaurant and hospitality industries. As a result, the Company’s revenues, which are largely tied to processing volumes in these verticals, were materially impacted beginning in the final two weeks of March 2020. Since the last quarter ended December 31, 2020, the Company has seen a significant recovery in its end-to-end payment volumes as some merchants began resuming their normal operations. While end-to-end volumes for the three months ended March 31, 2021 have exceeded those for both the three months ended March 31, 2020 andthrough the three months ended December 31, 2020 to $1.1 million through the ultimate impact thatthree months ended December 31, 2021. During the COVID-19 pandemic willquarter ended December 31, 2021, the development of the Mullen FIVE show cars was completed in November 2021, and the Engineering Team is working on battery development and initial stages of program car development. Research and development costs are expensed as incurred. Research and development expenses primarily consist of the Mullen FIVE EV show car development and are primarily comprised of personnel-related costs for employees and consultants. These costs are expected to rise in the future with continuing development of the Mullen FIVE car program. 39 Table of Contents Interest Expense Interest expense increased by $20.0 million or 672.35% from $2.4 million through the three months ended December 31, 2020 to $22.4 million through the three months ended December 31, 2021, 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. Gain on extinguishment of debt During November 2020, the U.S. Small Business Administration (“SBA”) approved the CARES Act loan forgiveness amount of $875,426 in principal and accrued interest on November 20, 2020. Net Loss Net loss was $36.4 million for the three months ended December 31, 2021, an increase of $31.4 million or 629.80% from $4.9 million in the three months ended December 31, 2020, mainly for the reasons discussed above. Liquidity and Capital Resources As of the date of this Quarterly Report, we have on the Company’s consolidated results ofyet 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 in future periods remains uncertain and expand our business will depend on future developments, which are continuously evolving and cannot be predicted.  This includes, but is not limited to, the duration and spread of the COVID-19 pandemic, its severity, the emergence and severity of its variants,many factors, including our working capital needs, the availability of equity or debt financing and, the efficacy of vaccines (particularly with respect to emerging strains of the virus), other protective actions taken to contain the virus or treat its impact, such as restrictions on travel and transportation, and how quickly and to what extent normal economic and operating conditions can resume. The Company will continue to evaluate the nature and extent of these potential impacts to its business, consolidated results of operations, and liquidity. During March 2020, our Company evaluated its liquidity position, future operating plans, and its labor force, which included a reduction in the labor force and compensation to executives and other employees, in order to maintain current payment processing functions, capabilities, and continued customer service to its merchants. We are also seeking sources of capital to pay our contractual obligations as they come due, in light of these uncertain times. Management believes that its operating strategy will provide the opportunity for us to continue as a going concern as long as we are able to obtain additional financing. At thisover time, due to the unprecedented and rapid spread of COVID-19 pandemic, we cannot predict the impact of these conditions on our ability to obtain financing necessary forgenerate cash flows from operations. As of December 31, 2021, our cash and cash equivalents amounted to $0.61 million and our total debt amounted to $19.1 million. Debt has red ced significantly from September 30, 2021 due to principal paydowns, debt payoffs, and conversion of convertible debt to equity. Tax liabilities slightly increased to $4.2 million from $3.9 million, which is comprised of IRS and other tax jurisdictions related to payroll taxes and sales and use taxes. During this quarter, the Company received $20 million from the equity purchase of Series C Preferred Stock with warrants to fund its future working capital requirements.  Our Company has also decidedan unaffiliated investor immediately prior to explore strategic alternatives and potential options for its business, including salethe Effective Time of the Company or certain assets, licensing of technology, spin-offs, or a business combination. Accordingly,Merger. There is approximately $45 million in equity commitments to assist the Company has entered intothroughout 2022; an agreement with ESOUSA to provide us with a merger agreement$30.0 million equity line of credit beginning in connectionFebruary 2022 and a $15 million note receivable with CEOcast, Inc. that will begin in 2022 after the registration of common shares with the contemplatedSEC. We received $7.4 million in net proceeds from the Net Element merger with Mullen Automotivetransaction. We also received an additional $7.62 million in convertible notes from TDR Capital and certain related transactions, including a divestiture of the Company’s existing business operations. See “—Recent Developments—Mullen Merger and Related Transactions” for additional information. There can be no assurance, at this time, regarding the eventual outcome of our planned strategic alternatives, including the Merger and the related transactions On May 7, 2020, the Company entered into a promissory note (the “Note”) evidencing an unsecured loan (the “Loan”) in the amount of $491,493 made to the Company under the Paycheck Protection Program (the “PPP”). The Note matures on May 7, 2022 and bears interest at a rate of 1% per annum. Beginning December 7, 2020, the Company is required to make 17 monthly payments of principal and interest, with the principal component of each such payment based upon the level amortization of principal over a two-year period from May 7, 2020. Pursuant to the terms of the CARES Act and the PPP, the Company may apply to the Lender for forgiveness for the amount due on the Loan. The amount eligible for forgiveness is based on the amount of Loan proceeds used by the Company (during the eight-week period after the Lender makes the first disbursement of Loan proceeds) for the payment of certain covered costs, including payroll costs (including benefits), interest on mortgage obligations, rent and utilities, subject to certain limitations and reductions in accordance with the CARES Act and the PPP. On May 9, 2021, our Company was informed by the Small Business Administration that the loan forgiveness application was approved. The Company will reverse the amount due and reflect it as other income in the next reporting period. JADR Consulting Group Pty Limited. As part of our Company's plan to obtain capital to fund future operations, on March 27, 2020, our Company entered into a Master Exchange Agreement (the “ESOUSA Agreement”)agreement with ESOUSA Holdings, LLC ("ESOUSA"), a related party. Prior to entering into the ESOUSA Agreement, ESOUSA agreed to acquire an existing promissory note that had been previously issued byNASDAQ, the Company must complete a qualified offering within six months after regulatory approval. In February 2022, The Company filed a S-3 Registration Statement that became effective, which are expected to result in the increase of upcommon shares outstanding and enhance market capitalization. We expect our capital expenditures and working capital requirements to $2,000,000increase substantially in principal amount outstanding plus interestthe 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 RBL Capital Group, LLC ("RBL"). Pursuantchanged 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. To the extent that our current resources are insufficient to satisfy our cash requirements, we may need to seek additional equity or debt financing. If the financing is not available, or if the terms of financing are less desirable than we expect, we may be forced to decrease our level of investment in product development or scale back our operations, which could have an adverse impact on our business and financial prospects. See Note 1 to the ESOUSA Agreement,audited consolidated financial statements included elsewhere in this Quarterly Report. 40 Table of Contents Debt To date, our current working capital and development needs have been primarily funded through the Company hadissuance 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 right, at any time priorbalance sheet date, in addition to March 27, 2021,loans that have matured and remain unpaid. Management plans to request ESOUSA,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 ESOUSA agreed upon each such request, to exchange this promissory note in trancheswill be classified within short-term debt on the dates when the Company instructs ESOUSA,balance sheet. Interest and fees on loans are being accounted for such number of shares ofwithin accrued interest. The loans are secured by substantially all the Company’s common stock (“Common Stock”) as determined under the ESOUSA Agreement based upon the numberassets. Several principal shareholders have provided loans to and hold convertible debt of shares of Common Stock (already in ESOUSA’s possession) that ESOUSA sold in order to finance its purchase of such tranche of the promissory note from RBL Capital Group, LLC. ESOUSA will purchase each tranche of the promissory note equal to 88% of the gross proceeds from the shares of Common Stock sold by ESOUSA to finance the purchase of such Exchange Amount from RBL Capital Group, LLC. Each such tranche to be $148,000 unless otherwise agreed to by the Company and ESOUSA.are related parties. The following is a summary of our debt as of December 31, 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Carrying Value ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​      Unpaid Principal       ​ ​      ​ ​      ​      Contractual  Type of Debt      Balance      Current      Long-Term      Interest Rate      Maturity Matured Notes ​ $ 3,718,585 ​ $ 3,718,585 ​ $ —   0.00% - 15.00 %   2016 - 2021 Promissory Notes ​   14,531,554 ​   14,531,554 ​   —   28.00 %   2021 – 2022 Real Estate Note ​   274,983 ​   36,724 ​   238,259   5.00 %   2023 Loan Advances ​   618,158 ​   618,158 ​   —   0.00% - 10.00 %   2019 – 2020 Less: Debt Discount ​   — ​   — ​   —   NA   NA Total Debt ​ $ 19,143,280 ​ $ 18,905,021 ​ $ 238,259   NA   NA ​ On April 23, 2020 and August 3, 2020, the Company entered into certain amendments to the ESOUSA Agreement, which together increased from $2,000,000 to $15,000,000 the principal amount and unpaid interestThe following is a summary of one or more promissory notesour debt as of the Company or its direct or indirect subsidiaries that ESOUSA either purchased in whole or has an irrevocable right to purchase in tranches from RBL in connection with the ESOUSA Agreement. On March 27, 2020, the Company received its first tranche of RBL promissory notes in the aggregate amount of $148,000, less any fees, from ESOUSA to be exchanged for Common Stock pursuant to the ESOUSA Agreement. Included in other accrued expenses at March 31, 2021 is approximately $145,000 in connection with this first tranche for which shares of Common Stock have not yet been issued. Concurrently with this transaction, the Company received an equivalent aggregate amount of $148,000 from RBL under the Loan and Security Agreement (“Credit Facility”) with RBL. On April 28, 2020, the Company received its second tranche of RBL promissory notes in the aggregate amount of $143,000, less any fees, from ESOUSA to be exchanged for Common Stock pursuant to the ESOUSA Agreement.  The Company issued 65,862 shares of Common Stock to ESOUSA in connection with this exchange.  Concurrently with this transaction, the Company received an equivalent aggregate amount of $143,000 from RBL under the Credit Facility.  On August 11, 2020, the Company received its third tranche of RBL promissory notes in the aggregate amount of $707,000, less any fees, from ESOUSA to be exchanged for Common Stock pursuant to the ESOUSA Agreement.  The Company issued 66,190 shares of Common Stock to ESOUSA in connection with this exchange.  Concurrently with this transaction, the Company received an equivalent aggregate amount of $707,000 from RBL under the Credit Facility.  On August 21, 2020, the Company received its fourth tranche of RBL promissory notes in the aggregate amount of $401,000, less any fees, from ESOUSA to be exchanged for Common Stock pursuant to the ESOUSA Agreement.  The Company issued 45,654 shares of Common Stock to ESOUSA in connection with this exchange.  Concurrently with this transaction, the Company received an equivalent aggregate amount of $401,000 from RBL under the Credit Facility.  On September 25, 2020, the Company received its fifth tranche of RBL promissory notes in the aggregate amount of $426,000, less any fees, from ESOUSA to be exchanged for Common Stock pursuant to the ESOUSA Agreement.  The Company issued 50,000 shares of Common Stock to ESOUSA in connection with this exchange.  Concurrently with this transaction, the Company received an equivalent aggregate amount of $426,000 from RBL under the Credit Facility.  On December 30, 2020, the Company received its sixth tranche of RBL promissory notes in the aggregate amount of $1,960,000, less any fees, from ESOUSA to be exchanged for Common Stock pursuant to the ESOUSA Agreement. The Company issued 200,000 shares of Common Stock to ESOUSA in connection with this exchange. Concurrently with this transaction, the Company received an equivalent aggregate amount of $1,960,000 from RBL under the Credit Facility.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 ​ These conditions raise substantial doubt about our ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.41 30 Table of Contents Cash Flows The net income (loss) attributable to Net Element, Inc. stockholders was approximately $305,000following table provides a summary of net incomeMullen’s cash flow data for the three months ended MarchDecember 31, 2021 comparedand 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended December 31,  ​ ​      2021      2020 ​ ​ ​ (dollar amounts in thousands) ​ Net cash used (provided) in operating activities ​ $ (14,712,802) ​ $ 85,312 ​ Net cash used in investing activities ​   (10,462,219) ​   (72,585) ​ Net cash provided by financing activities ​   25,194,308 ​   178,192 ​ ​ Cash Flows used in Operating Activities Our cash flow used in operating activities to approximately $1.4date 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 $14.7 million in the three months ended December 31, 2021, an increase from $.85 million net cash provided by activities in the three months ended December 31, 2020. Cash Flows used in Investing Activities Our cash flows used in investing activities increased due to the purchase of net lossthe 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 $10.5 million in the three months ended December 31, 2021, an increase from $.72 million used in investing activities the three months ended December 31, 2020. Cash Flows provided by Financing Activities Through December 31, 2021, we have financed our operations primarily through the issuance of convertible notes and equity securities. Net cash provided by financing activities was $25.2 million for the three months ended MarchDecember 31, 2020. Operating activities used approximately $2.3 million2021 primarily due to issuance of cash for the three months ended March 31, 2021notes payable, as compared to approximately $448,000 of cash provided for the three months ended March 31, 2020. The change is primarily the result of the increase in accounts receivable for the three months ended March 31, 2021 as compared to the previous three months ended March 31, 2020. Investing activities provided approximately $270,000 in cash for the three months ended March 31, 2021 as compared to approximately $421,000 in cash used in investing activities for the three months ended March 31, 2020. The decrease change was primarily due to a decrease in client acquisition costs and a corresponding increase in other assets. Financing activities provided approximately $1.7$.17 million in cash for the three months ended March 31, 2021 as compared to approximately $100,000 ofnet cash provided by financing activities for the three months ended MarchDecember 31, 2020. 2020, which included (i) $7.3 million net proceeds from issuance of notes payable; (ii) $10.8 million in net proceeds from issuance of Common Stock which was partially offset by $13.0 million of payments of notes payable; and (iii) $5.2 million in proceeds to issue preferred C shares. 42 Table of Contents Contractual Obligations and Commitments The increase infollowing tables summarizes our contractual obligations and other commitments for cash provided by financing activities for the three months ended Marchexpenditures as of December 31, 2021, was primarilyand the result of the Company receiving its sixth tranche of RBL promissory notesyears in which these obligations are due: Operating Lease Commitments ​ ​ ​ ​ ​      Scheduled  Years Ended September 30,  ​ Payments 2022 (9 months) ​ $ 908,149 2023 ​   1,157,693 2024 ​   824,287 2025 ​   436,155 2026 ​   222,787 2027 and Thereafter ​   — Total Future Minimum Lease Payments ​ $ 3,549,071 ​ We currently lease our headquarters space in the aggregate amount of $1,960,000 pursuantLos 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 December 31,  ​      2022 (9 months)      2023      2024      2025      2026      2027      Thereafter      Total Total Debt ​ $ 18,905,021 ​ $ 238,259 ​ $ — ​ $ — ​ $ — ​ $ — ​ $ — ​ $ 19,143,280 ​ Off-Balance Sheet Arrangements We are not a party to the Exchange Agreement. Off-balance sheet arrangements At March 31, 2021, we did not have any off-balance sheet arrangements, as defined under SEC rules. Critical Accounting Policies and Estimates Our financial statements have been prepared in Item 303(a)(4)accordance with U.S. GAAP. In the preparation of Regulation S-K.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 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 43 Table of Contents 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 RiskRisk. Not applicable. Item 4. Controls and ProceduresProcedures. AsEvaluation of the end of the period covered by this Report, our management conducted an evaluation, under the supervisionDisclosure Controls and with the participation of our chief executive officer and our chief financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")). Procedures Disclosure controls and procedures are designed to provide reasonable but not absolute, 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. Based on thatAs 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 chiefmanagement, including our principal executive officer and chiefprincipal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Management has not been in a position to make its assessment regarding internal control over financial reporting due to the circumstances described in detail below. Accordingly, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were not deemed effective due to the material weaknesses in our internal control over financial reporting (as defined in Rule 13a-15(f )and Rule 15d-15(f ) under the Exchange Act), as discussed in Item 9A. Controls and Procedureseffective. 44 Table of the Company’s Form 10-K for the fiscal year ended December 31, 2020, under the heading “Management’sContents Management’s Report on Internal Control over Financial Reporting.”Reporting ChangesThis Quarterly Report and our Annual Report on Form 10-K filed with the SEC for the year ended September 30, 2021 do not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of our independent registered public accounting firm as we determined that the Company is currently similarly situated to a newly public company due to the relatively recent closing of the Merger, which was accounted for as a reverse merger transaction, in Internal Control which Mullen Automotive-California is treated as the acquirer for financial accounting purposes. In making this determination, we have considered the timing and effects of the Merger, which closed on November 5, 2021, and after which, there was a complete change in the business, operations, accounting, board of directors and executive management of the Company and all of the business of the Company was that of Mullen Automotive-California. As of March 31, 2021,a result, the internal controls and related material weaknesses disclosedpreviously reported related to the Company’s prior business and no longer exist with respect to the Company’s current business. Management was not in a position to conduct an assessment because of the impending reverse merger transaction which was at an advanced stage at year end. We plan to file our first assessment regarding internal control over financial reporting in our Annual Report on Form 10-K for the year ended December 31, 2020 have not yetending September 30, 2022. Changes in Internal Control over Financial Reporting Other than what has been fully remediated; however, significant progress were made during 2019 in remediating certain material weaknesses. Several steps taken in improving and remediating internal controls over financial reporting have included retaining a financial reporting manager, the formation of a disclosure committee, as well as, formal education and training of our Board members. Remediation activities for our material weaknesses include: ● Risk Assessment. We are continuing the process of designing and implementing an improved enterprise wide risk management process that follows the COSO 2013 framework and one aspect of this process will focus on identifying and mitigating risks to our business that could have an impact on our internal control over financial reporting. Our process includes periodic updates of the enterprise risk universe through the consideration of current and historical risks, periodic input from executive management, and our domestic and international segment local management. Each time a new potential risk is identified, we will evaluate if any additional controls are required to mitigate risks to our internal control over financial reporting. During the year ended December 31, 2019, management sent a consultant to Russia in an effort to fully understand, implement, train, and eventually test the internal controls relating to our International Transaction Solution's segment’s internal control over financial reporting. The local management team in our International Transaction Solution's segment is continuing in the process of documenting processes, controls, and recommendations provided under the guidance and assistance of the Company's consultant. Due to the current COVID-19 pandemic, the Company has had to allocate resources to mitigate risks with its current merchant accounts and evaluated its operational plans to eliminate any potential exposure to its disclosure controls and procedures. Pending the outcome of this uncertainty, including health concerns and travel restrictions to Russia, we cannot determine how or when we expect to remediate the material weaknesses noted above, including the allocation of appropriate resources to department heads during 2021. Except as stateddescribed above, there were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) ofthat occurred during the Exchange Act during our quarterthree months ended MarchDecember 31, 2021 or year ended September 30, 2021, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reportingreporting. Inherent Limitations on Effectiveness of Disclosure Controls and ProceduresInternal Control over Financial Reporting Control systems,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, are designed tocan provide aonly reasonable, but not an absolute, level of assurance that the objectives of the control system are met. Further,The effectiveness of our disclosure controls and procedures and our internal control over financial reporting is subject to risks, including that the designcontrols may become inadequate because of a control system must reflectchanges in conditions or that the fact that there are resource constraints, and the benefitsdegree of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Because of the inherent limitations in any control system, misstatements due to errorcompliance with our policies or fraudprocedures may occur and not be detected.deteriorate. ​ 45 31 Table of Contents PART II —II. OTHER INFORMATION Item 1. Legal proceedingsProceedings For a discussion ofThere have been no material developments during the fiscal quarter covered by this Report for our legal proceedings Refer to Note 10. "Commitments and Contingencies”that were disclosed in our Annual Report on Form 10-K for the condensed consolidated unaudited financial statements contained in Part I, Item 1 of this Report, which section is incorporated by reference herein.year ended September 30, 2021. 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 December 31, 2020,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 $15M Note Receivable Transaction As previously disclosed in the Company Form 10-K for the year ended September 30, 2021, on October 8, 2021, the Company entered into a loan transaction with CEOcast as described below. Securities Purchase Agreement 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. The aggregate purchase price will be paid to MTI at closing by means of a full recourse promissory note. MAI will issue warrants that are registered in the name of CEOcast, Inc. Promissory Note On October 8, 2021, CEOcast, Inc. committed to pay to MAI (through MTI) in the principal amount of $15 million. The note receivable bears no interest, and the payment of principal will be made in 6 equal monthly installments beginning on the first business day of the calendar month after warrants. Pre-Funded Common Stock Warrants (Penny Warrants) On October 8, 2021, CEOcast, Inc. is entitled to receive warrants (this “Warrant”) issued by the Company in connection with the note receivable transaction contemplated within the Securities Purchase Agreement. The warrant structure is pre-funded, meaning that it allows MTI to receive the exercise price of a not pre-funded warrant, except for the nominal exercise price, at the time of warrant issuance rather than the time of exercise. The aggregate exercise price of the warrant 46 Table of Contents is $0.001 per warrant share. The number of common shares is calculated by multiplying 125% by $2,500,000 and then dividing by the closing sale price for the trading day immediately after the sale price for the trading day immediately after the last closing trade price for MAI securities reported on the principal securities exchange or trading market is listed or trading. The initial closing date is based on the close of the reverse merger transaction with Net Element, which occurred on November 5, 2021. We are obligated to file a registration statement with the SEC covering the sale of the Registrable securities by MAI, which would be declared effective before commencement of the purchases of common stock. $1.0 Million Loan Letter of Intent On January 14, 2022, MAI executed a Letter of Intent (“LOI”) with Mark Betor, MAI Director, for a $1,000,000 loan. The loan terms are as follows: ● $250,000 loan advance upon the execution of LOI ● $750,000 remaining balance is paid to Mullen Automotive upon execution of transaction documents The loan will be evidenced by a Promissory Note with a maturity date for full repayment of loan no later than 90 days from January 11, 2022. Total agreed repayment amount is $1,150,000. Collateral is a first lien position 1 Greentech Drive, Tunica, MS. MAI Board of Directors approved transaction on January 18, 2022. Mr. Betor abstained from voting. The information set forth above is included herewith for the purpose of providing the disclosure required under “Item 1.01 — Entry into a Material Definitive Agreement” and “Item 2.03 - Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant” and “Item 3.02 - Unregistered Sales of Equity Securities” of Form 8-K. 47 Table of Contents Item 6. Exhibits Exhibit Number Exhibit Description 10.1 ​ 2.1 Second AmendmentLetter Agreement, dated as of March 30,November 3, 2021 to Agreementbetween the Company and Plan of Merger, dated as of August 4, 2020, among Net Element, Inc., Mullen Acquisitions, Inc. and Mullen Technologies, Inc.ESOUSA Holdings, LLC (incorporated by reference to Exhibit 2.1010.1 to the Company’s Current Report on Form 8-K, filed with the SEC on November 4, 2021). 10.2# ​ Employment Agreement dated October 25, 2021 between the Company and Kerri Sadler (incorporated by reference to Exhibit 10.21 to the Company’s Annual Report on Form 10-K, filed with the CommissionSEC on March 31,December 29, 2021) 3.1 Certificate of Corporate Domestication of Cazador, filed with the Secretary of State of the State of Delaware on October 2, 2012 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Commission on October 5, 2012). 3.210.3 ​ AmendedForm of Voting and Restated CertificateSupport Agreement dated as of IncorporationOctober 26, 2021 regarding approval of Net Element International, Inc.,an amendment to certificate of incorporation to reflect a Delaware corporation, filedthree-year sunset provision pertaining to the voting rights associated with the Secretary of State of the State of Delaware on October 2, 2012 (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed with the Commission on October 5, 2012) 3.3 Amended and Restated Bylaws of Net Element International, Inc., a Delaware corporation (incorporated by reference to Exhibit 3.3 to the Company’s Current Report on Form 8-K filed with the Commission on October 5, 2012) 3.4 Certificate of Merger, filed with the Secretary of State of the State of Delaware on October 2, 2012 (incorporated by reference to Exhibit 3.4 to the Company’s Current Report on Form 8-K filed with the Commission on October 5, 2012) 3.5 Certificate of Amendment to Amended and Restated Certificate of Incorporation, dated December 5, 2013, changing the Company’s name from Net Element International, Inc. to Net Element, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Commission on December 6, 2013) 3.6 Certificate of Amendment to Amended and Restated Certificate of Incorporation, dated December 16, 2014, to increase authorized common stock to 200 million shares (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed with the Commission on December 17, 2014) 3.7 Certificate of Designations, Preferences and Rights of Series A Convertible Preferred Stock (incorporated by reference to Exhibit 3.110.23 to the Company’s CurrentAnnual Report on Form 8-K10-K, filed with the CommissionSEC on May 1, 2015)December 29, 2021). 3.810.4 ​ Certificate of Amendment to AmendedConsultant Agreement dated October 26, 2021 between the Company and Restated Certificate of Incorporation, dated June 15, 2015, to increase authorized common stock to 300 million sharesMary Winter (incorporated by reference to Exhibit 3.110.25 to the Company’s CurrentAnnual Report on Form 8-K10-K, filed with the CommissionSEC on June 16, 2015)December 29, 2021). 3.910.4(a) ​ Amendment No. 1 to the BylawsForm of the Company,Securities Purchase Agreement dated June 15, 2015November 4, 2021 (incorporated by reference to Exhibit 3.210.27 to the Company’s CurrentAnnual Report on Form 8-K10-K, filed with the CommissionSEC on June 16, 2015)December 29, 2021). 3.1010.4(b) ​ Amendment No. 2 to the BylawsForm of the Company,Convertible Note dated July 10, 2015November 4, 2021 (incorporated by reference to Exhibit 3.110.27(a) to the Company’s CurrentAnnual Report on Form 8-K10-K, filed with the CommissionSEC on July 10, 2015)December 29, 2021). 3.1110.4(c) ​ CertificateForm of Amendment to Amended and Restated Certificate of Incorporation,Warrant dated May 24, 2016November 4, 2021 (incorporated by reference to Exhibit 3.110.27(b) to the Company’s second CurrentAnnual Report on Form 8-K10-K, filed with the CommissionSEC on May 24, 2016)December 29, 2021). 3.1210.5* ​ CertificatePromissory Note dated October 8, 2021 in the principal amount of Amendment$15.0 million payable to Amended and Restated Certificate of Incorporation, dated June 15, 2016 (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed with the Commission on June 16, 2016)CEOcast, Inc. 3.1310.5(a)* ​ Certificate of Amendment to Amended and Restated Certificate of Incorporation,Securities Purchase Agreement dated October 4, 2017 (incorporated by reference to Exhibit 3.1 of8, 2021 between the Company’s Current Report on Form 8-K filed with the Commission on October 4, 2017)Company and CEOcast, Inc. 10.5(b)* ​ Pre-Funded Common Stock Purchase Warrant dated October 8, 2021 issued to CEOcast, Inc. 31.1 * 10.6* ​ Amendment to Convertible Preferred Security and Warrant dated February 10, 2022 between the Company and Esousa Holdings, llc 31.1* ​ Certification of ChiefPrincipal Executive Officer, pursuant to Rule 13a-14(a) or Rule 15d-14(a) underof the Securities and Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2* ​ 31.2 * Certification of ChiefPrincipal Financial Officer, pursuant to Rule 13a-14(a) or Rule 15d-14(a) underof the Securities and Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1* ​ 32.1* Certification of Chief Executive Officer and Chief Financial Officer 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) ​ 101.INS* XBRL Instance Document 101.SCH* XBRL Taxonomy Extension Schema Document 101.CAL* XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF* XBRL Taxonomy Extension Definition Linkbase Document 101.LAB* XBRL Taxonomy Extension Label Linkbase Document 101.PRE* XBRL Taxonomy Extension Presentation Linkbase Document # Indicates management contract or compensatory plan or arrangement. * Filed herewith (furnished herewith with respect to Exhibit 32.1). ​ ​ 48 32 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. ​ ​ ​ ​ Net Element,Mullen Automotive Inc. ​ ​ ​ Dated: May 17, 2021February 14, 2022 By: /s/ Oleg Firer David Michery ​ ​ Name: Oleg Firer David Michery ​ ​ Title:  Chief Executive Officer, President and Chairman of the Board ​ ​ (Principal Executive Officer) Net Element, Inc. ​ ​ ​ Dated: May 17, 2021​ By:​ /s/ Jeffrey Ginsberg Kerri Sadler ​ ​ Name: Jeffrey Ginsberg Kerri Sadler ​ ​ Title:  Chief Financial Officer ​ ​ (Principal Financial Officer and Principal Accounting Officer) ​ ​ ​ ​ 33 49