Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Jun. 30, 2022 | Aug. 10, 2022 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Jun. 30, 2022 | |
Entity File Number | 001-34887 | |
Entity Registrant Name | MULLEN AUTOMOTIVE INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 90-1025599 | |
Entity Address State Or Province | CA | |
Entity Address, Address Line One | 1405 Pioneer Street | |
Entity Address, City or Town | Brea | |
Entity Address, Postal Zip Code | 92821 | |
City Area Code | 714 | |
Local Phone Number | 613-1900 | |
Title of 12(b) Security | Common Stock, par value $0.001 per share | |
Trading Symbol | MULN | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 509,294,481 | |
Entity Central Index Key | 0001499961 | |
Current Fiscal Year End Date | --09-30 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Jun. 30, 2022 | Sep. 30, 2021 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 60,934,439 | $ 42,174 |
Restricted cash | 176,824 | |
Materials and supplies | 76,163 | 55,753 |
Deferred advertising | 24,699 | 261,550 |
Prepaid expenses | 1,142,023 | 6,201,247 |
Other current assets | 734,223 | 250,331 |
Notes receivable | 90,552 | |
TOTAL CURRENT ASSETS | 63,088,371 | 6,901,607 |
Property, equipment and leasehold improvements, net | 13,443,071 | 1,181,477 |
Intangibles assets, net | 2,180,785 | 2,495,259 |
Right-of-use assets | 1,939,829 | 2,350,929 |
Other assets | 3,612,774 | 4,243,222 |
TOTAL ASSETS | 84,264,830 | 17,172,494 |
CURRENT LIABILITIES | ||
Accounts payable | 3,076,409 | 5,206,310 |
Accrued expenses and other current liabilities | 13,911,341 | 19,126,765 |
Series E option liability | 23,085,886 | |
Liability to issue stock | 14,118,227 | 7,027,500 |
Lease liabilities, current portion | 680,185 | 599,898 |
Notes payable, current portion | 3,645,764 | 39,200,970 |
TOTAL CURRENT LIABILITIES | 58,517,812 | 71,161,443 |
Notes payable, net of current portion | 5,256,611 | 247,612 |
Lease liabilities, net of current portion | 1,334,518 | 1,857,894 |
Other liabilities | 5,617,192 | |
TOTAL LIABILITIES | 65,108,941 | 78,884,141 |
Commitments and Contingencies (Note 17) | ||
STOCKHOLDERS' EQUITY (DEFICIT) | ||
Preferred Stock; $0.001 par value; 58,000,000 shares authorized; zero and 5,667,683 shares issued and outstanding at June 30, 2022 and September 30, 2021 respectively. | 5,668 | |
Common Stock; $0.001 par value; 500,000,000 shares authorized; 498,694,481 and 7,048,387 shares issued and outstanding at June 30, 2022 and September 30, 2021 respectively. | 498,694 | 7,048 |
Additional Paid-in Capital | 297,540,727 | 88,650,286 |
Accumulated Deficit | (278,883,532) | (150,374,649) |
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) | 19,155,889 | (61,711,647) |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | $ 84,264,830 | $ 17,172,494 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jun. 30, 2022 | Sep. 30, 2021 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Preferred Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 |
Preferred Stock, Shares Authorized | 58,000,000 | 58,000,000 |
Preferred Stock, Shares Issued | 0 | 5,667,683 |
Preferred Stock, Shares Outstanding | 0 | 5,667,683 |
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 500,000,000 | 500,000,000 |
Common Stock, Shares, Issued | 498,694,481 | 7,048,387 |
Common Stock, Shares, Outstanding | 498,694,481 | 7,048,387 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
OPERATING EXPENSES | ||||
General and administrative | $ 10,896,800 | $ 4,926,154 | $ 53,067,316 | $ 12,555,572 |
Research and development | 7,324,365 | 1,479,399 | 9,665,126 | 2,535,693 |
Total Operating Expense | 18,221,165 | 6,405,553 | 62,732,442 | 15,091,265 |
Loss from Operations | (18,221,165) | (6,405,553) | (62,732,442) | (15,091,265) |
Interest expense | (5,346,766) | (8,339,195) | (29,906,225) | (13,784,976) |
Other financing costs | (506,654) | (1,559,961) | ||
Loss on debt settlement | (41,096) | |||
Gain (loss) on extinguishment of indebtedness, net | 74,509 | 890,581 | ||
Incentive fee to creditor for transfer of note payable | (23,085,886) | (23,085,886) | ||
Loss on disposal of fixed assets | (50,574) | (50,574) | ||
Penalty for insufficient authorized shares | 3,495,000 | 3,495,000 | ||
Revaluation of Liability to Issue Shares | 3,045,000 | 3,045,000 | ||
Other income (expense), net | (12,317,169) | (12,317,170) | ||
Net Loss | $ (59,471,560) | $ (15,251,402) | $ (128,508,884) | $ (29,545,621) |
Net Loss per Share, Basic | $ (0.16) | $ (2.90) | $ (0.79) | $ (5.79) |
Net Loss per Share, Diluted | $ (0.16) | $ (2.90) | $ (0.79) | $ (5.79) |
Weighted average shares outstanding, basic | 376,786,685 | 5,262,206 | 169,531,688 | 5,100,831 |
Weighted average shares outstanding, diluted | 376,786,685 | 5,262,206 | 169,531,688 | 5,100,831 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT) - USD ($) | Preferred Stock Series A Preferred Stock | Preferred Stock Series B Preferred Stock | Preferred Stock Series C Preferred Stock | Common Stock | Paid-in Capital | Accumulated Deficit | Series A Preferred Stock | Total |
Balance, beginning at Sep. 30, 2020 | $ 116 | $ 5,568 | $ 5,086 | $ 63,619,280 | $ (106,134,069) | $ (42,504,019) | ||
Balance, beginning (in shares) at Sep. 30, 2020 | 116,789 | 5,567,319 | 5,086,225 | |||||
Warrant issuances | 2,092,337 | 2,092,337 | ||||||
Beneficial conversion feature of convertible debt | 172,663 | 172,663 | ||||||
Stock-based compensation | $ 39 | 1,241,366 | 1,241,405 | |||||
Stock-based compensation (in shares) | 38,561 | |||||||
Net loss | (4,996,450) | (4,996,450) | ||||||
Balance, ending at Dec. 31, 2020 | $ 116 | $ 5,568 | $ 5,125 | 67,125,646 | (111,130,519) | (43,994,064) | ||
Balance, ending (in shares) at Dec. 31, 2020 | 116,789 | 5,567,319 | 5,124,786 | |||||
Balance, beginning at Sep. 30, 2020 | $ 116 | $ 5,568 | $ 5,086 | 63,619,280 | (106,134,069) | (42,504,019) | ||
Balance, beginning (in shares) at Sep. 30, 2020 | 116,789 | 5,567,319 | 5,086,225 | |||||
Dividends accumulated on preferred stock | $ 0 | |||||||
Net loss | (29,545,621) | |||||||
Balance, ending at Jun. 30, 2021 | $ 116 | $ 5,568 | $ 5,200 | 78,662,652 | (135,679,691) | (57,006,155) | ||
Balance, ending (in shares) at Jun. 30, 2021 | 116,789 | 5,567,319 | 5,200,056 | |||||
Balance, beginning at Dec. 31, 2020 | $ 116 | $ 5,568 | $ 5,125 | 67,125,646 | (111,130,519) | (43,994,064) | ||
Balance, beginning (in shares) at Dec. 31, 2020 | 116,789 | 5,567,319 | 5,124,786 | |||||
Common shares issued for cash | $ 23 | 1,104,779 | 1,104,802 | |||||
Common shares issued for cash (in shares) | 23,126 | |||||||
Warrant issuances | 870,428 | 870,428 | ||||||
Beneficial conversion feature of convertible debt | 98,335 | 98,335 | ||||||
Stock-based compensation | 1,631,660 | 1,631,660 | ||||||
Net loss | (9,297,770) | (9,297,770) | ||||||
Balance, ending at Mar. 31, 2021 | $ 116 | $ 5,568 | $ 5,148 | 70,830,848 | (120,428,289) | (49,586,609) | ||
Balance, ending (in shares) at Mar. 31, 2021 | 116,789 | 5,567,319 | 5,147,912 | |||||
Common shares issued for cash | $ 52 | 1,291,449 | 1,291,501 | |||||
Common shares issued for cash (in shares) | 52,144 | |||||||
Warrant issuances | 4,566,218 | 4,566,218 | ||||||
Beneficial conversion feature of convertible debt | 268,519 | 268,519 | ||||||
Stock-based compensation | 1,705,618 | 1,705,618 | ||||||
Dividends accumulated on preferred stock | 0 | |||||||
Net loss | (15,251,402) | (15,251,402) | ||||||
Balance, ending at Jun. 30, 2021 | $ 116 | $ 5,568 | $ 5,200 | 78,662,652 | (135,679,691) | (57,006,155) | ||
Balance, ending (in shares) at Jun. 30, 2021 | 116,789 | 5,567,319 | 5,200,056 | |||||
Balance, beginning at Sep. 30, 2021 | $ 100 | $ 5,568 | $ 7,048 | 88,650,286 | (150,374,649) | (61,711,647) | ||
Balance, beginning (in shares) at Sep. 30, 2021 | 100,363 | 5,567,319 | 7,048,387 | |||||
Common shares issued for cash | $ 7,704 | 10,886,955 | 10,894,659 | |||||
Common shares issued for cash (in shares) | 7,704,082 | |||||||
Common shares issued for asset | $ 109 | 140,891 | 141,000 | |||||
Common shares issued for asset (in shares) | 109,412 | |||||||
Preferred shares issued for cash | $ 2,264 | 19,997,736 | 20,000,000 | |||||
Preferred shares issued for cash (in shares) | 2,263,970 | |||||||
Preferred shares issued to settle liability to issue | $ 85 | 704,915 | 705,000 | |||||
Preferred shares issued to settle liability to issue (in shares) | 84,900 | |||||||
Warrant issuances | 10,491,621 | 10,491,621 | ||||||
Shares issued for conversion of debt | $ 2,829 | 24,988,926 | 24,991,755 | |||||
Shares issued for conversion of debt (in shares) | 2,829,029 | |||||||
Stock-based compensation | $ 443 | 4,424,825 | 4,425,268 | |||||
Stock-based compensation (in shares) | 443,124 | |||||||
Common shares issued to settle liability to issue | $ 131 | 1,034,681 | 1,034,812 | |||||
Common shares issued to settle liability to issue (in shares) | 131,477 | |||||||
Prefunded warrant issuance | 15,000,000 | 15,000,000 | ||||||
Issuance of common stock for conversion of preferred stock | $ (85) | $ 8,500 | (8,415) | |||||
Issuance of common stock for conversion of preferred stock (in shares) | (84,996) | 8,499,680 | ||||||
Net loss | (36,463,938) | (36,463,938) | ||||||
Balance, ending at Dec. 31, 2021 | $ 15 | $ 5,568 | $ 5,178 | $ 23,935 | 176,312,421 | (186,838,587) | (10,491,470) | |
Balance, ending (in shares) at Dec. 31, 2021 | 15,367 | 5,567,319 | 5,177,899 | 23,936,162 | ||||
Balance, beginning at Sep. 30, 2021 | $ 100 | $ 5,568 | $ 7,048 | 88,650,286 | (150,374,649) | (61,711,647) | ||
Balance, beginning (in shares) at Sep. 30, 2021 | 100,363 | 5,567,319 | 7,048,387 | |||||
Dividends accumulated on preferred stock | 0 | |||||||
Net loss | (128,508,884) | |||||||
Balance, ending at Jun. 30, 2022 | $ 498,694 | 297,540,727 | (278,883,532) | 19,155,889 | ||||
Balance, ending (in shares) at Jun. 30, 2022 | 498,694,481 | |||||||
Balance, beginning at Dec. 31, 2021 | $ 15 | $ 5,568 | $ 5,178 | $ 23,935 | 176,312,421 | (186,838,587) | (10,491,470) | |
Balance, beginning (in shares) at Dec. 31, 2021 | 15,367 | 5,567,319 | 5,177,899 | 23,936,162 | ||||
Shares issued for cash | $ 4,974 | $ 57,998 | 73,536,483 | 73,599,455 | ||||
Shares issued for cash (in shares) | 4,974,266 | 57,998,313 | ||||||
Cashless Warrant exercise | $ 196,005 | (196,005) | ||||||
Cashless Warrant exercise (in shares) | 196,005,353 | |||||||
Stock-based compensation | $ 5,868 | 21,536,148 | 21,542,016 | |||||
Stock-based compensation (in shares) | 5,868,482 | |||||||
Issuance of common stock for conversion of preferred stock | $ (13) | $ (4,633) | $ 5,976 | (1,330) | ||||
Issuance of common stock for conversion of preferred stock (in shares) | (13,433) | (2,783,660) | (1,848,842) | 5,975,802 | ||||
Dividends accumulated on preferred stock | (2,519,948) | (2,519,948) | ||||||
Net loss | (32,573,385) | (32,573,385) | ||||||
Balance, ending at Mar. 31, 2022 | $ 2 | $ 935 | $ 10,152 | $ 289,782 | 268,667,769 | (219,411,972) | 49,556,668 | |
Balance, ending (in shares) at Mar. 31, 2022 | 1,934 | 2,783,659 | 8,303,323 | 289,784,112 | ||||
Shares issued for conversion of debt | $ 14,344 | (14,344) | ||||||
Shares issued for conversion of debt (in shares) | 14,343,550 | |||||||
Cashless Warrant exercise | $ 170,232 | (170,232) | ||||||
Cashless Warrant exercise (in shares) | 170,231,117 | |||||||
Issuance of common stock for conversion of debt | $ 17,500 | 22,907,500 | 22,925,000 | |||||
Issuance of common stock for conversion of debt (in shares) | 17,500,000 | |||||||
Beneficial conversion feature of convertible debt | 3,336,853 | 3,336,853 | ||||||
Reclassification of Convertible Security to Derivative Liability Value | $ (2) | $ (8,013) | (8,015) | |||||
Stock-based compensation | $ 1,913 | 5,100,822 | 5,102,735 | |||||
Stock-based compensation (in shares) | 1,912,500 | |||||||
Issuance of common stock for conversion of preferred stock | $ (935) | $ (2,139) | $ 4,923 | (1,849) | ||||
Issuance of common stock for conversion of preferred stock (in shares) | (2,783,659) | (2,139,543) | 4,923,202 | |||||
Reclassification of convertible security to derivative liability | $ (2) | $ (8,013) | (8,015) | |||||
Reclassification of convertible security to derivative liability (in shares) | (1,934) | (6,163,780) | ||||||
Dividends accumulated on preferred stock | (2,285,792) | $ 0 | (2,285,792) | |||||
Net loss | (59,471,560) | (59,471,560) | ||||||
Balance, ending at Jun. 30, 2022 | $ 498,694 | $ 297,540,727 | $ (278,883,532) | $ 19,155,889 | ||||
Balance, ending (in shares) at Jun. 30, 2022 | 498,694,481 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 9 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Cash Flows from Operating Activities | ||
Net Loss | $ (128,508,884) | $ (29,545,621) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 918,855 | 338,321 |
Impairment charge - materials | 74,495 | |
Employee stock compensation | 5,056,821 | 2,024,426 |
Issuance of shares for services | 27,422,889 | 1,731,779 |
Non-cash interest and other operating activities | 3,879,496 | |
Non-cash lease expense | 411,100 | 391,433 |
Amortization of debt discount | 19,584,041 | 4,817,504 |
Loss on revaluation of derivatives | 14,118,227 | |
Loss on asset disposal | 50,574 | |
Loss (gain) on extinguishment of debt | 23,011,377 | (890,581) |
Loss on debt settlement | 41,096 | |
Changes in operating assets and liabilities: | ||
Material and supplies | (20,410) | (87,165) |
Other current assets | 5,466,441 | (564,168) |
Other assets | (1,960,058) | (14,515) |
Accounts payable | (2,129,901) | 1,918,768 |
Accrued expenses and other liabilities | (10,119,169) | 7,144,718 |
Lease liabilities | (443,089) | (376,501) |
Net cash used in operating activities | (43,220,594) | (13,037,107) |
Cash Flows from Investing Activities | ||
Purchase of equipment | (10,968,389) | (78,140) |
Purchase of intangible assets | (305,044) | (63,299) |
Net cash used in investing activities | (11,273,433) | (141,439) |
Cash Flows from Financing Activities | ||
Changes in investment by Mullen Technologies, Inc. | 6,157,956 | |
Proceeds from issuance of notes payable | 12,142,791 | 8,068,500 |
Proceeds from issuance of common stock | 40,151,308 | |
Proceeds from issuance of preferred stock | 63,925,000 | |
Proceeds from note receivable | 15,000,000 | |
Payment of notes payable | (15,655,983) | (417,051) |
Net cash provided by financing activities | 115,563,116 | 13,809,405 |
Increase (decrease) in cash | 61,069,089 | 630,859 |
Cash, beginning of period | 42,174 | 33,368 |
Cash, ending of period | 61,111,263 | 664,227 |
Supplemental disclosure of Cash Flow information: | ||
Cash paid for interest | 1,500,106 | 11,514 |
Supplemental disclosure for non-cash activities: | ||
Refinance of indebtedness | 28,867,187 | |
Issuance of common stock for conversion of debt | 17,356,500 | |
Preferred shares issued in exchange for convertible debt | $ 23,192,500 | |
Initial recognition of right-of-use assets and lease liabilities | $ 1,129,003 |
DESCRIPTION OF BUSINESS AND BAS
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION | 9 Months Ended |
Jun. 30, 2022 | |
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION | |
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION | NOTE 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION Description of Business Mullen Automotive Inc. (“ MAI Mullen we Company MTI NETE Net Element Basis of Presentation and Principles of Consolidation The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the " Commission GAAP . The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Mullen Investment Properties, LLC, which was established in August 2021 to hold our real estate. Intercompany accounts and transactions have been eliminated, if any. As of June 30, 2022, Mullen Investment Properties, LLC holds the Advanced Manufacturing and Engineering Center or “AMEC” in Tunica County, MS. As MTI has not historically prepared financial statements for Mullen, and Mullen did not exist as a legal entity prior to November 5, 2021, these condensed consolidated financial statements have been prepared from the financial records of MTI on a carve-out basis. The condensed consolidated balance sheets include all of the MAI Assets. The condensed consolidated Statements of operations for each of the three and nine months ended June 30, 2022 and 2021, reflect all expenses and activities directly attributable to MAI, and an allocation of MTI’s general and administrative expenses incurred (prior to the reorganization) in each of those years, as these expenditures were shared by MAI. In some instances, certain expenses were not allocated as they would have related directly to MAI. All inter-entity balances and transactions have been eliminated. The equity capital presented in the condensed consolidated financial statements reflect the retrospective application of the November 5, 2021 capitalization and corporate reorganization arising from the merger transaction with NETE. These financial statements have been prepared based upon the historical cost amounts recorded by MTI. These condensed consolidated financial statements may not be indicative of MAI financial performance and do not necessarily reflect what its financial position, results of operations, and cash flows would have been had Mullen operated as an independent entity during the years presented. |
LIQUIDITY, CAPITAL RESOURCES, A
LIQUIDITY, CAPITAL RESOURCES, AND GOING CONCERN CONSIDERATION | 9 Months Ended |
Jun. 30, 2022 | |
LIQUIDITY, CAPITAL RESOURCES, AND GOING CONCERN CONSIDERATION | |
LIQUIDITY, CAPITAL RESOURCES, AND GOING CONCERN CONSIDERATION | NOTE 2 – LIQUIDITY, CAPITAL RESOURCES, AND GOING CONCERN CONSIDERATION The accompanying condensed consolidated financial statements have been prepared on the basis that the Company will continue as a going concern. Our principal source of liquidity consists of existing cash and restricted cash of approximately $61.1 million at June 30, 2022. During the nine months ended June 30, 2022, the Company used $43.2 million of cash for operating activities and had net working capital of approximately $4.6 million at June 30, 2022. During the three months ended June 30, 2022, the Company obtained additional financing in the amount of $15.0 million in equity issuances. During the nine months ended June 30, 2022, the Company obtained additional financing in the amount of $12.2 million in notes payable; $10 million in equity from Net Element merger; and $108.6 million in equity issuances. The Coronavirus (“ COVID-19 Going Concern As an early-stage development company, our ability to access capital is critical. Our management plans to continue to raise additional capital through a combination of equity and debt financings, strategic alliances, and licensing arrangements. Company management has evaluated whether there are any conditions and events, considered in aggregate, which raise substantial doubt about its ability to continue as a going concern over the next twelve months from the date of filing this report. Since inception, we have incurred significant accumulated losses of approximately $278.9 million, and management expects to continue to incur operating losses over the near future. On July 26, 2022, MAI stockholders approved a proposal to issue $275 million in Series D Preferred Stock and associated warrants in exchange for cash. The projected capital raise is expected to provide sufficient liquidity and capital resources for 2023. On August 5, 2022, the Company filed a S-3 Registration Statement for selling stockholders. The Company will receive approximately $43 million in cash in exchange for Series C Preferred Stock and associated warrants for the remainder of 2022. Proceeds from the planned capital raise and exercise of warrants are expected to provide Mullen with sufficient liquidity and capital resources to fund its operating expenses and capital requirements for at least the next 12 months. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Jun. 30, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Significant accounting policies are defined as those that are reflective of significant judgments and uncertainties, and potentially result in materially different results under different assumptions and conditions. Push-Down Accounting The carve-out financial statements for the periods presented prior to November 5, 2021 reflect costs and expenses incurred by MTI on behalf of MAI, including interest costs. As a result, share-based compensation, and other equity transactions (such as issuances of warrants and stock conversion rights embedded in issuances of indebtedness) are reflected in these carve-out financial statements. Accordingly, the classification of debt and equity issuances by MTI have been pushed down and reflected with similar classification in these carve-out financial statements. In addition, certain right-of-use assets and related lease liabilities of MTI have been pushed down to MAI. Reverse Merger and Recapitalization The November 2021 Business Combination with Net Element was accounted for as a reverse merger and recapitalization, with Net Element treated as the “acquired” company for accounting purposes. The Business Combination was accounted as the equivalent of Mullen Automotive Inc. issuing stock for the net assets of Net Element, accompanied by a recapitalization. Accordingly, these condensed consolidated financial statements reflect the share capital and weighted average shares outstanding via a retrospective recapitalization as shares representing the exchange ratio established in the Business Combination. Use of Estimates The preparation of carve-out financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the carve-out financial statements and the reported amounts of total expenses in the reporting periods. Estimates are used for, but not limited to, fair value of long-lived assets, fair value of financial instruments, depreciable lives of property and equipment, income taxes, contingencies, and inputs used to value stock-based compensation, valuation of common and preferred stock issued by MTI. Additionally, the rates of interest on several debt agreements have been imputed where there was no stated interest rate within the original agreement. The imputed interest results in adjustments to the debt amounts reported in our condensed consolidated financial statements prepared under U.S. GAAP. Loan valuations issues can arise when trying to determine the debt attributes, such as discount rate, credit loss factors, liquidity discounts, and pricing. Management bases its estimates on historical experience and on various other assumptions believed to be reasonable, the results of which form the basis for adjustments about the carrying values of assets and liabilities and the recording of costs and expenses that are not readily apparent from other sources. The actual results may differ materially from these estimates. Risks and Uncertainties We operate within an industry that is subject to rapid technological change, intense competition, and serves an industry that has significant government regulations. It is subject to significant risks and uncertainties, including competitive, financial, developmental, operational, technological, required knowledge of industry governmental regulations, and other risks associated with an emerging business. Any one or combination of these or other risks could have a substantial influence on our future operations and prospects for commercial success. Cash and Cash Equivalents Company management considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. There were no cash equivalents at June 30, 2022 or September 30, 2021. Restricted Cash Funds that are not available for immediate use and must use for a specific purpose. These funds are refundable deposits for individuals and businesses who have made $100 reservations for the Mullen FIVE SUV, which debuted at the Los Angeles Auto Show in November 2021. At June 30, 2022, the restricted cash balance was $176,824. Customer deposits are accounted for within other liabilities. Deferred Advertising At June 30, 2022 and September 30, 2021, deferred advertising was $24,699 and $261,550, respectively. The costs were primarily upfront costs paid related to the Los Angeles auto show during November 2021. Prepaid Expenses and Other Current Assets Prepaid expenses consist of various advance payments made for goods or services to be received in the future. These prepaid expenses include insurance and other contracted services requiring up-front payments. Property, Equipment and Leasehold Improvements, Net Property, equipment and leasehold improvements are stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated economic useful lives of the assets. Repairs and maintenance expenditures that do not extend the useful lives of related assets are expensed as incurred. Estimated Useful Lives Description Life Buildings 30 Years Furniture and Equipment 5 Years Computer and Software 1 – 3 years Machinery and Equipment 5 Years Leasehold Improvements Shorter of the estimated useful life or the underlying lease term Vehicles 5 Years Expenditures for major improvements are capitalized, while minor replacements, maintenance and repairs, which do not extend the asset lives, are charged to operations as incurred. Upon sale or disposition, the cost and related accumulated depreciation are removed from the accounts and any gain or loss is included in operations. Company management continually monitors events and changes in circumstances that could indicate that the carrying balances of its property, equipment and leasehold improvements may not be recoverable in accordance with the provisions of ASC 360, “Property, Plant, and Equipment.” Income Taxes Prior to Mullen’s capitalization and corporate reorganization, our operations were included in the tax filings of MTI. The cash and deferred tax positions between us and MTI and are formalized in a tax sharing agreement. Income taxes are recorded in accordance with ASC 740, Income Taxes (“ ASC 740 There are transactions that occur during the ordinary course of business for which the ultimate tax determination may be uncertain. At June 30, 2022 and September 30, 2021, there were no material changes to either the nature or the amounts of the uncertain tax positions. The Company’s income tax provision consists of an estimate for U.S. federal and state income taxes based on enacted rates, as adjusted for allowable credits, deductions, uncertain tax positions, changes in deferred tax assets and liabilities, and changes in the tax law. We maintain a full valuation allowance against the value of our U.S. and state net deferred tax assets because management does not believe the recoverability of the tax assets meets the “more likely than not” likelihood at June 30, 2022 and September 30, 2021. Intangible Assets Intangible assets consist of acquired and developed intellectual property and website development costs. In accordance with ASC 350, “Intangibles—Goodwill and Others,” Other Assets Other assets are comprised primarily of Coda electric vehicles, related parts and security deposits related to the Company’s property leases related to the EV business. Extinguishment of Liabilities The Company derecognizes financial liabilities when the Company’s obligations are discharged, cancelled, or expired. Leases The Company follows the provisions of Accounting Standards Update (ASU) No. 2016 02, “Leases” (ASU 2016 02), which requires a lessee to recognize a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying leased asset for the lease term. Accrued Expenses Accrued expenses are expenses that have been incurred but not yet paid and are classified within current liabilities on the consolidated balance sheets. General and Administrative Expenses General and administrative (“ G&A “Other Expenses – Advertising Cost.” Research and Development Costs Research and development costs are expensed as incurred. Research and development expenses primarily consist of costs associated with the development of our two electric vehicle product lines, the Mullen Five car and the Mullen One van. Share-Based Compensation We account for share-based awards issued by MAI in accordance with ASC Subtopic 718-10, “Compensation – Share Compensation,” compensation awards have been valued based on valuation of the trading price of Net Element common stock, as adjusted for the share exchange ratio in the merger. See Note 9, MAI Share-Based Compensation, for the amount of share-based compensation expense that is included within General and Administrative expenses for the three and nine months ended June 30, 2022 and 2021. Related Party Transactions We have related party transactions with certain of our directors, officers, and principal stockholders. These transactions, which are primarily long-term in nature, include operational loans, convertible debt, and warrants for financial support associated with the borrowing of funds and are entered into in the ordinary course of business. Fair Value of Financial Instruments We apply fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value on a recurring basis. Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities that are required to be recorded at fair value, Company management considers the principal or most advantageous market in which we would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risk. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: Level 1 – Quoted prices in active markets for identical assets or liabilities. Level 2 – Level 3 – Concentrations of Business and Credit Risk We maintain cash balances in several financial institutions that are insured by either the Federal Deposit Insurance Corporation or the National Credit Union Association up to certain federal limitations, generally $250,000. At times, our cash balance may exceed these federal limitations and maintains significant cash on hand at certain of its locations. However, we have not experienced any losses in such accounts and management believes we are not exposed to any significant credit risk on these accounts. Recently Issued Accounting Standards In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. This ASU amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity’s own equity, and also improves and amends the related earnings per share guidance for both Subtopics. The ASU will be effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years and early adoption is permitted. Company management is evaluating the future impact this guidance on our consolidated financial statements. In May 2021, the FASB issued ASU No. 2021-04, Earnings Per Share (Topic 260), Debt – Modifications and Extinguishments (Subtopic 470-50), Compensation – Stock Compensation (Topic 718) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40). The ASU will be effective for the Company’s fiscal years beginning October 1, 2022. The Company has issued debt and equity instruments, the accounting for which could be impacted by this update. Company management is evaluating the impact this guidance on our financial condition and results of operations. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 9 Months Ended |
Jun. 30, 2022 | |
INTANGIBLE ASSETS | |
INTANGIBLE ASSETS | NOTE 4 – INTANGIBLE ASSETS For the nine months ended June 30, 2022 and 2021, we incurred website development and trademark costs of $310,405 and $63,299, respectively. These costs historically have been capitalized, as the website was in the development stage and costs resulted in improved functionality. Amortization of the website commenced when the website was placed in service for its intended use during the fourth quarter of 2021. Trademark costs relate to legal fees incurred for registration of trademarks and patents. Amortization of these costs will commence when the trademark application and registration process has been completed. The weighted average useful life of the intellectual property is 3.0 years. Identifiable intangible assets with definite lives are amortized over the period of estimated benefit using the straight-line method and the estimated useful lives of three years. The straight-line method of amortization represents management’s best estimate of the distribution of the economic value of the identifiable intangible assets. June 30, 2022 September 30, 2021 Gross Net Gross Net Carrying Accumulated Carrying Carrying Accumulated Carrying Finite-Lived Intangible Assets Amount Amortization Amount Amount Amortization Amount Website design and development $ 2,660,391 $ (886,797) $ 1,773,594 $ 2,660,391 $ (221,699) $ 2,438,692 Intellectual property 71,182 (71,182) — 71,182 (69,205) 1,977 Trademark 407,191 — 407,191 54,590 — 54,590 Total Finite-Lived Intangible Assets $ 3,138,764 $ (957,979) $ 2,180,785 $ 2,786,163 $ (290,904) $ 2,495,259 Total future amortization expense for finite-lived intellectual property is as follows: Years Ended June 30, Future Amortization 2022 (three months) $ 221,699 2023 886,797 2024 665,099 Thereafter 407,190 Total Future Amortization Expense $ 2,180,785 For the three and nine months ended June 30, 2022, amortization expense for the intangible assets was $221,699 and $667,075 and was $5,932 and $17,796 for the three and nine months ended June 30, 2021, respectively. |
DEBT
DEBT | 9 Months Ended |
Jun. 30, 2022 | |
DEBT | |
DEBT | 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 June 30, 2022: Net Carrying Value Unpaid Principal Contractual Contractual Type of Debt Balance Current Long-Term Interest Rate Maturity Matured Notes $ 3,049,955 $ 3,049,955 $ — 0.00% - 15.00 % Past Due Promissory Notes 5,000,000 — 5,000,000 8.99 % 2024 Convertible Notes 1,096,787 — 1,096,787 28.00 % 2024 Real Estate Note 256,850 37,651 219,199 5.00 % 2023 Loan Advances 558,158 558,158 — 0.00% - 10.00 % Past Due Less: Debt Discount (1,059,375) — (1,059,375) NA NA Total Debt $ 8,902,375 $ 3,645,764 $ 5,256,611 NA NA The following is a summary of our indebtedness at September 30, 2021: Net Carrying Value Unpaid Principal Contractual Contractual Type of Debt Balance Current Long-Term Interest Rate Maturity Matured Notes $ 5,838,591 $ 5,838,591 $ — 0.00% - 15.00 % 2016 - 2021 Promissory Notes 23,831,912 23,831,912 — 28.00 % 2021 – 2022 Demand Note 500,000 500,000 — 27.00 % 2020 Convertible Unsecured Notes 15,932,500 15,932,500 — 15.00%-20.00 % 2021 - 2022 Real Estate Note 283,881 36,269 247,612 5.00 % 2023 Loan Advances 1,122,253 1,122,253 — 0.00% - 10.00 % 2019 – 2020 Less: Debt Discount (8,060,555) (8,060,555) — NA NA Total Debt $ 39,448,582 $ 39,200,970 $ 247,612 NA NA Scheduled Debt Maturities The following scheduled debt maturities at June 30, 2022: Years Ended June 30, 2022 (6 months) 2023 2024 Total Total Debt $ 3,645,764 $ 219,199 $ 5,037,412 $ 8,902,375 Notes and Advances We enter into promissory notes with third parties and company officers to support our operations. Promissory notes typically are for less than three years maturity and carry interest rates from 0% to 28.0%. There are no financial covenants associated with the promissory notes and loan advances, and there are no compliance waivers that have been received from creditors. We record imputed interest on promissory notes and advances which are deemed to be below the market interest rate. For the three and nine months ended June 30, 2022, we recorded interest expense of $5,346,766 and $29,906,225 and $8,339,195 and $13,784,976 for the three and nine months ended June 30, 2021, respectively. In some instances, MTI issued shares of common stock or warrants along with the issuance of promissory notes, resulting in the recognition of a debt discount which is amortized to interest expense over the term of the promissory note. Debt discount amortization for the nine months ended June 30, 2022 and 2021, was $19,584,041 and $4,817,504, respectively. During 2021, MTI issued shares of stock to certain creditors in satisfaction of debt payments or in settlement of indebtedness. These agreements essentially exchanged a predetermined amount of stock to settle debt. For the nine months ended June 30, 2022 and 2021, the carrying amount of indebtedness that was settled via issuance of MTI shares was $23,192,500 and zero, respectively. NuBridge Commercial Lending LLC Promissory Note On March 7, 2022, the Company’s wholly owned subsidiary, Mullen Investment Properties, LLC entered into a Promissory Note (the “Promissory Note”) with NuBridge Commercial Lending LLC for a principal amount of $5 million. The Promissory Note bears interest at a fixed rate of 8.99% per annum and the principal amount is due March 1, 2024. Collateral for the loan included the title to the Company’s property at 1 Greentech Drive, Tunica, MS Under the Promissory Note, prepaid interest and issuance costs were withheld from the principal and recorded as a discount on the note of $1.2 million, which will be amortized over the term of the note. As of June 30, 2022, the remaining unamortized discount was $973,652. Drawbridge Relationship During July 2020, Drawbridge-DBI and MTI entered into a settlement agreement (the “ Agreement The amounts owed to Drawbridge-DBI is $27,185,390 and $33,296,648 as of June 30, 2022 and September 30, 2021, respectively. The amounts owed to other DBI-affiliated entities is zero and $982,500, as of June 30, 2022 and September 30, 2021, respectively. On July 16, 2021, the Company and Drawbridge entered into an agreement whereby Drawbridge acknowledged, waived, and consented to the contribution and spin-off of Mullen's EV assets into a new entity. As indicated in Note 1 to the condensed consolidated financial statements, the spin-off occurred immediately prior to the consummation of the merger with Net Element. As part of the agreement, Drawbridge was paid $10,000,000, to be applied towards the outstanding principal balance. The principal pay down to Drawbridge occurred on November 15, 2021. On June 17, 2022, the Company entered into an Amended and Restated Secured Convertible Note and Security Agreement (the “A&R Note”) with Esousa Holdings LLC, a New York limited liability company (“Esousa”). The A&R Note amends and restates that certain promissory note dated July 23, 2020, entered into between the Mullen Technologies, Inc. (“Original Borrower”) and DBI Lease Buyback Servicing LLC, a Delaware limited liability company (“DBI”) for a principal amount of $23,831,553.98 (the “Original Note”). The Company had previously assumed all of the obligations of the Original Borrower under the Original Note upon the completion of the Merger. Esousa purchased rights under the Original Note from DBI immediately prior to entering into the A&R Note. The A&R Note extends the maturity date of the Original Note by two years, from July 23, 2022 to July 23, 2024. The A&R Note provided Esousa the right to convert all or any portion of the then-outstanding principal balance of the A&R Note into that number of shares of the Common Stock of the Company. The transaction is accounted for as an extinguishment of debt with Drawbridge and the related expense within the “Incentive fee to creditor for transfer of note payable” line item of the Statement of Operations. The new debt with Esousa is viewed as a loan modification. On June 27, 2022, the Company received notification from Esousa that it was exercising the A&R Note’s conversion feature to partially convert the note and accrued interest in exchange for 28,000,000 shares. The conversion price was $0.9918 per share and the principal of the A&R Note has a remaining balance of $1,096,787 . Due to the limited number of authorized shares available to settle the conversion only 17,500,000 shares were issued. The remaining shares owed to the creditor is recognized as a derivative liability within the “Liability to issue shares” line item of the Balance Sheet. The Company agreed to pay a $3,495,000 penalty to Esousa, settleable in cash or stock, by August 31, 2022. This fee was recognized as Penalty for insufficient authorized shares within the Statement of Operations and within Accrued Expenses on the Balance Sheet. In connection with entering into the A&R Note with Esousa, the Company granted Drawbridge an option to purchase up to $25 million worth of shares of a yet to be created Series E Preferred Stock from the Company (the “Series E Purchase Option”). Refer to Note 6, Fair Value Measurements and Note 17, Commitments and Contingencies, for details on the Series E Purchase option. Release of Liability, Debt Paydowns and Payoffs Since the reverse merger with Net Element in November 2021, there have been numerous debt paydowns and payoffs with the releases of liability obtained from former creditors. The debt portfolio has been reduced by approximately $5 million, excluding the principal paydowns of $10 million on the Drawbridge Loan. The latest debt payoff occurred on April 1, 2022, the Company repaid the $500,000 loan from MNB Capital Group, which had a maturity date of December 16, 2022. Convertible Notes 2020-2021 Between August 2020 and November 2021, MTI issued unsecured convertible notes totaling $23,192,500. The unsecured convertible notes bore interest at 15% and included warrants to acquire shares of common stock based on a specified formula. Interest was accrued in arrears until the last business day of each calendar year quarter. The default rate on the note would increase to 20% if quarterly interest payments are not timely made by MTI. Because the market price for MTI common stock on the date of the notes exceeded the notes’ conversion price of $0.6877 per share, a beneficial conversion feature in the amount of $10,613,630 was recorded as a discount on the notes. The discount is being amortized as additional interest over the life of the notes. At June 30, 2021, the discount was fully amortized. Company management evaluated the conversion features embedded in the convertible notes for classification and accounting under the provisions of ASC 815-40 and determined the conversion features met treatment as equity. |
FAIR VALUE MEASUREMENTS AND FAI
FAIR VALUE MEASUREMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS | 9 Months Ended |
Jun. 30, 2022 | |
FAIR VALUE MEASUREMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS | |
FAIR VALUE MEASUREMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS | NOTE 6 – FAIR VALUE MEASUREMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following three levels: Level 1: Observable inputs such as unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date. Level 2: Inputs (other than quoted prices included in Level 1) that are either directly or indirectly observable for the asset or liability. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. 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 “ ” . Financial Liabilities Measured at Fair Value on a Recurring Basis As of June 30, 2022, the Company has an insufficient number of authorized shares available for issuance for the conversion of Series C Preferred Stock and any remaining associated warrants for common stock. Therefore, these financial instruments meet the definition of a derivative until MAI stockholders approve the increase in authorized common and preferred shares. The MAI Board of Directors approve this measure on July 26, 2022. The remaining Series C preferred stock and warrants are valued using the Black Scholes option valuation model. The estimated fair value of the Common Stock warrants was $1,233,025. the Company also recognized a liability to issue shares related to convertible preferred stock, which was $6,394,543. On July 26, 2022, an increase in the Company’s authorized number of shares was approved and the Company filed the Certificate of Amendment to the Company’s Certificate of Incorporation with the Delaware Secretary of State accordingly. Refer to Note 19, Subsequent Events for further details. The fair value of the warrants and other convertible instruments includes inputs that are not observable in the market and thus represents a Level III financial liability. The assumptions used that represent management’s best estimates of the fair value of the Company’s warrants and other convertible instruments issued and outstanding were as follows: June 30, 2022 Expected term (in years) 4.75 - 9.97 Volatility 152 % Dividend yield 0.00 % Risk-free interest rate 2.98 - 3.01 % Exercise price $ 8.834 Financial Liabilities Measured at Fair Value on a Non-Recurring Basis The Company must estimate the fair value of the Series E Preferred Stock commitment from the Drawbridge-DBI transaction. Based on the Option Pricing Model and the implied equity value as of June 17, 2022, we determined the fair value of the Series E option to be $23,085,886. The fair value of the Series E option includes inputs that are not observable in the market and thus represents a Level III financial liability. The assumptions used that represent management’s best estimates of the fair value of the Series E option were as follows: Unobservable Inputs June 17, 2022 Expected term (in years) 5.0 Volatility 151.8 % Annual Rate of Quarterly Dividends — % Discount Rate - Bond Equivalent Yield 3.34 % Stock Price $ 1.52 Conversion Price $ 1.32 Financial instruments for which carrying value approximates fair value Certain financial instruments that are not carried at fair value on the condensed consolidated balance sheets are carried at amounts that approximate fair value, due to their short-term nature and credit risk. These instruments include cash and cash equivalents, accounts payable, accrued liabilities, and debt. We believe that the carrying value of term debt 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. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 9 Months Ended |
Jun. 30, 2022 | |
STOCKHOLDERS' EQUITY | |
STOCKHOLDERS' EQUITY | NOTE 7 – STOCKHOLDERS’ EQUITY The accompanying financial statements include a retrospective recapitalization to reflect the composition of stockholder’s equity, as if they had existed for the periods presented. Preferred Stock On November 5, 2021, we filed an Amended and Restated Articles of Incorporation which included the rights and privileges of Preferred Stock Series A, Series B, and Series C. Under the terms of our Articles of Incorporation, the Board of Directors may determine the rights, preferences and terms of our authorized but unissued shares of preferred stock. At June 30, 2022, the Company had 58,000,000 shares of Preferred Stock authorized with $0.001 par value per share. There were zero and 5,667,683 shares of Preferred Stock issued and outstanding at June 30, 2022 September 30, 2021 Dividends The holders of Preferred Stock are entitled to non-cumulative dividends if declared by the Board of Directors. The holders of the Preferred Stock Series A and Series B shall participate on a pro rata basis (on an “as converted” basis to common stock) in any cash dividend paid on common stock. No dividends have been declared or paid during the three and nine months ended June 30, 2022 and 2021. The Series C Preferred Stock bears a cumulative 15.0% per annum fixed dividend payable no later than the 5 th The Company may elect to pay dividends for any month with a paid-in-kind election (“ PIK In addition to the above, the shares are also redeemable by the Company in accordance with the following schedule provided the issuance of shares of Common Stock underlying the shares has been registered and the registration statement remains effective: Year 1: No Redemption Year 2: Redemption at 120% of the Series C Redemption Price Year 3: Redemption at 115% of the Series C Redemption Price Year 4: Redemption at 110% of the Series C Redemption Price Year 5: Redemption at 105% of the Series C Redemption Price Year 6 and thereafter: Redemption at 100% of the Series C Redemption Price Liquidation Based on a reverse ratio of one share of the Company for 12.8485 shares of Mullen Technologies (the “ Reverse Ratio ”): (i) the liquidation preference for the Series A Preferred to $1.29 per share from $0.10 per share as set forth in Section 2(c) of Article III(B) of the Certificate, and (ii) the “Series B Original Issue Price” of the Series B Preferred and the “Series C Original Issue Price” of the Series C Preferred to $8.84 per share from $0.6877 per share as set forth in Section 2(a) and Section 2(b), respectively, of Article III(B) of the Certificate. Subject to applicable law, in the event of any Liquidation Event, the holders of the Series B Preferred will be entitled to receive, prior and in preference to any distribution of the proceeds to the holders of the other series of Preferred Stock or the Common Stock by reason of their ownership thereof, an amount per share equal to the Series B Original Issue Price plus declared but unpaid dividends. The holders of the Series C Preferred will then be entitled to receive, prior and in preference to any distribution of the proceeds to the holders of the Series A Preferred or the Common Stock by reason of their ownership thereof, an amount per share equal to the Series C Original Issue Price plus declared but unpaid dividends. Thereafter, any remaining proceeds will be distributed to holders of the Series A Preferred and Common Stock ratably in proportion to the number of shares of the Series A Preferred and Common Stock held by them, on a fully converted basis. Conversion Preferred Stock Series A is convertible at any time at the option of the holder into Common Stock at a conversion rate of one 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 Common Stock At June 30, 2022, the Company had 500,000,000 shares of common stock authorized with $0.001 par value per share. There were 498,694,481 and 7,048,387 shares of common stock issued outstanding The holders of Common Stock are entitled to one vote for each share of Common Stock held at all meetings of stockholders. In the event of a liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, the common stockholders are entitled to receive the remaining assets following distribution of liquidation preferences, if any, to the holders of our preferred stock. The holders of common stock are not entitled to receive dividends unless declared by our Board of Directors. To date, no dividends were declared or paid to the holders of common stock. Warrants The Company issued pre-merger Warrants at an initial exercise price of $0.6877 per share, which were immediately exercisable and have a five-year term. The exercise price was adjusted as provided in the warrants and further in accordance with the Merger Agreement such that the exercise price is now $8.834 per share. The Warrants were exercisable for an aggregate of 1,579,631 shares of Common Stock as of June 30, 2022. The Warrants provide that if the Company issues or sells, enters into a definitive, binding agreement pursuant to which he Company is required to issue or sell or is deemed, pursuant to the provisions of the Warrants, to have issued or sold, any shares of Common Stock for a price per share lower than the exercise price then in effect (a “Dilutive Issuance”), subject to certain limited exceptions, then the exercise price of the Warrants shall be reduced to such lower price per share. In addition, the exercise price and the number of shares of Common Stock issuable upon exercise of the Warrants are subject to adjustment in connection with stock splits, dividends or distributions or other similar transactions. The following table summarizes warrant activity for the nine months ended June 30, 2022: Weighted Average MAI shares Exercise Price Warrants outstanding at September 30, 2021 4,924,447 $ 8.834 Warrants exercised (28,420,265) $ 8.834 Warrants granted 25,075,449 $ 8.834 Warrants expired — $ — Warrants outstanding at June 30, 2022 1,579,631 $ 8.834 2020-2021 Warrants The warrants are exercisable for a five-year period commencing upon issuance. The estimated fair value of the MAI warrants was valued using the Black-Scholes option valuation model. The assumptions used that represent management’s best estimates of the fair value of the Company’s warrants issued and outstanding were as follows: June 30, 2022 Expected term (in years) 5.0 Volatility 135 % Dividend yield 0.00 % Risk-free interest rate 0.98% - 1.17 % Common stock price $ 4.16 The allocation of the fair value of these warrants was included as a debt discount on the consolidated balance sheet and amortized to interest expense over the scheduled maturity dates of the various promissory notes. All unamortized debt discount was charged to interest at the time of merger on November 5, 2021. Registration Rights and Registration Statement Form S-3 At the effective time of the Merger, various agreements that Mullen Technologies entered into were assumed by the Company, including the Exchange Agreement, the $20 Million SPA and the Registration Rights Agreement. These agreements caused the Company to be obligated to file one or more registration statements to register the resale of our Common Stock. On April 15, 2022, the Securities and Exchange Commission (“ SEC Equity Transactions $30 Million Esousa Equity Line of Credit On September 1, 2021, Mullen Technologies and Esousa Holdings LLC (“Esousa”) entered into a Securities Purchase Agreement (the “Equity Line of Credit”) whereby the Esousa Holdings, LLC committed to purchase shares up to an aggregate of $30,000,000. At the effective time of the Merger, the obligations under the Equity Line of Credit were assumed by the Company. As a condition to the obligation of the investor to fund the Equity Line of Credit, the Company was required to file a registration statement with the SEC covering the sale of the Common Stock issued under the Equity Line of Credit and such registration statement must be declared effective. The Registration Statement was filed on February 1, 2022 and was declared effective on February 3, 2022. As of June 30, 2022, MAI has received net proceeds of approximately $29.6 million from the Equity Line of Credit and Esousa has received 54,811,504 shares of common stock. |
LOSS PER SHARE
LOSS PER SHARE | 9 Months Ended |
Jun. 30, 2022 | |
LOSS PER SHARE | |
LOSS PER SHARE | NOTE 8 – LOSS PER SHARE Earnings per common share (“ EPS For the three and nine months ended June 30, 2022 and 2021, the convertible debt and shares of Preferred Stock were excluded from the diluted share count because the result would have been antidilutive under the “if-converted method.” The warrants to purchases common shares of stock also were excluded from the computation because the result would have been antidilutive. The following table presents the reconciliation of net income attributable to common stockholders to net income used in computing basic and diluted net income per share of common stock: Three months ended June 30, Nine months ended June 30, 2022 2021 2022 2021 Net income attributable to common stockholders $ (59,471,560) $ (15,251,402) $ (128,508,884) $ (29,545,621) Less: Accumulated Preferred Stock Dividends (2,285,792) — (4,805,740) - Net income used in computing basic net income per share of common stock $ (61,757,352) $ (15,251,402) $ (133,314,624) $ (29,545,621) |
MAI SHARE- BASED COMPENSATION
MAI SHARE- BASED COMPENSATION | 9 Months Ended |
Jun. 30, 2022 | |
MAI SHARE- BASED COMPENSATION | |
MAI SHARE- BASED COMPENSATION | NOTE 9 – MAI SHARE- BASED COMPENSATION MAI has a share incentive plan as part of its annual discretionary share-based compensation programs. The plan includes consultants and employees, including directors and officers. For employees, they are notified of company share incentives during the onboarding process. The employee’s offer letter briefly describes the plan. Subject to the approval of MAI’s Board of Directors or its Compensation Committee and following the adoption of an equity incentive plan, employees are issued a specified number of shares of the MAI Common Shares. Employees are vested in 100% of the MAI shares after 12 months of continuous service. Additional MTI shares may be issued to employees over the next two years at anniversary date. Any disruption or separation of service results in the forfeiture of common shares. The total expense recognized for share awards represents the grant date fair value of such awards, which is generally recognized as a charge to income ratably over the vesting period. Since Mullen Automotive is a publicly reporting company, the employee shares are valued each month, using the MULN closing stock price on the NASDAQ CM. Consulting agreements or MAI shares for services are determined by the number of MAI shares granted within the individual contracts, as well as the services provided by the consultant. The MAI shares specified within the individual agreements are negotiated and approved by our Chief Executive Officer. The consultant earns the MAI shares over the service period. The MAI shares are accounted for as professional fees within G&A expenses. Employee share issuances are part of Salaries expense. The expense recognized for share awards represents the grant date fair value of such awards, which is generally recognized as a charge to income ratably over the vesting period. For the three months ended June 30, For the nine months ended June 30, Composition of Stock-Based Compensation Expense 2022 2021 2022 2021 Employee MAI share issuance $ 1,721,434 $ 1,091,554 $ 5,014,421 $ 2,024,426 MAI shares for services 3,381,301 440,650 27,423,361 1,731,779 MAI Share-Based compensation expense $ 5,102,735 $ 1,532,204 $ 32,437,782 $ 3,756,205 |
ACCRUED EXPENSES AND OTHER CURR
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 9 Months Ended |
Jun. 30, 2022 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | NOTE 10 – ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES June 30, 2022 September 30, 2021 Accrued Expenses and Other Liabilities Accrued expense - other $ 5,618,811 $ 2,051,696 Accrued payroll 3,576,061 4,586,057 Accrued interest 4,716,469 12,489,012 Total $ 13,911,341 $ 19,126,765 Accrued payroll represents salaries and benefits that are owed to employees, including payroll tax liabilities. Accrued interest |
NOTE RECEIVABLE
NOTE RECEIVABLE | 9 Months Ended |
Jun. 30, 2022 | |
NOTE RECEIVABLE | |
NOTE RECEIVABLE | NOTE 11 – NOTE RECEIVABLE On October 8, 2021, MAI (through MTI) and CEOcast, Inc. entered into an agreement, whereby CEOcast, Inc. irrevocably committed to purchase, and MAI irrevocably committed to sell $15 million in warrants to acquire shares of common stock. In late April and early May 2022, MAI received $15 million in three $5 million cash increments from CEOcast, Inc. In return, CEOcast, Inc. received warrants to acquire shares of common stock. As of this June 30, 2022, CEOcast, Inc. has exercised its warrants for MAI common shares. |
LIABILITY TO ISSUE STOCK
LIABILITY TO ISSUE STOCK | 9 Months Ended |
Jun. 30, 2022 | |
LIABILITY TO ISSUE STOCK | |
LIABILITY TO ISSUE STOCK | NOTE 12 – LIABILITY TO ISSUE STOCK Liability represents stock payable that is accrued for and issuable at a future date for certain convertible securities and warrants and was $14,118,227 as of June 30, 2022. The liability to issue stock to consultants and employees as compensation and was zero and $7,027,500 as of June 30, 2022 and September 30, 2021, respectively. |
PROPERTY, EQUIPMENT AND LEASEHO
PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET | 9 Months Ended |
Jun. 30, 2022 | |
PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET | |
PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET | NOTE 13 – PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET Property, equipment, and leasehold improvements, net consists of the following: June 30, September 30, 2022 2021 Building $ 8,078,757 $ 804,654 Furniture and Equipment 490,823 111,102 Vehicles 45,887 45,887 Computer Hardware and Software 350,083 139,742 Machinery and Equipment 6,929,731 2,597,654 Construction-in-progress 280,844 — Leasehold Improvements 40,096 66,379 Subtotal 16,216,221 3,765,418 Less: Accumulated Depreciation (2,773,150) (2,583,941) Property, Equipment and Leasehold Improvements, Net $ 13,443,071 $ 1,181,477 Depreciation expense related to property, equipment and leasehold improvements for the three-and-nine months ended June 30, 2022 was $86,598 and $251,780, and was $109,058 and $320,525 for the three and nine months ended June 30, 2021, respectively. On November 12, 2021, Mullen Investment Properties, LLC, MAI real estate wholly owned subsidiary, completed the $12,000,000 purchase of the Tunica County, MS property ("Advanced Manufacturing and Engineering Center" or "AMEC"). The property is located at 1 Greentech Drive, in the City of Robinsonville, MS. AMEC will be used to class 1 and class 2 EV cargo vans and the Mullen FIVE Crossover. The facility currently occupies 124,000 square feet of manufacturing space. The total available land on the property is over 100 acres. On the expanded site, Mullen plans to build a body shop, fully automated paint shop and a general assembly shop. Construction-in-progress includes development and construction that is currently in progress at the AMEX facility. |
OTHER ASSETS
OTHER ASSETS | 9 Months Ended |
Jun. 30, 2022 | |
OTHER ASSETS | |
OTHER ASSETS | NOTE 14 – OTHER ASSETS Other assets consist of the following: June 30, 2022 September 30, 2021 Other Assets Coda Materials $ 76,588 $ 76,587 Show Room Cars 3,349,545 2,739,995 Security Deposits 186,641 186,640 Deposit on Property (See Note 16) — 1,240,000 Total Other Assets $ 3,612,774 $ 4,243,222 |
OPERATING EXPENSES
OPERATING EXPENSES | 9 Months Ended |
Jun. 30, 2022 | |
OPERATING EXPENSES | |
OPERATING EXPENSES | NOTE 15 – OPERATING EXPENSES General and Administrative Expenses consists of the following: Three months ended June 30, Nine months ended June 30, 2022 2021 2022 2021 Professional fees $ 4,908,855 $ 1,458,969 $ 31,773,409 $ 4,858,544 Salaries 3,177,790 2,125,097 10,556,783 4,359,245 Depreciation and amortization 308,297 114,991 918,855 338,321 Lease 474,032 513,169 1,493,150 1,248,573 Settlements and penalties 169,607 57,017 1,054,439 136,515 Employee benefits 639,779 82,092 1,552,939 253,638 Utilities and office expense 202,652 99,475 428,565 239,709 Advertising and promotions 644,423 17,104 3,570,016 270,320 Taxes and licenses 8,805 33,744 25,926 45,248 Repairs and maintenance 167,173 66,501 246,875 166,836 Other 195,387 357,995 1,446,359 638,623 Total $ 10,896,800 $ 4,926,154 $ 53,067,316 $ 12,555,572 Research and development consist of the following: Three months ended June 30, Nine months ended June 30, 2022 2021 2022 2021 Research & Development Professional fees $ 7,324,365 $ 1,479,399 $ 9,665,126 $ 2,535,693 Total $ 7,324,365 $ 1,479,399 $ 9,665,126 $ 2,535,693 Research and development costs are expensed as incurred. Research and development expenses primarily consist of Mullen Five EV and Mullen One EV cargo van development and are primarily comprised of engineering, homologation, and prototyping costs and personnel-related costs for employees and consultants. |
LEASES
LEASES | 9 Months Ended |
Jun. 30, 2022 | |
LEASES | |
LEASES | NOTE 16 – LEASES MTI (now assumed by MAI due to the merger) has entered into various operating lease agreements for certain of its offices, manufacturing and warehouse facilities, and corporate jet. We have implemented the provisions of ASC 842, on October 1, 2019. Operating leases are included in right-of-use assets, and current and noncurrent portion of lease liabilities, as appropriate. These right-of-use assets also includes any lease payments made and initial direct costs incurred at lease commencement and excludes lease incentives. The lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. We have lease agreements which require payments for both lease and non-lease components and has elected to account for these as a single lease component. Certain leases provide for annual increases to lease payment based on an index or rate. We calculate the present value of future lease payments based on the index or at the lease commencement date for new leases. The table below presents information regarding our lease assets and liabilities. June 30, 2022 September 30, 2021 Assets: Operating lease right-of-use assets $ 1,939,829 $ 2,350,929 Liabilities: Operating lease liabilities, current (680,185) (599,898) Operating lease liabilities, non-current (1,334,518) (1,857,894) Total lease liabilities $ (2,014,703) $ (2,457,792) Weighted average remaining lease terms: Operating leases 2.75 years 3.34 years Weighted average discount rate: Operating leases 28 % 28 % Operating lease costs: For the three months ended June 30, For the nine months ended June 30, 2022 2021 2022 2021 Fixed lease cost $ 327,409 $ 280,169 $ 1,066,680 $ 765,409 Variable lease cost 158,399 126,218 418,999 362,817 Short-term lease cost 34,473 127,795 160,250 183,386 Sublease income (46,144) (21,013) (152,431) (63,039) Total operating lease costs $ 474,137 $ 513,169 $ 1,493,498 $ 1,248,573 Operating Lease Commitments Our leases primarily consist of land, land and building, or equipment leases. Our lease obligations are based upon contractual minimum rates. Most leases provide that we pay taxes, maintenance, insurance and operating expenses applicable to the premises. The initial term for most real property leases is typically 1 to 3 years, with renewal options of 1 to 5 years, and may include rent escalation clauses. For financing obligations, a portion of the periodic lease payments is recognized as interest expense and the remainder reduces the obligations. For operating leases, rent is recognized on a straight-line basis over the lease term, including scheduled rent increases and rent holidays. The following table reflects maturities of operating lease liabilities at June 30, 2022: Years ending June 30, 2022 (3 months) $ 294,069 2023 1,157,693 2024 824,287 2025 436,156 2026 222,787 Thereafter — Total lease payments $ 2,934,992 Less: Imputed interest (920,289) Present value of lease liabilities $ 2,014,703 |
CONTINGENCIES AND CLAIMS
CONTINGENCIES AND CLAIMS | 9 Months Ended |
Jun. 30, 2022 | |
CONTINGENCIES AND CLAIMS | |
CONTINGENCIES AND CLAIMS | NOTE 17 – CONTINGENCIES AND CLAIMS ASC 450 governs the disclosure and recognition of loss contingencies, including potential losses from litigation, regulatory, tax and other matters. The accounting standard defines a “loss contingency” as “an existing condition, situation, or set of circumstances involving uncertainty as to possible loss to an entity that will ultimately be resolved when one or more future events occur or fail to occur.” ASC 450 requires accrual for a loss contingency when it is “probable that one or more future events will occur confirming the fact of loss” and “the amount of the loss can be reasonably estimated.” From time to time, we are subject to asserted and actual claims and lawsuits arising in the ordinary course of business. Company management reviews any such legal proceedings and claims on an ongoing basis and follows appropriate accounting guidance when making accrual and disclosure decisions. We establish accruals for those contingencies where the incurrence of a loss is probable and can be reasonably estimated, and it discloses the amount accrued and the amount of a reasonably possible loss in excess of the amount accrued, if such disclosure is necessary for our consolidated financial statements to not be misleading. To estimate whether a loss contingency should be accrued by a charge to income, management evaluates, among other factors, the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of the loss. We do not record liabilities when the likelihood is probable, but the amount cannot be reasonably estimated. Series D Preferred Stock Commitment On June 7, 2022, we entered into a securities purchase agreement, which was amended on June 23, 2022 (the “Securities Purchase Agreement”), with certain investors, pursuant to which upon the terms and subject to the conditions contained therein and solely upon the request of the Company, the investors will be required to purchase an aggregate of $275 million (the “Commitment Amount”) of the Company’s yet to be created Series D Preferred Stock, par value $0.001 per share (the “Series D Preferred Stock”), and five-year warrants exercisable for shares of Common Stock (the “Warrants”). The number of Warrants that may be issued will equal 110% of the shares of Series D Preferred Stock purchased by the investors. The purchase price per share of Series D Preferred Stock will be the lower of (i) $1.27, the closing price of the Company’s stock on the date the Securities Purchase Agreement was executed, or (ii) the closing price of the Common Stock on the trading day immediately preceding the Purchase Date (as defined below), subject to a floor price of $0.10 per share. Series E Preferred Stock Purchase Option On June 17, 2022, we entered into a Series E Preferred Stock Purchase Option with Drawbridge to purchase up to $25 million worth of MAI shares. The purchase price per share of Series E Preferred Stock will be the lower of (x) the closing market price of the Company’s common stock on the effective date of the Option Agreement for the Series E Preferred Stock and (y) the closing market price of the Company’s common stock on the date shares of Series E Preferred Stock are issued by the Company in accordance with the terms of the Option Agreement. Shares of Series E Preferred Stock will be convertible into shares of the Company’s common stock on a 1-to-1 basis, subject to adjustment for stock splits and other events. Shares of Series E Preferred Stock may be purchased in one or more transactions with a minimum of $5,000,000 per purchase, until December 31, 2024, at which point the Series E Purchase Option shall expire. The Company will be obligated to file a registration statement for the resale of the Company’s common stock issuable upon conversion of shares of Series E Preferred Stock and shall use reasonable best efforts to obtain and maintain the effectiveness of such registration statement during the term of the Option Agreement. In connection with the exercise of the Series E Purchase Option, Drawbridge will receive warrants to purchase three shares of common stock (“Common Stock Warrants”) for each share of Series E Preferred Stock purchased. The Common Stock Warrants will have terms and conditions similar to those warrants included in the purchase of the Company’s Series D Preferred Stock. The Common Stock Warrants will have a term of five years from the date of grant and an exercise price equal to the applicable purchase price for the shares of Series E Preferred Stock. The Common Stock Warrants will also permit cashless exercise to be calculated as a function of the warrant’s Black-Scholes value plus an additional $1.25 per warrant exercised. International Business Machines (“IBM”) We previously recorded a $4.5 million liability associated with a lawsuit with IBM, in which IBM contended that we had not fulfilled our obligations pursuant to a contract entered into during 2017. On April 28, 2020, the Supreme Court of the State of New York granted summary judgment in favor of IBM’s claim for breach of contract. The Court, however, found that a trial (inquest) was required to determine the damages to which IBM is entitled. We proposed an offer in settlement to resolve the matter, with the parties proceeding under the Joint Development and Technology License Agreement and all rights restored to us under the Trademark License Agreement. On December 1, 2021, the Supreme Court of the State of New York entered a judgment of $5.6 million to IBM. On December 2, 2021, we filed a Notice of Appeal. As a result, we recorded an additional charge, increasing the liability to the adjudicated amount. In May 2022, we transferred $5.6 million cash to a surety bond to cover this liability while our appeal is in process. Federal and State Tax Liabilities We have recorded a liability associated with past due amounts owed to the Internal Revenue Service (“ IRS EDD On April 14, 2022, the Company entered into an instalment with the IRS to pay $45,000 per month related to unpaid federal payroll liabilities plus accrued interest and penalties. As of June 30, 2022 we had an accrued liability of $2.6 million of accrued payroll taxes related to IRS liabilities. Raymond James and Associates (“RJA”) – Investment Banking Services Agreement On May 5, 2020, MTI entered into an agreement with Raymond James & Associates for public offering and placement agent services. The agreement called for payment of a cash retainer of $50,000, which remains unpaid. Upon the closing of any public offering, regardless of whether RJA procured the agreement regarding the offering, we are obligated to pay a financing fee of equal to the greater of a) 6.0% of aggregate gross proceeds and b) $3,000,000. Linghang Guochang Holding Group Co. (a/k/a “Linghang Boao Group, LTD”) In November 2019, we entered into a three-year Strategic Cooperation Agreement (“ SCA 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. We sustained a loss of $390,000 at September 30, 2020 due to contract nonperformance and force majeure. There are no accrued liabilities recorded for any remaining milestone payments at June 30, 2022. On May 12, 2022, the Company received official notification that the 2019 contractual arrangement will resume under the original contractual terms. They acknowledge that the COVID-19 pandemic had delayed the original plan, and Linghang Boao Group LTD looks forward to resuming the battery partnership with Mullen Automotive. ASC GEM Equity Line Financing This claim arises out an alleged breached Securities Purchase Agreement dated November 13, 2020. On November 9, 2021, the parties appointed an arbitrator. On January 7, 2022, GEM filed a letter brief with the arbitrator requesting leave to file a dispositive motion addressing a threshold legal issue regarding a defined term within a contract executed by the parties. Mullen filed a response to the letter brief on January 12, 2022. On January 21, 2022, the arbitrator issued a procedural order granting GEM’s request to file a dispositive motion. GEM filed its dispositive motion is on February 14, 2022. Mullen’s filed its opposition to the dispositive motion on March 3, 2022. On April 4, 2022, the court denied GEM’s dispositive motion. The parties exchanged discovery requests on May 10, 2022. Responses were served on June 14, 2022. The follow up hearing with the arbitrator set for June 22, 2022 was adjourned. The parties recently served amended responses along with supplemental document productions on August 2, 2022 as required by the arbitrator at the July 27, 2022 hearing related to ongoing discovery issues. The parties expect a ruling from the arbitrator regarding same shortly. All party depositions have been scheduled. Odyssey Group Settlement On August 13, 2021, MTI and Odyssey Group reached a settlement concerning disputes and differences that arose from collections on invoices and liens pending pursuant to Odyssey’s Client Account and the Odyssey Group Consulting Agreement. Odyssey alleged that the MTI owed $503,637 at June 30, 2021. The parties agreed that Odyssey would receive $50,000 and 500,000 shares of MTI common stock (pre-merger). Additionally, Odyssey will receive an equivalent of $10,000 in cash or common stock from MAI. The obligation to pay Odyssey may be terminated upon 30-days ’ notice by either party. A release of liability for the amounts owed on the Consulting arrangement was signed and executed on the settlement date. The Company has issued Odyssey the 500,000 common shares worth $1.25 million and paid $50,000 in cash and common stock. The $10,000 in cash or common stock provision has not been terminated by either party. Odyssey/Adam Grill’s contract was terminated on March 31st and the last effective date of the Consulting Contract was April 30, 2022. TOA Trading LLC Litigation This claim arises out of an alleged breach of contract related to an unpaid finder’s fee. On April 11, 2022, Plaintiffs TOA Trading LLC and Munshibari LLC filed a complaint against Mullen Automotive, Inc. and Mullen Technologies, Inc. in the United States District Court for the Southern District of Florida. On May 18, 2022, the Company filed a Motion to Dismiss or in the Alternative, Transfer Venue. Plaintiffs filed their opposition on June 3, 2022. The Company filed its reply on June 8, 2022. The court has taken the motions under submission. The Company expects a ruling in two Based upon information presently known to management, the Company believes that the potential liability from this claim, if any, will not have a material adverse effect on its financial condition, cash flows or results of operations. Therefore, no liability has been reflected on the condensed consolidated financial statements. Net Element Stockholder Litigation On May 28, 2021, a Net Element stockholder filed a complaint against Net Element and Mullen Acquisition, Inc., and certain named individuals regarding the proposed merger transaction. The complaint alleges, among other things, a potential dilution of the value of Net Elements stock and a failure to act in a fiduciary duty to its stakeholders. On September 3, 2021, a Net Element stockholder filed a lawsuit against Net Element, Mullen Technologies, Inc. and Mullen Acquisition, Inc., and certain individuals regarding the proposed merger agreement. The lawsuit alleges material omissions regarding the merger transaction and seeks to prevent the consummation of the merger agreement, as well as certain other equitable relief. Based upon information presently known to management, the Company believes that the potential liability from the May 2021 complaint and September 2021 lawsuit, if any, will not have a material adverse effect on its financial condition, cash flows or results of operations. Therefore, no liability has been reflected on the condensed consolidated financial statements. Mullen Stockholder Litigation Margaret Schaub v. Mullen Automotive, Inc. On May 5, 2022, Plaintiff Margaret Schaub filed a complaint against Mullen Automotive, Inc. f/k/a Net Element, Inc, David Michery, and Oleg Firer in the United States District Court Central District of California on (Case No. 2:22-cv-03026). The complaint alleges violation of section 10(b) of the Exchange Act and Rule 10b-5 against all defendants and violation of section 20(a) of the Exchange Act arising out of claims made in the Hindenburg article. On June 16, 2022, the Company’s insurance company (AXIS) accepted coverage for this lawsuit. The Company engaged King & Spaulding as defense counsel. On July 5, 2022, movants Duy Nguyen, Mejgan Mirbaz, and David Reed filed motions to consolidate this matter and the Gru matter (see below) into once case and for appointment of lead plaintiff/lead counsel. Subsequently, Plaintiff Nguyen withdrew his motion and Plaintiff Reed filed notice that he did not oppose Plaintiff Mirbaz’ motion. On August 4, 2022, the court granted Plaintiff Mirbaz’ unopposed motion to consolidate the case and for appointment as lead plaintiff/counsel. The court further vacated the August 5, 2022, hearing on the motions to consolidate. The Company was served with the complaint on August 1, 2022. Its response is due filed on or before August 22, 2022. David Gru v. Mullen Automotive, Inc. On May 12, 2022, Plaintiff David Gru filed a complaint against Mullen Automotive, Inc. f/k/a Net Element, Inc, David Michery, and Oleg Firer in the United States District Court Central District of California (Case No. 8:22-cv-976). The complaint alleges violation of section 10(b) of the Exchange Act and Rule 10b-5 against all defendants and violation of section 20(a) of the Exchange Act arising out of claims made in the Hindenburg article. On June 16, 2022, the Company’s insurance company (AXIS) accepted coverage for this lawsuit. The Company has not been served with the complaint. The Company engaged King & Spaulding as defense counsel. On August 4, 2022, the court consolidated this action into the Schaub action (see above). As a result, the court ordered this matter to administratively closed. Ram Hari Khadka v. Mullen Automotive, Inc. This claim was filed on June 23, 2022 in the Court of the Chancery of the State of Delaware (Case No. Case No. 2022-0542) by Plaintiff Ram Hari Khadka against Mullen Automotive, Inc., David Michery, Jerry Alban, Kent Puckett, Mary Winter, Mark Betor, William Miltner, and Jonathan New . The matter arises out of an alleged breach of fiduciary duty related to a grant of performance equity awards to the Company’s Chief Executive Officer pursuant to a performance stock award agreement, which was recommended for approval by the Company’s Compensation Committee on April 29, 2022 and approved by its Board of Directors on May 5, 2022. The Company engaged McDermott Will & Emery LLP as defense counsel. The Company finalized and issued a supplemental disclosure to its June 10, 2022 proxy statement to its stockholders in advance of its July 26, 2022, annual meeting of stockholders. The supplemental disclosure provides additional information to stockholders regarding the performance stock award agreement. On July 29, 2022, Plaintiff filed a notice and proposed order voluntarily dismissing the action and moot and retaining jurisdiction to determine Plaintiff's counsel's application for an award of attorney's fees and reimbursement of expenses. The order was entered by the court on August 5, 2022. Jeff Witt v. Mullen Automotive, Inc. On August 1, 2022, Plaintiffs Jeff Witt and Joseph Birbigalia, derivatively on behalf of nominal defendant Mullen Automotive, Inc. f/k/a Net Element, Inc. filed a derivative complaint on August 1, 2022 in the United States District Court Central District of California (Case No. Case No. 2:22-cv-05336) against David Michery, Ignacio Novoa, Mary Winter, Kent Puckett, Mark Betor, William Miltner, Jonathan New, Mullen Automotive, Inc. f/k/a Net Element, Inc.. The matter arises out of an alleged breach of fiduciary duty, unjust enrichment, abuse of control, waste of corporate assets, and violation of Section 14 of the Exchange Act related to claims made in the Hindenburg article. The lawsuit further alleges that all defendants caused the Company to issue the false and misleading statements that were outlined in the Hindenburg piece. The Company has engaged King & Spaulding as defense counsel. Once the Company has been served, it anticipates filing a motion to stay this matter pending the outcome of the Schaub matter. On August 3, 2022, the Company reported this matter to its insurance carrier. The Company is awaiting a coverage determine from its carrier. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Jun. 30, 2022 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 18 – RELATED PARTY TRANSACTIONS At June 30, 2022 and September 30, 2021, respectively, the Drawbridge Investments, LLC relationship comprised various loans and advances, common shares, and preferred shares. The Common and Preferred Shares presented are shares in MAI, since issued MTI shares were exchanged due to the merger. Drawbridge Related Transactions (Cumulative) June 30, 2022 September 30, 2021 Description Loan Principal # of Shares FV of Shares Loan Principal # of Shares FV of Shares Various Notes $ — — $ — $ 23,831,554 — $ — Common Shares — 13,931,103 14,209,725 — 8,130,384 66,994,364 Preferred Shares - Series A — — — — 2,335 3,012 Preferred Shares - Series B — — — — 5,567,319 49,215,100 Total Related Party Transactions $ — 13,931,103 $ 14,209,725 $ 23,831,554 13,700,038 $ 116,212,476 * Shares are MAI common and preferred shares. Chief Executive Officer Loans to MAI From time to time, the Company’s CEO provides loans to the Company. The outstanding balances for these loans were zero and $479,914 at June 30, 2022 and September 30, 2021. During the three and nine months ended June 30, 2022, the Company repaid the outstanding loan balances in full. William Miltner William Miltner is a litigation attorney who provides legal services to Mullen Technologies and its subsidiaries. Mr. Miltner also is an elected Director for MAI, beginning his term in August 2021. For the three and nine months ended June 30, 2022, Mr. Miltner received $178,640 and $804,120, respectively, for legal services rendered to us. Mr. Miltner has been providing legal services to the Company since 2020. Mary Winters On October 26, 2021, MAI entered into a 1-year Short-Term Financing On January 14, 2022, MAI executed a Letter of Intent (“LOI”) with Mark Betor, MAI Director, for a 90-day $1,000,000 loan. The loan was be evidenced by a Promissory Note with a maturity date for full repayment of loan no later than April 11, 2022. Total agreed repayment amount was $1,150,000, which included an interest charge of $150,000. Collateral included a first lien position 1 Greentech Drive, Tunica, MS. MAI Board of Directors approved transaction on January 18, 2022. Mr. Betor abstained from voting. On March 3, 2022 this loan was repaid in full. Ignacio Novoa On June 9, 2022, the board of directors of the Company appointed Ignacio Novoa as a director effective as of the Effective Date. The Company and Mr. Novoa entered into a 1-year Consulting Agreement, dated January 12, 2022, whereby Mr. Novoa provides electric vehicle market research, analysis of market trends in the electric vehicle industry and other research and services. Mr. Novoa was issued an aggregate of 255,500 shares of Common Stock pursuant to the terms of the Consulting Agreement. Other than as described above, Mr. Novoa does not have a direct or indirect material interest in any “related party” transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K. There are no family relationships between Mr. Novoa and any director or executive officer of the Company. Jerry Alban On June 7, 2022, Jerry Alban notified the Company that he will retiring effective June 30, 2022 (“Effective Date”). Accordingly, he will no longer be Chief Operating Officer or a member of the board of directors of the Company as of the Effective Date. Mr. Alban’s decision to retire was not the result of any dispute or disagreement with the Company on any matter relating to the Company’s operation, policies (including accounting or financial policies) or practices. On June 27, 2022, the Company entered into a 1-year consulting agreement with Mr. Alban, who is expected to consult on organizational, financial, and operational matters concerning MAI. The agreement is $60,000 per annum with $5,000 monthly installments. The first payment begins on August 1, 2022 with successive payments due on the first day each month thereafter. On June 27, 2022, the Company and Mr. Alban also entered into an Employment Separation Agreement pursuant to which the Company agreed to pay Mr. Alban a single lump sum of $53,846.15 and issue to Mr. Alban 250,000 shares of common stock. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Jun. 30, 2022 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 19 – SUBSEQUENT EVENTS Company management has evaluated subsequent events through August 12, 2022, which is the date these condensed consolidated financial statements were available to be issued. Except as discussed below, management has determined that there were no subsequent events which required recognition, adjustment to or disclosure in the carve-out financial statements: Registered Filing Registration Statement Form S-3 On August 5, 2022, the Company filed Registration Statement Form S-3. The Company registered the resale of Conversion Shares and the Warrant Shares as required by that certain Registration Rights Agreement, entered into among Mullen Technologies, Inc (“Mullen Technologies”) and certain of the Selling Stockholders and that certain Exchange Agreement, entered into among Mullen Technologies and certain of the Selling Stockholders. The Offered Shares consisted solely of 4,533,353 shares of our Common Stock, 11,139,665 shares of our Common Stock issuable upon conversion of our preferred stock, and up to 508,394,030 shares of our Common Stock issuable upon exercise of outstanding warrants to purchase shares of our Common Stock”. Annual Meeting of Stockholders Authorized Increase in Common and Preferred Stock On July 26, 2022, at the 2022 Annual Meeting, the Company’s stockholders approved an amendment (the “Amendment”) to Section A of Article III of the Company’s Second Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) to increase the Company’s number of shares of authorized common stock, par value $0.01 per share, from 500,000,000 shares to 1,750,000,000 shares and increase the number of shares of Preferred Stock that we are authorized to issue from 58,000,000 shares of Preferred Stock to 500,000,000 shares of Preferred Stock, with a corresponding increase in our total authorized capital stock, which includes Common Stock and Preferred Stock, from 558,000,000 shares to 2,250,000,000 shares. On July 26, 2022, the Company filed the Certificate of Amendment to the Company’s Certificate of Incorporation with the Delaware Secretary of State implementing the Amendment. Performance Stock Award Agreement On May 5, 2022, the Company’s Board of Directors (1) determined that the grant of performance equity awards to the Chief Executive Officer (“CEO Performance Award”) pursuant to the Performance Stock Award Agreement (the “PSA Agreement”) was advisable and in the best interests of the Company and its stockholders and (2) approved entering into the PSA Agreement and the grant of the CEO Performance Award. On July 26, 2022, at the 2022 Annual Meeting, the Company’s stockholders approved, for purposes of complying with Nasdaq Listing Rule 5635(c), of the issuance of shares of common stock to the Company’s Chief Executive Officer, David Michery, pursuant to the PSA Agreement. The CEO Performance Award represents the right of Mr. Michery to receive shares of common stock of the Company based on the achievement of milestones, subject to the terms and conditions set forth in the PSA Agreement. 2022 Equity Incentive Plan On July 26, 2022, at the 2022 Annual Meeting of Stockholders (“2022 Annual Meeting”) of the Company, the Company’s stockholders approved the 2022 Equity Incentive Plan (the “2022 Plan”). Additional details about the 2022 Plan are set forth in the Company’s Definitive Proxy Statement on Schedule 14A, as filed with the SEC on June 24, 2022 and the Supplement to the Proxy Statement filed with the SEC on July 13, 2022. The 2022 Plan provides for grants of stock options, stock appreciation rights , stock awards and restricted stock units, all of which are sometimes referred to individually, to employees, consultants, non-employee directors of the Company and its subsidiaries. Stock options may be either incentive stock options, as defined in Section 422 of the Internal Revenue Code, or non-qualified stock options. The 2022 Plan authorizes the grant of awards relating to up to 175,000,000 shares of the Company’s common stock. Class 1 Directors On July 26, 2022, the following individuals were elected as Class 1 Directors: 1. David Michery 2. Ignacio Novoa 3. Mary Winter The nominees have been elected to serve as Class I director on the Board of Directors for a three-year term ending as of the annual meeting in 2025 or until their respective successors are elected and qualify. Ratification of Independent Auditor MAI stockholders approved the appointment of Daszkal Bolton LLP as the independent registered public accounting firm of the Company for the fiscal year ending September 30, 2022. Binding Agreement Del Pack Logistics, LLC On July 11, 2022, the Company signed a binding agreement (the “Agreement”) with DelPack Logistics, LLC (“DPL”), an Amazon Delivery Service Partner, for DPL to purchase up to 600 Mullen Class 2 EV cargo vans over the next 18 months. Conditions to the Agreement between Mullen and DPL include the following: • DPL will place a purchase order for up to 600 Mullen Class 2 Electric Cargo Vans over the next 18 months • The 600 Class 2 EV Cargo Vans will be fully homologated for the United States • The first 300 fully homologated for the United States Mullen Class 2 EV Cargo Vans can be delivered to DPL by Nov. 30, 2022, at the request of DPL All Mullen Class 2 Electric Cargo Vans will be equipped with all airbags as required by United States standards and a cabin comfort package, including adjustable seats, cup holders, an infotainment system, and comfortable passenger seat. In addition, the Mullen Class 2 Electric Cargo Vans will carry a minimum of an 80 kilowatt per hour battery pack. Business Operations and Plans Irvine Automotive Development Center On June 29, 2022, the Company signed a lease with the Lakeview Business Center, LLC. The leased property is located at Suite 100, 100 Technology Drive, Irvine, CA 92618. The approximate rentable space is Beginning August 1, 2022, the Company plans to move into the newly leased space. Various departments will be relocated to the new office space, Engineering Design and Development, Styling, Program Management, Marketing, and Finance teams. Detroit EV Technology Team On August 3, 2022 the Company announced plans to open a new location in Pontiac, Michigan and the hiring of approximately 11 new hires. The planned “Detroit Tech Center” will be home to a new division of engineers and technology developers focused on Mullen’s Class 1 – 5 commercial vehicle development. At the proposed new location, the Company plans to hire a total of 50 employees by the end of 2022. Tax Liabilities Repayment of State Tax Liabilities On July 19, 2022, the Company repaid its state tax liability of $334,358.11 with the Employment Development Department of California. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Jun. 30, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Push-Down Accounting | Push-Down Accounting The carve-out financial statements for the periods presented prior to November 5, 2021 reflect costs and expenses incurred by MTI on behalf of MAI, including interest costs. As a result, share-based compensation, and other equity transactions (such as issuances of warrants and stock conversion rights embedded in issuances of indebtedness) are reflected in these carve-out financial statements. Accordingly, the classification of debt and equity issuances by MTI have been pushed down and reflected with similar classification in these carve-out financial statements. In addition, certain right-of-use assets and related lease liabilities of MTI have been pushed down to MAI. |
Reverse Merger and Recapitalization | 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 condensed consolidated financial statements reflect the share capital and weighted average shares outstanding via a retrospective recapitalization as shares representing the exchange ratio established in the Business Combination. |
Use of Estimates | 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 | Risks and Uncertainties We operate within an industry that is subject to rapid technological change, intense competition, and serves an industry that has significant government regulations. It is subject to significant risks and uncertainties, including competitive, financial, developmental, operational, technological, required knowledge of industry governmental regulations, and other risks associated with an emerging business. Any one or combination of these or other risks could have a substantial influence on our future operations and prospects for commercial success. |
Cash and Cash Equivalents | Cash and Cash Equivalents Company management considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. There were no cash equivalents at June 30, 2022 or September 30, 2021. |
Restricted Cash | Restricted Cash Funds that are not available for immediate use and must use for a specific purpose. These funds are refundable deposits for individuals and businesses who have made $100 reservations for the Mullen FIVE SUV, which debuted at the Los Angeles Auto Show in November 2021. At June 30, 2022, the restricted cash balance was $176,824. Customer deposits are accounted for within other liabilities. |
Deferred Advertising | Deferred Advertising At June 30, 2022 and September 30, 2021, deferred advertising was $24,699 and $261,550, respectively. The costs were primarily upfront costs paid related to the Los Angeles auto show during November 2021. |
Prepaid Expenses and Other Current Assets | Prepaid Expenses 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. |
Property, Equipment and Leasehold Improvements, Net | Property, Equipment and Leasehold Improvements, Net Property, equipment and leasehold improvements are stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated economic useful lives of the assets. Repairs and maintenance expenditures that do not extend the useful lives of related assets are expensed as incurred. Estimated Useful Lives Description Life Buildings 30 Years Furniture and Equipment 5 Years Computer and Software 1 – 3 years Machinery and Equipment 5 Years Leasehold Improvements Shorter of the estimated useful life or the underlying lease term Vehicles 5 Years Expenditures for major improvements are capitalized, while minor replacements, maintenance and repairs, which do not extend the asset lives, are charged to operations as incurred. Upon sale or disposition, the cost and related accumulated depreciation are removed from the accounts and any gain or loss is included in operations. Company management continually monitors events and changes in circumstances that could indicate that the carrying balances of its property, equipment and leasehold improvements may not be recoverable in accordance with the provisions of ASC 360, “Property, Plant, and Equipment.” |
Income Taxes | Income Taxes Prior to Mullen’s capitalization and corporate reorganization, our operations were included in the tax filings of MTI. The cash and deferred tax positions between us and MTI and are formalized in a tax sharing agreement. Income taxes are recorded in accordance with ASC 740, Income Taxes (“ ASC 740 There are transactions that occur during the ordinary course of business for which the ultimate tax determination may be uncertain. At June 30, 2022 and September 30, 2021, there were no material changes to either the nature or the amounts of the uncertain tax positions. The Company’s income tax provision consists of an estimate for U.S. federal and state income taxes based on enacted rates, as adjusted for allowable credits, deductions, uncertain tax positions, changes in deferred tax assets and liabilities, and changes in the tax law. We maintain a full valuation allowance against the value of our U.S. and state net deferred tax assets because management does not believe the recoverability of the tax assets meets the “more likely than not” likelihood at June 30, 2022 and September 30, 2021. |
Intangible Assets | Intangible Assets Intangible assets consist of acquired and developed intellectual property and website development costs. In accordance with ASC 350, “Intangibles—Goodwill and Others,” |
Other Assets | Other Assets Other assets are comprised primarily of Coda electric vehicles, related parts and security deposits related to the Company’s property leases related to the EV business. |
Extinguishment of Liabilities | Extinguishment of Liabilities The Company derecognizes financial liabilities when the Company’s obligations are discharged, cancelled, or expired. |
Accrued Expenses | 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 Expenses General and administrative (“ G&A “Other Expenses – Advertising Cost.” |
Research and Development Costs | Research and Development Costs Research and development costs are expensed as incurred. Research and development expenses primarily consist of costs associated with the development of our two electric vehicle product lines, the Mullen Five car and the Mullen One van. |
Share-Based Compensation | Share-Based Compensation We account for share-based awards issued by MAI in accordance with ASC Subtopic 718-10, “Compensation – Share Compensation,” compensation awards have been valued based on valuation of the trading price of Net Element common stock, as adjusted for the share exchange ratio in the merger. See Note 9, MAI Share-Based Compensation, for the amount of share-based compensation expense that is included within General and Administrative expenses for the three and nine months ended June 30, 2022 and 2021. |
Related Party Transactions | Related Party Transactions We have related party transactions with certain of our directors, officers, and principal stockholders. These transactions, which are primarily long-term in nature, include operational loans, convertible debt, and warrants for financial support associated with the borrowing of funds and are entered into in the ordinary course of business. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments We apply fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value on a recurring basis. Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities that are required to be recorded at fair value, Company management considers the principal or most advantageous market in which we would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risk. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: Level 1 – Quoted prices in active markets for identical assets or liabilities. Level 2 – Level 3 – |
Concentrations of Business and Credit Risk | Concentrations of Business and Credit Risk We maintain cash balances in several financial institutions that are insured by either the Federal Deposit Insurance Corporation or the National Credit Union Association up to certain federal limitations, generally $250,000. At times, our cash balance may exceed these federal limitations and maintains significant cash on hand at certain of its locations. However, we have not experienced any losses in such accounts and management believes we are not exposed to any significant credit risk on these accounts. |
Recently Issued and Adopted Accounting Standards | Recently Issued Accounting Standards In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. This ASU amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity’s own equity, and also improves and amends the related earnings per share guidance for both Subtopics. The ASU will be effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years and early adoption is permitted. Company management is evaluating the future impact this guidance on our consolidated financial statements. In May 2021, the FASB issued ASU No. 2021-04, Earnings Per Share (Topic 260), Debt – Modifications and Extinguishments (Subtopic 470-50), Compensation – Stock Compensation (Topic 718) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40). The ASU will be effective for the Company’s fiscal years beginning October 1, 2022. The Company has issued debt and equity instruments, the accounting for which could be impacted by this update. Company management is evaluating the impact this guidance on our financial condition and results of operations. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Jun. 30, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of Property, Equipment and Leasehold Improvements, Net 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 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 9 Months Ended |
Jun. 30, 2022 | |
INTANGIBLE ASSETS | |
Schedule of finite lived intangible assets | June 30, 2022 September 30, 2021 Gross Net Gross Net Carrying Accumulated Carrying Carrying Accumulated Carrying Finite-Lived Intangible Assets Amount Amortization Amount Amount Amortization Amount Website design and development $ 2,660,391 $ (886,797) $ 1,773,594 $ 2,660,391 $ (221,699) $ 2,438,692 Intellectual property 71,182 (71,182) — 71,182 (69,205) 1,977 Trademark 407,191 — 407,191 54,590 — 54,590 Total Finite-Lived Intangible Assets $ 3,138,764 $ (957,979) $ 2,180,785 $ 2,786,163 $ (290,904) $ 2,495,259 |
Schedule of future amortization expense for finite-lived intellectual property | Years Ended June 30, Future Amortization 2022 (three months) $ 221,699 2023 886,797 2024 665,099 Thereafter 407,190 Total Future Amortization Expense $ 2,180,785 |
DEBT (Tables)
DEBT (Tables) | 9 Months Ended |
Jun. 30, 2022 | |
DEBT | |
Schedule of indebtedness of short term and long term debt | The following is a summary of our indebtedness at June 30, 2022: Net Carrying Value Unpaid Principal Contractual Contractual Type of Debt Balance Current Long-Term Interest Rate Maturity Matured Notes $ 3,049,955 $ 3,049,955 $ — 0.00% - 15.00 % Past Due Promissory Notes 5,000,000 — 5,000,000 8.99 % 2024 Convertible Notes 1,096,787 — 1,096,787 28.00 % 2024 Real Estate Note 256,850 37,651 219,199 5.00 % 2023 Loan Advances 558,158 558,158 — 0.00% - 10.00 % Past Due Less: Debt Discount (1,059,375) — (1,059,375) NA NA Total Debt $ 8,902,375 $ 3,645,764 $ 5,256,611 NA NA The following is a summary of our indebtedness at September 30, 2021: Net Carrying Value Unpaid Principal Contractual Contractual Type of Debt Balance Current Long-Term Interest Rate Maturity Matured Notes $ 5,838,591 $ 5,838,591 $ — 0.00% - 15.00 % 2016 - 2021 Promissory Notes 23,831,912 23,831,912 — 28.00 % 2021 – 2022 Demand Note 500,000 500,000 — 27.00 % 2020 Convertible Unsecured Notes 15,932,500 15,932,500 — 15.00%-20.00 % 2021 - 2022 Real Estate Note 283,881 36,269 247,612 5.00 % 2023 Loan Advances 1,122,253 1,122,253 — 0.00% - 10.00 % 2019 – 2020 Less: Debt Discount (8,060,555) (8,060,555) — NA NA Total Debt $ 39,448,582 $ 39,200,970 $ 247,612 NA NA |
Scheduled Debt Maturities | The following scheduled debt maturities at June 30, 2022: Years Ended June 30, 2022 (6 months) 2023 2024 Total Total Debt $ 3,645,764 $ 219,199 $ 5,037,412 $ 8,902,375 |
FAIR VALUE MEASUREMENTS AND F_2
FAIR VALUE MEASUREMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 9 Months Ended |
Jun. 30, 2022 | |
FAIR VALUE MEASUREMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS | |
Schedule of estimate of fair value of the Company's warrants issued and outstanding | The assumptions used that represent management’s best estimates of the fair value of the Company’s warrants and other convertible instruments issued and outstanding were as follows: June 30, 2022 Expected term (in years) 4.75 - 9.97 Volatility 152 % Dividend yield 0.00 % Risk-free interest rate 2.98 - 3.01 % Exercise price $ 8.834 Unobservable Inputs June 17, 2022 Expected term (in years) 5.0 Volatility 151.8 % Annual Rate of Quarterly Dividends — % Discount Rate - Bond Equivalent Yield 3.34 % Stock Price $ 1.52 Conversion Price $ 1.32 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 9 Months Ended |
Jun. 30, 2022 | |
STOCKHOLDERS' EQUITY | |
Summary of warrant activity | The following table summarizes warrant activity for the nine months ended June 30, 2022: Weighted Average MAI shares Exercise Price Warrants outstanding at September 30, 2021 4,924,447 $ 8.834 Warrants exercised (28,420,265) $ 8.834 Warrants granted 25,075,449 $ 8.834 Warrants expired — $ — Warrants outstanding at June 30, 2022 1,579,631 $ 8.834 |
Schedule of assumptions used for warrants issued and outstanding | June 30, 2022 Expected term (in years) 5.0 Volatility 135 % Dividend yield 0.00 % Risk-free interest rate 0.98% - 1.17 % Common stock price $ 4.16 |
LOSS PER SHARE (Tables)
LOSS PER SHARE (Tables) | 9 Months Ended |
Jun. 30, 2022 | |
LOSS PER SHARE | |
Seclude of computation of basic and diluted net income per share | Three months ended June 30, Nine months ended June 30, 2022 2021 2022 2021 Net income attributable to common stockholders $ (59,471,560) $ (15,251,402) $ (128,508,884) $ (29,545,621) Less: Accumulated Preferred Stock Dividends (2,285,792) — (4,805,740) - Net income used in computing basic net income per share of common stock $ (61,757,352) $ (15,251,402) $ (133,314,624) $ (29,545,621) |
MAI SHARE- BASED COMPENSATION (
MAI SHARE- BASED COMPENSATION (Tables) | 9 Months Ended |
Jun. 30, 2022 | |
MAI SHARE- BASED COMPENSATION | |
Schedule of composition of stock-based compensation expense | For the three months ended June 30, For the nine months ended June 30, Composition of Stock-Based Compensation Expense 2022 2021 2022 2021 Employee MAI share issuance $ 1,721,434 $ 1,091,554 $ 5,014,421 $ 2,024,426 MAI shares for services 3,381,301 440,650 27,423,361 1,731,779 MAI Share-Based compensation expense $ 5,102,735 $ 1,532,204 $ 32,437,782 $ 3,756,205 |
ACCRUED EXPENSES AND OTHER CU_2
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) | 9 Months Ended |
Jun. 30, 2022 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |
Schedule of accrued expenses and other current liabilities | June 30, 2022 September 30, 2021 Accrued Expenses and Other Liabilities Accrued expense - other $ 5,618,811 $ 2,051,696 Accrued payroll 3,576,061 4,586,057 Accrued interest 4,716,469 12,489,012 Total $ 13,911,341 $ 19,126,765 |
PROPERTY, EQUIPMENT AND LEASE_2
PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET (Tables) | 9 Months Ended |
Jun. 30, 2022 | |
PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET | |
Schedule of property and equipment, net | June 30, September 30, 2022 2021 Building $ 8,078,757 $ 804,654 Furniture and Equipment 490,823 111,102 Vehicles 45,887 45,887 Computer Hardware and Software 350,083 139,742 Machinery and Equipment 6,929,731 2,597,654 Construction-in-progress 280,844 — Leasehold Improvements 40,096 66,379 Subtotal 16,216,221 3,765,418 Less: Accumulated Depreciation (2,773,150) (2,583,941) Property, Equipment and Leasehold Improvements, Net $ 13,443,071 $ 1,181,477 |
OTHER ASSETS (Tables)
OTHER ASSETS (Tables) | 9 Months Ended |
Jun. 30, 2022 | |
OTHER ASSETS | |
Schedule of other assets | June 30, 2022 September 30, 2021 Other Assets Coda Materials $ 76,588 $ 76,587 Show Room Cars 3,349,545 2,739,995 Security Deposits 186,641 186,640 Deposit on Property (See Note 16) — 1,240,000 Total Other Assets $ 3,612,774 $ 4,243,222 |
OPERATING EXPENSES (Tables)
OPERATING EXPENSES (Tables) | 9 Months Ended |
Jun. 30, 2022 | |
OPERATING EXPENSES | |
Schedule of Operating Expenses | General and Administrative Expenses consists of the following: Three months ended June 30, Nine months ended June 30, 2022 2021 2022 2021 Professional fees $ 4,908,855 $ 1,458,969 $ 31,773,409 $ 4,858,544 Salaries 3,177,790 2,125,097 10,556,783 4,359,245 Depreciation and amortization 308,297 114,991 918,855 338,321 Lease 474,032 513,169 1,493,150 1,248,573 Settlements and penalties 169,607 57,017 1,054,439 136,515 Employee benefits 639,779 82,092 1,552,939 253,638 Utilities and office expense 202,652 99,475 428,565 239,709 Advertising and promotions 644,423 17,104 3,570,016 270,320 Taxes and licenses 8,805 33,744 25,926 45,248 Repairs and maintenance 167,173 66,501 246,875 166,836 Other 195,387 357,995 1,446,359 638,623 Total $ 10,896,800 $ 4,926,154 $ 53,067,316 $ 12,555,572 Research and development consist of the following: Three months ended June 30, Nine months ended June 30, 2022 2021 2022 2021 Research & Development Professional fees $ 7,324,365 $ 1,479,399 $ 9,665,126 $ 2,535,693 Total $ 7,324,365 $ 1,479,399 $ 9,665,126 $ 2,535,693 |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Jun. 30, 2022 | |
LEASES | |
Summary of lease assets and liabilities and lease costs | The table below presents information regarding our lease assets and liabilities. June 30, 2022 September 30, 2021 Assets: Operating lease right-of-use assets $ 1,939,829 $ 2,350,929 Liabilities: Operating lease liabilities, current (680,185) (599,898) Operating lease liabilities, non-current (1,334,518) (1,857,894) Total lease liabilities $ (2,014,703) $ (2,457,792) Weighted average remaining lease terms: Operating leases 2.75 years 3.34 years Weighted average discount rate: Operating leases 28 % 28 % Operating lease costs: For the three months ended June 30, For the nine months ended June 30, 2022 2021 2022 2021 Fixed lease cost $ 327,409 $ 280,169 $ 1,066,680 $ 765,409 Variable lease cost 158,399 126,218 418,999 362,817 Short-term lease cost 34,473 127,795 160,250 183,386 Sublease income (46,144) (21,013) (152,431) (63,039) Total operating lease costs $ 474,137 $ 513,169 $ 1,493,498 $ 1,248,573 |
Summary of maturities of operating lease liabilities | Years ending June 30, 2022 (3 months) $ 294,069 2023 1,157,693 2024 824,287 2025 436,156 2026 222,787 Thereafter — Total lease payments $ 2,934,992 Less: Imputed interest (920,289) Present value of lease liabilities $ 2,014,703 |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 9 Months Ended |
Jun. 30, 2022 | |
Drawbridge | |
Related party transactions | |
Summary of related party transactions | Drawbridge Related Transactions (Cumulative) June 30, 2022 September 30, 2021 Description Loan Principal # of Shares FV of Shares Loan Principal # of Shares FV of Shares Various Notes $ — — $ — $ 23,831,554 — $ — Common Shares — 13,931,103 14,209,725 — 8,130,384 66,994,364 Preferred Shares - Series A — — — — 2,335 3,012 Preferred Shares - Series B — — — — 5,567,319 49,215,100 Total Related Party Transactions $ — 13,931,103 $ 14,209,725 $ 23,831,554 13,700,038 $ 116,212,476 * Shares are MAI common and preferred shares. |
LIQUIDITY, CAPITAL RESOURCES,_2
LIQUIDITY, CAPITAL RESOURCES, AND GOING CONCERN CONSIDERATION (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||||
Aug. 05, 2022 | Jul. 26, 2022 | Jun. 30, 2022 | Dec. 31, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | |
Liquidity Capital Resources And Going Concern [Line Items] | ||||||||
Cash and restricted cash | $ 61,111,263 | $ 61,111,263 | $ 664,227 | $ 42,174 | $ 33,368 | |||
Cash used in operating activities | (43,220,594) | $ (13,037,107) | ||||||
Working capital deficit | 4,600,000 | 4,600,000 | ||||||
Proceeds from notes payable | 12,200,000 | |||||||
Proceeds in equity from merger | 10,000,000 | |||||||
Proceeds from Issuance or Sale of Equity | 15,000,000 | 108,600,000 | ||||||
Accumulated Deficit | $ (278,883,532) | $ (278,883,532) | $ (150,374,649) | |||||
Preferred shares issued for cash | $ 20,000,000 | |||||||
Series D Preferred Stock | Subsequent event | ||||||||
Liquidity Capital Resources And Going Concern [Line Items] | ||||||||
Preferred shares issued for cash | $ 275,000,000 | |||||||
Series C Preferred Stock | Subsequent event | ||||||||
Liquidity Capital Resources And Going Concern [Line Items] | ||||||||
Preferred shares issued for cash | $ 43,000,000 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property, Equipment and Leasehold Improvements, Net (Details) | 9 Months Ended |
Jun. 30, 2022 | |
Buildings | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 30 years |
Furniture and Equipment | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 5 years |
Computer Hardware and Software | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 3 years |
Computer Hardware and Software | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 1 year |
Machinery and Equipment | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 5 years |
Vehicles | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 5 years |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Additional Information (Details) - USD ($) | 9 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Sep. 30, 2021 | |
Refundable deposits for individuals and businesses | $ 100 | ||
Restricted Cash and Cash Equivalents, Current | 176,824 | ||
Deferred Advertising Charges | 24,699 | $ 261,550 | |
Impairment charges | $ 74,495 | ||
Cash equivalents | $ 0 | $ 0 | |
Maximum | |||
Amortization period | 36 months |
INTANGIBLE ASSETS - Schedule of
INTANGIBLE ASSETS - Schedule of distribution of the economic value of the identifiable intangible assets (Details) - USD ($) | 9 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Sep. 30, 2021 | |
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | $ 3,138,764 | $ 2,786,163 | |
Accumulated Amortization | (957,979) | (290,904) | |
Net Carrying Amount | $ 2,180,785 | 2,495,259 | |
Weighted average Useful life | 3 years | ||
Estimated useful lives | 3 years | ||
Website design and development | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | $ 2,660,391 | 2,660,391 | |
Accumulated Amortization | (886,797) | (221,699) | |
Net Carrying Amount | 1,773,594 | 2,438,692 | |
Incurred intangible asset costs | 310,405 | $ 63,299 | |
Intellectual property | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | 71,182 | 71,182 | |
Accumulated Amortization | (71,182) | (69,205) | |
Net Carrying Amount | 1,977 | ||
Trademark | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | 407,191 | 54,590 | |
Net Carrying Amount | $ 407,191 | $ 54,590 |
INTANGIBLE ASSETS - Schedule _2
INTANGIBLE ASSETS - Schedule of total future amortization expense for finite-lived intellectual property (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Sep. 30, 2021 | |
Future Amortization Expense | |||||
2022 (three months) | $ 221,699 | $ 221,699 | |||
2023 | 886,797 | 886,797 | |||
2024 | 665,099 | 665,099 | |||
Thereafter | 407,190 | 407,190 | |||
Total Future Amortization Expense | 2,180,785 | 2,180,785 | $ 2,495,259 | ||
Amortization expense | $ 221,699 | $ 5,932 | $ 667,075 | $ 17,796 |
DEBT - Summary of our indebtedn
DEBT - Summary of our indebtedness (Details) - USD ($) | Jun. 30, 2022 | Mar. 07, 2022 | Sep. 30, 2021 |
Debt Instrument [Line Items] | |||
Net Carrying Value Unpaid Principal Balance | $ 8,902,375 | $ 39,448,582 | |
Current | 3,645,764 | 39,200,970 | |
Long-term | 5,256,611 | 247,612 | |
Less: Debt Discount | (1,059,375) | (8,060,555) | |
Matured Notes | |||
Debt Instrument [Line Items] | |||
Net Carrying Value Unpaid Principal Balance | 3,049,955 | 5,838,591 | |
Current | $ 3,049,955 | $ 5,838,591 | |
Matured Notes | Maximum | |||
Debt Instrument [Line Items] | |||
Contractual Interest Rate | 15% | 15% | |
Matured Notes | Minimum | |||
Debt Instrument [Line Items] | |||
Contractual Interest Rate | 0% | 0% | |
Promissory Notes | |||
Debt Instrument [Line Items] | |||
Net Carrying Value Unpaid Principal Balance | $ 5,000,000 | $ 23,831,912 | |
Current | $ 23,831,912 | ||
Long-term | $ 5,000,000 | ||
Contractual Interest Rate | 8.99% | 8.99% | 28% |
Promissory Notes | Maximum | |||
Debt Instrument [Line Items] | |||
Contractual Interest Rate | 28% | ||
Promissory Notes | Minimum | |||
Debt Instrument [Line Items] | |||
Contractual Interest Rate | 8.99% | 0% | |
Convertible Notes | |||
Debt Instrument [Line Items] | |||
Net Carrying Value Unpaid Principal Balance | $ 1,096,787 | ||
Long-term | $ 1,096,787 | ||
Contractual Interest Rate | 28% | ||
Demand Note | |||
Debt Instrument [Line Items] | |||
Net Carrying Value Unpaid Principal Balance | $ 500,000 | ||
Current | $ 500,000 | ||
Contractual Interest Rate | 27% | ||
Convertible Unsecured Notes | |||
Debt Instrument [Line Items] | |||
Net Carrying Value Unpaid Principal Balance | $ 15,932,500 | ||
Current | $ 15,932,500 | ||
Convertible Unsecured Notes | Maximum | |||
Debt Instrument [Line Items] | |||
Contractual Interest Rate | 20% | ||
Convertible Unsecured Notes | Minimum | |||
Debt Instrument [Line Items] | |||
Contractual Interest Rate | 15% | ||
Real Estate Note | |||
Debt Instrument [Line Items] | |||
Net Carrying Value Unpaid Principal Balance | $ 256,850 | $ 283,881 | |
Current | 37,651 | 36,269 | |
Long-term | $ 219,199 | $ 247,612 | |
Contractual Interest Rate | 5% | 5% | |
Loan Advances | |||
Debt Instrument [Line Items] | |||
Net Carrying Value Unpaid Principal Balance | $ 558,158 | $ 1,122,253 | |
Current | $ 558,158 | $ 1,122,253 | |
Loan Advances | Maximum | |||
Debt Instrument [Line Items] | |||
Contractual Interest Rate | 10% | 10% | |
Loan Advances | Minimum | |||
Debt Instrument [Line Items] | |||
Contractual Interest Rate | 0% | 0% |
DEBT - Scheduled debt maturitie
DEBT - Scheduled debt maturities (Details) - USD ($) | Jun. 30, 2022 | Sep. 30, 2021 |
Debt Maturities | ||
2022 (6 months) | $ 3,645,764 | |
2023 | 219,199 | |
2024 | 5,037,412 | |
Total | $ 8,902,375 | $ 39,448,582 |
DEBT - Notes and Advances (Deta
DEBT - Notes and Advances (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Mar. 07, 2022 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Sep. 30, 2021 | |
Debt Instrument [Line Items] | ||||||
Amortization of debt discount | $ 19,584,041 | $ 4,817,504 | ||||
Promissory Notes | ||||||
Debt Instrument [Line Items] | ||||||
Maturity term | 3 years | |||||
Interest rate (as a percent) | 8.99% | 8.99% | 8.99% | 28% | ||
Debt instrument interest expense | $ 5,346,766 | $ 8,339,195 | $ 29,906,225 | 13,784,976 | ||
Amortization of debt discount | $ 1,200,000 | 19,584,041 | 4,817,504 | |||
Carrying amount of debt settled via issuance of stock during the period | 23,192,500 | $ 0 | ||||
Principal amount | $ 5,000,000 | |||||
Remaining unamortized discount | $ 973,652 | |||||
Promissory Notes | Maximum | ||||||
Debt Instrument [Line Items] | ||||||
Interest rate (as a percent) | 28% | |||||
Promissory Notes | Minimum | ||||||
Debt Instrument [Line Items] | ||||||
Interest rate (as a percent) | 8.99% | 8.99% | 0% | |||
Loan Advances | Maximum | ||||||
Debt Instrument [Line Items] | ||||||
Interest rate (as a percent) | 10% | 10% | 10% | |||
Loan Advances | Minimum | ||||||
Debt Instrument [Line Items] | ||||||
Interest rate (as a percent) | 0% | 0% | 0% |
DEBT - Drawbridge Relationship
DEBT - Drawbridge Relationship (Details) - USD ($) | 1 Months Ended | ||||||
Jun. 27, 2022 | Jul. 16, 2021 | Jul. 23, 2020 | Jul. 31, 2020 | Jun. 30, 2022 | Jun. 17, 2022 | Sep. 30, 2021 | |
Debt Instrument [Line Items] | |||||||
Series E Preferred Stock shares yet to be created | $ 5,668 | ||||||
A&R Note | |||||||
Debt Instrument [Line Items] | |||||||
Shares issued on conversion of note | 28,000,000 | ||||||
Share price (in dollars per share) | $ 0.9918 | ||||||
Carrying amount of indebtedness of debt | $ 1,096,787 | ||||||
Shares issued to settle conversion of notes | 17,500,000 | ||||||
Additional penalty | $ 3,495,000 | ||||||
Maximum | Series E Preferred Stock | A&R Note | |||||||
Debt Instrument [Line Items] | |||||||
Series E Preferred Stock shares yet to be created | $ 25 | ||||||
DBI and MTI | |||||||
Debt Instrument [Line Items] | |||||||
Sale-Leaseback obligation amount | $ 49,500,000 | ||||||
Sale-Leaseback obligation in face value | 23,831,554 | ||||||
Extinguishment of debt amount | $ 9,935,086 | ||||||
Amounts owed to affiliated | $ 27,185,390 | 33,296,648 | |||||
Outstanding principal paid | $ 10,000,000 | ||||||
DBI and MTI | MAI warrants | |||||||
Debt Instrument [Line Items] | |||||||
Common shares issued for cash (in shares) | 5,567,319 | ||||||
DBI and MTI | MTI warrants | |||||||
Debt Instrument [Line Items] | |||||||
Common shares issued for cash (in shares) | 71,516,534 | ||||||
Other DBI | |||||||
Debt Instrument [Line Items] | |||||||
Amounts owed to affiliated | $ 0 | $ 982,500 | |||||
Other DBI | A&R Note | |||||||
Debt Instrument [Line Items] | |||||||
Principal amount | $ 23,831,553.98 | ||||||
Maturity term | 2 years |
DEBT - Release of Liability, De
DEBT - Release of Liability, Debt Paydowns and Payoffs (Details) - USD ($) | 4 Months Ended | |
Apr. 01, 2022 | Mar. 31, 2022 | |
Debt Instrument [Line Items] | ||
Decrease in debt | $ 5,000,000 | |
Principal paydowns | $ 10,000,000 | |
MNB Capital Group | ||
Debt Instrument [Line Items] | ||
Loan repaid | $ 500,000 |
DEBT - Convertible Notes 2020-2
DEBT - Convertible Notes 2020-2021 (Details) - USD ($) | 9 Months Ended | |
Jun. 30, 2022 | May 07, 2021 | |
Debt Instrument [Line Items] | ||
Warrants exercise price | $ 8.834 | $ 0.6877 |
Convertible Debt | ||
Debt Instrument [Line Items] | ||
Unsecured convertible notes | $ 23,192,500 | |
Interest rate (as a percent) | 15% | |
Percentage of quarterly interest payments | 20% | |
beneficial conversion feature | $ 10,613,630 | |
Convertible Notes | ||
Debt Instrument [Line Items] | ||
Warrants exercise price | $ 0.6877 |
FAIR VALUE MEASUREMENTS AND F_3
FAIR VALUE MEASUREMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS - (Details) - Recurring | Jun. 30, 2022 USD ($) |
FAIR VALUE MEASUREMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS | |
Fair value of common stock warrants | $ 1,233,025 |
Liability to issue shares related to convertible preferred stock | $ 6,394,543 |
FAIR VALUE MEASUREMENTS AND F_4
FAIR VALUE MEASUREMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS - Fair Value of warrant (Details) | Jun. 30, 2022 Y | Jun. 17, 2022 USD ($) Y |
Series E Preferred Stock | ||
FAIR VALUE MEASUREMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS | ||
Fair value of Series E option | $ | $ 23,085,886 | |
Expected term (in years) | Series E Preferred Stock | ||
FAIR VALUE MEASUREMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS | ||
Promissory note, measurement input | 5 | |
Expected term (in years) | Minimum | ||
FAIR VALUE MEASUREMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS | ||
Measurement input | 4.75 | |
Expected term (in years) | Maximum | ||
FAIR VALUE MEASUREMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS | ||
Measurement input | 9.97 | |
Volatility | ||
FAIR VALUE MEASUREMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS | ||
Measurement input | 1.52 | |
Volatility | Series E Preferred Stock | ||
FAIR VALUE MEASUREMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS | ||
Promissory note, measurement input | 1.518 | |
Dividend yield | ||
FAIR VALUE MEASUREMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS | ||
Measurement input | 0 | |
Discount Rate - Bond Equivalent Yield | Series E Preferred Stock | ||
FAIR VALUE MEASUREMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS | ||
Promissory note, measurement input | 0.0334 | |
Common stock price | Series E Preferred Stock | ||
FAIR VALUE MEASUREMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS | ||
Promissory note, measurement input | 0.0152 | |
Conversion Price | Series E Preferred Stock | ||
FAIR VALUE MEASUREMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS | ||
Promissory note, measurement input | 0.0132 | |
Risk-free interest rate | Minimum | ||
FAIR VALUE MEASUREMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS | ||
Measurement input | 0.0298 | |
Risk-free interest rate | Maximum | ||
FAIR VALUE MEASUREMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS | ||
Measurement input | 0.0301 | |
Exercise price | ||
FAIR VALUE MEASUREMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS | ||
Measurement input | 0.08834 |
STOCKHOLDERS' EQUITY - Addition
STOCKHOLDERS' EQUITY - Additional Information (Details) | 3 Months Ended | 9 Months Ended | |||||
Jun. 30, 2022 USD ($) $ / shares shares | Mar. 31, 2022 USD ($) | Jun. 30, 2021 USD ($) | Jun. 30, 2022 USD ($) Vote $ / shares shares | Jun. 30, 2021 USD ($) | Sep. 30, 2021 $ / shares shares | May 07, 2021 $ / shares | |
Class of Stock [Line Items] | |||||||
Preferred stock, shares authorized | shares | 58,000,000 | 58,000,000 | 58,000,000 | ||||
Preferred Stock Par value | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | ||||
Preferred stock, shares issued | shares | 0 | 0 | 5,667,683 | ||||
Preferred stock, shares outstanding | shares | 0 | 0 | 5,667,683 | ||||
Preferred stock dividends declared or paid | $ 2,285,792 | $ 2,519,948 | |||||
Number of Trading Days | 10 | 10 | |||||
Number of Consecutive Trading Days | 20 | ||||||
Average Daily Trading Volume of Common Stock | $ 2,000,000 | ||||||
Reverse stock ratio | 12.8485 | ||||||
Number of votes per share | Vote | 1,000 | ||||||
Threshold proceeds to be received | $ 50,000,000 | ||||||
Common Stock, shares authorized | shares | 500,000,000 | 500,000,000 | 500,000,000 | ||||
Common Stock, par value | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | ||||
Common Stock, shares issued | shares | 498,694,481 | 498,694,481 | 7,048,387 | ||||
Common Stock, shares outstanding | shares | 498,694,481 | 498,694,481 | 7,048,387 | ||||
Number of votes per common share | Vote | 1 | ||||||
Common stock dividends declared or paid | $ 0 | ||||||
Warrants exercise price | $ / shares | $ 8.834 | $ 8.834 | $ 0.6877 | ||||
Warrants to acquire shares of common stock | shares | 1,579,631 | 1,579,631 | |||||
Exercisable term of warrants | 5 years | 5 years | |||||
Series A Preferred Stock | |||||||
Class of Stock [Line Items] | |||||||
Preferred stock dividends declared or paid | $ 0 | $ 0 | $ 0 | $ 0 | |||
Preferred Stock, Liquidation Preference Per Share | $ / shares | $ 1.29 | $ 1.29 | $ 0.10 | ||||
Conversion ratio | 0.01 | 0.01 | |||||
Series B Preferred Stock | |||||||
Class of Stock [Line Items] | |||||||
Conversion ratio | 1 | 1 | |||||
Series C Preferred Stock | |||||||
Class of Stock [Line Items] | |||||||
Preferred stock dividends rate, percentage | 15% | ||||||
Number of Days Notice For Stock Redemption | 15 | ||||||
Percentage of redemption price in first year | 0% | ||||||
Percentage of redemption price in second year | 120% | ||||||
Percentage of redemption price in third year | 115% | ||||||
Percentage of redemption price in fourth year | 110% | ||||||
Percentage of redemption price in fifth year | 105% | ||||||
Percentage of redemption price in sixth year and thereafter | 100% | ||||||
Series B And C Preferred Stock [Member] | |||||||
Class of Stock [Line Items] | |||||||
Preferred Stock, Liquidation Preference Per Share | $ / shares | $ 8.84 | $ 8.84 | $ 0.6877 |
STOCKHOLDERS' EQUITY - Summary
STOCKHOLDERS' EQUITY - Summary of Warrant Activity (Details) | 9 Months Ended |
Jun. 30, 2022 $ / shares shares | |
Weighted Average Exercise Price | |
Warrants outstanding at ending | $ 8.834 |
Warrants | |
MAI shares | |
Warrants outstanding at beginning | shares | 4,924,447 |
Warrants exercised | shares | (28,420,265) |
Warrants granted | shares | 25,075,449 |
Warrants outstanding at ending | shares | 1,579,631 |
Weighted Average Exercise Price | |
Warrants outstanding at beginning | $ 8.834 |
Warrants exercised | 8.834 |
Warrants granted | 8.834 |
Warrants outstanding at ending | $ 8.834 |
STOCKHOLDERS' EQUITY - Schedule
STOCKHOLDERS' EQUITY - Schedule of Assumptions Used For Warrants Issued and 0utstanding (Details) | Jun. 30, 2022 Y |
Expected term (in years) | Minimum | |
Class of Warrant or Right [Line Items] | |
Measurement input | 4.75 |
Expected term (in years) | Maximum | |
Class of Warrant or Right [Line Items] | |
Measurement input | 9.97 |
Dividend yield | |
Class of Warrant or Right [Line Items] | |
Measurement input | 0 |
Risk-free interest rate | Minimum | |
Class of Warrant or Right [Line Items] | |
Measurement input | 0.0298 |
Risk-free interest rate | Maximum | |
Class of Warrant or Right [Line Items] | |
Measurement input | 0.0301 |
Warrants | Expected term (in years) | |
Class of Warrant or Right [Line Items] | |
Measurement input | 5 |
Warrants | Volatility. | |
Class of Warrant or Right [Line Items] | |
Measurement input | 1.35 |
Warrants | Dividend yield | |
Class of Warrant or Right [Line Items] | |
Measurement input | 0 |
Warrants | Risk-free interest rate | Minimum | |
Class of Warrant or Right [Line Items] | |
Measurement input | 0.0098 |
Warrants | Risk-free interest rate | Maximum | |
Class of Warrant or Right [Line Items] | |
Measurement input | 0.0117 |
Warrants | Common stock price | |
Class of Warrant or Right [Line Items] | |
Measurement input | 0.0416 |
STOCKHOLDERS' EQUITY - Equity T
STOCKHOLDERS' EQUITY - Equity Transactions (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||||
Apr. 15, 2022 | Sep. 01, 2021 | Dec. 31, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Jun. 30, 2022 | Nov. 05, 2021 | |
Subsidiary, Sale of Stock [Line Items] | |||||||
Amount of SPA and registration rights agreement | $ 20,000,000 | ||||||
Purchase agreement | $ 10,894,659 | $ 1,291,501 | $ 1,104,802 | ||||
Proceeds from issuance of common stock | $ 40,151,308 | ||||||
Mullen Technologies and Esousa Holdings LLC | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Purchase agreement | $ 30,000,000 | ||||||
Proceeds from issuance of common stock | $ 29,600,000 | ||||||
Number of shares issued (in shares) | 54,811,504 | ||||||
Exchange Agreement | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Number of shares issued (in shares) | 51,622,489 | ||||||
Conversion of Preferred Stock | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Number of shares issued (in shares) | 4,969,357 | ||||||
Exercise of Warrants | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Number of shares issued (in shares) | 196,517,186 |
LOSS PER SHARE - Computation of
LOSS PER SHARE - Computation of basic and diluted net income per share (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||||
Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2020 | Jun. 30, 2022 | Jun. 30, 2021 | |
LOSS PER SHARE | ||||||||
Net income attributable to common stockholders | $ (59,471,560) | $ (32,573,385) | $ (36,463,938) | $ (15,251,402) | $ (9,297,770) | $ (4,996,450) | $ (128,508,884) | $ (29,545,621) |
Less: Accumulated Preferred Stock Dividends | (2,285,792) | (4,805,740) | ||||||
Net income used in computing basic net income per share of common stock | (61,757,352) | (15,251,402) | (133,314,624) | (29,545,621) | ||||
Net income used in computing diluted net income per share of common stock | $ (61,757,352) | $ (15,251,402) | $ (133,314,624) | $ (29,545,621) |
MAI SHARE- BASED COMPENSATION_2
MAI SHARE- BASED COMPENSATION (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
MAI SHARE- BASED COMPENSATION | ||||
Vesting percentage | 100% | |||
Requisite service period | 12 months | |||
Period over which additional shares may be issued | 2 years | |||
Composition of Stock-Based Compensation Expense | ||||
Employee MAI share issuance | $ 1,721,434 | $ 1,091,554 | $ 5,014,421 | $ 2,024,426 |
MAI shares for services | 3,381,301 | 440,650 | 27,423,361 | 1,731,779 |
MAI Share-Based compensation expense | $ 5,102,735 | $ 1,532,204 | $ 32,437,782 | $ 3,756,205 |
ACCRUED EXPENSES AND OTHER CU_3
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) - USD ($) | Jun. 30, 2022 | Sep. 30, 2021 |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | ||
Accrued expense - other | $ 5,618,811 | $ 2,051,696 |
Accrued payroll | 3,576,061 | 4,586,057 |
Accrued interest | 4,716,469 | 12,489,012 |
Total | 13,911,341 | $ 19,126,765 |
Amount payable due to insufficient shares being available for conversion | 3,495,000 | |
Accrued expense | $ 4,805,739 |
NOTE RECEIVABLE (Details)
NOTE RECEIVABLE (Details) $ in Millions | 2 Months Ended | 9 Months Ended | |
May 31, 2022 USD ($) installment | Jun. 30, 2022 shares | Oct. 08, 2021 USD ($) | |
CEO cast | |||
Class of Warrant or Right [Line Items] | |||
Proceeds from warrants | $ 15 | ||
Number of equal monthly installments | installment | 3 | ||
Incremental proceeds from warrants | $ 5 | ||
Number of Shares Issued (in shares) | shares | 14,343,550 | ||
Securities Purchase Agreement | |||
Class of Warrant or Right [Line Items] | |||
Warrants | $ 15 |
LIABILITY TO ISSUE STOCK (Detai
LIABILITY TO ISSUE STOCK (Details) - USD ($) | Jun. 30, 2022 | Jun. 17, 2022 | Sep. 30, 2021 |
Schedule of Liability to Issue Stock [Line items] | |||
Liability to issue stock | $ 14,118,227 | $ 7,027,500 | |
Consultants and Employees | |||
Schedule of Liability to Issue Stock [Line items] | |||
Liability to issue stock | $ 0 | $ 7,027,500 | |
Series E Preferred Stock | |||
Schedule of Liability to Issue Stock [Line items] | |||
Fair value of Series E option | $ 23,085,886 |
PROPERTY, EQUIPMENT AND LEASE_3
PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Sep. 30, 2021 | |
Property, Plant and Equipment [Line Items] | |||||
Subtotal | $ 16,216,221 | $ 16,216,221 | $ 3,765,418 | ||
Less: Accumulated Depreciation | (2,773,150) | (2,773,150) | (2,583,941) | ||
Property, Equipment and Leasehold Improvements, Net | 13,443,071 | 13,443,071 | 1,181,477 | ||
Depreciation | 86,598 | $ 109,058 | 251,780 | $ 320,525 | |
Buildings | |||||
Property, Plant and Equipment [Line Items] | |||||
Subtotal | 8,078,757 | 8,078,757 | 804,654 | ||
Furniture and Equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Subtotal | 490,823 | 490,823 | 111,102 | ||
Vehicles | |||||
Property, Plant and Equipment [Line Items] | |||||
Subtotal | 45,887 | 45,887 | 45,887 | ||
Computer Hardware and Software | |||||
Property, Plant and Equipment [Line Items] | |||||
Subtotal | 350,083 | 350,083 | 139,742 | ||
Machinery and Equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Subtotal | 6,929,731 | 6,929,731 | 2,597,654 | ||
Construction-in-progress | |||||
Property, Plant and Equipment [Line Items] | |||||
Subtotal | 280,844 | 280,844 | |||
Leasehold Improvements | |||||
Property, Plant and Equipment [Line Items] | |||||
Subtotal | $ 40,096 | $ 40,096 | $ 66,379 |
PROPERTY, EQUIPMENT AND LEASE_4
PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET - Mullen Investment Properties (Details) | Nov. 12, 2021 USD ($) ft² a |
PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET | |
Payments to acquire property | $ | $ 12,000,000 |
Manufacturing space occupies | ft² | 124,000 |
Area of Land | a | 100 |
OTHER ASSETS (Details)
OTHER ASSETS (Details) - USD ($) | Jun. 30, 2022 | Sep. 30, 2021 |
OTHER ASSETS | ||
Coda Materials | $ 76,588 | $ 76,587 |
Show Room Cars | 3,349,545 | 2,739,995 |
Security Deposits | 186,641 | 186,640 |
Deposit on Property | 1,240,000 | |
Total Other Assets | $ 3,612,774 | $ 4,243,222 |
OPERATING EXPENSES (Details)
OPERATING EXPENSES (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
OPERATING EXPENSES | ||||
Professional Fees | $ 4,908,855 | $ 1,458,969 | $ 31,773,409 | $ 4,858,544 |
Salaries | 3,177,790 | 2,125,097 | 10,556,783 | 4,359,245 |
Depreciation and amortization | 308,297 | 114,991 | 918,855 | 338,321 |
Lease | 474,032 | 513,169 | 1,493,150 | 1,248,573 |
Settlements and penalties | 169,607 | 57,017 | 1,054,439 | 136,515 |
Employee benefits | 639,779 | 82,092 | 1,552,939 | 253,638 |
Utilities and office expense | 202,652 | 99,475 | 428,565 | 239,709 |
Advertising and promotions | 644,423 | 17,104 | 3,570,016 | 270,320 |
Taxes and licenses, net | 8,805 | 33,744 | 25,926 | 45,248 |
Repairs and maintenance | 167,173 | 66,501 | 246,875 | 166,836 |
Other | 195,387 | 357,995 | 1,446,359 | 638,623 |
Total General and Administrative Expenses | $ 10,896,800 | $ 4,926,154 | $ 53,067,316 | $ 12,555,572 |
OPERATING EXPENSES - Research a
OPERATING EXPENSES - Research and development (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Research & Development | ||||
Professional fees | $ 7,324,365 | $ 1,479,399 | $ 9,665,126 | $ 2,535,693 |
Total | $ 7,324,365 | $ 1,479,399 | $ 9,665,126 | $ 2,535,693 |
LEASES - Lease assets and liabi
LEASES - Lease assets and liabilities (Details) - USD ($) | Jun. 30, 2022 | Sep. 30, 2021 |
Assets: | ||
Operating lease right-of-use assets | $ 1,939,829 | $ 2,350,929 |
Liabilities: | ||
Operating lease liabilities, current | (680,185) | (599,898) |
Operating lease liabilities, non-current | (1,334,518) | (1,857,894) |
Total lease liabilities | $ (2,014,703) | $ (2,457,792) |
Weighted average remaining lease terms: Operating leases | 2 years 9 months | 3 years 4 months 2 days |
Weighted average discount rate: Operating leases | 28% | 28% |
LEASES - Operating lease costs
LEASES - Operating lease costs (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Operating lease costs: | ||||
Fixed lease cost | $ 327,409 | $ 280,169 | $ 1,066,680 | $ 765,409 |
Variable lease cost | 158,399 | 126,218 | 418,999 | 362,817 |
Short-term lease cost | 34,473 | 127,795 | 160,250 | 183,386 |
Sublease income | (46,144) | (21,013) | (152,431) | (63,039) |
Total operating lease costs | $ 474,137 | $ 513,169 | $ 1,493,498 | $ 1,248,573 |
LEASES - Maturities of operatin
LEASES - Maturities of operating lease liabilities (Details) - USD ($) | Jun. 30, 2022 | Sep. 30, 2021 |
Year ending March 31, | ||
2022 (3 months) | $ 294,069 | |
2023 | 1,157,693 | |
2024 | 824,287 | |
2025 | 436,156 | |
2026 | 222,787 | |
Total lease payments | 2,934,992 | |
Less: Imputed interest | (920,289) | |
Present value of lease liabilities | $ 2,014,703 | $ 2,457,792 |
LEASES - Additional Information
LEASES - Additional Information (Details) | 9 Months Ended |
Jun. 30, 2022 | |
Lessee, Lease, Description [Line Items] | |
Option to extend | true |
Option to terminate | true |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Operating lease term | 1 year |
Renewal term | 1 year |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Operating lease term | 3 years |
Renewal term | 5 years |
CONTINGENCIES AND CLAIMS - Seri
CONTINGENCIES AND CLAIMS - Series D Preferred Stock Commitment (Details) - USD ($) $ / shares in Units, $ in Millions | Jun. 07, 2022 | Jun. 30, 2022 | Sep. 30, 2021 |
CONTINGENCIES AND CLAIMS | |||
Preferred Stock Par value | $ 0.001 | $ 0.001 | |
Exercisable term of warrants | 5 years | ||
Series D Preferred Stock | |||
CONTINGENCIES AND CLAIMS | |||
Commitment Amount | $ 275 | ||
Preferred Stock Par value | $ 0.001 | ||
Exercisable term of warrants | 5 years | ||
Warrants issuable as a percentage of preferred stock purchased by investors | 110% | ||
Series D Preferred Stock Commitment | Series D Preferred Stock | |||
CONTINGENCIES AND CLAIMS | |||
Share price (in dollars per share) | $ 1.27 | ||
Floor price (in dollars per share) | $ 0.10 |
CONTINGENCIES AND CLAIMS - Se_2
CONTINGENCIES AND CLAIMS - Series E Preferred Stock Purchase Option (Details) | Jun. 30, 2022 $ / shares | Jun. 17, 2022 USD ($) $ / shares shares | Sep. 30, 2021 USD ($) | May 07, 2021 $ / shares |
CONTINGENCIES AND CLAIMS | ||||
Preferred stock value | $ 5,668 | |||
Warrants Term | 5 years | |||
Warrants exercise price | $ / shares | $ 8.834 | $ 0.6877 | ||
Common Stock Warrants | ||||
CONTINGENCIES AND CLAIMS | ||||
Warrants to purchase to common stock | shares | 3 | |||
Warrants Term | 5 years | |||
Warrants exercise price | $ / shares | $ 1.25 | |||
Series E Preferred Stock Purchase Option | Series E Preferred Stock | ||||
CONTINGENCIES AND CLAIMS | ||||
Preferred stock value | $ 25,000,000 | |||
Conversion ratio | 1 | |||
Total commitment amount | $ 5,000,000 |
CONTINGENCIES AND CLAIMS - Inte
CONTINGENCIES AND CLAIMS - International Business Machines (Details) - Lawsuit with IBM - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended | |
Dec. 01, 2021 | May 31, 2022 | Sep. 30, 2017 | |
CONTINGENCIES AND CLAIMS | |||
Provision for legal liability | $ 4.5 | ||
Amount of judgment | $ 5.6 | ||
Cash transferred to surety bonds to cover legal liability | $ 5.6 |
CONTINGENCIES AND CLAIMS - Fede
CONTINGENCIES AND CLAIMS - Federal and State Tax Liabilities (Details) - Payroll Tax Liability - USD ($) | 9 Months Ended | |
Apr. 14, 2022 | Jun. 30, 2022 | |
CONTINGENCIES AND CLAIMS | ||
Amount of monthly payments | $ 45,000 | |
Aggregate liability, settlement amount | $ 2,600,000 | |
EDD | ||
CONTINGENCIES AND CLAIMS | ||
Liability associated with past due amounts | $ 300,000 |
CONTINGENCIES AND CLAIMS - Inve
CONTINGENCIES AND CLAIMS - Investment Banking Services Agreement (Details) - Investment Banking Services Agreement. | May 05, 2020 USD ($) |
CONTINGENCIES AND CLAIMS | |
Amount of retainer for services | $ 50,000 |
Threshold percentage of gross proceeds of the public offering | 6% |
Threshold amount of gross proceeds from public offering | $ 3,000,000 |
CONTINGENCIES AND CLAIMS - Ling
CONTINGENCIES AND CLAIMS - Linghang Boao Group, LTD (Details) - Strategic Cooperation Agreement | 1 Months Ended | 12 Months Ended | ||
Dec. 03, 2019 USD ($) | Nov. 30, 2019 USD ($) Milestone | Sep. 30, 2020 USD ($) | Jun. 30, 2022 USD ($) | |
CONTINGENCIES AND CLAIMS | ||||
Term of Agreement | 3 years | |||
Total commitment amount | $ 2,196,000 | |||
Payment of installment amount | $ 390,000 | |||
Loss on contract | $ 390,000 | |||
Accrual for remaining milestone payments | $ 0 | |||
Minimum | ||||
CONTINGENCIES AND CLAIMS | ||||
Driving range distance (in miles) | Milestone | 480 | |||
Maximum | ||||
CONTINGENCIES AND CLAIMS | ||||
Driving range distance (in miles) | Milestone | 720 |
CONTINGENCIES AND CLAIMS (Detai
CONTINGENCIES AND CLAIMS (Details) - USD ($) | 9 Months Ended | |||
Aug. 13, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Sep. 30, 2021 | |
CONTINGENCIES AND CLAIMS | ||||
Litigation Liability | $ 0 | |||
Common Stock; $0.001 par value; 500,000,000 shares authorized; 498,694,481 and 7,048,387 shares issued and outstanding at June 30, 2022 and September 30, 2021 respectively. | $ 498,694 | $ 7,048 | ||
Odyssey Group Settlement | ||||
CONTINGENCIES AND CLAIMS | ||||
Litigation owed | $ 503,637 | |||
Litigation settlement payable | $ 50,000 | |||
Litigation settlement payable in common stock | 500,000 | |||
Litigation settlement payable in cash or common stock | $ 10,000 | |||
Litigation settlement duration term | 30 days | |||
Common stock issued for litigation settlement | 500,000 | |||
Common Stock; $0.001 par value; 500,000,000 shares authorized; 498,694,481 and 7,048,387 shares issued and outstanding at June 30, 2022 and September 30, 2021 respectively. | $ 1,250,000 | |||
Litigation settlement paid in cash | $ 50,000 | |||
TOA Trading LLC Litigation | Minimum | ||||
CONTINGENCIES AND CLAIMS | ||||
Litigation settlement duration term | 2 months | |||
TOA Trading LLC Litigation | Maximum | ||||
CONTINGENCIES AND CLAIMS | ||||
Litigation settlement duration term | 3 months |
RELATED PARTY TRANSACTIONS - Dr
RELATED PARTY TRANSACTIONS - Drawbridge Related Transactions (Details) - Drawbridge - USD ($) | Jun. 30, 2022 | Sep. 30, 2021 |
Related Party Transaction [Line Items] | ||
Loan Principal | $ 23,831,554 | |
Number of Shares | 13,931,103 | 13,700,038 |
Fair value of Shares | $ 14,209,725 | $ 116,212,476 |
Various Notes | ||
Related Party Transaction [Line Items] | ||
Loan Principal | $ 23,831,554 | |
Common and preferred shares | Common Stock | ||
Related Party Transaction [Line Items] | ||
Number of Shares | 13,931,103 | 8,130,384 |
Fair value of Shares | $ 14,209,725 | $ 66,994,364 |
Common and preferred shares | Series A Preferred Stock | ||
Related Party Transaction [Line Items] | ||
Number of Shares | 2,335 | |
Fair value of Shares | $ 3,012 | |
Common and preferred shares | Series B Preferred Stock | ||
Related Party Transaction [Line Items] | ||
Number of Shares | 5,567,319 | |
Fair value of Shares | $ 49,215,100 |
RELATED PARTY TRANSACTIONS - Ch
RELATED PARTY TRANSACTIONS - Chief Executive Officer Loans to MTI (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Oct. 26, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Sep. 30, 2021 | |
Related Party Transaction [Line Items] | ||||||
Consulting payments | $ 4,908,855 | $ 1,458,969 | $ 31,773,409 | $ 4,858,544 | ||
Consulting agreements | Mary Winters, Corporate Secretary and Director | ||||||
Related Party Transaction [Line Items] | ||||||
Term of agreement | 1 year | |||||
Annual salary under agreement | $ 60,000 | |||||
Consulting payments | 30,000 | |||||
Monthly salary under agreement | $ 5,000 | |||||
Chief Executive Officer | ||||||
Related Party Transaction [Line Items] | ||||||
Outstanding balances for loans to related parties | $ 0 | $ 0 | $ 479,914 |
RELATED PARTY TRANSACTIONS - Wi
RELATED PARTY TRANSACTIONS - William Miltner (Details) - USD ($) | 3 Months Ended | 9 Months Ended |
Jun. 30, 2022 | Jun. 30, 2022 | |
RELATED PARTY TRANSACTIONS | ||
Amount paid for legal services | $ 178,640 | $ 804,120 |
RELATED PARTY TRANSACTIONS - Sh
RELATED PARTY TRANSACTIONS - Short-Term Financing (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Jan. 14, 2022 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Related Party Transaction [Line Items] | |||||
Interest expense | $ 5,346,766 | $ 8,339,195 | $ 29,906,225 | $ 13,784,976 | |
Letter of Intent | |||||
Related Party Transaction [Line Items] | |||||
Letter of amount maximum borrowing capacity | $ 1,000,000 | ||||
Total agreed repayment amount | 1,150,000 | ||||
Interest expense | $ 150,000 |
RELATED PARTY TRANSACTIONS - Ig
RELATED PARTY TRANSACTIONS - Ignacio Novoa (Details) - Consulting agreements - Executive Officers | Jun. 09, 2022 shares |
Related Party Transaction [Line Items] | |
Term of agreement | 1 year |
Number of shares issued (in shares) | 255,500 |
RELATED PARTY TRANSACTIONS - Je
RELATED PARTY TRANSACTIONS - Jerry Alban (Details) - Former Chief Operating Officer - Consulting agreements - USD ($) | Jun. 27, 2022 | Jun. 26, 2022 |
Related Party Transaction [Line Items] | ||
Term of agreement | 1 year | |
Annual salary under agreement | $ 53,846.15 | $ 60,000 |
Monthly salary under agreement | 5,000 | |
Officer payment | $ 53,846.15 | $ 60,000 |
Shares issued for services (in shares) | 250,000 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) | Aug. 05, 2022 shares | Jul. 26, 2022 $ / shares shares | Jul. 19, 2022 USD ($) | Jul. 11, 2022 kWh item | Apr. 15, 2022 shares | Sep. 30, 2022 employee | Aug. 03, 2022 employee | Jul. 25, 2022 shares | Jun. 30, 2022 USD ($) $ / shares shares | Jun. 29, 2022 USD ($) ft² | Sep. 30, 2021 USD ($) $ / shares shares |
Subsequent Event [Line Items] | |||||||||||
Common Stock, shares authorized | 500,000,000 | 500,000,000 | |||||||||
Common Stock, par value | $ / shares | $ 0.001 | $ 0.001 | |||||||||
Preferred stock, shares authorized | 58,000,000 | 58,000,000 | |||||||||
Present value of lease liabilities | $ | $ 2,014,703 | $ 2,457,792 | |||||||||
Exchange Agreement | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Number of shares issued (in shares) | 51,622,489 | ||||||||||
Conversion of Preferred Stock | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Number of shares issued (in shares) | 4,969,357 | ||||||||||
Exercise of Warrants | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Number of shares issued (in shares) | 196,517,186 | ||||||||||
Irvine Lease in California | Lakeview Business Center, LLC | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Area of Leased Office Space | ft² | 31,603 | ||||||||||
Renewal term | 36 months | ||||||||||
Present value of lease liabilities | $ | $ 654,636 | ||||||||||
Subsequent event | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Common Stock, shares authorized | 1,750,000,000 | 500,000,000 | |||||||||
Common Stock, par value | $ / shares | $ 0.01 | ||||||||||
Preferred stock, shares authorized | 500,000,000 | 58,000,000 | |||||||||
Shares authorized | 2,250,000,000 | 558,000,000 | |||||||||
Board of directors, nominee term | 3 years | ||||||||||
Subsequent event | EDD | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Repayment of state tax liability | $ | $ 334,358.11 | ||||||||||
Subsequent event | Binding Agreement | Delpack Logistics, LLC | Mullen Class 2 EV Cargo Vans | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Number of vehicles to be purchased by counter party | item | 600 | ||||||||||
Number of vehicles to be purchased by counterparty, period | 18 months | ||||||||||
Number of vehicles to be fully homologated for United States | item | 600 | ||||||||||
Number of vehicles fully homologated, available for delivery | item | 300 | ||||||||||
Vehicles carrying, battery per hour | kWh | 80 | ||||||||||
Subsequent event | Equity Incentive Plan, 2022 | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Number of shares authorized | 175,000,000 | ||||||||||
Subsequent event | Exchange Agreement | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Number of shares issued (in shares) | 4,533,353 | ||||||||||
Subsequent event | Conversion of Preferred Stock | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Number of shares issued (in shares) | 11,139,665 | ||||||||||
Subsequent event | Exercise of Warrants | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Number of shares issued (in shares) | 508,394,030 | ||||||||||
Subsequent event | Detroit Tech Center | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Number of employees | employee | 50 | 11 |