Net Element(MULN) - 2024 Q3 - Quarterly Results

Executive Summary & Recent Developments This section provides an overview of the company's recent financial performance, strategic initiatives, and key business milestones, highlighting progress in EV commercialization and financing efforts CEO Commentary & Key Financial Highlights CEO David Michery highlighted a narrowed net loss and expressed optimism for strong Q4 growth, driven by scaling commercial EV business, with positive stockholders' equity and total assets reported - CEO David Michery noted a narrowed loss for the quarter and year-to-date, positioning Q4 for strong year-over-year growth, emphasizing the scaling of commercial EV business[1] Key Financial Metrics | Metric | As of June 30, 2024 | | :---------------------- | :------------------ | | Stockholders' Equity | $53 Million | | Total Assets | $192 Million | Recent Business Highlights Mullen secured significant financing, launched a Class 1 EV cargo van lease program, received key orders, achieved EPA certification for Bollinger's B4, and made strategic personnel changes - Secured a $250 million new financing commitment ($50M received, $50M additional investment right, $150M equity line of credit) and a $100 million commitment for senior secured convertible notes[1] - Launched a lease program for Class 1 EV cargo vans (bizEV) starting at $475 per month, including scheduled vehicle maintenance[1] - GAMA, an international distributor, placed an order for 29 Mullen-GO commercial micro-urban delivery vehicles, valued at $304,000[1] - Bollinger's B4, Class 4 EV chassis cab received EPA Certification on June 18, 2024, and full warranty coverage was released in July[1] - Mullen's Class 1 EV cargo van received approval for the MOR-EV Program, granting a $3,500 rebate in Massachusetts, potentially reducing net effective cost to approximately $23,500 when combined with the $7,500 federal tax credit[1] - Bollinger Motors announced new orders for B4 commercial trucks: 5 vehicles to Spencer Manufacturing (valued at ~$825,000) and 70 vehicles to Doering Fleet Management (valued at ~$11.5 million)[1] - James Taylor named CEO of Bollinger Motors; John Taylor promoted to President of Mullen's Commercial EV Division[1] - Announced commercial EV orders of 130 Class 1 EV cargo vans and 50 Class 3 EV trucks to Eco Auto over the next 18 months, with an estimated value of $7.7 million[1] - Preparing significant pilot programs and actively deploying Class 1 and Class 3 EVs in Europe and Canada[1] Business Updates This section details advancements in Mullen's commercial EV division, Bollinger Motors, and battery technology, including market expansion, certifications, and manufacturing progress Mullen Commercial EV Division Mullen's commercial EV division expanded its dealer network, secured state-level cash vouchers for its Class 3 EV truck, and gained Foreign Trade Zone status for its Tunica facility Class 1 & 3 Commercial Vehicles Updates Mullen's Class 3 EV truck received significant cash vouchers in Massachusetts and California, while the company expanded its dealer network and secured new European orders - Massachusetts MOR-EV approval grants Mullen's Class 3 EV truck a $15,000 cash voucher per vehicle sold[2] - Expanded commercial dealer network by adding Eco Auto, Ziegler Truck Group, Range Truck Group, National Auto Fleet Group, and Pritchard EV[2] - Secured a new commercial EV Fleet order for Europe with Switzerland-based Antidoto SA for 40 Mullen-GO urban delivery vehicles, valued at $440,000 USD[2] - Announced a new European distributor, GAMA, for the Balkans Region with an initial order for 53 commercial EV urban delivery vehicles, cargo vans, and trucks[2] - California HVIP approval grants Mullen's Class 3 EV trucks a $45,000 cash voucher per vehicle sold[2] - Received new CARB approval for the 2025 model year Class 3 EV cab chassis truck in April[2] Manufacturing & Dealer Network Expansion Mullen's Tunica facility achieved Foreign Trade Zone status, offering duty deferment, and the company is actively negotiating with major fleet and government clients - U.S. Department of Commerce approved Mullen's Tunica, MS facility as a foreign trade zone, delivering up to $21 million in deferred duty for the remainder of FY2024 and FY2025[2] - Actively engaged in negotiations with major telecoms, large fleet providers, delivery companies, universities, local municipalities, government agencies, and airport service providers to expand customer base and market share[2] Bollinger Motors Updates Bollinger Motors expanded its retail dealer network, achieved EPA certification for its B4 Class 4 EV trucks, secured significant sales orders, and made key leadership appointments Class 4-6 Commercial Vehicles Developments Bollinger Motors expanded its retail dealer network, received EPA certification for its B4 Class 4 EV trucks, and secured substantial sales orders for B4 vehicles - Bollinger announced retail dealers including LaFontaine Automotive Group, Nacarato Truck Centers, and Nuss Truck and Equipment, covering initial states like Michigan, Florida, Georgia, Kentucky, Maryland, and Minnesota[3] - Bollinger received EPA certification for Class 4 EV Commercial Trucks in June, a critical step for U.S. sales[3] - Received a $13.2 million sales order from Momentum Groups for 80 B4 Class 4 EV trucks[3] - Announced the sale of 50 Bollinger B4 Chassis Cab EV Trucks to EnviroCharge for $8.3 million[3] - Bollinger expects to begin B4, Class 4 vehicle production and deliveries in the second half of 2024[3] Bollinger Strategic Developments Bollinger Motors appointed James Taylor as CEO, promoted key executives, and partnered with Amerit Fleet Solutions for B4 truck service and warranty - Bollinger Motors named former GM executive James Taylor as CEO; company founder Robert Bollinger remains on the Board of Directors[1] - Bryan Chambers promoted to President and Chief Operating Officer, and Siva Kumar to Chief Strategy Officer and Senior Vice President of Finance of Bollinger[1] - Bollinger Motors announced Amerit Fleet Solutions for mobile service and warranty for the B4 all-electric Class 4 commercial truck[3] Mullen High Energy Facility & Battery Technology Mullen's Fullerton facility completed its battery pack assembly line phase one and is advancing its solid-state polymer pack program towards 2025 certification Fullerton Facility Development Mullen's Fullerton facility completed phase one of its Battery Pack Assembly line and announced the development of a PowerUP Mobile EV Charging Truck - Phase one completion of the Battery Pack Assembly line in Fullerton, CA, was marked in April[4] - Announced the development of a zero-emissions, PowerUP Mobile EV Charging Truck in May[4] Battery Technology Program Update Mullen is advancing its solid-state polymer pack program with ongoing testing, identified suppliers, and anticipates full certification by the second half of 2025 - Advancing its solid-state polymer pack program and continuing battery and vehicle testing since February 2024[4] - Identified lead suppliers for development and components and issued initial purchase orders to support the program[4] - Expects solid-state polymer packs to be fully certified for production and sale in the second half of 2025[4] Financial Review This section provides a comprehensive analysis of Mullen's financial performance, including revenue, net loss, cash flow, working capital, and shareholders' equity for the period Overall Financial Performance Summary Mullen invoiced 377 vehicles valued at $16.8 million, with revenue recognition deferred, and significantly narrowed its net loss attributable to common shareholders - Invoiced 377 vehicles valued at $16.8 million for the nine months ended June 30, 2024, with revenue and accounts receivable recognition deferred[5] Net Loss and Loss Per Share Analysis Net loss attributable to common shareholders significantly narrowed to $289.9 million, with loss per share decreasing to $37.92, despite $105.5 million in non-cash impairment charges Net Loss and Loss Per Share | Metric | 9 Months Ended June 30, 2024 | 9 Months Ended June 30, 2023 | Change (YoY) | | :------------------------------------------------ | :--------------------------- | :--------------------------- | :----------- | | Net Loss Attributable to Common Shareholders | $(289.9) million | $(792.7) million | $(502.8) million (↓63.4%) | | Net Loss Per Share (adjusted for reverse splits) | $(37.92) | $(5,544.35) | $(5,506.43) (↓99.3%) | - The net loss for the nine months ended June 30, 2024, included non-cash impairment charges totaling $105.5 million, primarily due to future funding uncertainties and a decrease in the Company's market capitalization[6] Cash Flow and Working Capital Analysis Total cash spent decreased to $159.2 million, with net cash used in operating activities increasing to $145.2 million, and a $1.0 million investment in working capital Cash Flow Summary | Metric | 9 Months Ended June 30, 2024 | 9 Months Ended June 30, 2023 | Change (YoY) | | :------------------------------------ | :--------------------------- | :--------------------------- | :----------- | | Total Cash Spent (Operating & Investing) | $(159.2) million | $(221.1) million | $(61.9) million (↓28.0%) | | Net Cash Used in Operating Activities | $(145.2) million | $(113.6) million | $(31.6) million (↑27.8%) | | Net Cash Used in Investing Activities | $(14.1) million | $(107.4) million | $(93.3) million (↓86.9%) | Changes in Operating Assets and Liabilities | Changes in Operating Assets and Liabilities | 9 Months Ended June 30, 2024 | 9 Months Ended June 30, 2023 | | :---------------------------------------- | :--------------------------- | :--------------------------- | | Accounts receivable | $671,750 | — | | Inventories | $(21,027,871) | — | | Prepaids and other assets | $(279,024) | $(14,089,476) | | Accounts payable | $18,788,174 | $6,013,276 | | Accrued expenses and other liabilities | $1,757,670 | $4,835,588 | | Right-of-use assets and lease liabilities | $(872,733) | $231,048 | | Total changes in operating assets and liabilities | $(962,034) | $(3,009,564) | Non-Cash Expenses and Gains Details Total non-cash expenses and gains significantly decreased to $182.8 million, primarily due to lower derivative liabilities revaluation and substantial impairment charges Non-Cash Expenses and Gains | Non-Cash Expenses and Gains | 9 Months Ended June 30, 2024 | 9 Months Ended June 30, 2023 | | :------------------------------------------------ | :--------------------------- | :--------------------------- | | Stock-based compensation | $29,174,038 | $71,015,371 | | Depreciation and amortization | $17,768,083 | $10,991,239 | | Impairment of intangible assets | $73,447,067 | — | | Impairment of goodwill | $28,846,832 | — | | Impairment of right-of-use assets | $3,197,668 | — | | Other financing costs - ELOC commitment fee | $6,000,000 | — | | Other financing costs - Initial recognition of derivative liabilities | $4,261,718 | $504,373,115 | | Other financing costs - initial recognition of warrants | $13,652,762 | — | | Revaluation of derivative liabilities | $888,075 | $89,462,559 | | Total non-cash expenses and gains | $182,763,377 | $696,177,260 | Shareholders' Equity Analysis Shareholders' equity decreased to $53.0 million, primarily due to impairment charges and operating losses, partially offset by warrant exercises and notes conversions Shareholders' Equity | Metric | As of June 30, 2024 | As of September 30, 2023 | Change | | :---------------------- | :------------------ | :----------------------- | :----- | | Shareholders' Equity | $53.0 million | $272.8 million | $(219.8) million (↓80.6%) | - The decrease in stockholders' equity reflects impairment charges of $105.5 million and other operating losses of $225.4 million, partially offset by warrant exercises, notes conversions, stock-based compensation, and other equity transactions[11] Liquidity and Debt Status Cash and cash equivalents significantly decreased to $4.0 million, working capital turned negative, and the company managed debt through payoffs and new convertible note issuances Liquidity and Working Capital | Metric | As of June 30, 2024 | As of September 30, 2023 | Change | | :------------------------------------ | :------------------ | :----------------------- | :----- | | Total Cash (incl. restricted cash) | $4.0 million | $155.7 million | $(151.7) million (↓97.4%) | | Working Capital | $(59.0) million | $58.5 million | $(117.5) million | | Working Capital (adjusted) | $(10.4) million | $133.3 million | $(143.7) million | - Paid off $4.9 million in current notes payable secured by a mortgage on the Tunica, Mississippi, facility[13] - Issued new senior secured convertible notes with warrants for cash totaling $12.5 million during the quarter ended June 30, 2024[13] - Subsequent to June 30, 2024, investors purchased an additional aggregate principal amount of $39.5 million for $37.5 million in cash[13] Consolidated Financial Statements This section presents the company's consolidated balance sheets, statements of operations, and cash flows, detailing asset, liability, equity, revenue, expense, and cash movement changes Consolidated Balance Sheets Total assets decreased to $192.3 million, driven by reduced cash and intangible assets, while total liabilities slightly decreased and stockholders' equity significantly declined Consolidated Balance Sheet Summary | Balance Sheet Item | June 30, 2024 | September 30, 2023 | Change (YoY) | | :------------------------------ | :-------------- | :----------------- | :----------- | | ASSETS | | | | | Cash and cash equivalents | $3,549,367 | $155,267,098 | $(151,717,731) (↓97.7%) | | Inventory | $37,834,884 | $16,807,013 | $21,027,871 (↑125.1%) | | Total Current Assets | $67,558,541 | $198,130,456 | $(130,571,915) (↓65.9%) | | Intangible assets, net | $27,939,106 | $104,235,249 | $(76,296,143) (↓73.2%) | | Goodwill, net | — | $28,846,832 | $(28,846,832) (↓100%) | | Total Assets | $192,329,766 | $421,705,730 | $(229,375,964) (↓54.4%) | | LIABILITIES | | | | | Accounts payable | $29,247,841 | $13,175,504 | $16,072,337 (↑122.0%) | | Derivative liabilities | $3,751,217 | $64,863,309 | $(61,112,092) (↓94.2%) | | Total Current Liabilities | $126,559,247 | $139,610,909 | $(13,051,662) (↓9.3%) | | Total Liabilities | $139,334,616 | $148,897,620 | $(9,563,004) (↓6.4%) | | STOCKHOLDERS' EQUITY | | | | | Total Stockholders' Equity | $52,995,150 | $272,808,110 | $(219,812,960) (↓80.6%) | Consolidated Statements of Operations Vehicle sales revenue decreased, gross profit declined, and operating expenses included significant impairment charges, leading to a narrowed net loss before income tax benefit Consolidated Statements of Operations Summary | Statement of Operations Item | 9 Months Ended June 30, 2024 | 9 Months Ended June 30, 2023 | Change (YoY) | | :------------------------------------------------ | :--------------------------- | :--------------------------- | :----------- | | Vehicle sales revenue | $98,570 | $308,000 | $(209,430) (↓68.0%) | | Gross profit / (loss) | $49,122 | $59,331 | $(10,209) (↓17.2%) | | General and administrative | $138,615,121 | $144,186,161 | $(5,571,040) (↓3.9%) | | Research and development | $54,486,237 | $51,188,991 | $3,297,246 (↑6.4%) | | Impairment of goodwill | $28,846,832 | — | $28,846,832 | | Impairment of right-of-use assets | $3,197,668 | — | $3,197,668 | | Impairment of intangible assets | $73,447,067 | — | $73,447,067 | | Loss from operations | $(298,543,803) | $(195,315,821) | $(103,227,982) (↑52.8%) | | Net loss before income tax benefit | $(330,874,340) | $(807,316,026) | $476,441,686 (↓59.0%) | | Net loss attributable to common stockholders after preferred dividends | $(289,858,116) | $(792,659,528) | $502,801,412 (↓63.4%) | | Net Loss per Share | $(37.92) | $(5,544.35) | $5,506.43 (↓99.3%) | | Weighted average shares outstanding | 7,644,049 | 142,967 | 7,501,082 (↑5247.9%) | Consolidated Statements of Cash Flows Net cash used in operating activities increased, investing activities decreased, and financing activities saw a substantial reduction in proceeds, leading to a significant overall cash decrease Consolidated Statements of Cash Flows Summary | Cash Flow Item | 9 Months Ended June 30, 2024 | 9 Months Ended June 30, 2023 | Change (YoY) | | :------------------------------------------------ | :--------------------------- | :--------------------------- | :----------- | | Net loss | $(326,984,240) | $(806,795,641) | $479,811,401 (↓59.5%) | | Net cash used in operating activities | $(145,182,897) | $(113,627,945) | $(31,554,952) (↑27.8%) | | Net cash used in investing activities | $(14,053,838) | $(107,449,762) | $93,395,924 (↓86.9%) | | Net cash provided by financing activities | $7,504,168 | $364,134,630 | $(356,630,462) (↓97.9%) | | Change in cash | $(151,732,567) | $143,056,923 | $(294,789,490) | | Cash and restricted cash, ending of period | $3,963,903 | $227,432,008 | $(223,468,105) (↓98.3%) | - Non-cash activities included $67.8 million from exercise of warrants and $8.1 million from convertible notes and interest conversion to common stock for the nine months ended June 30, 2024[19] Company Overview This section provides an overview of Mullen Automotive, an EV manufacturer with U.S. production facilities, detailing its commercial vehicle offerings, certifications, and market expansion efforts About Mullen Automotive Mullen Automotive, a Southern California-based EV manufacturer, operates two U.S. plants, produces CARB and EPA certified commercial vehicles, and benefits from federal tax credits and FTZ status - Mullen Automotive is a Southern California-based EV manufacturer with two U.S. vehicle plants in Tunica, Mississippi (120,000 sq ft) and Mishawaka, Indiana (650,000 sq ft)[20] - Began commercial vehicle production in Tunica in August 2023[20] - Received IRS approval for federal EV tax credits on its commercial vehicles, offering eligible customers up to $7,500 per vehicle[20] - Both Mullen ONE (Class 1 EV cargo van) and Mullen THREE (Class 3 EV cab chassis truck) are California Air Resource Board (CARB) and EPA certified and available for sale in the U.S.[20] - CARB issued HVIP approval on the Mullen THREE, Class 3 EV truck, providing up to a $45,000 cash voucher at the time of vehicle purchase[20] - Expanded its commercial dealer network with the addition of Pritchard EV, National Auto Fleet Group, Ziegler Truck Group, Range Truck Group, and Eco Auto[20] - Tunica, Mississippi, commercial vehicle manufacturing center received Foreign Trade Zone (FTZ) status approval, providing benefits including deferment of duties owed and elimination of duties on exported vehicles[20] Legal & Contact Information This section outlines the forward-looking statements disclaimer, highlighting inherent risks and uncertainties, and provides essential contact information for the company Forward-Looking Statements This section contains forward-looking statements subject to significant risks and uncertainties, including financing, delivery timelines, and regulatory changes, with no obligation to update - Statements in the press release are forward-looking and involve significant risks and uncertainties that could cause actual results to differ materially[22] - Examples of risks include timing and receipt of capital commitments, sufficiency of funding, B4 vehicle delivery timelines, development and launch of new models, success of grant applications, and outcomes of battery testing[22] - Additional risks include ability to obtain financing, maintain contracts, expand markets, manage acquisitions, unanticipated costs, attract and retain personnel, competition, regulatory changes, consumer behavior, intellectual property, and general economic conditions[22] - Mullen assumes no obligation to update any forward-looking statements, except as expressly required by law[22] Contact Information Provides contact details for Mullen Automotive, Inc. and Corporate Communications via InvestorBrandNetwork (IBN) - Contact information is provided for Mullen Automotive, Inc. and Corporate Communications via InvestorBrandNetwork (IBN)[23]