MULLEN AUTOMOTIVE INC
For the period ended Sep 30, 2024. Filed Jan 24, 2025.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Jan 24, 2025
BINI$0.07-20.3%Stored close · as of Jul 8, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-09-30; filed 2024-01-17.
0001558370-24-000312
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-09-30; filed 2025-01-24.
0001437749-25-001816
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 90 previous paragraphs and 83 current paragraphs.
37 unchanged; 15 reworded; 28 added; 36 removed; 2 previous and 3 current paragraphs rearranged.
Tables are not compared: 13 previous and 18 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (28)
Current report
We are an early-stage company and have recently begun generating notable revenues, with vehicle production and deliveries commencing in fiscal year 2023 (Mullen THREE and, later, Mullen ONE in the last calendar quarter of 2023). In September 2024, our Bollinger segment delivered the first B4 vehicles to customers.
Current report
We recognize revenue from the sale of electric vehicles upon the transfer of control to the dealer/customer. Normally, control transfers at the point of delivery when the dealer/customer has possession of the vehicle and bears the risks and rewards of ownership. However, a contract with one of our dealers includes return provision, allowing unsold vehicles to be returned after one year; and contracts with two of our dealers include return provisions, allowing unsold vehicles to be returned upon contract termination. For these arrangements, due to limited historical data on returns, we defer revenue recognition until the dealer sells the vehicles to end customers, or there is sufficient evidence to reasonably estimate the consideration to which we expect to be entitled. This approach aligns with our commitment to conservative revenue recognition practices and ensures compliance with accounting standards.
Current report
Cost of revenues
Current report
The cost of revenues for the year ended September 30, 2024, totaled $16.9 million, comprising:
Current report
a) Cost of Goods Sold (COGS)
Current report
COGS amounted to $1.3 million, including $0.2 million from the Mullen Commercial segment and $1.1 million from the Bollinger segment. These costs encompass vehicle components and parts, labor costs, amortized tooling costs, and other production-related expenses, as well as estimated warranty provisions. The $1.1 million COGS for the Bollinger segment consist of approximately $0.6 million in standard costs and $0.5 million in cost variances.
Current report
b) Inventory Adjustments to Net Realizable Value
Current report
A non-cash write-down of $15.6 million was recognized for the Mullen Commercial segment, primarily due to excess raw materials and slower-moving inventory. The determination of net realizable value (NRV) involves significant judgment, and actual results may materially differ from estimates. For further details, refer to “Critical Accounting Policies and Estimates” below.
Current report
Interest expense increased by approximately $44.4 million from $5.0 million through the twelve months ended September 30, 2023, to $49.4 million through the twelve months ended September 30, 2024, primarily due to amortization of original issue discount of convertible notes issued and partially converted by the Company in the second half of fiscal year ending September 30, 2024.
Current report
Other financing costs
Current report
Financing costs other than "Interest expense" included losses on initial recognition of derivative liabilities, ELOC commitment fee, losses on initial recognition of warrants and gain/(loss) on derivative liability revaluation: $69.8 million during the year ended September 30, 2024, and $622.5 million during the fiscal year ended September 30, 2023, a decrease of 89% or $552.7 million. These losses have decreased in comparison to the previous year mainly due to decrease in financing. The main part of these losses is caused when the Company issues warrants recognized at fair value as liabilities in addition to preferred stock or other equity instruments in lieu of preferred stock and notes (see further details in theNote 8 andNote 7 of the consolidated financial statements).
Current report
Waived/(accrued) accumulated preferred dividends and other capital transactions with preferred stock owners
Current report
The accumulated preferred dividends and other capital transactions with preferred stock owners amounted to $13.9 million loss in the fiscal year ended September 30, 2023 and were represented primarily by fair value of common stock issued to avoid fractional shares on reverse stock splits - $5.2 million (seeNote 1 - Description of business and basis of presentation) and $8.6 million of financial result from exchange of Series C P/S for Series E P/S (seeNote 9, Series E Preferred Stock section). In the previous fiscal year ended September 30, 2023, the amount was positive ($7.4 million) due to the fact that holders of Series C Preferred stock waived accumulated dividends.*** ***
Current report
Our Common Stock is listed on the Nasdaq Capital Market. To maintain that listing, we must satisfy minimum financial and other requirements including, without limitation, a requirement that our closing bid price be at least $1.00 per share. Effective September 17, 2024, the Company implemented a reverse stock split at a ratio of 1-for-100 shares in order to satisfy this requirement. The reverse stock split did not change the authorized number of shares or the par value of the Common Stock nor modify any voting rights of the Common Stock. No fractional shares were issued in connection with the September 2024 reverse stock split and each fractional share resulting from the reverse stock split were rounded up to the next whole share. On October 16, 2024, the Company received formal notice from Nasdaq confirming that it had regained compliance with the minimum bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2).
Current report
In addition to the reverse stock split implemented in September 2024, the Company previously effected a 1-for-25 reverse stock split on May 4, 2023, a 1-for-9 reverse stock split on August 11, 2023, and a 1-for-100 reverse stock split on December 21, 2023. The Company retroactively adjusted its historical financial statements to reflect the reverse stock splits.
Current report
The Company believes that its available liquidity will not be sufficient to meet its current obligations for a period of at least twelve months from the date of the filing of this Annual Report on Form 10-K. Accordingly, the Company has concluded there is substantial doubt about its ability to continue as a going concern. Without additional funding, the Company may be unable to continue operations and could be required to seek bankruptcy protection within 30 days of the issuance of these financial statements.
Current report
Management is pursuing several strategies to address liquidity concerns, including:
Current report
Despite these efforts, there is no assurance that these initiatives will be successful. If the Company cannot secure additional funding in the immediate term, it may be required to curtail operations significantly or seek bankruptcy protection. These consolidated financial statements do not include any adjustments to the carrying amounts of assets or liabilities that may result from the outcome of these uncertainties.
Current report
(1) In October 2024, the Company reached an agreement with holders of all matured notes and loan advances (see table above) in amount of $2.7 million, as well as accumulated interest in amount of approximately $1.8 million, that the liabilities would be settled by issuance of shares of common stock of the Company worth of $3 million. The liability has been fully settled by December 2024 by issuing shares of common stock in several installments.
Current report
(2) As of September 30, 2024, the Company's senior convertible notes (totaling $20.3 million) and accumulated interest (approximately $0.3 million) were in cross-default due to the non-payment of $0.2 million that matured in September 2024. As a result, the entire principal balance became due immediately, allowing investors to demand full repayment. Additionally, the interest rate increased from 15% to 20%. However, investors have not requested immediate cash payment of the notes or accrued interest. In December 2024, the court has approved a settlement agreement between the Company and holders of the Senior convertible notes, and, by the date these financial statements are available to be issued, almost full amount of the Senior convertible notes and accumulated interest has been converted to shares of common stock under Section 3(a)(10) of the Securities Act of 1933.
Current report
The following is the overview of changes in our indebtedness during the year ended September 30, 2024:
Current report
The following is the overview of changes in our indebtedness during the year ended September 30, 2023:
Current report
As a result of impairment tests performed by management during the twelve months ended September 30, 2024 in respect of** **Mullen Commercial segment, impairment was recognized for part of right-of-use assets in the amount of $10.2 million, as well as for engineering design intangible assets with a carrying amount of $15.1 million, and construction-in-progress for $4.2 million. Also, the Company has recorded impairment of goodwill in amount of $1.2 million pertaining to acquisition of retail business (seeNote 4 - Business acquisitions). The primary reasons for the impairment of these assets were sales slower than expected, decrease in the Company's market capitalization, and uncertainty of the availability of future funding.
Current report
As a result of impairment tests performed by management during the twelve months ended September 30, 2024 in respect of the Bollinger segment, additional impairment was recognized in the financial statements: including $28.8 million for goodwill, $58.3 million for indefinite-lived in-process research and development assets, as well as $1.3 million for right-of-use assets. The impairment has been recognized primarily due to the present uncertainty of the availability of future funding required to support this segment and the decrease in the Company's market capitalization.
Current report
Net realizable value of inventory
Current report
In accordance with applicable accounting standards, we value inventory at the lower of cost or net realizable value. Our assessment of net realizable value is a critical accounting estimate due to the inherent market volatility, evolving technology, and competitive landscape of the EV industry.
Current report
The net realizable value of inventory is determined based on the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. In determining net realizable value, we consider several factors, including:
Current report
For the year ended September 30, 2024, we recognized net realizable value adjustments of $15.6 million, primarily related to excess raw material and slower moving inventory of the Mullen Commercial segment. These adjustments were recorded as a component of cost of goods sold.
Removed paragraphs (36)
Previous report
In connection with the Merger Agreement (as defined below), and as disclosed in our Current Report on Form 8-K filed with the SEC on November 12, 2021, our fiscal year end has changed from December 31 to September 30, effective for our fiscal year ended September 30, 2022. As a result, and unless otherwise indicated,references to our fiscal year 2023 and prior years mean the fiscal year ended on September 30 of such year.
Previous report
We are a development stage company and have only recently started to generate notable revenues. Vehicle production and deliveries began in June 2023. As we expand production and commercialization of vehicles, we expect the majority of our revenue to be derived from sales of commercial vehicles. We are planning to ramp up production and reach sufficient revenue levels in subsequent periods – primarily from sales of Commercial Delivery Vehicles (Class 1 – 6). As we continue to develop our product line, we expect additional revenue streams in the future, also from the sales of Sport Utility Vehicles ("SUVs") and the flexible leasing of our electric vehicles ("EVs").
Previous report
In accordance with accounting standards, we recognize revenue from the sale of electric vehicles upon transfer of control to a customer. In general, the control is transferred at the point of delivery to the customer but certain contracts with our dealers contain a return provision, stating that they may return unsold vehicles after 1 year. Since the Company does not have sufficient relevant statistics of returns yet, we defer revenue recognition until the vehicles have been sold by such dealer or until there is sufficient evidence to justify a reasonable estimate for consideration to which the Company expects to be entitled. Payments from customers are generally expected to be received within 30 days after delivery.
Previous report
Cost of Goods Sold
Previous report
The costs of goods sold primarily include vehicle components and parts, labor costs, amortized tooling costs, provisions for estimated warranty expenses, and other relevant costs associated with the production of these vehicles.
Previous report
Interest expense decreased by approximately $22.0 million or 81% from approximately $26.9 million through the twelve months ended September 30, 2022, to approximately $5.0 million through the twelve months ended September 30, 2023, primarily due to a decrease in convertible debt that has been fully converted in Q1 and Q2 of the 2023 fiscal year.
Previous report
During the calendar year ended December 31, 2023 we have completed 3 reverse stock splits. In May 2023, we completed a 1-for-25 reverse split of our outstanding shares of common stock. In August 2023, we completed a 1-for-9 reverse split of our outstanding shares of common stock. The last 1-for-100 reverse stock split was effectuated in December 2023.
Previous report
The 1-for-25 reverse stock split was reflected in our unaudited condensed consolidated financial statements for the six months ended March 31, 2023 and 2022. The 1-for-25 and 1-for-9 reverse splits were reflected in our unaudited condensed consolidated financial statements for the nine months ended June 30, 2023 and 2022. The last 1-for-100 reverse stock split effected on December 21, 2023 has been recognized in our consolidated financial statements for the year ended September 30, 2023 (comparatives for the year ended September 30, 2022 have also been retroactively adjusted).
Previous report
As a result of these reverse splits, our issued and outstanding common stock decreased from 833,468,180 shares to 37,043 shares as of September 30, 2022, and from 7,048,387 shares to 313 shares as of September 30, 2021.
Previous report
The Nasdaq Hearings Panel, on October 26, 2023, allowed Mullen Automotive to continue its listing on The Nasdaq Capital Market, subject to certain conditions, including maintaining a minimum stock price and holding an annual shareholder meeting.
Previous report
The Company is evaluating strategies to obtain the required additional funding for future operations. These strategies may include, but are not limited to, obtaining equity financing, issuing debt, or entering other financing arrangements, and restructuring of operations to grow revenues and decrease expenses. However, given the impact of the economic downturn on the U.S. and global financial markets, the Company may be unable to access further equity or debt financing when needed. As such, there can be no assurance that the Company will be able to obtain additional liquidity when needed or under acceptable terms, if at all.
Previous report
Despite these efforts, there can be no assurance that our plans will be successful in alleviating the substantial doubt about our ability to continue as a going concern. These financial statements do not include any adjustments that might result from the outcome of this uncertainty, such as the potential need to liquidate assets, restructure operations, or make other significant changes to the business model.
Previous report
Net cash used in investing activities was $107.9 million in the year ended September 30, 2023, a 129% increase from $47.1 million used in investing activities the year ended September 30, 2022. The primary factor in the increased cash outflows was the ELMS assets acquisition.
Previous report
New lease contracts
Previous report
On November 1, 2023, the Company entered a 5-year lease agreement for premises of approximately 122,000 sq. ft. in Fullerton, California, designated for light manufacturing and distribution of electric vehicle batteries. Base rent is $2,992 thousand for the first year (and increases approximately 4% every year) and additional operating expenses are approximately $715 thousand in the first year with subsequent annual recalculation. Security deposit payable to the landlord is approximately $1 million.
Previous report
Non-convertible secured promissory note
Previous report
On December 18, 2023, Mullen entered into a Debt Agreement to issue a non-convertible secured promissory note (the “Note”) with a principal amount of $50 million, purchased for $32 million, reflecting an $18 million original issue discount. The Note, which does not include conversion rights, stock, warrants, or other securities, aims to raise capital for the Company's manufacturing operations. The issuance of this non-convertible Note is scheduled for the first trading day when all closing conditions are met. By January 15, 2024, the loan has not been received.
Previous report
The Note will incur 10% annual interest, escalating to 18% post-Event of Default. It matures three months post-issuance. The Note's terms allow for accelerated repayment upon default, requiring the Company to pay the principal, accrued interest, and other due amounts. The Note is secured by the Company’s assets and imposes restrictions on the Company, limiting additional debt, asset liens, stock repurchases, outstanding debt repayment, and affiliate transactions, except for specified exceptions. It mandates prepayment of the principal from net proceeds of any subsequent financing.
Previous report
Scheduled Debt Maturities
Previous report
The following are scheduled debt maturities as of September 30, 2023:
Previous report
Critical accounting estimates for goodwill and indefinite-lived intangibles assets impairment tests
Previous report
Our goodwill and indefinite-lived intangible assets, which primarily consist of in-process research and development assets and patents, pertain to the Bollinger acquisition on September 7, 2022 (refer toNote 4 for more details).
Previous report
We utilize the discounted cash flow method under the income approach to estimate the fair value of our reporting units. Some of the more significant assumptions inherent in estimating the fair value include the estimated future annual net cash flows for the reporting units (including net sales, cost of products sold, sales, general, and administrative costs (“SG&A”), depreciation and amortization, working capital, and capital expenditures), income tax rates, long-term growth rates, and a discount rate that appropriately reflects the risks inherent in each future cash flow stream. We selected the assumptions used in the financial forecasts using historical data, supplemented by current and anticipated market conditions, estimated product line growth rates, management’s plans, and comparable company market multiples.
Previous report
We utilize the excess earnings method under the income approach to estimate the fair value of our in-process research and development assets. Some of the more significant assumptions inherent in estimating the fair values include the estimated future annual net cash flows for the in-process research and development assets (including net sales, cost of products sold, and SG&A), contributory asset charges, income tax considerations, economic depreciation rate, a discount rate that reflects the level of risk associated with the future earnings attributable to the in-process research and development assets, and management’s intent to invest in the in-process research and development assets indefinitely. We selected the assumptions used in the financial forecasts using historical data, supplemented by current and anticipated market conditions, estimated product line growth rates, management’s plans, and comparable company market multiples.
Previous report
As a result of our quantitative impairment assessment of goodwill, we reassessed the fair value of the reporting units and recorded a goodwill impairment loss of $63,988,000 within the consolidated statement of operations. As a result of our quantitative impairment assessment of in-process research and development assets, we determined that the fair value exceeded the carrying amount and as such, no impairment loss was recorded.
Previous report
The discount rate and long-term growth rate used to estimate the fair value of our reporting units, and the carrying amount of goodwill used in our quantitative impairment assessment were as follows:
Previous report
The discount rate and economic depreciation rate used to estimate the fair value of our in-process research and development assets, and the carrying amount used in our quantitative impairment assessment were as follows:
Previous report
Assumptions used in impairment assessments are made at a point in time and therefore, they are subject to change based on the facts and circumstances present at each annual and interim impairment assessment date. Additionally, these assumptions are generally interdependent and do not change in isolation. However, as it is reasonably possible that changes in assumptions could occur, as a sensitivity measure, we have presented the estimated effects of isolated changes in discount rates and long-term growth rates on the fair values of our reporting units. We have also presented the estimated effects of isolated changes in discount rates and economic depreciation rate on the fair value of the in-process research and development assets. These estimated changes in fair value are not necessarily representative of the actual impairment that would be recorded in the event of a fair value decline.
Previous report
If we had changed the following assumptions used to estimate the fair value of the reporting units and in-process research and development assets as part of the quantitative impairment assessment, these isolated changes, which are reasonably possible to occur, would have led to the following increase/(decrease) in the aggregate fair value of reporting units and in-process research and development assets, respectively, as follows:
Previous report
Critical accounting estimates for other long-lived assets impairment tests
Previous report
Our long-lived assets primarily consist of equipment, real property and finite-lived intangible assets subject to amortization, which for us are capitalized engineering design assets. The long-lived assets primarily pertain to Legacy Mullen and to assets acquired as part of the ELMS asset acquisition by November 30, 2022 (refer toNote 4 for more details).
Previous report
We utilized the discounted cash flow method under the income approach to estimate the fair value of our long-lived assets. Some of the more significant assumptions inherent in estimating the fair value include the estimated future annual net cash flows for the long-lived assets (including net sales, cost of products sold, SG&A, depreciation and amortization, working capital, and capital expenditures), income tax rates, long-term growth rates, and a discount rate that appropriately reflects the risks inherent in each future cash flow stream. We selected the assumptions used in the financial forecasts using historical data, supplemented by current and anticipated market conditions, management’s plans, and comparable company market multiples. Impairment losses on long-lived assets to be disposed of, if any, are based on the estimated proceeds to be received, less costs of disposal. As a result of our impairment assessment of long-lived assets, we reassessed the fair value of the long-lived assets and recorded an impairment loss of $20,643,000 within the consolidated statement of operations.
Previous report
The discount rates and long-term growth rates used to estimate the fair values of our long-lived assets, as well as the long-lived assets carrying amount used in our impairment assessment were as follows:
Previous report
Assumptions used in impairment assessments are made at a point in time and require significant judgment; therefore, they are subject to change based on the facts and circumstances present at each assessment date. Additionally, these assumptions are generally interdependent and do not change in isolation. However, as it is reasonably possible that changes in assumptions could occur, as a sensitivity measure, we have presented the estimated effects of isolated changes in discount rates and long-term growth rates on the fair values of our long-lived assets. These estimated changes in fair value are not necessarily representative of the actual impairment that would be recorded in the event of a fair value decline.
Previous report
If we had changed the following assumptions used to estimate the fair value of the long-lived assets as part of the impairment assessment, these isolated changes, which are reasonably possible to occur, would have led to the following increase/(decrease) in the aggregate fair value of the long-lived assets:
Reworded paragraphs (15)
Previous wording
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries Mullen Investment Properties LLC, a Mississippi corporation, Ottava Automotive, Inc., a California corporation, Mullen Real Estate, LLC, a Delaware corporation, as well as a 60%-owned subsidiary Bollinger Motors Inc., a Delaware corporation. Intercompany accounts and transactions have been eliminated, if any. The financial statements reflect the consolidated financial position and results of operations of Mullen, which have been prepared in accordance with Generally Accepted Accounting Principles in the United States.
Current wording
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries Ottava Automotive, Inc., a California corporation, Mullen Indiana Real Estate, LLC., a Delaware corporation, Mullen Investment Properties LLC, a Mississippi corporation, Mullen Advanced Energy Operations LLC, a California corporation and a majority ownership in Bollinger Motors, incorporated in Delaware. Intercompany accounts and transactions have been eliminated, if any. The financial statements reflect the consolidated financial position and results of operations of Mullen, which have been prepared in accordance with Generally Accepted Accounting Principles in the United States.
Previous wording
Research and development expenses increased by approximately $55.7 million or 257% from approximately $21.7 million through the twelve months ended September 30, 2022, to approximately $77.4 million through the twelve months ended September 30, 2023. Research and Development costs are expensed as incurred. To date, our research and development expenses have consisted primarily of engineering and consulting services in connection with the development and design of our EVs. As we ramp up for commercial operations, we expect research and development expenses to increase as we continue to invest in new vehicle model design and development of technology.
Current wording
Research and development expenses decreased by approximately $2.5 million or 3% from approximately $77.4 million through the twelve months ended September 30, 2023, to approximately $74.9 million through the twelve months ended September 30, 2024. Research and development costs are expensed as incurred. To date, our research and development expenses have consisted primarily of engineering and consulting services in connection with the development and design of our EVs.
Previous wording
General and administrative (“G&A”) expenses include all non-production expenses incurred by us in any given period. This includes expenses such as professional fees, salaries, rent, repairs and maintenance, utilities and office expense, employee benefits, depreciation and amortization, advertising and marketing, settlements and penalties, taxes, licenses and other expenses. We expense advertising costs as incurred. General and administrative expenses increased by approximately $140.5 million or 187% from approximately $75.3 million in the twelve months ended September 30, 2022, to approximately $215.8 million in the twelve months ended September 30, 2023, primarily due to increases in marketing, listing and regulatory fees, office expenses, settlements and penalties, and payroll related expenses with the growth of personnel and resources.
Current wording
General and administrative (“G&A”) expenses include all non-production expenses incurred by us in any given period. This includes expenses such as professional fees, salaries, rent, repairs and maintenance, utilities and office expense, employee benefits, depreciation and amortization, advertising and marketing, settlements and penalties, taxes, licenses and other expenses. We expense advertising costs as incurred. General and administrative expenses decreased by approximately $33.9 million or 16% from approximately $215.8 million in the twelve months ended September 30, 2023, to approximately $181.9 million in the twelve months ended September 30, 2024, primarily due to decrease in settlements and penalties, and in stock-based compensation to CEO under Performance stock awards agreements (including CEO share based performance award liability revaluation - seeNote 11 - Share-based compensationof the financial statements for more information), although certain expenses increased, like advertising and promotion, professional fees, depreciation, etc.
Previous wording
Due to unfavorable market conditions and decline of the market prices of the Company’s common stock, we have tested long-lived asset for recoverability. As a result of the impairment test performed on September 1, 2023 by independent professional appraisers, the Company has recognized impairment losses in amount of $84,631,000 that related to goodwill (Bollinger segment), property, plant, and equipment, and intangible assets (ELMS/Mullen segment). See more details below.
Current wording
Due to unfavorable market conditions and decline of the market prices of the Company’s common stock, we have tested long-lived assets for recoverability. As a result of the impairment tests performed during the year ended September 30, 2024, the Company recognized impairment losses in amount of $119.2 million that related to goodwill, property, plant, and equipment, intangible assets, and right-of-use assets - an increase of $34.6 million from the last year, when impairment of goodwill, property, plant, and equipment, and intangible assets reached $84.6 million. See more details in the section below.
Previous wording
The net loss attributable to common stockholders (after preferred dividends) was $964.9 million, or $1,574.14 net loss per share, for the twelve months ended September 30, 2023, as compared to a net loss attributable to common stockholders after preferred dividends of $780.0 million, or $63,085.26 loss per share, for the twelve months ended September 30, 2022.
Current wording
The net loss attributable to common stockholders (after transactions accounted for as preferred dividends) was $471.0 million, or $1,425.61 net loss per share, for the twelve months ended September 30, 2024, as compared to a net loss attributable to common stockholders (after transactions accounted for as preferred dividends) of $964.9 million, or $157,405.25 loss per share, for the twelve months ended September 30, 2023.
Previous wording
The Company's principal source of liquidity consists of existing cash and restricted cash of approximately $155.7 million as of September 30, 2023. During the twelve months ended September 30, 2023, the Company used approximately $179.2 million of cash for operating activities. The net working capital on September 30, 2023 was positive and amounted to approximately $58.5 million, or approximately $133.3 million after excluding derivative liabilities and liabilities to issue stock that are supposed to be settled by issuing common stock without using cash. For the year ended September 30, 2023, the Company has incurred a net loss of $1,006.7 million and, as of September 30, 2023, our accumulated deficit is $1,862.2 million.
Current wording
The Company's principal source of liquidity consists of existing cash and restricted cash of approximately $10.7 million as of September 30, 2024. During the twelve months ended September 30, 2024, the Company used approximately $185.6 million of cash for operating activities. The net working capital on September 30, 2024 was negative and amounted to approximately $120.0 million, or approximately $38.5 million after excluding derivative liabilities and liabilities to issue stock that are supposed to be settled by issuing common stock without using cash. For the year ended September 30, 2024, the Company has incurred a net loss of $505.8 million and, as of September 30, 2024, our accumulated deficit was $2.3 billion.
Previous wording
To date, our current working capital and development needs have been primarily funded through the issuance of convertible indebtedness, convertible preferred stock and common stock. Debt comprises an insignificant component of our funding needs.
Current wording
To date, our current working capital and development needs have been primarily funded through the issuance of convertible indebtedness, convertible preferred stock and common stock.
Previous wording
The short-term debt classification primarily is based upon loans due within twelve-months from the balance sheet date, in addition to loans that have matured and remain unpaid. Management plans to renegotiate matured loans with creditors for favorable terms, such as reduce interest rate, extend maturities, or both; however, there is no guarantee favorable terms will be reached. Until negotiations with creditors are resolved, these matured loans remain outstanding and will be classified within short-term debt on the balance sheet. Interest and fees on loans are being accounted for within accrued interest.
Current wording
The short-term debt classification primarily is based upon loans due within twelve-months from the balance sheet date, in addition to loans that have matured and remain unpaid.
Previous wording
Our cash flow used in operating activities to date has been primarily comprised of costs related to research and development, payroll and other general and administrative activities. As we continue to ramp up hiring ahead of starting commercial operations, we expect our cash used in operating activities to increase significantly before we start to generate any material cash flow from our business.
Current wording
Our cash flow used in operating activities to date has been primarily comprised of costs related to starting production, research and development, payroll and other general and administrative activities. As we continue to ramp up commercial manufacturing and sales, we expect our cash used in operating activities to decrease over time as we continue to reduce operating expenses and start to generate cash flow from our commercial vehicle sales. Net cash used in operating activities was $185.6 million in the twelve months ended September 30, 2024, a 4% increase from $179.2 million net cash used during the twelve months ended September 30, 2023.
Previous wording
Our cash flows used in investing activities, to date, have been comprised mainly of purchases of equipment. We expect these costs to increase substantially in the near future as we ramp up activity ahead of commencing commercial operations.
Current wording
Our cash flows used in investing activities, to date, have been comprised mainly of purchases of equipment. We expect these costs to decrease in the near future as we have ramped up production activity during 2024. Net cash used in investing activities was $16.1 million in the year ended September 30, 2024, an 85% decrease from $107.9 million used in investing activities the year ended September 30, 2023.
Previous wording
Net cash provided by financing activities was $358.4 million for the year ended September 30, 2023 primarily due to issuance of preferred shares and other convertible instruments in lieu of preferred shares, as compared to $197.3 million net cash provided by financing activities for the year ended September 30, 2022.
Current wording
Through September 30, 2024, we have financed our operations primarily through the issuance of convertible notes and warrants. Net cash provided by financing activities was $56.8 million for the year ended September 30, 2024, as compared to $358.4 million net cash provided by financing activities for the year ended September 30, 2023.
Previous wording
Our financial statements have been prepared in accordance with U.S. GAAP. In the preparation of these financial statements, our management is required to use judgment in making estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements, as well as the reported expenses incurred during the reporting periods. Management considers an accounting judgment, estimate or assumption to be critical when (1) the estimate or assumption is complex in nature or requires a high degree of judgment and (2) the use of different judgments, estimates and assumptions could have a material impact on the consolidated financial statements. Our significant accounting policies are described inNote 3 to the consolidated financial statements. Management believes none of the accounting estimates are considered critical for the preparation of these consolidated financial statements.
Current wording
Our financial statements have been prepared by U.S. GAAP. In the preparation of these financial statements, our management is required to use judgment in making estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements, as well as the reported expenses incurred during the reporting periods. Management considers an accounting judgment, estimate, or assumption to be critical when (1) the estimate or assumption is complex in nature or requires a high degree of judgment and (2) the use of different judgments, estimates, and assumptions could have a material impact on the consolidated financial statements. Our significant accounting policies are described inNote 3 to the consolidated financial statements.
Previous wording
In preparation of these financial statements, management applied critical estimates and assumptions while performing impairment test for goodwill and other long-lived assets. We identified Bollinger and ELMS/Legacy Mullen (refer toNote 21 - Segment information) as our reporting units for the purposes of assessing impairments.
Current wording
In preparation of these financial statements, management applied critical estimates and assumptions while performing impairment tests for goodwill and other long-lived assets and while determining net realizable value of inventory.
Previous wording
We review our long-lived asset groups for impairment whenever events or changes in circumstances indicate that the carrying amount of such asset groups may not be recoverable. Such conditions could include significant adverse changes in the business climate, current period operating or cash flow losses, significant declines in forecasted operations, or a current expectation that an asset group will be disposed of before the end of its useful life. Recoverability of long-lived asset groups to be held and used is measured by a comparison of the carrying amount of the asset group to future undiscounted net cash flows expected to be generated by the asset group. If the asset group is considered to be impaired, the impairment recognized is the amount by which the carrying amount of the asset group exceeds the fair value of the asset group. Due to a prolonged decrease in our market capitalization, including a significant decline in stock price and budgeted performance targets not achieved as compared to acquisition date budgets, we assessed the long-lived assets for impairment.
Current wording
We review our noncurrent asset groups for impairment whenever events or changes in circumstances indicate that the carrying amount of such asset groups may not be recoverable. Such conditions could include significant adverse changes in the business climate, current period operating or cash flow losses, significant declines in forecasted operations, or a current expectation that an asset group will be disposed of before the end of its useful life. The recoverability of noncurrent asset groups to be held and used is measured by a comparison of the carrying amount of the asset group to future undiscounted net cash flows expected to be generated by the asset group. Suppose the asset group is considered to be impaired. In that case, the impairment recognized is the amount by which the carrying amount of the asset group exceeds the fair value of the asset group. Due to a prolonged decrease in our market capitalization, including a significant decline in stock price and budgeted performance targets not achieved as compared to acquisition date budgets, we assessed noncurrent assets for impairment.
Previous wording
Fair value determinations require significant judgment and are sensitive to changes in underlying assumptions, estimates, and market factors. Estimating the fair value of the reporting units and in-process research and development assets requires us to make assumptions and estimates regarding our future plans, as well as industry, economic, and regulatory conditions. These assumptions and estimates include estimated future annual net cash flows, income tax considerations, discount rates, long-term growth rates, contributory asset charges, and other market factors. If current expectations of future growth rates and margins are not met, if market factors outside of our control, such as discount rates, or income tax rates, change, or if management’s expectations or plans otherwise change, including updates to our long-term operating plans, then our reporting units or in-process research and development assets might become impaired in the future. Additionally, any decisions to divest certain non-strategic assets could in the future lead to goodwill or in-process research and development assets impairments.
Current wording
Estimating the fair value of the reporting units and certain assets requires us to make assumptions and estimates regarding our future plans, as well as industry, economic, and regulatory conditions. These assumptions and estimates include estimated future annual net cash flows, income tax considerations, discount rates, long-term growth rates, contributory asset charges, and other market factors. Assumptions used in impairment assessments are made at a point in time. Therefore, they are subject to change based on the facts and circumstances present at each annual and interim impairment assessment date. Fair value determinations require significant judgment and are sensitive to changes in underlying assumptions, estimates, and market factors.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
The following is a summary of our debt as of September 30, 2023:
Current report — wording carried from elsewhere
Impairment tests for goodwill and other long-lived assets
Current report — wording carried from elsewhere
We identified Bollinger and Mullen Commercial (refer toNote 21 - Segment information) as our reporting units for the purposes of assessing impairments.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Net cash used in operating activities was $179.2 million in the twelve months ended September 30, 2023, a 172% increase from $65.8 million net cash used during the twelve months ended September 30, 2022.
Previous report — wording carried elsewhere
Through September 30, 2023, we have financed our operations primarily through the issuance of convertible notes and equity securities.