MULLEN AUTOMOTIVE INC

NOTE** 1 –DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Description of Business

Mullen Automotive Inc., a Delaware corporation (“MAI”, “Mullen”, “we” or the “Company”), is a Southern California-based development-stage electric vehicle company that operates in various verticals of businesses focused within the automotive industry. Mullen controls 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.

Mullen Automotive Inc., a California corporation (“Previous Mullen”), was originally formed on* April20* 2010, as a developer and manufacturer of electric vehicle technology and operated as the Electric Vehicle (“EV”) division of Mullen Technologies, Inc. (“MTI”) until* November 5, 2021,at which time Previous Mullen underwent a capitalization and corporate reorganization by way of a spin-off to its shareholders, followed by a reverse merger with and into Net Element, Inc., which was accounted for as a reverse merger transaction, in which Previous Mullen was treated as the acquirer for financial accounting purposes. (the “Merger”). The Company changed its name from “Net Element, Inc.” to “Mullen Automotive Inc” and the Nasdaq ticker symbol for the Company’s common stock changed from “NETE” to “MULN” on the Nasdaq Capital Market at the opening of trading on November5,* 2021.

Mullen is building and delivering the newest generation of Commercial Trucks. We also have a portfolio of high-performance Passenger vehicles in various stages of Product Development for launch in subsequent years subject to available financing.

Acquisition of controlling interest in Bollinger Motors, Inc. in* September 2022positioned Mullen into the medium duty truck classes4*-6, along with the Sport Utility and Pick Up Trucks EV segments. First Bollinger vehicles were sold in* September 2024.*

Thesecond acquisition was in* October 2022,when the U.S. Bankruptcy Court approved the Company acquisition of ELMS (Electric Last Mile Solutions) assets in an all-cash purchase. With this transaction, Mullen acquired a manufacturing plant in Mishawaka Indiana and all the intellectual property needed to engineer and build Class1* and Class3 electric vehicles. First vehicles were produced and delivered to customers during the* 12 months ended* * September 30, 2023.*

Basis of Presentation and Principles of Consolidation

These consolidated financial statements have been prepared in accordance with Generally Accepted Accounting Principles in the United States (“U.S. GAAP”). The financial statements reflect the consolidated financial position and results of operations of Mullen, which include the accounts of the Company and its subsidiaries. Intercompany accounts and transactions have been eliminated, if any. Certain prior-period amounts have been reclassified in the accompanying consolidated financial statements and notes thereto in order to conform to the current period presentation.

Noncontrolling interest presented in these consolidated financial statements relates to the portion of equity (net assets) in subsidiariesnot attributable, directly or indirectly, to Mullen. Net income or loss are allocated to noncontrolling interests by multiplying the relative ownership interest of the noncontrolling interest holders for the period by the net income or loss of the entity to which the noncontrolling interest relates.

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Reverse Stock Splits

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. On* September 16, 2024,we received formal notice from the Listing Qualifications department of The Nasdaq Stock Market LLC that, based upon the closing bid price for our Common Stock, for the previous30*-consecutive business day period, the Companyno longer satisfied the minimum bid price requirement for continued listing.

Effective* September 17, 2024,the Company implemented a reverse stock split at a ratio of1*-for-100 shares. 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 Rule5550*(a)(2).

In addition to the reverse stock split implemented in* September 2024,the Company previously effected a1*-for-25 reverse stock split on* May 4, 2023,a1*-for-9 reverse stock split on* August 11, 2023,and a1*-for-100 reverse stock split on* December 21, 2023.*

As a result of these reverse stock splits, the number of shares of common stock that can be issued upon exercise of warrants, preferred stock, and other convertible securities, as well as any commitments to issue securities, that provide for adjustments in the event of a reverse stock split, was appropriately adjusted pursuant to their applicable terms for the reverse stock splits. If applicable, the conversion price for each outstanding share of preferred stock and the exercise price for each outstanding warrant was increased, pursuant to their terms, in inverse proportion to the split ratio such that upon conversion or exercise, the aggregate conversion price for conversion of preferred stock and the aggregate exercise price payable by the warrant holder to the Company for shares of common stock subject to such warrant will remain approximately the same as the aggregate conversion or exercise price, as applicable, prior to the reverse stock splits.No fractional shares were issued in connection with the reverse stock splits. All fractional shares were rounded up to the nearest whole share. As a result, additional 3,210 and 439,899 shares were issued for the benefit of stockholders that would otherwise obtain fractional shares upon reverse stock split in* December 2023and September 2024,*respectively.

The reverse stock splits havenot changed the authorized number of shares or the par value of the common stock nor modified any voting rights of the common stock. The number and par value of Series A Preferred Stock, Series C Preferred Stock and Series D Preferred Stock werenot affected by the reverse stock splits, but their conversion ratios have been proportionally adjusted. There wereno outstanding shares of Series B Preferred Stock and Series E Preferred Stock as of the effective date of the reverse stock splits.

The Company retroactively adjusted its historical financial statements to reflect the reverse stock splits (SeeNote10* - Loss per share* for reverse stock splits effect on loss per share). All issued and outstanding common stock and per share amounts contained in the financial statements have been adjusted to reflect the reverse stock splits for all periods presented. The common stock and additional paid-in-capital line items of the financial statements were adjusted to account for the reverse stock splits for all periods presented: including adjustment of $2,843 and $37 to common stock (decreased) and additional paid-in-capital (increased) reported by the Company in the previous10-K as of* September 30, 2023,and October 1, 2022,*respectively.

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The impact of the reverse stock splits on the shares of common stock previously reported for the fiscal year ended* September 30, 2023*was as follows:

NOTE 2 –** LIQUIDITY, CAPITAL RESOURCES, AND GOING CONCERN**

These consolidated financial statements have been prepared on the basis that assumes the Company will continue as a going concern which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business.

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 thetwelve 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.

The Company believes that its available liquidity willnot be sufficient to meet its current obligations for a period of at leasttwelve months from the date of the filing of this Annual Report on Form10-K. Accordingly, the Company has concluded there is substantial doubt about its ability to continue as a going concern. Without additional funding, the Company* maybe unable to continue operations and could be required to seek bankruptcy protection within30* days of the issuance of these financial statements.

Management’s Plans and Uncertainty About Future Viability

Management is pursuing several strategies to address liquidity concerns, including:

Despite these efforts, there isno 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 donot include any adjustments to the carrying amounts of assets or liabilities that* may*result from the outcome of these uncertainties.

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NOTE 3 –** SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

Use of Estimates

The preparation of our 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 consolidated financial statements and the reported amounts of total expenses in the reporting periods. Estimates are used for, butnot limited to, cash flow projections and discount rate for calculation of goodwill impairment, fair value and impairment of long-lived assets, including intangible assets, inventory valuation, and fair value of financial instruments. Management bases its estimates on historical experience and on various other assumptions believed to be reasonable, the results of which form the basis for carrying values of assets and liabilities and the recording of costs and expenses that arenot 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 significant government regulation. 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. The Company is dependent on its suppliers, including single-source suppliers. It depends on the ability of these suppliers to deliver the necessary components of our products in a timely manner at prices, quality levels, and volumes acceptable to us. Anyone or combination of these or other risks could have a substantial impact on our future operations and prospects for commercial success.

Business Combination

Business acquisitions are accounted for in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)805 “Business Combinations”. FASB ASC805 requires the reporting entity to identify the acquirer, determine the acquisition date, recognize and measure the identifiable tangible and intangible assets acquired, the liabilities assumed and any noncontrolling interest in the acquired entity, and recognize and measure goodwill or a gain from the purchase. The acquiree’s results are included in the Company’s consolidated financial statements from the date of acquisition. Assets acquired and liabilities assumed are recorded at their fair values and the excess of the purchase price over the amounts assigned is recorded as goodwill. Adjustments to fair value assessments are recorded to goodwill over the measurement period (not longer thantwelve months). The acquisition method also requires that acquisition-related transaction and post-acquisition restructuring costs be charged to expense.

Cash and Cash Equivalents

Cash and cash equivalents are financial instruments that are potentially subject to concentrations of credit risk. The Company’s cash and cash equivalents are deposited in accounts at large financial institutions, and amounts* mayexceed federally insured limits. The Company believes it isnot* exposed to significant credit risk due to the financial strength of the depository institutions in which the cash and cash equivalents are held. The Company hasno financial instruments with off-balance sheet risk of loss.

Restricted Cash

Cash obtained from customer deposits is held by the Company and is considered to be restricted from use to fund operations. Refundable deposits were $426.9 thousand and $429.4 thousand for the years ended* September 30, 2024* and2023.

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.

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Accounts receivable

Accounts receivable consist of receivables from our customers for the sale of vehicles. The Company provides an allowance against accounts receivable for any expected credit losses. No allowance was recorded for the Company for the years ended* September 30, 2024and2023*.

Inventory

Inventories are stated at the lower of cost or net realizable value and consist of raw materials, work in progress, and finished goods. The net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Cost of inventories is determined using the standard cost method, which approximates actual cost on afirst-infirst-out basis. Cost includes direct materials, direct labor, and a proportionate share of manufacturing overhead costs based on normal capacity. Regular reviews are performed to identify and account for variances between the standard costs and actual costs. The Company regularly reviews its inventory for excess quantities and obsolescence. This analysis takes into account factors such as demand forecasts, product life cycles, product development plans, and current market conditions. The Company records inventory write-downs for excess or obsolete inventories based upon assumptions about current and future demand forecasts. If inventory on-hand is in excess of future demand forecast, the excess amounts are written-off. Once inventory is written down to a net realizable value, a new, lower-cost basis is established, and the inventory isnot subsequently written up if market conditions improve. All such inventory write-downs are included as a component of cost of revenues in the period in which the write-down occurs. The Company records inventory write-downs for excess or obsolete inventories based upon assumptions about current and future demand forecasts. If inventory on-hand is in excess of future demand forecast, the excess amounts are written-off. During the year ended* September 30, 2024,*the Company recorded a write down of inventory totaling $15.6 million which includes consideration for potential reductions in the selling price of vehicles in inventory.

Property, Plant, and Equipment, net

Property, plant, and equipment is stated at cost less accumulated depreciation and impairment. Depreciation is calculated using the straight-line method over the estimated economic useful lives of the assets. Repairs and maintenance expenditures that donot extend the useful lives of related assets are expensed as incurred.

Estimated Useful Lives

Expenditures for major improvements are capitalized, while minor replacements, maintenance and repairs, which donot 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, plant, and equipment* may**not* be recoverable in accordance with the provisions of ASC360, “Property, Plant, and Equipment.”* When such events or changes in circumstances are present, we assess the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the future cash flows is less than the carrying amount of those assets, we recognize an impairment loss based on the excess of the carrying amount over the fair value of the assets. Management has assessed whether indicators of impairment exist as of September 30, 2024,and concluded there were such triggering events. The Company recorded an impairment charge of $4.2 million in2024.* The recoverability of long-lived assets continues to be dependent on the market acceptance of the Company's vehicles.

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Income Taxes

The Company and its less than100% owned subsidiaries are filing separate tax returns, and we calculate the provision for income taxes by using a "separate" return method. Section174 capitalization and R&D credits are calculated using consolidated tax return rules and allocated among its members.

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.

Income taxes are recorded in accordance with ASC740**, Income Taxes, which provides for deferred taxes using an asset and liability approach. We record deferred income taxes using enacted tax laws and rates for the years in which the taxes are expected to be paid. We recognize deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the consolidated financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are provided, if based upon the weight of available evidence, it is more likely thannot that some or all of the deferred tax assets willnot be realized. We maintain a full valuation allowance against the value of our U.S. and state net deferred tax assets because the recoverability of the tax assets doesnot meet the “more likely thannot” requirement as of* September 30, 2024and2023*.

Uncertain tax positions taken or expected to be taken in a tax return are accounted for using the “more likely thannot” threshold for financial statement recognition and measurement. There are transactions that occur during the ordinary course of business for which the ultimate tax determination* maybe uncertain. As of September 30, 2024and2023*, there wereno material changes to either the nature or the amounts of the uncertain tax positions.

Intangible Assets, net

Intangible assets consist of acquired and developed intellectual property. In accordance with ASC350, “Intangibles—Goodwill and Others,”* goodwill and other intangible assets with indefinite lives (including in-process research and development assets acquired in a business combination) arenot* subject to amortization but are tested for impairment annually or whenever events or changes in circumstances indicate that the asset might be impaired.

Intangible assets with determinate lives are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount* may**not* be recoverable. Amortizable intangible assets generally are amortized on a straight-line basis over periods up to120 months. The costs to periodically renew our intangible assets are expensed as incurred.

Impairment of Long-Lived Assets

The Company periodically evaluates long-lived assets (intangible assets, right-of-use assets, and property, plant, and equipment) for impairment whenever events or changes in circumstances indicate that a potential impairment* mayhave occurred. If such events or changes in circumstances arise, the Company compares the carrying amount of the long-lived assets to the estimated future undiscounted cash flows expected to be generated by the long-lived assets. If the estimated aggregate undiscounted cash flows are less than the carrying amount of the long-lived assets, an impairment charge, calculated as the amount by which the carrying amount of the assets exceeds the fair value of the assets, is recorded. The fair value of the long-lived assets is determined based on the estimated discounted cash flows expected to be generated from the long-lived asset unless another method provides a more reliable estimate. If an impairment loss is recognized, the adjusted carrying amount of a long-lived asset is recognized as a new cost basis of the impaired asset. Impairment loss isnot* reversed even if fair value exceeds carrying amount in subsequent periods.

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Other Assets

Other noncurrent assets are comprised primarily of security deposits for property leases.

Extinguishment of Liabilities

The Company derecognizes financial liabilities when the Company’s obligations are discharged, cancelled, or expired.

Leases

Leases are recorded on the consolidated balance sheet as both a right-of-use asset and lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate. Lease liabilities are increased by interest and reduced by payments each period, and the right of use asset is amortized over the lease term. The Company excludes short-term leases having initial terms of12 months or less from the new guidance as an accounting policy election, and instead recognizes rent expense on a straight-line basis over the lease term. The current portion of the Company’s lease liability is based on lease payments due withintwelve months of the balance sheet date.

Contingencies and Commitments

The Company follows ASC440 and ASC450 to account for contingencies and commitments, respectively. Certain conditions, as a result of past events,* mayexist as of the balance sheet date, which mayresult in a loss to the Company, but which will only be resolved whenone* or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that* may*result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be reasonably estimated, then the estimated liability is accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency isnot probable but is reasonably possible, or is probable but cannot be reasonably estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed. Legal costs associated with such loss contingencies are expensed as incurred. Loss contingencies considered remote are generallynot disclosed unless they involve guarantees, in which case the guarantees would be disclosed.

Accrued Expenses

Accrued expenses are expenses that have been incurred butnot yet billed and paid are classified within current liabilities on the consolidated balance sheets.

F-16

Debt Issuance Costs

Direct and incremental costs, including amounts paid to initial purchasers of the Company’s convertible notes, are directly attributed to efforts to obtain debt financing and are debt issuance costs. Upon issuance of debt, the carrying value is the principal amount of debt reduced by any debt issuance costs. Debt issuance costs are attributed to interest expense and accreted over the expected term of the debt using the effective interest rate method when the fair value option hasnot been elected.

Revenue Recognition

The Company’s revenue includes revenue from the sale of electric vehicles and is accounted for in accordance with ASC606, “Revenue from Contracts with Customers”. The Company applies afive-step analysis to: (i) identify the contract with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when, or as, the Company satisfies a performance obligation. Payments for electric vehicle sales are generally received at or shortly after delivery. Sales tax, if any, is excluded from the measurement of the transaction price. The revenue from the sale of electric vehicles is recognized when control of the vehicle is transferred to the customer. In general, the control is transferred at the point of delivery to the customer, signifying the fulfillment of our primary performance obligation under ASC606. A contract withone of our dealers includes return provision, allowing unsold vehicles to be returned afterone year; and contracts withtwo of our dealers include a return provision, allowing unsold vehicles to be returned upon contract termination. Since the Company doesnot have sufficient relevant statistics of returns yet, we defer revenue recognition until the vehicles have been sold by such dealer (when the dealer has a right of return exists) or until there is sufficient evidence to justify a reasonable estimate for the consideration to which the Company expects to be entitled. Relevant vehicles transferred to the dealer are presented as “Finished goods delivered to dealer for distribution” in the consolidated balance sheets at initial cost, less any expected costs to recover those products (including potential decreases in the value to the entity of returned products). At the end of each reporting period, the Company updates the measurement of these assets and refund liabilities.

Customer Deposits and Advances

Customer deposits are required in order to complete the sales order process, which includes the selection of the vehicle model, trim and options and will be applied to the sales price of the vehicle and recognized as revenue when the vehicle is sold and delivered to the customer.

Cost of Revenues

The costs of goods sold primarily include vehicle components and parts, labor costs, amortized tooling costs, and other relevant costs associated with the production of these vehicles. Other inventory costs and expenses primarily include write downs of inventory to net realizable value, provisions for estimated warranty expenses, and other similar costs.

Warranty

The Company provides a manufacturer’s warranty on all vehicles sold that covers the costs to repair or replace faulty parts or components, including those costs incurred under recalls. The Company records a warranty reserve based on industry benchmarks and/or actual claims incurred to date and after consideration of the nature, frequency and costs of future claims. The warranty doesnot cover any item where failure is due to normal wear and tear. This assurance-type warranty doesnot create a performance obligation as part of the sale of the vehicle. The amount of warranty claims is included within Accrued expenses and other in the Consolidated Balance Sheets. Carrying amount of the warranty provision as of* September 30, 2024is $89 thousand. The Company reevaluates the adequacy of the warranty reserve on a regular basis and makes revisions when necessary. Warranty estimates are inherently uncertain, especially given the Company’s limited history of sales, and more historical experience or updates to benchmarks and projections may*cause material changes to the warranty reserve in the future.

General and Administrative Expenses

General and administrative (“G&A”) expenses include expensesnot related to production, such as salaries and employee benefits, professional fees, rent, repairs and maintenance, utilities and office expenses, depreciation and amortization, advertising, marketing and other selling expenses, settlements and penalties, taxes, and licenses, etc. Advertising costs are expensed as incurred and are included in G&A expenses, other than trade show expenses which are deferred until occurrence of the future event in accordance with ASC720‑35, “Other Expenses –* Advertising Cost.” Advertising costs for the years ended September 30, 2024and2023* were $17.3 million and $8.4 million, respectively.

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Research and Development Costs

Research and development expenses are primarily comprised of external fees and internal costs for engineering, homologation, prototyping costs and other expenses related to preparation to mass-production of electric vehicles such as Mullen Three EV, Mullen One EV cargo van, BollingerB4 Truck, etc. These include expenses related to the design, development, testing, and improvement of our electric vehicles and corresponding technologies. Per ASC730, "Research and Development," the Company recognizes all research and development costs in the statement of operations as they occur. Assets with alternative future uses are capitalized and depreciated over their useful lives, with the depreciation expense reported under research and development costs.

Share-Based Compensation

The share-based awards issued by the Company are accounted for in accordance with ASC Subtopic718-10, “Compensation –* Share Compensation*,” which requires fair value measurement on the grant date and recognition of compensation expense for all shares of common stock of the Company issued to employees, non-employees, and directors. The grant date is the date at which a grantor and a grantee reach a mutual understanding of the key terms and conditions of a share-based payment award, and is the date that a grantee begins to benefit from, or be adversely affected by, subsequent changes in the price of the grantor's equity shares (e.g. the date when the Board of Directors has authorized share-based compensation to be issued from reserves approved by shareholders). Generally, the fair value of awards is estimated based on the market price of the shares of common stock of the Company the day immediately preceding the grant date. The fair value of non-marketable share-based awards (granted to employees before the Company became public) was estimated based on an independent valuation. The Company recognizes forfeitures of awards in the periods they occur.

The overwhelming part of share-based awards to employees per employment contracts and a certain part of contracts with non-employees (consultants) are classified as equity with costs and additional paid-in capital recognized ratably over the service period. A significant part of the Company’s share-based awards to consultants is liability-classified: mainly if the number of shares the consultant is entitled to depends on a certain monetary value fixed in the contract. An accrued part of liability, in this case, is revalued each period based on an earned portion of the grant and changes in the market price of the shares of common stock of the Company until a sufficient number of shares is issued.

The Company has also adopted incentive plans that entitle the Chief Executive Officer to share-based awards generally calculated as 1-3% of then outstanding number of shares of common stock, issuable upon achievement of specific financial and operational targets (milestones). This share-based compensation is accrued over the service term when it is probable that the milestone will be achieved. The liability to issue stock (presented within non-current liabilities if the achievement is expected later than12 months after the balance sheet date) is revalued on every balance sheet date based on the length of the service period, the current market price of the common stock and the number of shares of common stock outstanding – until the shares have been issued, or until fulfilling the milestone requirements becomes unlikely.

Net Loss per Share of Common Stock

Basic net loss per share is calculated by dividing the net loss attributable to common shares by the weighted-average number of shares of common stock outstanding for the period. The diluted net loss per share of common stock is computed by dividing the net loss using the weighted-average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of stock options and warrants to purchase common stock (using the treasury stock method). Due to net loss incurred in2024 and2023, securities convertible into common stock were considered anti-dilutive.

Derivative Financial Instruments

The Company doesnot use derivative instruments to hedge exposures to interest rate, market, or foreign currency risks. The Company evaluates all of its financial instruments, including notes payable and warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. The Company applies significant judgment to identify and evaluate complex terms and conditions in its contracts and agreements to determine whether embedded derivatives exist. Embedded derivatives must be separately measured from the host contract if all the requirements for bifurcation are met. The assessment of the conditions surrounding the bifurcation of embedded derivatives depends on the nature of the host contract. Bifurcated embedded derivatives are recognized at fair value, with changes in fair value recognized in the statement of operations each period. Bifurcated embedded derivatives are classified with the related host contract on the Company’s balance sheet.

A freestanding instrument that is a derivative is evaluated by the Company to determine if it qualifies for an exception to derivative accounting. The Company determines whether the equity-linked feature is indexed to the Company's common stock and whether the settlement provision in the contract is consistent with a fixed-for-fixed equity instrument. To qualify for classification in stockholder's equity, the Company evaluates whether the contract requires physical settlement, net share settlement, or a combination thereof and, when the Company has a choice of net cash settlement or settlement in the Company's shares, additional criteria are evaluated to determine whether equity classification is appropriate. Refer to Notes7 and8 for additional information regarding the accounting for the convertible notes and warrants.

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Fair Value of Financial Instruments

ASC825-10 defines fair value 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 required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of non-performance. ASC825-10 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC825-10 establishesthree levels of inputs that* may*be used to measure fair value:

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value* may*fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed and is determined based on the lowest level input that is significant to the fair value measurement.

Expected credit losses

The estimation of expected credit losses that* maybe incurred as we work through the invoice collection process with our customers and other counterparties requires us to make judgments and estimates regarding the probability the amounts due to us are going to be paid. We monitor our customers' payment history and current creditworthiness to determine that collectability is reasonably assured. We also consider the overall business climate in which our customers and other counterparties operate. Uncertainties regarding changes in the financial condition of our counterparties could impact the amount and timing of any additional credit losses that maybe recognized. Due to insignificant value of financial assets,no material allowance for credit losses was recognized to cover anticipated credit losses under current conditions as of September 30, 2024and2023*.

Concentrations of Credit Risk

Cash and cash equivalents are financial instruments that are potentially subject to concentrations of credit risk. The Company maintains 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* mayexceed these federal limitations. However, we havenot* experienced any losses in such accounts and management believes we arenot exposed to any significant credit risk on these accounts due to the high credit rating of relevant financial institutions. The amounts in excess of insured limits as of* September 30, 2024and2023* are $10.0 million and $154.9 million, respectively. The Company hasno financial instruments with off-balance sheet risk of loss.

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Concentrations of Supply Risk

The Company is dependent on its suppliers, the majority of which are single-source suppliers, and the inability of these suppliers to deliver necessary components of its products according to the schedule and at prices, quality levels and volumes acceptable to the Company, or its inability to efficiently manage these components, could have a material adverse effect on the Company’s results of operations and financial condition.

As of and for the year ended* September 30, 2024,one supplier accounted for 12% of the Company’s total accounts payable andtwo suppliers accounted for 17% and 10% of inventory purchases. As of and for the year ended September 30, 2023,*three suppliers accounted for 20%,19% and 11% of the Company’s total accounts payable andone supplier accounted for 10% of inventory purchases.

Segments

Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s CODM is its Chief Executive Officer. The Company has determined that it operates intwo operating segments, as the CODM reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance.

Accounting pronouncements

The Company has implemented all applicable accounting pronouncements that are in effect. The Company has recently adopted the following pronouncements:

ASU2022-04 -Supplier Finance Program (SFP). This ASU requires that a buyer in an SFP disclose qualitative and quantitative information about its program, including the nature of the SFP and key terms, outstanding amounts as of the end of the reporting period, and presentation in its financial statements. This pronouncement hasnot impacted the Company’s consolidated financial statements.

ASU2016-13 -Measurement of Credit Losses on Financial Instruments (CECL). This guidance, commonly referred to as Current Expected Credit Loss (“CECL”), changes impairment recognition to a model that is based on expected losses rather than incurred losses. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including trade receivables. The Company evaluated and determined the amendment didnot have a material effect on the consolidated financial statements.

The following are accounting pronouncements that have been issued but arenot yet effective for the Company’s consolidated financial statements:

In* August 2020,the FASB issued ASUNo.* 2020-06, Debt—Debt with Conversion and Other Options (Subtopic470-20), and Derivatives and Hedging—Contracts in an Entity’s Own Equity (Subtopic815-40):Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The amendments in ASUNo. 2020-06 simplify the complexity associated with applying GAAP for certain financial instruments with characteristics of liabilities and equity. More specifically, the amendments focus on the guidance for convertible instruments and derivative scope exceptions for contracts in an entity’s own equity. For smaller reporting companies, ASU2020-06 is effective for fiscal years beginning after* December 15, 2023,including interim periods within those fiscal years. The Company is examining the impact this pronouncement may*have on the Company’s consolidated financial statements.

In* November 2023,the FASB issued Accounting Standards Update2023*-07—**Segment Reporting (Topic280*): Improvements to Reportable Segment Disclosures.It requires all annual disclosures currently required by ASC280* to be included in interim periods. It requires disclosure of significant segment expenses regularly provided to the chief operating decision maker ("CODM"), a description of other segment items by reportable segment, and applicable additional measures of segment profit or loss used by the CODM when allocating resources and assessing business performance. All public entities will be required to report segment information in accordance with the new guidance starting in annual periods beginning after* December 15, 2023.*The Company expects to enhance segment reporting disclosures based on new requirements.

In* December 2023,the FASB issued ASUNo.* 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures." ASUNo. 2023-09, which enhances the transparency, effectiveness, and comparability of income tax disclosures by requiring consistent categories and greater disaggregation of information related to income tax rate reconciliations and the jurisdictions in which income taxes are paid. The guidance is effective for public business entities for fiscal years beginning after* December 15, 2024,*with early adoption permitted. The Company expects to enhance income tax disclosures based on new requirements.

F-20

In* November 2024,the FASB issued Accounting Standards Update2024*-03 "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic220*-40)*" which requires that at each interim and annual reporting period an entity:

1. Disclose the amounts of (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and (e) depreciation, depletion, and amortization included in each relevant expense caption. A relevant expense caption is an expense caption presented on the face of the income statement within continuing operations that contains any of the listed expense categories.

2. Include certain amounts that are already required to be disclosed under current generally accepted accounting principles (GAAP) in the same disclosure as the other disaggregation requirements.

3. Disclose a qualitative description of the amounts remaining in relevant expense captions that arenot separately disaggregated quantitatively.

4. Disclose the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses.

These amendments are effective for annual reporting periods beginning after* December 15, 2026,and interim reporting periods beginning after December 15, 2027:*either (1) prospectively to financial statements issued for reporting periods after the effective date of this Update or (2) retrospectively to any or all prior periods presented in the financial statements. The Company expects to enhance disclosures of expenses based on new requirements.

In* November 2024,the FASB also issued Accounting Standards Update2024*-04 "Debt - Debt with Conversion and Other Options (Subtopic470*-20) “Induced Conversions of Convertible Debt Instruments”to clarify the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. Under the amendments, to account for a settlement of a convertible debt instrument as an induced conversion, an inducement offer is required to provide the debt holder with, at a minimum, the consideration (in form and amount) issuable under the conversion privileges provided in the terms of the instrument. An entity should assess whether this criterion is satisfied as of the date the inducement offer is accepted by the holder. If, when applying this criterion, the convertible debt instrument had been exchanged or modified (without being deemed substantially different) within theone*-year period leading up to the offer acceptance date, an entity should compare the terms provided in the inducement offer with the terms that existedone year before the offer acceptance date. The amendments in this Update also clarify that the induced conversion guidance applies to a convertible debt instrument that isnot currently convertible as long as it had a substantive conversion feature as of both its issuance date and the date the inducement offer is accepted. The amendments are effective for all entities for annual reporting periods beginning after* December 15, 2025,and interim reporting periods within those annual reporting periods. The Company is examining the impact this pronouncement may*have on the Company’s consolidated financial statements.

Other accounting pronouncements issued butnot yet effective arenot believed by management to be relevant or to have a material impact on the Company’s present or future consolidated financial statements.

**NOTE4 – **BUSINESS ACQUISITIONS

Acquisition of retail and repair business of Mullen Technologies, Inc.

On* July 18, 2024,the Company entered into an Asset Purchase Agreement with Mullen Technologies, Inc. (“MTI”), related party (the Company’s CEO has a controlling financial interest and is Chairman of MTI), pursuant to which the Company assumed a lease for premises located in Oceanside, California (approximately 8,000 square feet premises on approximately 16,000 square feet of land) and acquired all equipment and inventory in these premises, as well as staffing (relevant workforce of MTI has been employed by the Company) and other infrastructure for vehicle sales and repairs for consideration of $1.4 million in cash paid at closing. The Company has purchasedno* shares of common stock of MTI and has assumedno liabilities of MTI other than lease in Oceanside. The acquisition is expected to facilitate retail sales of the Company's products in California.

F-21

The Company has determined that the contract constitutes a business acquisition as defined by ACS805, Business Combinations, as the Company has acquired an integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing a return in the form of lower costs and other economic benefits. Accordingly, the assets acquired, and the liabilities assumed in the transaction were recorded at their acquisition date estimated fair value, while the transaction costs associated with the acquisition were expensed as incurred pursuant to the purchased method of accounting in accordance with ASC805. The Company’s purchase price allocation was based on evaluation of the appropriate fair values by independent appraiser. Fair values were determined based on the requirements of ASC**820,* Fair Measurements and Disclosure*(level3). The following table summarizes the allocation of fair value of assets acquired and liabilities assumed.

As disclosed further in theNote6* - Goodwill and other intangible assets*, when preparing financial statements, for the fiscal year ended* September 30, 2024,*the Company recognized impairment loss in amount of $1.2 million in respect of this goodwill due to the uncertainty with future funding required to support business operations.

Supplemental pro forma information

The following supplemental pro forma information summarizes the Company’s results of operations for the fiscal year ended* September 30, 2024,as if the Company completed the acquisition as of the beginning of the annual reporting period beginning October 1, 2023.The MTI acquisition didnot* result in additional revenues as the operations and location are to be integrated in the Mullen commercial sales operations.

F-22

NOTE 5 –** INVENTORY**

The Company's inventories are stated at the lower of cost or net realizable value and consist of the following:

The cost of inventories is determined using a standard cost method, which approximates thefirst-in,first-out (FIFO) method. This includes direct materials, direct labor, and relevant manufacturing overhead costs. Variances between standard and actual costs are recognized in the cost of goods sold during the period in which they occur.

The Company regularly reviews its inventories for excess and obsolete items by assessing their net realizable value. The net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. During the year ended* September 30, 2024*, we recorded a loss of $15.6 million to write the inventories down to net realizable value (Mullen commercial segment) - mainly due to excess raw materials and slower-moving inventory.

The net realizable value assessment considered the current expected selling prices of Mullen One, Mullen Three, and BollingerB4 vehicles, based on recent sales and current market demand. Should actual sales prices or demand decline, additional write-downs* maybe required in future periods. Additionally, if the Company is unable to secure sufficient funding to continue operations as planned, inventory may*need to be sold at further discounted prices, which could negatively impact future financial results.

During the year ended* September 30, 2024*, approximately $4.5 million of the Company's inventories was consumed in R&D activities (approximately $1 million during the year ended* September 30, 2023),*which was recognized as part of research and development expense in the consolidated statement of operations.

NOTE 6 –** GOODWILL AND OTHER INTANGIBLE ASSETS**

Goodwill

The goodwill pertains to the Bollinger Motors acquisition in* September**2022* and retail and repair business of MTI in* July 2024 (seeNote4 - Business Acquisitions*).

Goodwill isnot amortized and is tested for impairment annually, or more frequently if there are indicators of impairment. Every reporting period the Company assesses qualitative factors (such as macroeconomic conditions, industry and market considerations, financial performance of the Company, entity-specific events etc.) to determine whether it is necessary to perform the quantitative goodwill impairment test. Upon the quantitative goodwill impairment test, impairment* mayarise to the extent carrying amount of a reporting unit that includes goodwill (i.e. Bollinger production unit, seeNote21 – Segment information*) exceeds its fair value.

F-23

As a result of the impairment test for goodwill pertaining to the Bollinger segment, performed on* September 1, 2023by management with the assistance of independentthird*-party valuation professionals, the Company has recognized impairment loss in amount of $64.0 million in the statement of operations for the year ended* September 30, 2023.The impairment was caused mainly by unfavorable capital market conditions, i.e., prolonged decrease in the Company’s market capitalization, including a significant decline in stock price and a budgeted performance misses compared to the budgets prepared on acquisition date. As a result of the impairment test on March 31, 2024,*the Company recognized further impairment in the remaining amount of $28.8 million, mainly due to the uncertainty with future funding required to support Bollinger Motors' business operations and the decrease in the Company's market capitalization. Full amount of the loss has been recognized in the consolidated statement of operations, and the part of the loss that relates to noncontrolling interest in the subsidiary has decreased noncontrolling interest in equity section of the consolidated balance sheets.

We used a combination of market and income approach to determine impairment of goodwill. The quantitative goodwill impairment tests were based on determining the fair value of the Bollinger Motors reporting units based on management judgments and assumptions using the discounted cash flows under the income approach classified in Level3 of the fair value hierarchy and comparable company market valuation classified in Level2 of the fair value hierarchy approaches. When the carrying value of a reporting unit exceeded its fair value, the Company measured goodwill impairment loss as the amount by which the carrying amount of a reporting unit exceeds its fair value,not to exceed the total amount of goodwill allocated to that reporting unit. The valuation approaches are subject to key judgments and assumptions that are sensitive to change such as judgments and assumptions about appropriate sales growth rates, operating margins, discount rate, and comparable company market multiples. When developing these key judgments and assumptions, the Company considers economic, operational and market conditions that could impact the fair value of the reporting unit. However, estimates are inherently uncertain and represent only management’s reasonable expectations regarding future developments. These estimates and the judgments and assumptions upon which the estimates are based will likely differ in some respects from actual future results.

As a result of the impairment test for goodwill pertaining to MTI retail business, the Company has recognized impairment loss in amount of $1.2 million in the statement of operations for the year ended* September 30, 2024.The impairment was recorded mainly due to the uncertainty of future funding required to support business operations (seeNote*2**).

Changes in the carrying amount of goodwill are presented in the following table:

F-24

Other intangible assets

Intangible assets are stated at cost, net of accumulated amortization and impairment. Patents and other identifiable intellectual property purchased as part of the Bollinger Motors acquisition in* September 2022*have been initially recognized at fair value.

Intangible assets with indefinite useful lives (in-process research and development assets acquired as part of the Bollinger Motors acquisition) arenot amortized but instead tested for impairment. Due to unfavorable market conditions and the decline of market prices of the Company’s common stock, we have tested indefinite-lived in-process research and development assets acquired in* September 2022as part of the Bollinger segment (seeNote21** - Segment information) for recoverability on March 31, 2024*and recognized impairment loss in full amount of $58.3 million, mainly due to the uncertainty of future fundings required to support the business and decrease of Company's market capitalization.

Intangible assets with finite useful lives (e.g. patents,) are amortized over the period of estimated benefit using the straight-line method. The weighted average useful life of intangible assets is 7.7 years. The straight-line method of amortization represents management’s best estimate of the distribution of the economic value of the intangible assets.

During the year ended* September 30, 2024,an impairment loss in the amount of $15.1 million was recognized in respect of the intangible assets with finite useful lives of the Mullen Commercial segment (engineering designs) on March 31, 2024 -mainly due to performance misses compared to the previous budgets. Their accumulated amortization in the amount of $1.1 million wasderecognized in correspondence with the initial cost to present the new cost basis of these assets in accordance with ASC350*-30. No additional impairment has been recognized based on tests performed subsequently. During the year ended* September 30, 2023,an impairment loss in amount of $5.9 million was recognized in respect of the intangible assets of the Mullen Commercial segment (primarily engineering designs and website design and development). Their accumulated amortizaiton in amount of $4.3 million wasderecognized in correspondence with initial cost to present the new cost basis. Fair value of the engineering designs (classified in Level3* of the fair value hierarchy) was estimated based on cost approach, which involves evaluation of the costs required to replace or recreate the subject intangible assets. Significant judgments inherent in this analysis include the accuracy of the historical cost data, obsolescence factor, probability of success related to the commercialization of the reporting segment that utilizes the engineering designs.

The remaining finite lived intangible assets at* September 30, 2024consist of the patents which were acquired as part of the acquisition of Bollinger (Patents). The Company performed an impairment test on these intangible assets and determined that the carrying amount of the Patents were recoverable, thereforeno* impairment is required at* September 30, 2024.*It is currently the plan of the Company to operate the Bollinger business unit and the Company believes that operations would recover the Patent. At the same time, the Company also believes that the Bollinger business unit is marketable and the deemed fair value of the business unit exceeds the carrying amount and would result in a recovery of the Patent assets.

F-25

Total future amortization expense for finite-lived intangible assets is as follows:

For the years ended* September 30, 2024and2023*, amortization of the intangible assets was $4.3 million and $6.5 million respectively. For the years ended* September 30, 2024and2023*, impairment of the intangible assets was $73.4 million and $5.9 million respectively.

NOTE 7 –** DEBT**

The Company has only short-term debt defined as debt with principal maturities ofone year or less from the balance sheet date, as well as loans that have matured or in default and remain unpaid.

The following is a summary of our indebtedness as of* September 30, 2024*:

(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 common stock in several installments.

(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 havenot* 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 Section3*(a)(10) of the Securities Act of1933.

F-26

The following is the overview of changes in our indebtedness during the year ended* September 30, 2024 (*see further details in narrative disclosures below):

The following is a summary of our debt as of* September 30, 2023*:

F-27

The following is the overview of changes in our indebtedness during the year ended* September 30, 2023:*

Accrued interest

As of* September 30, 2024* and* September 30, 2023,accrued interest on outstanding notes payable was $2.4 million and $1.5 million, respectively. The weighted average interest rate on short term borrowings outstanding as of September 30, 2024was 18.8% (9.3% - as of September 30, 2023)and approximates effective interest rate as of those dates. Amortization of the debt discounts and issuance costs during the fiscal year ended September 30, 2024amounted to $47.7 million (during the year ended September 30, 2023 -$0.8 million presented as interest expense; plus $150 million of original issue discount (see subsectionSeries D Convertible Notes* below) was presented as part of item "Other financing costs - initial recognition of derivative liabilities" of the statement of operations for the year ended* September 30, 2023,as these expenses were closely related to initial recognition of notes and warrants). Contractual interest expense during the fiscal year ended September 30, 2024amounted to $1.6 million ($4.2 million - during the year ended September 30, 2023).*

NuBridge Commercial Lending LLC Promissory Note (paid)

On* March 7, 2022,the Company’s wholly owned subsidiary, Mullen Investment Properties, LLC, entered into a Promissory Note (the “Real estate note”) with NuBridge Commercial Lending LLC for a principal amount of $5 million. The Real estate note bore interest at a fixed rate of 8.99% per annum and the principal amount was due March 1, 2024.Collateral for the loan included the title to the Company’s property at1* Greentech Drive, Tunica, MS. Under the Real estate note, prepaid interest and issuance costs of $1,157,209 were withheld from the principal and recorded as debt discount, which was amortized over the term of the Real estate note. In* January 2024,*the loan was paid by the Company in full, and the collateral was released.

F-28

Non-convertible promissory note (terminated)

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 issuance of this non-convertible Note was expected on thefirst* trading day when all closing conditions are met. The Note contemplated 10% annual interest, escalating to 18% post-Event of Default. It would maturethree months post-issuance. The Note's terms allowed for accelerated repayment upon default, requiring the Company to pay the principal, accrued interest, and other due amounts. The Note was supposed to be secured by the Company’s assets and impose restrictions on the Company, limiting additional debt, asset liens, stock repurchases, outstanding debt repayment, and affiliate transactions, except for specified exceptions. It mandated prepayment of the principal from net proceeds of any subsequent financing. The funds contemplated by the Debt Agreement havenot been received, and on* May 7, 2024,the Debt Agreement was terminated. The $18 million original issue discount was considered a settlement cost related to a dispute over financings that occurred during the fiscal year ending September 30, 2023.The costs have been accrued as of September 30, 2023.Since the loss isno* longer probable, the accrual was reversed.

Series D Convertible Notes (converted)

During the previous financial years ended* September 30, 2023and September 30, 2022,the Company financed its activities mainly with proceeds from the June 7, 2022Securities Purchase Agreement. On November 14, 2022,the Company entered into AmendmentNo.* 3 to the* June 7, 2022,Securities Purchase Agreement (as amended, the “Series D SPA”). The investors paid $150 million. Instead of receiving shares of Series D Preferred Stock and warrants, they received notes convertible into shares of the Company’s common stock (“Notes”) and warrants (seeNote8 - Warrants and other derivative liabilities and fair value measurements*). During the year ended* September 30, 2023,*all Notes and accumulated interest have been fully converted to shares of common stock of the Company.

$50 Million Senior Secured Convertible Notes and Warrants (and Additional Investment Right)

On* May 14, 2024,the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with certain accredited investors for the sale of Senior Secured Convertible Notes ("Convertible Notes") andfive-year warrants exercisable for shares of common stock (the “Warrants”). Upon execution of the Securities Purchase Agreement, investors purchased an initial aggregate principal amount of $13.2 million, or $12.5 million, including the 5% original issue discount, of Convertible Notes (the “Initial Notes”), and also received 47,934 Warrants, giving effect to reverse stock split (the “Initial Warrants”). Investors were also obligated to purchase an additional principal amount of $39.5 million, or$37.5* million including the 5% original issue discount, of Convertible Notes and related Warrants if (i) the Company has sufficient authorized shares of common stock available to cover250% of the shares of common stock underlying the conversion of the Convertible Notes and exercise of the Warrants, (ii) the common stock has an average daily trading volume of*$3* million in the previousten (10) trading days, (iii) a registration statement covering the shares of common stock underlying the conversion of the Convertible Notes and exercise of the Warrants has been declared effective, (iv) the Company has obtained stockholder approval of the issuance of the Convertible Notes and Warrants in compliance with Nasdaq Listing Rule5635(d), and (v) the Company is in compliance with the continued listing standards of the Nasdaq Capital Market. Such additional Convertible Notes and Warrants were issued in* July 2024.*

The Convertible Notes accrue interest at 15%, including a 5% Original Issue Discount, and mature infour months from the date of issuance. Upon any event of default, the interest rate automatically increases to 20% per annum. The outstanding principal and accrued but unpaid interest on the Convertible Notes* maybe converted by the holder into shares of common stock at the lower of (i) $5.49 (after reverse stock split - $549), (ii)95% of the closing sale price of the common stock on the date that the Company’s registration statement on Form S-1 is declared effective (i.e. $3.61, after the reverse stock split - $361), or (iii)95% of the lowest daily volume weighted average price in thefive* (5) trading days prior to such conversion date, provided that the conversion price willnot be less than $1.16 per share (not subject to reverse stock split).

F-29

As security for payment of the amounts due and payable under the Convertible Notes, the Company collaterally assigned and granted to the holders a continuing security interest in all of the Company’s right, title, and interest in, to, and under the property of the Company, whether then or hereafter owned, existing, acquired or arising and wherever then or hereafter located (subject to certain exceptions). The Convertible Notes are senior in right of payment to all other current and future notes to which the Company is a party. The Convertible Notes also impose restrictions on the Company, limiting additional debt, asset liens, stock repurchases, outstanding debt repayment, dividends distribution, and affiliate transactions, except for specified exceptions.

In connection with the issuance of the Convertible Notes, the holders also received5-year warrants exercisable for 200% of the shares of common stock underlying such Convertible Notes, see further details in theNote8**.

The Convertible Notes and Warrants arenot convertible by a holder to the extent that the holder or any of its affiliates would beneficially own in excess of 9.9% of the common stock.

The Company and the investors also executed a registration rights agreement. In the event that (i) sales cannot be made pursuant to the registration statement or the prospectus contained therein isnot properly available for any reason for more thanfive consecutive calendar days or more than an aggregate of10 calendar days during any12-month period or (ii) a registration statement isnot effective for any reason, or the prospectus contained therein isnot properly available for use for any reason, and the Company fails to file with the SEC any required reports under the Exchange Act, then the Company has agreed (unless the Registrable Securities are freely tradable pursuant to Rule144) to make payments to each investor as liquidated damages in an amount equal to 1.5% of such investor’s total committed purchase price for the registrable securities affected by such failure and an additional 1.5% on every30 day anniversary, with a maximum of12 payments. Such payments will bear interest at the rate of 10% per month (prorated for partial months) until paid in full and* may*be paid in registered shares of common stock at the option of the Company. The Company will recognize a liability under the registration payment arrangement if the transfer of consideration becomes probable and can be reasonably estimated.

For a period beginning on* May* 14, 2024, and ending on theone-year anniversary from the later of (i) the date registration statements registering the shares issuable upon conversion of all of the Convertible Notes and exercise of all the Warrants is declared effective or (ii) the date the Company has obtained stockholder approval for the transaction, the investors have the right, butnot the obligation, to purchase an additional $52.6 million of 5% Original Issue Discount Senior Secured Convertible Notes and related Warrants on the same terms and conditions as provided in the Securities Purchase Agreement.

The exercise price and number of shares issuable upon conversion of the Convertible Notes or exercise of the Warrants, as applicable, will further be adjusted upon the occurrence of certain events, and holders will be allowed to participate in certain issuances and distributions (subject to certain limitations and restrictions), including certain stock dividends and splits, dilutive issuances of additional common stock, and dilutive issuances of, or changes in option price or rate of conversion of, options or convertible securities, as well as the issuance of purchase rights or distributions of assets during restricted period. “Restricted period” means the period commencing on the purchase date and ending on the earlier of (i) the date immediately following the90th day after a registration statement registering for the securities has been declared effective by the SEC and (ii) the90th day after the securities purchased are saleable under Rule144 without the requirement for current public information and without volume or manner of sale limitations.

The Convertible Notes and Warrants also provide for certain purchase rights whereby if the Company grants, issues, or sells any options, convertible securities, or rights to purchase stock, warrants, securities, or other property pro rata to the record holders of any class of common stock, then the holder will be entitled to acquire such purchase rights which the holder could have acquired if the holder had held the number of shares of common stock acquirable upon complete exercise of the Warrant.

F-30

On* May 14, 2024,upon execution of the Securities Purchase Agreement, the investors purchased an initial aggregate principal amount of $13.2 million, or $12.5 million, including the 5% original issue discount, of Notes and also received 47,934 Warrants (giving effect to the reverse stock split, seeNote1 - Description of business and basis of presentation*).

On* July 9, 2024,*the investors purchased an additional aggregate principal amount of $10.5 million, or $10 million including the 5% original issue discount, of Notes and also received 38,347 Warrants (giving effect to the reverse stock split).

On* July 15, 2024,*the investors purchased the final aggregate principal amount of $29 million, or $27.5 million including the 5% original issue discount, of Notes and also received 105,455 Warrants (giving effect to the reverse stock split).

Subsequently, on or around* September 27, 2024,*the investors exercised a part of their additional investment rights and purchased an aggregate principal amount of $12.5 million, or $11.9 million including the 5% original issue discount, of Notes and also received 45,664 Warrants (giving effect to the reverse stock split).

For details on initial recognition of these transactions in these consolidated financial statements, see furtherNote8* *below.

During the remaining period until* September 30, 2024,*a part of notes and accumulated interest with carrying value of $48.5 million had been converted to 822,705 shares of common stock of the Company (giving effect to the reverse stock split). Any unamortized original issue discount has been immediately recognized as interest expense in the consolidated statement of operations.

The Convertible Notes in amount of $5 million were in technical default on* June 28, 2024,because the Company failed to obtain shareholders’ approval as was required by the contract. This gave investors the right to demand immediate repayment of the outstanding notes.None of the investors utilized this right to accelerate payment. An increased interest rate of 20% was applied until the Company obtained shareholders' approval for this transaction on July 9, 2024.*

The Convertible Notes and relevant accumulated interest were in cross-default as of* September 30, 2024,therefore the interest rate increased from 15% to 20% starting from October 1, 2024.As of the date these financial statements are authorized for issuance, investors havenot* demanded accelerated payment of the notes and interest in cash. In* November 2024,the Company and the investors reached a settlement agreement (approved by court in December 2024)which allowed investors to convert all the notes and interest, under the conditions described above, into shares of common stock issued pursuant to Section3*(a)(10) of the Securities Act. The Company has elected to continue to amortize the related debt discounts over the original loan terms because the creditors havenot and arenot expected to demand repayment.

As of* September 30, 2024,the outstanding convertible notes amounted to $20.3 million (with debt discount to convertible notes of $17.7 million) and with the accumulated interest in amount of $0.6 million were potentially convertible into 5,697,575 shares of common stock. Conversion of the notes depends on the lowest daily volume weighted average price of the Company's common stock ("VWAP"). If the lowest daily VWAP in thefive* trading days prior to* September 30, 2024,was $0.10 less, the Company, upon full conversion of outstanding notes and accumulated interest, would theoretically be liable to issue approximately 150,795 shares more. If the lowest daily VWAP in thefive* trading days prior to* September 30, 2024,was $0.10 higher, the Company, upon full conversion of outstanding notes and accumulated interest, would theoretically be liable to issue approximately 144,160 shares less. The maximum number of shares that could theoretically be issued upon conversion of these notes and accumulated interest, was 19 million (if the lowest daily VWAP in thefive* trading days prior to such conversion date decreased to or below $1.16).

F-31

NOTE 8 –** WARRANTS AND OTHER DERIVATIVE LIABILITIES AND FAIR VALUE MEASUREMENTS**

ASC825-10 defines fair value 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. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value* may*fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed and is determined based on the lowest level input that is significant to the fair value measurement.

Financial Instruments at Carrying Value That Approximated Fair Value

Certain financial instruments that arenot carried at fair value on the 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 and accounts payable. Accounts payable are short-term in nature and generally are due upon receipt or within30 to90 days.

Non-Financial Assets Measured at Fair Value on a Non-Recurring Basis

Non-financial assets are only required to be measured at fair value when acquired as a part of business combination or when an impairment loss is recognized. See* Note6 - Goodwill and intangible assets and* Note14* - Property, plant, and equipment, netfor further information. All these valuations are based on Level3* – Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of these assets or liabilities*.*

Financial Liabilities Other than Measured at Fair Value on a Recurring Basis

As of* September 30, 2024*, the Company had the matured loans and advances due with a principal and carrying amount of $2.7 million and accumulated interest in amount of $2.1 million. Their fair value as of* September 30, 2024* (having significant unobservable inputs - level3) approximated $3 million. Also, the company had Senior convertible notes (see Note7 - Debt) in cross-default as of* September 30, 2024*, with a principal of $20.3 million and carrying amount (after unamortized original issue discount) of $2.7 million with accumulated interest in amount of $0.3 million. Their fair value (having significant unobservable inputs - level3) was approximately $17.7 million.

Financial Liabilities Measured at Fair Value on a Recurring Basis

During the year ended* September 30, 2024*, the Company had the following financial liabilities measured at fair value on a recurring basis:

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Warrants issued with the$50* Million Senior Secured Convertible Notes**(and Additional Investment Right)*

As described in theNote7**, in connection with the issuance of the Convertible Notes, the holders also received 5-year warrants exercisable for 200% of the shares of common stock underlying such Convertible Notes at an exercise price equal to 105% of the closing sale price of the common stock on the execution date (i.e., $6.07, after the reverse stock split - $607), subject to further adjustment. The Warrants also provide for cashless exercise pursuant to which the holder will receive upon exercise a “net number” of shares of common stock determined according to the following formula:

Net Number = (Ax B) / C

For purposes of the foregoing formula:

A= The total number of shares with respect to which the Warrant is then being exercised.

B= The Black Scholes Value (as described below).

C= The lower of thetwo Closing Bid Prices of the common stock in thetwo days prior the time of such exercise (as such Closing Bid Price is defined therein), but in any eventnot less than*$1* (after reverse stock split, seeNote1* - Description of business and basis of presentation*).

For purposes of the cashless exercise, “Black Scholes Value” means the Black Scholes value of an option forone share of common stock at the date of the applicable cashless exercise. As such, the Black Scholes value is determined and calculated using the Black Scholes Option Pricing Model obtained from the “OV” function on Bloomberg utilizing (i) an underlying price per share equal to the Exercise Price, as adjusted (i.e., $6.07, after the reverse stock split - $607), (ii) a risk-free interest rate corresponding to the U.S. Treasury rate, (iii) a strike price equal to the Exercise Price in effect at the time of the applicable cashless exercise (i.e., $6.07, after the reverse stock split - $607), (iv) expected volatility equal to 135%, and (v) a deemed remaining term of the Warrant offive years (regardless of the actual remaining term of the Warrant).

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, 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 Company will have the option to require the holders to exercise the Warrants for cash if, at any time, the following conditions are met: (i) the registration statement covering the securities has been declared effective is effective and available for the resale of the securities andno stop-order has been issued nor has the SEC suspended or withdrawn the effectiveness of the registration statement; (ii) the Company isnot in violation of any of the rules, regulations or requirements of, and hasno knowledge of any facts or circumstances that could reasonably lead to suspension in the foreseeable future on, the principal market; and (iii) the VWAP for each trading day during the10 trading day period immediately preceding the date on which the Company elects to exercise this option is 250% above the exercise price.

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As described inNote7**, the Company issued 237,400 warrants (giving effect to the reverse stock splits) as part of consideration for the funds provided under the*$50* million senior secured Convertible Notes contract and*$11.9* million out of the*$50* million additional investment right.

These warrants were recognized as liabilities due to requirements of ASC480 as the variable number of shares to be issued upon cashless exercise (deemed the predominant exercise option) is based predominantly on a fixed monetary value. The warrant liabilities were classified as derivative liabilities when requirements of ASC815 were met. The warrant liabilities for the remaining unexercised warrants are carried forward subsequently at fair value and the gain or loss from revaluation is recorded within the line item "Gain/(loss) on other warrants revaluation" and "Gain/(loss) on derivative liability revaluation" at each warrant exercise date and each accounting period end. The fair value of the warrants is based on the fair value of the shares they are exercisable into under cashless basis. Upon initial recognition, the fair value of warrants and other derivative liabilities was $126.7 million and exceeded the amount of proceeds. The resulting discount to the carrying amount of the Convertible Notes ($65.2 million) is amortized over the life of the note and recognized as interest expense under the effective interest method during the4 months after the date of the relevant tranche. Excess of initial fair value of warrant liabilities over the cash proceeds ($61.9 million) is presented in the consolidated statement of operations as "Other financing costs - initial recognition of warrants" (for warrant liabilities meeting, on initial recognition, requirements of ASC450 only) and "Other financing costs - initial recognition of derivative liabilities" (for warrant liabilities meeting, on initial recognition, requirements of ASC450 and ASC815).

The additional investment right has also been exercised in* July 2024*by certain investor who has exchanged 76,923 shares of Series E Preferred Stock for an initial aggregate principal amount of $3.2 million, or $3.0 million including the 5% original issue discount, of Convertible Notes and 11,504 Warrants (giving effect to reverse stock split). Upon initial recognition, the fair value of derivative liabilities was $6.3 million, and fair value of the convertible notes was $3.2 million. Excess of initial fair value of liabilities and over carrying amount of Series E Preferred stock ($0.9 million) is presented in the consolidated statement of operations as "Other financing costs - initial recognition of warrants".

During the remaining period until* September 30, 2024,*a part of the warrants in amount 77,361 (giving effect to the reverse stock split) was exercised on a cashless basis and 2,041,630 shares of common stock were issued by the Company.

Outstanding warrants in amount of 171,547 with carrying value of $79.7 million as of* September 30, 2024were potentially exercisable for 25,314,996 (under cashless basis) shares of common stock and their exercise (on a cash or cashless basis) is available to investors for a period of approximately 5 years. Exercise of the warrants depends on closing bid price in the last2* days. If the lowest closing bid price in the last2 days prior to* September 30, 2024was $0.10 less, the Company, upon full exercise of outstanding warrants, would potentially be liable to issue approximately 719,175 shares more. If the lowest closing bid price in the last2* days prior to* September 30, 2024was $0.10 higher, the Company, upon full exercise of outstanding warrants, would potentially be liable to issue approximately 680,511 shares less. The maximum number of shares that could theoretically be issued upon exercise of these warrants was 91.6 million (if the lowest closing bid price in the last2* days prior to such date decreased to or below*$1* which is the conversion floor adjusted after the reverse stock split made effective in* September 2024).*

The fair value of warrant obligations is calculated based on the number and market value of shares that can be issued upon exercise of the warrants. Accordingly, the fair value of warrants on recognition date and on subsequent dates was estimated as a maximum of (i) Black Scholes value for cash exercise of relevant warrants and (ii) current market value of the number of shares the Company would be required to issue upon cashless warrant exercise on a relevant date in accordance with warrant contract requirements. The latter valuation, based on observable inputs (level2), has been higher and reflects the pattern of the warrants exercise since the inception of the contract.

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At each warrant exercise date and each accounting period end the warrant liability for the remaining unexercised warrants was marked-to-market value and the resulting gain or loss was recorded in consolidated statement of operations as a “Gain / (loss) on derivative liability revaluation” (and "Gain/(loss) on other warrants revaluation" for revaluation of warrants when they didnot qualify as derivatives under ASC815).

Preferred D Warrants

During the financial years ended* September 30, 2023and September 30, 2022,the Company financed its activities mainly with proceeds from the June 7, 2022Securities Purchase Agreement (Series D SPA). In accordance with Series D SPA, for every share of Series D Preferred Stock purchased, the investors received 185% (for the final $100 million voluntary investment right expiring June 30, 2023 -110%) warrants (the “Preferred D Warrants”) exercisable for shares of common stock at an exercise price equal to the lower of the price at the execution date or the market price of common stock on the trading day immediately preceding the purchase notice date. The Preferred D Warrants were exercisable during afive*-year period commencing upon issuance.

Over the course of the Series D SPA, from* September 2022to June 2023,the Company received approximately $382 million investment and issued to investors 10,837 Preferred D Warrants, approximately 353 million shares of Series D Preferred Stock, as well as 5,631 prefunded warrants and 2,673 common shares in lieu of Series D Preferred stock (hereinafter, the warrants and shares of common stock are presented giving effect to the reverse stock splits, seeNote1** – Description of business and basis of presentation*).

During the year ended* September 30, 2023,all prefunded warrants and 7,013 Preferred D Warrants were exercised for 24,459 shares of common stock. As of September 30, 2023,*3,824 Preferred D Warrants (recognized as liabilities in the consolidated balance sheets) exercisable into 14,380 shares of common stock with fair value of $64.7 million remained outstanding.

During the year ended* September 30, 2024,all remaining Preferred D Warrants were exercised on a cashless basis for 55,530 shares of common stock (post reverse stock splits), and there areno* more Preferred D Warrants outstanding as of* September 30, 2024.*

The contracts for the Preferred D Warrants contained cashless exercise provisions similar to the Warrants issued with the*$50* Million Senior Secured Convertible Notes (see above), and management applied similar accounting treatment to the recognition, measurement, and presentation of these warrant liabilities, including approach to estimation of the fair value of Preferred D warrant obligations.

Qiantu Warrants

Warrants, issued to Qiantu Motor (Suzhou) Ltd. and their affiliates (herein “Qiantu”) in* March 2023were presented as other derivative liabilities as of September 30, 2023in amount of $0.1 million. These liabilities were classified as having significant unobservable inputs (level3*) in the table below. The Qiantu warrants to purchase up to 36,149 shares of common stock at the price of $3.15 per share (number and price of shares is presented after application of down round provisions and giving effect to the reverse stock splits) expired on* September 30, 2024.*

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The tables below represent a summary of issuances, exercises and forfeiture of warrants described earlier. Information for the previous periods* maynot* be directly comparable due to a series of reverse stock splits executed by the Company over the pasttwo financial years (seeNote1). In accordance with US GAAP, these reverse stock splits have been applied retroactively, reducing the number of warrant shares presented. Qiantu warrants represent the right to purchase1 share of common stock. Preferred C, Preferred D and* May 2024*Warrants can be exercised on a cashless basis into variable number of shares of common stock, see above.

Liabilities settlement agreement (SCC)

On* May 13, 2024,*the Company entered into a Settlement Agreement and Stipulation (the “SAA”) with Silverback Capital Corporation (“SCC”), pursuant to which the Company agreed to issue common stock to SCC in exchange for the settlement of an aggregate of $4.6 million (the “Settlement Amount”) to resolve outstanding overdue liabilities with different vendors.

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On* May 29, 2024,the Circuit Court of the Twelfth Judicial Circuit in and for Manatee County, Florida, entered an order approving, among other things, the fairness of the terms and conditions of an exchange pursuant to Section3*(a)(10) of the Securities Act in accordance with a stipulation of settlement, pursuant to the SSA between the Company and SCC.

Pursuant to the terms of the SSA approved by the Order, the Company agreed to issue to SCC shares (the “Settlement Shares”) of common stock. The price of the Settlement Shares was calculated as75% of the average of the3 lowest prices traded during the valuation period. The Settlement Agreement provided that the Settlement Shares will be issued inone or more tranches, as necessary, sufficient to satisfy the Settlement Amount through the issuance of securities issued pursuant to Section3(a)(10) of the Securities Act. The shares of common stock issuable under SSA didnot require shareholder's approval and registration.

Upon initial recognition of the transaction, the Company derecognized the liability to vendors in the amount of $4.6 million and recognized derivative liabilities to SCC in the amount of $7.0 million, calculated based on the fair value of the shares of common stock that can be issued to SCC to satisfy the claims. The financial result in the amount of $2.3 million was recognized as "Other financing costs—initial recognition of derivative liabilities" in the consolidated statement of operations.

In connection with the SAA, from* May 2024to August 2024,*the Company issued 63,812 Settlement Shares (giving effect to the reverse stock split) at fair value of $6.5 million to fully settle this liability.

Breakdown of items recorded at fair value on a recurring basis in consolidated balance sheets by levels of observable and unobservable inputs as of* September 30, 2024* and on* September 30, 2023* is presented below:

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A summary of all changes in warrants and other derivative liabilities is presented below:

NOTE 9 –** STOCKHOLDERS**’** EQUITY (DEFICIT)**

Common Stock

At a special meeting on* January 25, 2023,stockholders approved the proposal to increase the Company’s authorized common stock capital from 1.75 billion to 5 billion shares. As of September 30, 2024,*the Company had 5 billion shares of common stock authorized with $0.001 par value per share.

As described in detail inNote1** - Description of Business and Basis of Presentation above, the Company has effectuated several reverse stock splits. All stock splits resulted in the reduction of shares of common stock issued and outstanding and didnot affect authorized common stock or preferred stock. The Company had 4,577,306 and 28,718 shares of common stock (post reverse stock splits) issued and outstanding on* September 30, 2024and September 30, 2023,*respectively.

The holders of common stock are entitled toone 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 the distribution of liquidation preferences, if any, to the holders of our preferred stock. The holders of common stock arenot entitled to receive dividends unless declared by our Board. To date,no dividends have been declared or paid to the holders of common stock.

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Change in Control Agreements

On* August 11, 2023,*the Board of Directors approved, and the Company entered, Change in Control Agreements with each non-employee director and Chief Executive Officer. Pursuant to the Change in Control Agreements with each non-employee director, upon a change in control of the Company, any unvested equity compensation will immediately vest in full and such non-employee director will receive $5 million. Pursuant to the Agreement with CEO, upon a change in control of the Company, any unvested equity compensation will immediately vest in full and CEO will receive an aggregate percentage of the transaction proceeds as follows:10% of the transaction proceeds that are up to and including $1 billion; plus, an additional 5% of transaction proceeds that are more than $1 billion and up to $1.5 billion; and an additional 5% of transaction proceeds that are more than $1.5 billion.

A change in control, as defined in the agreements occurs upon (i) any person becoming the beneficial owner of 50% or more of the total voting power of the Company’s then outstanding voting securities, (ii) a change in the composition of the Board, as a result of which fewer than a majority of the directors are Incumbent Directors (as defined in the Change in Control Agreements), or (iii) the consummation of a merger or consolidation of the Company (except when the total voting power of the Company continues to represent at least 50% of the surviving entity), any liquidation, or the sale or disposition by the Company of all or substantially all of its assets.

Stockholder Rights Agreement and** **Series A-1 Junior Participating Preferred Stock

On* May 1, 2024,the Company entered into a Rights Agreement with Continental Stock Transfer & Trust Company as the rights agent. The Board of Directors declared a dividend ofone preferred share purchase right (a “Right”) for each share of common stock and each outstanding share of preferred stock company payable to holders of record as of the close of business on May 13, 2024.Each Right entitles the registered holder to purchaseone ten-thousandth of a share of Series A-1 Junior Participating Preferred Stock (“A-1 Preferred Stock”) of the Company at a price of $30.00 perone ten*-thousandth of a share of A-1 Preferred Stock, subject to adjustment (the “Exercise Price”). The Rights arenot exercisable until the Distribution Date (as defined below). The description and terms of the Rights are set forth in the Rights Agreement.

The Rights willnot be exercisable until the earlier often days after a public announcement by us that a person or group has acquired10% or more of the shares of common stock (an "Acquiring Person") andten business days (or a later date determined by our board of directors) after a person or group begins a tender or an exchange offer that, if completed, would result in that person or group becoming an Acquiring Person (the earlier of such dates being herein referred to as the “Distribution Date”). At any time after a person becomes an Acquiring Person, the Board of Directors* may,at its option, exchange all or any part of the then outstanding and exercisable Rights for shares of common stock at an exchange ratio ofone* share of common stock for each Right, subject to adjustment as specified in the Rights Agreement. Notwithstanding the foregoing, the Board of Directors generally willnot be empowered to effect such exchange at any time after any person becomes the beneficial owner of 50% or more of the common stock of the Company. The Rights will expire on* May 1, 2025,unless previously redeemed or exchanged by the Company. The Rights Agreement is designed to enable all Company stockholders to realize the long-term value of their investment and is intended to protect Mullen and its stockholders from efforts by a single stockholder or group to obtain control of the Company without paying a control premium, see below for further details. The Rights have certain anti-takeover effects, including potentially discouraging a takeover that stockholders mayconsider favorable. Certain exemptions mayapply to an Acquiring person. The Rights will cause substantial dilution to a person or group that attempts to acquire us on termsnot* approved by the Board of Directors.

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Preferred Stock

Under the terms of our Certificate of Incorporation, the Board* maydetermine the rights, preferences, and terms of our authorized but unissued shares of Preferred Stock. Pursuant to the terms of its Second Amended and Restated Certificate of Incorporation, as amended, upon conversion of shares of Preferred Stock, such shares so converted are cancelled andnot* issuable. As of* July 26, 2022,as a result of an amendment to its Certificate of Incorporation increasing its authorized Preferred Stock, the Company had 500,000,000 shares of Preferred Stock authorized with $0.001 par value per share, and as of September 30, 2024,pursuant to its terms of Preferred Stock conversion, the Company had remaining 126,263,159 shares of Preferred Stock authorized. The reverse stock splits (seeNote1** -Description of business and basis of presentation above) didnot* affect the number of shares of Preferred Stock authorized and outstanding, but the conversion ratios were proportionately adjusted to decrease the number of shares of common stock to be issued as a result.

The Company has designated Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, and Series D Preferred Stock (see description below), Series E Preferred Stock (see a separate section below), Series AA Preferred Stock (cancelled, see below), and Series A-1 Junior Participating Preferred Stock (seeStockholder Rights Agreementabove).

Transactions with Preferred Stock (other than Series E Preferred Stock which wasnot accounted for in permanent equity due to redemption provisions) during the years ended* September 30, 2024and September 30, 2023are presented in the table below. For more information on extinguishment of Series C Preferred Stock and issuance of Series E Preferred Stock, please see sectionSeries E Preferred Stock*below.

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Series E Preferred Stock

On* May**31,* 2024, the Company entered into the Settlement Agreement and Release with certain investor, pursuant to which the Company issued $3.0 million of, or 76,923, shares of the Company’s Series E Preferred Stock in exchange for the cancellation of 1,211,299 shares of the Company’s Series C Preferred Stock held by Ault Lending. Pursuant to the terms of the Certificate of Designation, such shares of Series C Preferred Stock, including undeclared dividends, had a redemption value of approximately $14.9 million.

Series E Preferred Stock generally has the following terms:

Conversion and Exchange. The Series E Preferred Stock is convertible at the option of each holder at any time into the number of shares of Common Stock, determined by dividing the Series E Original Issue Price by the Series E Conversion Price in effect on the date of conversion. “Series E Original Issue Price” means $39.00 per share for each share of the Series E Preferred Stock (as adjusted for any stock splits, stock dividends, combinations, recapitalization, or the like with respect to the Series E Preferred Stock). The initial “Series E Conversion Price” was $3.90 per share, subject to adjustment. Based on this formula, each share of Series E Preferred Stock was convertible into 10 shares of Common Stock before reverse stock split. If any shares of Series E Preferred Stock are converted, redeemed, or reacquired by the Company, such shares* may**not* be reissued and will automatically be retired and canceled. The Series E Preferred Stock willnot be convertible by a holder to the extent that such holder or any of its affiliates would beneficially own in excess of 9.99% of the Common Stock.

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Voting Rights

Holders of the Series E Preferred Stock are entitled to vote on an as-converted-to-Common-Stock basis, have full voting rights and powers equal to the voting rights and powers of the holders of the Common Stock, and are entitled to vote together with the Common Stock with respect to any question upon which holders of Common Stock have the right to vote. In addition, approval of holders of a majority of the shares of Series E Preferred Stock, voting as a separate class, is required to (i) alter or change the powers, preferences, or rights of the Series E Preferred Stock to affect them adversely, (ii) amend the Certificate of Incorporation or other charter documents in a manner adverse to the holders of Series E Preferred Stock, (iii) increase the number of authorized shares of Series E Preferred Stock, or (iv) enter into any agreement with respect to any of the foregoing.

Dividends. Holders of the Series E Preferred Stock are entitled to receive dividends on shares of Series E Preferred Stock equal (on an as-if-converted-to-Common-Stock basis, disregarding for such purpose any conversion limitations hereunder) to and in the same form as dividends actually paid on shares of the Common Stock when, as and if such dividends are paid on shares of the Common Stock.No other dividends will be paid on shares of Series E Preferred Stock.

Liquidation, Dissolution, and Winding Up. In the event of any Liquidation Event (as defined in the Certificate of Designation), the holders of the Series E Preferred Stock will be entitled to receive, prior and in preference to any distribution of the proceeds to the holders of the Common Stock, but subject to and after the distribution of proceeds to the Series A preferred stock, Series C preferred stock and Series D preferred stock, by reason of their ownership thereof, an amount per share equal to the Series E Original Price (as described above), plus declared but unpaid dividends on such share.

In accordance with the Settlement Agreement, Series E holders, at their discretion, were also permitted to exchange, pursuant to Section3(a)(9) of the Securities Act, or any other applicable securities exemption, some or all of the shares of Series E Preferred Stock for an equal dollar amount of Notes and Warrants pursuant to additional investment rights of the Securities Purchase Agreement. For more information on these Notes and Warrants, seeNote7* - Debt,* $50 Million Senior Secured Convertible Notes and Warrants,and Note8 – Warrants and other derivative liabilities and fair value measurements.

The Series E Preferred Stock were initially recognized at fair value of $8.6 million (classified as Level3 of the fair value hierarchy). As the Notes and Warrants conversion (exchange) option fair value significantly exceeded the fair value of the conventional conversion option, and the value of other rights available to Series E Preferred Stockholders wasnot likely to exceed this difference, the fair value of Series E Preferred Stock on initial recognition was determined based on fair value of the Notes and Warrants conversion (exchange) option, similarly to calculating fair value of warrants issued under the Securities Purchase Agreement (seeNote8* - Warrants and other derivative liabilities and fair value measurements*).

The difference between the carrying amount of extinguished Series C Preferred Stock and the fair value of issued Series E Preferred Stock was recognized as reduction of additional paid-in capital and decreased losses per share (seeNote10* - Loss per share*).

In* July 2024,all 76,923 shares of Series E Preferred Stock were exchanged for Senior Secured Convertible Notes with an initial aggregate principal amount of $3.2 million, or $3.0 million including the 5% original issue discount, and 11,504 Warrants (giving effect to reverse stock splits) with fair value of $6.2 million (seeNote8 – Warrants and other derivative liabilities and fair value measurements*). There areno Series E Preferred Stock shares outstanding as of* September 30, 2024.*

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Redemption Rights

The shares of Preferred Stock (hereinafter - other than Series E Preferred Stock) arenot subject to mandatory redemption.

The Series C Preferred Stock and Series D Preferred Stock are voluntarily redeemable by the Company in accordance with the following schedule, provided that the issuance of shares of common stock issuable upon conversion has been registered and the registration statement remains effective:

Year1: No Redemption

Year2: Redemption at 120% of the Redemption Price

Year3: Redemption at 115% of the Redemption Price

Year4: Redemption at 110% of the Redemption Price

Year5: Redemption at 105% of the Redemption Price

Year6 and thereafter: Redemption at 100% of the Redemption Price

The Series C Preferred Stock and Series D Preferred Stock are redeemable by the Company for a Redemption price per share equal to the Issue Price ($8.84 for Series C Preferred Stock and $0.4379 for the remaining Series D Preferred Stock), plus all unpaid accrued and accumulated dividends on such share (whether ornot declared), provided: (A) the Preferred Stock has been issued and outstanding for a period of at leastone year, (B) the issuance of the shares of common stock underlying the Preferred Stock has been registered pursuant to the Securities Act and such registration remains effective, and (C) the trading price for the common stock is less than the Conversion Price for20 trading days in any period of30 consecutive trading days on the Nasdaq Capital Market.

Dividends

The holders of Series A and Series B Preferred Stock are entitled to non-cumulative dividends if declared by the Board of Directors. The holders of the Series A Preferred Stock and Series B Preferred Stock 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 since issuance of these shares.

The Series C Preferred Stock originally provided for a cumulative 15.0% per annum fixed dividend on the Series C Original Issue Price plus unpaid accrued and accumulated dividends. On* January 13, 2023,*the Company and most holders of Series C Preferred Stock entered into a waiver agreement pursuant to which such holders irrevocably waived their right to receive any and all cumulative 15.0% per annum fixed dividends on such Preferred Stock, including all unpaid accrued and accumulated dividends.

The Series D Preferred Stock bears a 15.0% per annum fixed dividend accumulated and compounded monthly, payableno later than the5th day after the end of each month on the Series D Original Issue Price plus unpaid accrued and accumulated dividends. Dividends on the Series D Preferred Stock are payable prior to any dividends on any other series of Preferred Stock or the common stock. The amount of Series D Preferred Stock dividends accumulated as of* September 30, 2024*was approximately $0.5 million.

F-43 he Company* mayelect to pay dividends for any month with a payment-in-kind (“PIK”) election if (i) the shares issuable further to the PIK are subject to an effective registration statement, (ii) the Company is then in compliance with all listing requirements of NASDAQ and (iii) the average daily trading dollar volume of the Company’s common stock for10* trading days in any period of20 consecutive trading days on the NASDAQ is equal to or greater than $27.5 million.

Liquidation, Dissolution, and Winding Up

In the event of any Liquidation Event, the holders of the Series D Preferred Stock 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 D Original Issue Price ($0.4379 per share in respect of the outstanding Series D Preferred Stock) plus declared but unpaid dividends (none declared but unpaid dividends on* September 30, 2024and2023*).

In the event of any Liquidation Event, the holders of the Series B Preferred Stock will be entitled to receive, after full execution of rights of the Series D Preferred Stockholders, and 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 (none declared but unpaid dividends on* September 30, 2024and2023*).

Upon the completion of a distribution pursuant to a Liquidation Event to the Series D Preferred Stock and Series B Preferred Stock, the holders of the Series C Preferred Stock will be entitled to receive, prior and in preference to any distribution of the proceeds to the holders of the Series A Preferred Stock or the common stock by reason of their ownership thereof, an amount per share equal to the Series C Original Issue Price ($8.84 per share) plus declared but unpaid dividends (none declared but unpaid dividends on* September 30, 2024and2023*).

Upon the completion of a distribution pursuant to a Liquidation Event to the Series D Preferred Stock, Series B Preferred Stock, and Series C Preferred Stock, the holders of Series A Preferred Stock are entitled to receive, prior and in preference to any distribution of any proceeds to the holders of the common stock, by reason of their ownership thereof, $1.29 per share of each share of the Series A Preferred Stock, plus declared but unpaid dividends on such share (none declared but unpaid dividends on* September 30, 2024and2023*). “Liquidation Event” is as defined in the Certificate of Incorporation and, subject to certain exceptions, includes a sale or other disposition of all or substantially all of the Company’s assets, certain mergers, consolidations, and transfers of securities, and any liquidation, dissolution or winding up of the Company.

Conversion

The details on conversion rights of Preferred Stock are presented in the following table:

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Each share of Series C Preferred Stock will automatically be converted into shares of common stock at the applicable conversion rate at the time in effect immediately upon (A) the issuance of shares of common stock underlying the Series C Preferred Stock being registered pursuant to the Securities Act of1933 and such registration remaining effective, (B) the trading price for the Company’s common stock being more thantwo times the Series C Conversion Price for20 trading days in any period of30 consecutive trading days on the Nasdaq Capital Market, and (C) the average daily trading dollar volume of the Company’s common stock during such20 trading days is equal to or greater than $4.0 million.

Each share of Series D Preferred Stock will automatically be converted into shares of common stock at the applicable Conversion Rate at the time in effect immediately upon (A) the issuance of shares of common stock underlying the Series D Preferred Stock being registered pursuant to the Securities Act and such registration remaining effective, (B) the trading price for the Company’s common stock being more thantwo times the Series D Conversion Price for20 trading days in any period of30 consecutive trading days on the Nasdaq Capital Market, and (C) the average daily trading dollar volume of the Company’s common stock during such20 trading days is equal to or greater than $27.5 million.

Voting Rights

The holders of shares of common stock and Series A, Series B, Series C and Series E Preferred Stock at all times vote together as a single class on all matters (including the election of directors) submitted to a vote of the stockholders; provided, however, that, any proposal which adversely affects the rights, preferences and privileges of the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock or Series E Preferred stock, as applicable, must be approved by a majority in interest of the affected series of Preferred Stock, as the case* may*be.

Each holder of common stock, Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series E Preferred stock has the right toone vote for each share of common stock into which such Preferred Stock, as applicable, could be converted. Each holder of Series A Preferred had the right to 1,000 votes per share held of record by such holder which terminated on* November 5, 2024.*

The holders of Series D Preferred Stock haveno voting rights except for protective voting rights (one vote for each share) in cases such as approval of a liquidation event, authorization of the issue of securities having a preference over or parity with the Series D Preferred Stock with respect to dividends, liquidation, redemption or voting, entering a merger or consolidation, etc.

Equity Line of Credit and ELOC Commitment Fees

On* May21,* 2024, the Company entered into the Equity Line of Credit (ELOC) Purchase Agreement with Esousa LLC (the "Investor"), pursuant to which the Investor agreed to purchase from the Company, at the Company’s direction from time to time, in its sole discretion, from and after* July5,* 2024, and until the earlier of (i) the36-month anniversary of the Commencement Date of* July**16,* 2024, or (ii) the termination of the ELOC Purchase Agreement in accordance with the terms thereof, shares of Common Stock, having a total maximum aggregate purchase price of $150 million, upon the terms and subject to the conditions and limitations set forth below. In connection with the ELOC Purchase Agreement, the Company also entered into a registration rights agreement, pursuant to which the Company agreed to file a registration statement and any additional registration statements, with the SEC covering the resale of the shares of the Company’s Common Stock issued to Investor pursuant to the ELOC Purchase Agreement.

After the Commencement Date (as defined above), on any business day selected by the Company, the Company* may,from time to time and at its sole discretion, direct the Investor to purchase a number of shares of Common Stock that doesnot* exceed 20% of the trading volume on the Nasdaq Stock Market on the applicable purchase date at a purchase price per share equal to94% of the lower of (i) the lowest daily VWAP of any trading day during the15 trading days before, and including, the purchase date; and (ii) the closing price of the Common Stock on the applicable purchase date.

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The Company will control the timing and amount of any sales of its Common Stock to the Investor, and the Investor hasno right to require the Company to sell any shares to it under the Purchase Agreement. Actual sales of shares of Common Stock to the Investor under the Purchase Agreement will depend on a variety of factors to be determined by the Company from time to time, including (among others) market conditions, the trading price of its Common Stock, and determinations by the Company as to available and appropriate sources of funding for the Company and its operations. The Investor* may**not* assign or transfer its rights and obligations under the Purchase Agreement. The Company's right to direct the Investor to purchase shares is subject to certain conditions precedent, including continued listing on Nasdaq or another major stock exchange.

The Purchase Agreement prohibits the Company from directing the Investor to purchase any shares of Common Stock if those shares, when aggregated with all other shares of Common Stock, then beneficially owned by the Investor and its affiliates, would result in the Investor and its affiliates beneficially owning more than 9.99% of the then total outstanding shares of the Company’s Common Stock.

The Purchase Agreement* maybe terminated by the Company at any time, at its sole discretion, without any cost or penalty. From and after the date of the Purchase Agreement until its termination, the Company agreednot* to effect or enter into an agreement to effect any issuance by the Company or any of its subsidiaries of Common Stock or Common Stock equivalents (or a combination of units thereof), involving a Variable Rate Transaction (as defined in the Purchase Agreement), other than in connection with an exempt issuance as described in the Purchase Agreement. The Investor has agreednot to cause or engage in any manner whatsoever any direct or indirect short selling or hedging of the Company’s Common Stock.

On* July 5, 2024,the SEC declared effective a registration statement on Form S-1 registering 750,000 shares (giving effect to reverse stock splits) that can be issued in connection with the ELOC Purchase Agreement. On July 9, 2024,*shareholders of the Company ratified the issuance of shares in excess of the 20% Exchange Cap.

As consideration for its commitment to purchase the Company’s common stock under the ELOC Purchase Agreement, the Company agreed to issue shares of common stock equivalent to $6.0 million (presented as “Other financing costs - ELOC commitment fee” in the consolidated statement of operations for the year ended* September 30, 2024).In Augustand September 2024,*the Company fully settled the commitment fee by issuing 247,934 shares of common stock (giving effect to reverse stock splits).

In* October 2024,*after the balance sheet date, the Company issued 502,066 shares in accordance with the ELOC Purchase Agreement and received $1 million proceeds. The Company can continue to access the ELOC if it files another registration statement with the SEC.

Noncontrolling interest

See details in theNote16* - Noncontrolling interest*.

NOTE 10 –** LOSS PER SHARE**

Earnings per common share (“EPS”) is computed by dividing net income allocated to common stockholders by the weighted-average shares of common stock outstanding. Diluted EPS is computed by dividing income allocated to common stockholders plus dividends on dilutive convertible preferred stock by the weighted-average shares of common stock outstanding plus amounts representing the dilutive effect of outstanding warrants and the dilution resulting from the conversion of convertible preferred stock, if applicable. For the fiscal years ended* September 30, 2024and2023*, outstanding warrants, 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 following table presents the reconciliation of net loss attributable to common stockholders to net loss used in computing basic and diluted net income per share of common stock (giving effect to the reverse stock splits – seeNote1* - Description of business and basis of presentation*):

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NOTE 11 –SHARE-BASED COMPENSATION

The Company has an equity incentive plan that is a part of annual discretionary share-based compensation program for consultants, employees, directors, and officers. The Company has been issuing new shares of common stock under the share-based compensation programs, and cash hasnot been used to settle equity instruments granted under share-based payment arrangements. The remaining number of shares reserved for awards equity instruments under the Equity Incentives Plan to both employees and consultants on* September 30, 2024* was 20,449,704 shares of common stock. The remaining number of shares reserved for awards to CEO under the Performance Stock Award Agreements on* September 30, 2024* was 460,479 shares of common stock.

CEO Award Incentive Plans

The Company entered into a CEO Performance Stock Award Agreement, approved by the Board and by stockholders in2022 (“2022 PSA Agreement”) and a CEO Performance Stock Award Agreement, approved by the Board and by stockholders in2023 (“2023 PSA Agreement”). Under these plans, the Chief Executive Officer is entitled to share-based awards generally calculated as 1-3% of the outstanding number of shares of common stock, issuable upon achievement of specific financial and operational targets (milestones).

The costs (income) recognized within the line item "CEO share based performance award liability revaluation" in the table above represent both actual issuances of common stock under PSA Agreements and revaluation of these provisions for future probable awards. This share-based compensation is accrued over the service term when it is probable that the milestone will be achieved. The liability to issue stock (presented within non-current liabilities if the achievement is expected later than12 months after the balance sheet date) is revalued on every balance sheet date based on the length of the service period, the current market price of the common stock, and on the number of shares of common stock outstanding - until the shares have been issued or until the fulfillment of the milestone requirements isno longer probable. The CEO share based performance award liability revaluation for the year ended* September 30, 2024led to income recognition ($(7.6) million versus costs of $54.1 million during the year ended September 30, 2023)primarily due to reassessment of probability of milestones and market capitalization decline of the Company, and relevant decrease of the provision as of September 30, 2024versus provision as of September 30, 2023.*

The milestones per2022* PSA Agreement (all milestones have either been achieved or expired by* September 30, 2024):

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On* October 3, 2022,*the Company delivered its Class One Van to Hotwire Communications, a South Florida-based telecommunications company and Internet Service Provider for a pilot program under the captured fleet exemption.

On* August 20, 2023,a drivable porotype of the Mullen5* vehicle was part of the Mullen road tour and available for consumers to test drive.

On* June 27, 2022,the Company joined the Russell2000* and3000 Indexes.

By* September 30, 2023,the Company raised more than $400 million through the issuance of preferred stock, prefunded warrants and common stock in lieu of preferred stock and other warrants. By July 31, 2024 (expiration date of the milestone), the Company raised additional funds so that accumulated raised capital exceeded $100 million (mainly through the issuance of convertible notes and warrants), and relevant milestone shares are due as of September 30, 2024.*

On* September 1, 2022,the Company announced that it a signed partnership with Watergen Inc. to develop and equip Mullen’s portfolio of electric vehicles with technology that will produce fresh drinking water from the air for in-vehicle consumer and commercial application. On October 12, 2022,*the Company entered into the Distributorship Agreement whereby Watergen will be integrating its unique atmospheric water generating and dehumidifying technology into the Company’s vehicles and granting exclusivity to the Company for the integration design developed specifically for its vehicles.

On* November 8, 2022,*the Company entered into an agreement into an agreement to appoint Newgate Motor Group as the marketing, sales, distribution and servicing agent for the Mullen I-GO in Ireland and the United Kingdom.

On* December 12, 2022,*the Company entered into a Dealer Agreement with Randy Marion Isuzu, a large USA dealer, to purchase and distribute the Company’s vehicles.

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The milestones per2023* PSA Agreement:*

On* February 26, 2024,*the Company began Class One EV cargo van road testing with the integrated solid-state polymer battery pack.

On* November 21, 2024,*the Company announced to the public that utilizing equipment, inventory, and intellectual property for high-volume battery pack and module production acquired as part of its Romeo assets acquisition (see below), it had integrated these assets into the Company’s Monrovia, California facility, enhancing production capabilities and reducing supplier dependency. Battery lines include High-volume standard battery chemistry line, High-precision, low-volume standard chemistry R&D line, High-precision, low-volume solid-state polymer R&D line and in progress, High-volume standard chemistry battery line.

Shares to be issued pursuant to the Company meeting thesetwo milestones are recognized as a liability in the consolidated balance sheets as of* September 30, 2024.*

On* September 6, 2023,*the Company acquired the battery production assets of Romeo Power including intellectual property, machinery and equipment that allows the Company to expedite scaling of battery pack production in the USA.

In accordance with management’s estimate, all other milestones per2023 PSA Agreement as of* September 30, 2023are considered probable (and relevant provision as of September 30, 2024*has been recognized), except for the Vehicle Completion Milestones.

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CEO Performance Award Table (from inception of the PSA Agreements)

() The number of outstanding shares, shares issued and the stock price have been retroactively adjusted giving effect to reverse stock splits, seeNote1** -Description of business and basis of presentation. The number of shares issued for each milestone as presented in the table may**not* equal the product of the percentage of outstanding shares for such milestone, due to the rounding up of fractional shares as a result of each reverse stock split.

(**) Compensation amounts donot reflect cash amounts actually received by the CEO. Amounts reported only represent fair value of common stock awarded computed in accordance with FASB ASC Topic718 (i.e., market price of the shares on the date immediately preceding the date when the shares were issued). The weighted-average grant-date fair value of awards actually issued during the year, was $1.1 million and $3.7 million during the years ended* September 30, 2024and2023,* respectively. As of* September 30, 2024,the provision for future awards under both PSA Agreements amounted to approximately $1.6 million representing the earned part of all awards considered probable. A part of this provision in the amount of $0.4 million is presented within non-current liabilities as the achievement is expected later than12* months after the balance sheet date.

Total remaining compensation cost related to nonvested share-based compensation milestones granted under the Plans will depend on probability of the milestones' achievement, market price of the shares, and the number of shares of common stock outstanding on the day a milestone is achieved. If the market price ($3.15) and the number of shares of common stock outstanding on* September 30, 2024 (*4,577,306) remained constant and all milestones considered probable were actually achieved, these remaining compensation cost would amount to $0.9 million; the weighted-average period over which these costs are expected to be recognized after the balance sheet date is 11 months.

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Employees of the Company

Employees of the Company, including officers, are entitled to a number of shares of common stock specified in relevant offer letters and employment contracts and subject to the approval of our Board of Directors Compensation Committee. The total expense of share awards to employees represents the grant date fair value of the relevant number of shares to be issued. It is recognized, in correspondence with additional paid-in capital, over the service period. Awards to the majority of employees vest on thefirst or thesecond employment anniversary of the employee - the weighted average vesting period is 14 months. The weighted-average grant-date fair value of awards granted to employees per employment contracts, was $6 thousand and $2 thousand during the years ended* September 30, 2024and2023,* respectively. The weighted-average grant-date fair value of additional awards granted to employees, was $0.2 million and $0.1 million during the years ended* September 30, 2024and2023,* respectively. The majority of awards to employees are equity-classified. The liability related to liability classified stock-based compensation contracts with employees amounts to $0.1 million on* September 30, 2024.*Total remaining unrecognized compensation costs related to nonvested awards to these employees amount to $0.2 million. The weighted-average period over which these costs are expected to be recognized is 6 months.

() The number of shares, and the stock price have been retroactively restated giving effect to reverse stock splits, seeNote1 - Description of business and basis of presentation*. Stock based compensation costs, recognized by the Company during the year,* maynot* equal product of the shares and fair value in in this table, due to rounding up after adjusting to reverse stock splits. Information for the previous period(s)* maynot* be directly comparable due to a series of reverse stock splits executed by the Company over the pasttwo financial years, with a total combined ratio of 1:2,250,000. In accordance with US GAAP, these reverse stock splits have been applied retroactively, reducing the number of shares while proportionally increasing the share price.

Several members of management and officers are entitled to the same number of common stock specified in their employment contracts on every anniversary as long as they continue to serve. The grant fair value in this case is also based on the employment date. Therefore, these annual stock-based compensation costs are fixed throughout the employment period of each employee, unless modified subsequently. Total stock-based compensation costs of this type amounted to $5.8 million in the year ended* September 30, 2024*, and will amount to $5.8 million in each subsequent year unless entitled employees change or their contracts are modified.

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() The number of shares, and the stock price have been retroactively restated giving effect to reverse stock splits, seeNote1 - Description of business and basis of presentation*. Stock based compensation costs, recognized by the Company during the year,* maynot* equal product of the shares and fair value in in this table, due to rounding up after adjusting to reverse stock splits. Information for the previous period(s)* maynot* be directly comparable due to a series of reverse stock splits executed by the Company over the pasttwo financial years, with a total combined ratio of 1:2,250,000. In accordance with US GAAP, these reverse stock splits have been applied retroactively, reducing the number of shares while proportionally increasing the share price.

(**) Information is presented for a12-month period, see comments above.

During the year ended* September 30, 2024,in lieu of the shares as per employment contract, Chief Financial Officer of the Company received an option, vested immediately, to purchase 3,000 shares of common stock of the Company at the exercise price of $486 (there is also a cashless exercise provision). The option hasnot* been exercised by* September 30, 2024,and, unless exercised later, will expire on5/16/2029.* In accordance with the Black Scholes formula, the Company estimated fair value of this grant to be $1.6 million (level3 fair value measurement based on Black Scholes formula) on the grant date. The option hasnot been exercised yet.

Furthermore, during the year ended* September 30, 2024,*the Board of Directors of the Company awarded additional shares to certain employees and managers:

() The number of shares, and the stock price have been retroactively restated giving effect to reverse stock splits, seeNote1 - Description of business and basis of presentation*. Stock based compensation costs, recognized by the Company during the year,* maynot* equal product of the shares and fair value in in this table, due to rounding up after adjusting to reverse stock splits. Information for the previous period(s)* maynot* be directly comparable due to a series of reverse stock splits executed by the Company over the pasttwo financial years, with a total combined ratio of 1:2,250,000. In accordance with US GAAP, these reverse stock splits have been applied retroactively, reducing the number of shares while proportionally increasing the share price.

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The Company has also accrued a liability (presented within "Accrued expenses and other current liabilities" in the consolidated balance sheets) in an amount of $0.2 million (or 67,268 shares of common stock at market price on* September 30, 2024)*to compensate employees for delay with the issuance of common stock per relevant offer letters and employment contracts.

Consultants

From time to time the Company also issues share-based compensation to external consultants providing consulting, marketing, R&D, legal and other services. The weighted average term of such contracts is 6 months. The number of shares specified within the individual agreements, or a monetary value of those shares, if applicable, is usually negotiated by our Chief Executive Officer and approved by the Board.

These costs are generally presented as professional fees within general and administrative, and certain qualifying costs* maybe presented as part of research and development expenses ($0.4 million in the year ended September 30, 2024*, and $5.0 million in the year ended* September 30, 2023*). A part of these share-based awards is classified as equity and accounted for, similar to stock-based compensation to employees. Another part of the Company’s share-based awards to consultants is classified as liabilities, mainly if the number of shares a consultant is entitled to is predominantly based on monetary value fixed in the contract. An accrued part of liability, in this case, is revalued each period based on the part of the services performed and the market price of the shares of common stock of the Company until a sufficient number of shares is issued. The liability to consultants as of* September 30, 2024* amounted to $0.1 million (none as of* September 30, 2023).Total value of share-based liabilities settled in stock during the years ended September 30, 2024and2023,* was $32.4 million and $13 million, respectively. The Company generally practices prepayment for future services of the consultants by unrestricted shares of common stock. In this case, a prepaid asset is recognized on the balance sheet and is amortized over the period the consultant is delivering their services to the Company. These prepaid costs were $3.3 million as of* September 30, 2024* ($5.1 million as of* September 30, 2023)*and this amount represents the total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the Plan to non-employees. The weighted-average period over which these costs are expected to be recognized after the balance sheet date is 4 months.

The weighted-average grant-date fair value of awards granted to consultants during the year and classified as equity, was $1.2 million and $0.3 million during the years ended* September 30, 2024and2023,* respectively. The weighted-average grant-date fair value of awards granted to consultants during the year and classified as liability, was $0.8 million and $0.7 million during the years ended* September 30, 2024and2023,* respectively.

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() The number of shares, and the stock price have been retroactively restated giving effect to reverse stock splits, seeNote1 - Description of business and basis of presentation*. Stock based compensation costs, recognized by the Company during the year,* maynot* equal product of the shares and fair value in in this table, due to rounding up after adjusting to reverse stock splits. Information for the previous period(s)* maynot* be directly comparable due to a series of reverse stock splits executed by the Company over the pasttwo financial years, with a total combined ratio of 1:2,250,000. In accordance with US GAAP, these reverse stock splits have been applied retroactively, reducing the number of shares while proportionally increasing the share price.

() The number of shares, and the stock price have been retroactively restated giving effect to reverse stock splits, seeNote1 - Description of business and basis of presentation*. Stock based compensation costs, recognized by the Company during the year,* maynot* equal product of the shares and fair value in in this table, due to rounding up after adjusting to reverse stock splits. Information for the previous period(s)* maynot* be directly comparable due to a series of reverse stock splits executed by the Company over the pasttwo financial years, with a total combined ratio of 1:2,250,000. In accordance with US GAAP, these reverse stock splits have been applied retroactively, reducing the number of shares while proportionally increasing the share price.

NOTE 12 –** ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES**

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NOTE 13 - LIABILITY TO ISSUE STOCK

The liability to issue stock on* September 30, 2024* (current liability in the amount of $1.8 million and non-current liability in the amount of $0.4 million) represents CEO incentive award provision to be settled in shares of common stock upon the achievement of specific targets (current liability in the amount of $1.3 million and non-current liability in the amount of $0.4 million), liability to Directors of the Company ($0.1 million), employees ($0.2 million), as well as certain liability-classified contracts with consultants (current liability in the amount of $0.1 million) and other parties (current liability in amount of $0.1 million). The liability on* September 30, 2023 (current liability in amount of $9.9 million and non-current liability in amount of $1.8 million) mainly represents CEO incentive award provision to be settled in shares of common stock upon achievement of specific targets, seeNote* 11 - Share-based compensation for more details.

NOTE 14 –** PROPERTY, PLANT, AND EQUIPMENT, NET**

Property, plant, and equipment, net consists of the following:

Due to unfavorable market conditions, decline of the market prices of the Company’s common stock, and budgeted performance misses compared to the budgets prepared previously, we have tested long-lived asset for recoverability both for the year ended* September 30, 2024,and the year ended September 30, 2023.The tests were performed with assistance of independent professional appraisers using both discounted cash flow method and guideline public company method. Additionally, fair value of real property (classified in Level3* of the fair value hierarchy) was estimated under market approach.

Impairment tests performed as of* September 30, 2024didnot* result in recognition of impairment, except for $4.2 million impairment of assets (presented as construction-in-progress in the table above and related to Mullen Commercial segment - seeNote21* - Segment information*) recorded due to insufficient financing available to finish relevant projects.

Impairment tests performed for the year ended* September 30, 2023didnot* result in recognition of impairment in respect of the property, plant, and equipment of the Bollinger's segment, but impairment loss in amount of $13.5 million has been recognized in respect of the property, plant, and equipment of the Mullen Commercial segment: primarily construction-in-progress, and machinery and equipment, and show room assets. Their accumulated depreciation in amount of $6.0 million was derecognized in correspondence with initial cost to present the new cost basis of these assets in accordance with ASC360.

Depreciation expense related to property, plant, and equipment for the years ended* September 30, 2024and2023* was $17.6 million and $8.0 million, respectively.

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NOTE 15 –** OTHER NON-CURRENT ASSETS**

NOTE 16 –** NONCONTROLLING INTEREST**

On* September 7, 2022,the Company acquired approximately 60% of the outstanding shares of Bollinger Motors, Inc. Noncontrolling interest recognized as of the acquisition date amounted to $99 million through a series of purchase agreements. Up to September 30, 2023,*the noncontrolling interest decreased to $63.9 million due to allocation of losses of the subsidiary.

Per the Stock purchase agreement signed on* July 26, 2024 (*Effective date), the Company, as part of activities to launch production in the Bollinger segment, invested an additional $12.7 million in newly issued shares of the subsidiary, increasing controlling interest of the owners of the Company to 66% on a fully diluted basis. This investment has been eliminated in the consolidated statement of cash flows but decreased noncontrolling interest in the consolidated balance sheets by $3 million, see table below.

Over the next18 months following the Effective Date, the Company has the right to purchase additional shares of Bollinger for $23.4 million, further increasing the share of the Company to 73.4% on a fully diluted basis. Also, during the next36 months following the Effective Date, the Company shall have the right to purchase up to 100% of the total number of shares of Common Stock subject to any Committed Third Party Financing (as defined in the agreement) at a purchase price that is75% of the purchase price offered in such Committed Third Party Financing and otherwise on the same terms and conditions provided for in the Committed Third Party Financing.

Changes of the noncontrolling interest during the years ended* September 30, 2024and2023* are disclosed in the tables below:

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NOTE 17 –** LEASES**

We have entered into various operating lease agreements for certain offices, manufacturing and warehouse facilities, and land. Operating leases led to recognition of right-of-use assets, and current and noncurrent portion of lease liabilities. These right-of-use assets also include any lease payments made and initial direct costs incurred at lease commencement and exclude 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 that require payments for both lease and non-lease components and have elected to account for these as a single lease component. Certain leases provide for annual increases to lease payments based on an index or rate.

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 million for thefirst* year (and increases approximately 4% yearly), and additional operating expenses are approximately $715 thousand in thefirst year with subsequent annual recalculation. Security deposit paid to the landlord is approximately $1 million.

The table below presents information regarding our lease assets and liabilities.

During the year ended* September 30, 2024,we recognized impairment of right-of-use assets in the amount of $11.5 million (none during the year ended September 30, 2023)*mainly due to insufficient future cash flows to cover carrying amount of the relevant assets.

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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. Weighted average discount rate used in discounting operating lease liabilities is 28%. The following table reflects maturities of operating lease liabilities as of* September 30, 2024*, as well as reconciliation of undiscounted cash flows per lease contracts to carrying amount of the lease liabilities:

NOTE 18 –** INCOME TAXES**

The Company and its less than100% owned subsidiaries are filing separate tax returns, and we calculate the provision for income taxes by using a "separate" return method. Section174 capitalization and R&D credits are calculated using consolidated tax return rules and allocated among its members. We record deferred income taxes using enacted tax laws and rates for the years in which the taxes are expected to be paid. Deferred income tax assets and liabilities are recorded based on the differences between the financial reporting and income tax bases of assets and liabilities.

The Company's total provision (benefit) for income taxes for the years ended* September 30, 2024and2023* consists of the following elements:

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The following table represents accumulated income tax NOL (net operating loss) carryforwards for the years ended* September 30, 2024and2023*, respectively:

The reconciliation of our effective tax rate to the statutory federal rate of 21% for the years ended* September 30, 2024and2023* is as follows:

We record deferred income taxes using enacted tax laws and rates for the years in which the taxes are expected to be paid. Deferred income tax assets and liabilities are recorded based on the differences between the financial reporting and income tax bases of assets and liabilities.

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Significant components of the Company's net deferred tax assets as of* September 30, 2024and2023*, respectively, are as follows:

For the year ended* September 30, 2024,a full valuation allowance is recorded against the deferred tax assets because the Company is in athree*-year cumulative pre-tax book loss, which is significant negative evidence. We donot believe that the deferred tax assets recorded as of* September 30, 2024are more likely thannot* realizable.

We follow the guidance for accounting for uncertainty in income taxes in accordance with ASC740, which clarifies uncertainty in income taxes recognized in an enterprise's financial statements. The standard also prescribes a recognition threshold and measurement standard for the financial statement recognition and measurement of an income tax position taken, or expected to be taken, in an income tax return. Only tax positions that meet the more likely thannot recognition threshold* maybe recognized. In addition, the standard provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, and disclosure. As of September 30, 2024,the Company has recorded $15.2 million related to unrecognized tax benefits as a reduction to the associated deferred tax assets. The Company's tax years for2015* through2024 are still subject to examination by the tax authorities.

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NOTE 19 –** CONTINGENCIES AND CLAIMS**

Occasionally, 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. As required by ASC450, we recognize accruals for contingencies when incurrence of a loss is probable (likely to occur) and can be reasonably estimated, and disclose the amount accrued and the amount of a reasonably possible loss over the amount accrued if such disclosure is necessary for our consolidated financial statements. When the likelihood isnot probable or when the likelihood is probable but the amount cannot be reasonably estimated, liabilities arenot recognized. To estimate whether a loss contingency should be accrued, 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.

The outcomes of our legal proceedings and other contingencies are inherently unpredictable, subject to significant uncertainties. They could be material to our operating results and cash flows for a particular period. At least quarterly, we evaluate developments in our legal proceedings and other contingencies that could affect the amount of liability, including amounts over any previous accruals and reasonably possible losses disclosed, and make adjustments and changes to our accruals and disclosures as appropriate. For the matters disclosed below without an estimate of the amount of loss or range of losses, such an estimate isnot possible or is immaterial, and we* maybe unable to estimate the possible loss or range of losses that could potentially result from the application of non-monetary remedies. Until the final resolution of such matters, if any of our estimates and assumptions change or prove to have been incorrect, we may*experience losses over the amounts recorded, which could have a material effect on our business, consolidated financial position, results of operations, or cash flows.

Qiantu Motor (Suzhou) Ltd.

This matter arises out of a contract dispute between Mullen and Qiantu Motor (Suzhou) Ltd. (“Qiantu”) related to the engineering, design, support, and homologation of Qiantu’sK50 vehicle by Mullen. On* March 14, 2023,the parties entered into a Settlement Agreement providing for full settlement of all pending litigation between Mullen and Qiantu. The parties also released all claims against each other arising from or in connection with the matters and claims that were subject to the legal proceedings. Pursuant to the Settlement Agreement, (1) the parties agreed to enter into an IP Agreement (as defined and described below) and (2) in connection with the settlement of the legal proceedings and for the privilege of entering into the IP Agreement, Mullen paid $6 million to Qiantu. In connection with the execution of the Settlement Agreement, on March 14, 2023,Mullen entered into an Intellectual Property and Distribution Agreement (“IP Agreement”) with Qiantu, andtwo* of Qiantu’s affiliates (collectively “Qiantu”). Pursuant to the IP Agreement, Qiantu granted Mullen the exclusive license to use certain of Qiantu’s trademarks and the exclusive right to assemble, manufacture, and sell the homologated vehicles based on the Qiantu K-50 model throughout North America (including Canada, Mexico, and the United States of America) and South America for a period offive years, which period doesnot start until Mullen has successfully homologated vehicles based on terms of the IP Agreement (“Five Year Period”). During the Five-Year Period, Mullen is also obligated to purchase a certain number of vehicle kits every year from Qiantu. These rights shall be obtained and the commitment shall only be effective upon Mullen’s assessment of feasibility and profitability of the project within 150 days as provided for by the IP Agreement. As consideration for Mullen’s entry into the IP Agreement, Mullen issued to Qiantu USA warrants to purchase up to 34 shares of Mullen’s common stock (giving effect to reverse stock splits); paid Qiantu $2.0 million for deliverable items under the IP Agreement; and in exchange, Mullen will pay Qiantu a royalty fee of $1,200 for each homologated vehicle sold in North America and South America during the term of the IP Agreement.

No loss contingencies have been accrued in respect of this matter as of* September 30, 2024,*other than those paid (see above) as the Company cannot reasonably estimate either probability of additional losses, or their magnitude (if any), based on all available information presently known to management.

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International Business Machines ("IBM")

This claim was filed in the Supreme Court of the State of New York on* May 7, 2019.This matter arises out of a contract dispute between Mullen and IBM related to a joint development and technology license agreement, patent license agreement, and a logo trademark agreement. On November 9, 2021,the court, pursuant to an inquest order, awarded damages in favor of IBM and on December 1, 2021,the court entered a judgment in favor of IBM in the amount of $5.6 million. On February 2, 2022,IBM filed a Motion to Amend the Judgment it had obtained to add Mullen Automotive and Ottava as Judgment Debtors. Mullen filed an Appeal on April 8, 2022.A settlement was reached in which Mullen paid the full amount of the Judgment with interest, for a total of approximately $5.9 million, but maintained its Appeal rights. IBM then filed a Motion to Dismiss the Appeal based on Mullen’s payment of the Judgment. Mullen filed an Opposition to the same on July 18, 2022,and the hearing of the matter was set for July 25, 2022.The Court took the same under submission, and a decision has stillnot* been issued. The Appeal remains pending.

The Company has recognized the amounts paid ($5.9 million) as losses on settlement in the year ended* September 30, 2022and doesnot* expect any additional losses to be reasonably possible.

The GEM Group

On* September 21, 2021,the GEM Group filed an arbitration demand and statement of claim against Mullen seeking declaratory relief and damages. This matter arises out of an alleged breach of a securities purchase agreement dated November 13, 2020.On November 17, 2023,the arbitrator issued the Partial Final Award on Liability finding that Mullen and Mullen Technologies, Inc. (“MTI”) had repudiated and breached the securities purchase agreement and a related agreement (the “GEM Agreements”). On January 29, 2024,the parties completed the briefing on the issues of damages and allocation. On May 10, 2024,*the arbitrator issued his final award, awarding the GEM Group $26.8 million in damages for breach of the relevant agreements, and $3.8 million in attorney fees and certain administrative costs.

On* August 3, 2023,the Arbitrator ordered Mullen to deposit $7.0 million into an interest-bearing escrow account with a commercial bank or brokerage firm. That amount has been released to the GEM Group. On January 24, 2024,the arbitrator ordered Mullen to deposit an additional $24.1 million into escrow on or before March 9, 2024.The GEM Group has moved in the United States District Court to confirm thatsecond* interim order. On* June 11, 2024,*the United States District Court confirmed that order.

On or about On* December 28, 2023,Mullen and MTI filed a complaint against the GEM Group and Christopher F. Brown in the United States District Court for the Southern District of New York alleging, among other things, that the GEM Group and Mr. Brown engaged in an unlawful securities transaction under the federal securities laws by entering into the GEM Agreements while the GEM Group was operating as an unregistered dealer. The complaint seeks an order declaring, among other things, that the GEM Agreements are void ab initio. On April 8, 2024,*the District Court stayed that action.

On or about* July 10, 2024,Mullen moved in the United States District Court for the Southern District of New York for an order vacating the arbitration awards and denying GEM’s anticipated motion to confirm those awards. On or about August 7, 2024,GEM filed an opposition to Mullen’s motion to vacate and cross-moved to confirm the arbitration awards. On or about August 21, 2024,*Mullen filed a reply to GEM’s opposition. These motions are now fully briefed.

The Company has accrued $30 million as a probable settlement expense as of* September 30, 2024 (*in addition to $7 million that has been paid earlier).

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Mullen Stockholder Litigation

In re Mullen Automotive Inc. Securities Litigation.

On* May**5,* 2022, Plaintiff Margaret Schaub, a purported stockholder, filed a putative class action complaint in the United States District Court for the Central District of California against the Company, as well as its Chief Executive Officer, David Michery, and the Chief Executive Officer of a predecessor entity, Oleg Firer (the “Schaub Lawsuit”). The Schaub Lawsuit was brought by Schaub both individually and on behalf of a putative class of purchasers of the Company’s securities, claiming false or misleading statements regarding the Company’s business partnerships, technology, and manufacturing capabilities, and alleging violations of Sections10(b) and20(a) of the Securities Exchange Act of1934 (“Exchange Act”) and Rule10b-5 promulgated thereunder.

On* September**23,* 2022, a court-appointed lead plaintiff filed a Consolidated Amended Class Action Complaint against the Company, Mr. Michery, and the Company’s predecessor, Mullen Technologies, Inc., premised on the same purported violations of the Exchange Act and Rule10b-5, seeking to certify a putative class of shareholders, and seeking an award of monetary damages, as well as reasonable fees and expenses. On* August 14, 2024,*the parties entered a Stipulation and Agreement of Settlement to settle the securities class action matter subject to payment of $5.4 million by the Company and $1.8 million by the Company's D&O insurers. The settlement is subject to the court's final approval.

The Company has accrued $5.4 million as a probable settlement expense as of* September 30, 2024.*

In re Mullen Automotive Inc. Derivative Litigation.

On* August**1,* 2022, Jeff Witt and Joseph Birbigalia, purported stockholders, filed a derivative action in the United States District Court for the Central District of California against the Company as a nominal defendant, Mr. Michery, Mr. Firer, and current or former Company directors Ignacio Novoa, Mary Winter, Kent Puckett, Mark Betor, William Miltner and Jonathan New (the “Witt Lawsuit”). The Witt lawsuit asserts claims for breach of fiduciary duty, unjust enrichment, abuse of control, waste of corporate assets, and violation of Section14 of the Exchange Act primarily in connection with the issues and claims asserted in the Schaub Lawsuit. The Witt Lawsuit seeks monetary damages, as well as an award of reasonable fees and expenses. The case currently is stayed.

On* August 21, 2024,*the parties entered a Stipulation and Agreement of Settlement to settle the derivative matter subject to certain governance enhancements and payment of $500,000 in attorney's fees to be paid by the Company's D&O insurers. Notice of this settlement can be found on the Investor Relations page of the Company’s website. The settlement is subject to the court's final approval.

No provision has been accrued in respect of this matter as of* September 30, 2024,*as the Company expectsno losses to be incurred.

Chosten Caris v. David Michery.

On* April 27, 2023,Chosten Caris, a purported stockholder, filed a complaint against Mr. Michery in the Eighth Judicial Circuit in and for Alachua County, Florida (the “Caris Lawsuit”). On May 17, 2023,Mr. Michery removed the Caris Lawsuit to the United States District Court for the Northern District of Florida. This lawsuit purports to seek damages for claims arising under Sections10*(b) and20(a) of the Exchange Act and Rule10b-5 promulgated thereunder.

No loss contingencies have been accrued in respect of this matter as of* September 30, 2024,*as the Company cannot reasonably estimate either probability of the loss, or their magnitude (if any), based on all available information presently known to management.

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Trinon Coleman v. David Michery et al.

On* December**8,* 2023, Trinon Coleman, a purported stockholder, filed a derivative action in the Court of Chancery for the State of Delaware against the Company as a nominal defendant, Mr. Michery, and Company directors Mr. Puckett, Ms. Winter, Mr. Betor, Mr. Miltner, and Mr. New (the “Coleman Lawsuit”). This lawsuit asserts claims for breach of fiduciary duty, insider trading, and unjust enrichment primarily in connection with the issues and claims asserted in the Schaub Lawsuit. The Coleman Lawsuit seeks to direct the Company to improve its corporate governance and internal procedures, and seeks monetary damages and an award of reasonable fees and expenses. The case currently is stayed.

No loss contingencies have been accrued in respect of this matter as of* September 30, 2024,*as the Company cannot reasonably estimate either probability of the loss, or their magnitude (if any), based on all available information presently known to management.

Martis v. Michery et al.

On* March 14, 2024,Marius Martis, a purported stockholder, filed a shareholder derivative action in the United States District Court for the District of New Jersey, purportedly in the right and for the benefit of the Company as a nominal defendant, against others. This lawsuit purported to seek damages for claims relating to the Net Element, Inc. (“Net Element”) merger and Net Element’s divestiture of a payment processing business, arising under Sections10*(b),14(a),20, 21D and29(b) of the Exchange Act, as well as claims for breach of fiduciary duty. On* June 13, 2024,*the plaintiffs filed a notice of voluntary dismissal.

NOTE 20 –** RELATED PARTY TRANSACTIONS**

Transition Services Agreement with MTI

Prior to its spinoff as a separate entity and the closing of the Merger on* November 5, 2021,the Company operated as a division of Mullen Technology, Inc. (MTI), an entity in which the Company’s CEO and Chairman of the Board of directors David Michery has a controlling financial interest and of which he was CEO and Chairman during the fiscal years ended September 30, 2023and2022.*

Subsequent to the spinoff transaction and Merger on* November 5, 2021,the Company, in accordance with Transition Services Agreement dated May 12, 2021between the Company and MTI (the “TSA”), processed and disbursed payroll and related compensation benefits for 11 employees that provided services only to MTI and rent costs for facilities utilized by MTI pursuant to the TSA. The terms of the TSA require MTI to repay monthly the amounts advanced by the Company, with the lower of theprime rate plus 1% or the maximum rate under applicable law charged on the unpaid amounts. The terms of the TSA donot* provide for any other payment processing service fee from MTI to the Company except the interest fee on overdue advance balances.

The Company incurred approximately $1.2 million and $0.9 million of disbursements on behalf of MTI during the years ended* September 30, 2022and2023,* respectively. No amounts have been collected for the funds advanced through* September 30, 2023.On March 31, 2023,the Company converted approximately $1.4 million of these advances to MTI to a note receivable from MTI. The note bears interest at 10% per year and matures on March 31, 2025with a default rate of 15% per annum. By the end of the2023* fiscal year, the note principal has been increased by additional $0.4 million. Remaining advances, note and interest receivable as at* September 30 2023and2022* are presented within non-current assets of the consolidated balance sheets. On* January 16, 2024,*the Company terminated the Transition Services Agreement between the Company and Mullen Technologies, Inc., and received payment in full settlement of all amounts outstanding (including outstanding notes receivable, advances and related interest) of approximately $2.7 million.

Similarly, during the fiscal year ended* September 30, 2024,the Company paid $55 thousand for certain expenses of other companies under control of the Company’s CEO and $25 thousand was reimbursed by September 30, 2024.*

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MTI Business Acquisition

On* July 18, 2024,the Company entered into an Asset Purchase Agreement with Mullen Technologies, Inc. (“MTI”), pursuant to which the Company assumed a lease for premises located in Oceanside, California and all equipment and inventory in the premises, as well as staffing and other infrastructure for vehicle sales and repairs for consideration of $1.4 million. The Company’s CEO has a controlling financial interest and is Chairman of MTI. See further details in theNote4 - Business combinations*.

Transactions with Directors

For the fiscal year ended* September 30, 2024*, our non-employee directors have earned compensation for service on our Board of Directors and Committees of our Board of Directors in amount of $0.4 million in cash and $0.7 million in shares of common stock ($0.3 million in cash and $0.5 million in shares of common stock for the year ended* September 30, 2023).*In addition, the following non-employee directors were engaged in certain other consulting contracts with the Company:

William Miltner is a litigation attorney who provides legal services to Mullen Automotive and its subsidiaries. Mr. Miltner is also an elected Director for the Company, beginning his term in* August 2021.For the fiscal year ending September 30, 2024,Mr. Miltner received $1,180,733 for services rendered. Mr. Miltner has been providing legal services to us since2020.*

On* October 26, 2021,the Company entered into a consulting agreement with Mary Winter, Corporate Secretary and Director, to compensate for corporate secretary services and director responsibilities for the period from October 1, 2021,to September 30, 2024,in the amount of $60,000 annually or $5,000 per month. For the fiscal year ending September 30, 2024,*Ms. Winter has received $60,000 in consulting payments.

NOTE 21 –** SEGMENT INFORMATION**

Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. Our CEO and Chairman of the Board, as the CODM, makes decisions about resources to be acquired, allocated and utilized to each operating segment. The Company is currently comprised of 2 major operating segments:

All long-lived assets of the Company are located in the United States of America. All revenue presented in these consolidated financial statements relates to contracts with customers located in the United States of America.

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NOTE 22 –** SUBSEQUENT EVENTS**

Company management has evaluated subsequent events through* January 24, 2025*, which is the date these financial statements were available to be issued. Except as discussed below, management has determined that there wereno material subsequent events which required recognition, adjustment to or disclosure in the financial statements:

Significant stock issuances after the balance sheet date

After the balance sheet date, the Company issued 57,018,437 shares of common stock, mainly upon exercise of Warrants (seeNote8* - Warrants and other derivative liabilities and fair value measurements*), conversion of Senior convertible notes (seeNote7* - Debt*) and issuance of shares to consultants under stock-based compensation plans.

Settlement Agreement for Matured Notes

In* October 2024,the Company reached an agreement with holders of matured notes and loan advances in amount of $2.7 million, as well as accumulated interest in amount of approximately $1.8 million, that the liabilities would be settled pursuant to Section3*(a)(9) of the Securities Act of1933 by issuance of shares of common stock of the Company worth of $3 million. The liability was fully settled by* December 2024*by issuing shares of common stock in several installments.

Settlement Agreement for Senior Convertible Notes

In* November 2024,the Company entered into a settlement agreement related to outstanding Senior convertible notes totaling approximately $20.5 million, including accrued interest, under a Securities Purchase Agreement dated May 14, 2024.The settlement involves the issuance of shares of Mullen’s common stock, which will satisfy the claims in full. In December 2024,the Circuit Court of the11th* Judicial Circuit, Miami-Dade County, Florida approved a settlement agreement between the Company and holders of the Senior convertible notes. Settlement terms under this agreement were identical to the conversion terms of the original Senior convertible notes as described in theNote7* – Debt*, including the conversion price floor of $1.16 not subject to adjustments. By the date these financial statements are available to be issued, almost full amount of the Senior convertible notes and accumulated interest, that were outstanding on* September 30, 2024,has been converted to shares of common stock under Section3*(a)(10) of the Securities Act of1933.

Issuance of Secured Promissory Note by Subsidiary

In* October 2024,Bollinger Motors, Inc., a majority-owned subsidiary of Mullen Automotive Inc., issued an Amended and Restated Secured Promissory Note for $10.0 million to Robert Bollinger, providing additional capital to support the production and sale of Bollinger’s Class4* EV truck, theB4. The note bears interest at 15% per annum, with interest-only payments starting* November 29, 2024,and principal repayment due by October 30, 2026.*It is secured by part of the assets of Bollinger Motors, excluding inventory and certain intellectual property.

Additional investments in Bollinger

In accordance with the stock purchase agreement signed on* July 26, 2024,*the Company, as part of activities to launch production in the Bollinger segment, invested after the balance sheet date an additional $6 million in newly issued shares of the subsidiary, increasing controlling interest of the Company to approximately 68%.

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Additional Notes and Warrants and Investment Rights

On* December 12, 2024,the Company issued an additional aggregate principal amount of approximately $4.6 million (or $4.4 million including the 5% original issue discount) of senior secured convertible notes under investment rights pursuant to the existing Securities Purchase Agreement dated May 14, 2024.In conjunction with the Notes, the Company issued five-year warrants exercisable for 16,862 shares of common stock on a cash basis. The Notes and Warrants have identical terms and conditions to those previously issued, including afour*-month maturity date from issuance (seeNote8* - Warrants and other derivative liabilities and fair value measurements* andNote7* - Debt*). In conjunction with this transaction, the Company entered into an Additional Investment Rights Agreement, granting investors the right, through* December 12, 2025,*to purchase up to $4.6 million in additional Notes and related Warrants on similar terms.

On or around* December 26, 2024,the Company issued an additional aggregate principal amount of approximately $4.2 million (or $4.0 million including the 5% original issue discount) of senior secured convertible notes under investment rights pursuant to the existing Securities Purchase Agreement dated May 14, 2024,and issued five-year warrants exercisable on a cash basis for an aggregate of 8,255,933 shares of common stock. Except as set forth below, these notes and warrants have the same terms and conditions as those previously issued (seeNote8 - Warrants and other derivative liabilities and fair value measurements* andNote7* - Debt*). These notes* maybe converted into shares of common stock at the lower of (i) $1.02, (ii)95% of the closing sale price of the common stock on the date that the Initial Registration Statement is declared effective, or (iii)95% of the lowest daily volume weighted average price in thefive* trading days prior to such conversion date, provided that the conversion price willnot be less than $0.21 per share (not subject to adjustment to reverse stock splits and similar transactions). The warrants have an exercise price of $1.12 per share and* may*also be exercised by a cashless exercise with a closing bid price having a floor of $0.01 (subject to adjustment to reverse stock splits and similar transactions).

On* December 31, 2024,the Company, pursuant to the existing investment rights under Securities Purchase Agreement dated May 14, 2024,issued senior secured convertible notes for an aggregate principal amount of approximately $5.3 million (or $5.0 million including the 5% original issue discount) andfive-year warrants exercisable on a cash basis for an aggregate of 19,171 shares of Common Stock. These notes and warrants have terms and conditions identical to those previously issued (seeNote8 - Warrants and other derivative liabilities and fair value measurements* andNote7* - Debt*). In connection with the purchase of the additional Notes and Warrants, on* December 31, 2024,the Company and the Investor entered into an Additional Investment Rights Agreement whereby for aone*-year period ending on* December 31, 2025,the Investor has the right, butnot* the obligation, to purchase from the Company additional 5% Original Issue Discount Senior secured convertible notes in an aggregate principal amount of approximately $5.3 million (or $5.0 million including the 5% original issue discount), and related Warrants, on the same terms and conditions as provided in the Securities Purchase Agreement, except for resetting of conversion and exercise prices (and floors) of notes and warrants to subsequent market prices.

The new Additional Investment Rights granted in* Decemberas well as the notes and warrants issued on December 26, 2024are subject to approval under Nasdaq Listing Rule5635*(d), as the aggregate potential issuances could exceed19.99% of the Company’s outstanding common stock. Accordingly, this matter will be presented for shareholder approval at the Company’s Annual Meeting currently scheduled for* February 27, 2025.If approval isnot* obtained, the issuance of additional shares under the Notes and Warrants will be limited as per the Nasdaq requirements.

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Proxy statements filed to seek stockholder approval

The Company filed preliminary Proxy statement pursuant to Section14(a) of the Securities Exchange Act of1934 with regards to the Company’s2025 Annual Meeting of Stockholders, which is scheduled to be held on* February 27, 2025.*Among other matters, the Company seeks stockholder approval of:

In addition, the Company filed Proxy statement pursuant to Section14(a) of the Securities Exchange Act of1934 seeking stockholder approval at a Special Meeting of Stockholders to be held on* January**31,* 2025 of a reverse stock split at an exchange ratio between1-for-2 to1-for-100 as a precaution if, in the future, the Board of Directors determines the need to implement a reverse stock split in order to maintain compliance with the Bid Price Rule (Nasdaq Listing Rule5550(a)(2) requires listed companies to maintain a minimum bid price of at least $1.00 per share and failure to meet the continued listing requirement for the Bid Price Rule is determined to exist if the deficiency continues for a period of30 consecutive business days).

$6M Securities Purchase Agreement

On* January 23, 2025,the Company entered into a securities purchase agreement (the “JanuarySPA”) with certain investors for the sale of an aggregate principal amount of approximately $6.3 million of Senior Secured Convertible Notes ( "JanuaryNotes") andfive-year warrants exercisable on a cash basis for 32,116,906 shares of common stock (the “JanuaryWarrants”). The JanuaryNotes accrue interest at 15%, including a 5% Original Issue Discount, and mature infour months from the date of issuance. Upon any event of default, the interest rate automatically increases to 20% per annum. The holder mayconvert the outstanding principal and accrued but unpaid interest on the JanuaryNotes into shares of common stock at the lower of (i) $0.39, (ii)95% of the closing sale price of the common stock on the date that the Company’s registration statement on Form S-1 is declared effective, or (iii)95% of the lowest daily volume weighted average price in thefive* trading days prior to such conversion date, provided that the conversion price willnot be less than $0.08 per share (not subject to reverse stock split). The* JanuaryWarrants will have a cash exercise price equal to $0.43 and may*also be exercised on a cashless basis.

As security for payment of the amounts due and payable under the* JanuaryNotes, the Company collaterally assigned and granted to the holders a continuing security interest in all of the Company’s right, title, and interest in, to, and under the property of the Company, whether then or hereafter owned, existing, acquired or arising and wherever then or hereafter located (subject to certain exceptions). The JanuaryNotes are senior in right of payment to all other current and future notes to which the Company is a party. The JanuaryNotes also impose restrictions on the Company, limiting additional debt, asset liens, stock repurchases, outstanding debt repayment, dividends distribution, and affiliate transactions, except for specified exceptions. The JanuaryNotes and JanuaryWarrants arenot* convertible by a holder to the extent that the holder or any of its affiliates would beneficially own in excess of 9.9% of the common stock.

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