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| PART I | | 6 |
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| Item 1. | Business | 6 |
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| Item 1A. | Risk Factors | 23 |
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| Item 1B. | Unresolved Staff Comments | 56 |
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| Item 1C. | Cybersecurity | 56 |
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| Item 2. | Properties | 57 |
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| Item 3. | Legal Proceedings | 58 |
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| Item 4. | Mine Safety Disclosures | 58 |
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| PART II | | 59 |
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| Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 59 |
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| Item 6. | [Reserved] | 59 |
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| Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 60 |
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| Item 7A. | Quantitative and Qualitative Disclosures About Market Risk | 70 |
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| Item 8. | Financial Statements and Supplementary Data | 70 |
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| Item 9. | Changes In and Disagreements with Accountants on Accounting and Financial Disclosure | 70 |
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| Item 9A. | Controls and Procedures | 70 |
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| Item 9B. | Other Information | 73 |
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| Item 9C. | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 74 |
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| PART III | | 74 |
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| Item 10. | Directors, Executive Officers and Corporate Governance | 74 |
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| Item 11. | Executive Compensation | 79 |
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| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 88 |
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| Item 13. | Certain Relationships and Related Transactions, and Director Independence | 90 |
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| Item 14. | Principal Accountant Fees and Services | 92 |
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| PART IV | | 93 |
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| Item 15. | Exhibits and Financial Statement Schedules | 93 |
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| Item 16. | Form 10‑K Summary | 99 |
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| Signatures | | 84 |
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FORWARD-LOOKING STATEMENTS AND RISK FACTOR SUMMARY
This Annual Report on Form 10‑K (the “Annual Report” or “Report”) contains forward-looking statements that involve substantial risks and uncertainties. All statements contained in this Annual Report, other than statements of historical facts, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans, objectives of management and expected market growth, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.
The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, as applicable, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking information and statements include the risks summarized below. This summary does not address all of the risks that the Company faces. Additional discussion of the risks summarized in this risk factor summary; and other risks the Company faces, can be found below under the heading “Risk Factors” and should be carefully considered, together with other information in this Form 10-K and other filings with the SEC, before making a decision to invest in the Company. These risks include, among others, the following:
| ● | We have incurred significant losses since inception, and we expect that we will continue to incur losses for the foreseeable future; |
| ● | We will require substantial additional financing to effectuate our business plan; |
| ● | We have not yet manufactured or sold significant number of vehicles to customers. Many of our products are still on the development stage and we may never be able to mass-produce them; |
| ● | There is substantial doubt about our ability to continue as a going concern; |
| ● | Our ability to raise the substantial additional financing needed to execute our business plan, and a on acceptable terms, or at all, could force us to delay, limit, reduce or terminate our production operations; |
| ● | We incurred non-cash impairment charges during 2024 which adversely affected our year fiscal 2024 operating results and we may be required to incur additional future impairment and other charges, which could adversely affect our operating results; |
| ● | Our financial results may vary significantly from period to period due to fluctuations in our operating costs and other factors; |
| ● | We have not paid, and do not plan to pay, cash dividends on our common stock, so any return on investment may be limited to the value of our common stock; |
| ● | We may not be able to maintain compliance with the continued listing requirements of the NASDAQ Capital Markets; |
| ● | A reverse stock split may decrease the liquidity of the shares of our common stock and may have a dilutive effect on the ownership of existing stockholders; |
| ● | Following a reverse stock split, the resulting market price of our common stock may not attract new investors, including institutional investors, and may not satisfy the investing requirements of those investors. Consequently, the trading liquidity of our common stock may not improve; |
| ● | Our common stock may be subject to the “penny stock” rules in the future, which may be more difficult to resell; |
| ● | Our commitments to issue shares of common stock or securities that are convertible into shares of common stock may cause significant dilution to stockholders; |
| ● | Our commitment to issue shares of common stock pursuant to the terms of our preferred stock, and the Warrants, and stock-based compensation arrangements could encourage short sales by third parties which could contribute to the future decline of stock price; |
| ● | Substantial blocks of our total outstanding shares may be sold into the market, which may cause the price of our common stock to decline; |
| ● | Our stock price has been volatile, and the market price of our common stock may drop below the price you pay; |
| ● | Stockholder equity interest may be substantially diluted in any additional equity issuances; |
| ● | We may issue additional shares of common stock, including under our equity incentive plan. Any such issuances would dilute the interest of our stockholders and likely present other risks; |
| ● | Our Certificate of Incorporation designates specific courts as the exclusive forum for certain stockholder litigation matters, which could limit the ability of our stockholders to obtain a favorable forum for disputes with us or our directors, officers or employees; |
| ● | The dearth of analyst coverage or negative and inaccurate reporting; |
| ● | Potential acquisitions may disrupt our business and dilute stockholder value; |
| ● | Changes in tax laws may materially adversely affect our business, prospects, financial condition and operating results; |
| ● | We may be unable to develop, manufacture and obtain required regulatory approvals for a car of sufficient quality to appeal to customers on schedule or at all, or may be unable to do so on a large scale; |
| ● | We, our third party partners and our suppliers are subject to substantial regulation and unfavorable changes to, or failure by us, our third party partners or our suppliers to comply with, these regulations could substantially harm our business and operating results; |
| ● | Future changes to regulatory requirements may have a negative impact upon our business. |
| ● | Our currently planned vehicles rely on lithium-ion battery cells, which have been observed to catch fire or vent smoke and flame, potentially subjecting us to litigation, recall, and redesign risks; |
| ● | The efficiency of a battery’s use will decline slowly over time, which may negatively influence customers’ decisions whether to purchase an electric vehicle; |
| ● | We rely on our OEMs, suppliers and service providers for parts and components, any of whom could choose not to do business with us; |
| ● | We will rely on complex machinery for its operations and production, which involve a significant degree of risk and uncertainty in operational performance and costs; |
| ● | Complex software and technology systems need to be developed in coordination with vendors and suppliers, and there can be no assurance that such systems will be successfully developed; |
| ● | We may be unable to meet our projected construction timelines, costs and production ramps at our factories, or we may experience difficulties in generating and maintaining demand for products manufactured there; |
| ● | We may be negatively impacted by any early obsolescence of our manufacturing equipment; |
| ● | The inability of our suppliers, including single or limited source suppliers, to deliver components in a timely manner or at acceptable prices or volumes could have a material adverse effect on our business and prospects; |
| ● | Financial distress of our suppliers could necessitate that we provide substantial financial support, which could increase our costs, affect our liquidity or cause production disruptions; |
| ● | We have a history of losses and expect to incur significant expenses and continuing losses for the foreseeable future, casting doubt on our ability to continue as a going concern; |
| ● | Our operating and financial results forecast relies on assumptions and analyses we developed and may prove to be incorrect; |
| ● | Our business model is in the early stages of production, and it may fail to meet our strategic plans |
| ● | We may be unable to accurately estimate the supply and demand for our vehicles; |
| ● | Increased costs or disruptions in supply of raw materials or other components could occur; |
| ● | Our vehicles may fail to perform as expected; |
| ● | Our services may not be generally accepted by our users; |
| ● | The automotive market is highly competitive; |
| ● | The automotive industry is rapidly evolving and demand for our vehicles may be adversely affected; |
| ● | We have identified material weaknesses in our internal control over financial reporting; |
| ● | Our future growth is dependent on the demand for and consumers’ willingness to adopt electric vehicles; |
| ● | Government and economic incentives could become unavailable, reduced or eliminated; |
| ● | Our failure to manage our future growth effectively; |
| ● | We may establish insufficient warranty reserves to cover future warranty claims; |
| ● | We may not succeed in establishing, maintaining and strengthening our brand; |
| ● | The dealers' end customer, fleet managers’ willingness to adopt our electric vehicles; |
| ● | Doing business internationally may expose us to operational and financial and political risks; |
| ● | We are highly dependent on the services of David Michery, our Chief Executive Officer; |
| ● | We are exposed to risks relating to our relationship with a related party; |
| ● | Our business may be adversely affected by labor and union activities; |
| ● | Our business could be adversely impacted by global or regional catastrophic events; |
| ● | We face information security and privacy concerns; |
| ● | We may be forced to defend ourselves against alleged patent or trademark infringement claims and may be unable to prevent others from unauthorized use of our intellectual property; |
| ● | Our patent applications may not issue as patents, the patents may expire, our patent applications may not be granted, and our rights may be contested; |
| ● | We may be subject to damages resulting from trade secrets; |
| ● | Our vehicles are subject to various safety standards and regulations that we may fail to comply with; |
| ● | We may be subject to product liability claims; |
| ● | We face risks and uncertainties related to litigation, regulatory actions and government investigations and inquiries; |
| ● | We are or will be subject to anti-corruption, bribery, money laundering, and financial and economic laws; |
| ● | Risk of failure to improve our operational and financial systems to support expected growth; |
| ● | Risk of failure to build our financial infrastructure and improve our accounting systems and controls; |
| ● | The priority of the holders of our debt and preferred stock over the holders of our common stock in the event of liquidation, dissolution or winding up; and |
| ● | Other risks and uncertainties, including those listed under Part I, Item 1A of this Annual Report titled “Risk Factors.” |
These forward-looking statements are only predictions, and we may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, so you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in one or more of the forward-looking statements we make in this Annual Report. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our business, financial condition and operating results. We have included important factors in the cautionary statements included in this Annual Report, particularly in Part I, Item 1A, titled “Risk Factors,” that could cause actual future results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements in this Annual Report do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make.
You should read this Annual Report and the documents that we have filed as exhibits to this Annual Report with the understanding that our actual future results may be materially different from what we expect. We do not assume any obligation to update any forward-looking statements in this Annual Report, whether as a result of new information, future events or otherwise, except as required by applicable law.
WEBSITE AND MEDIA DISCLOSURE
We use our website (www.mullenusa.com) and various social media channels as a means of disclosing information about the Company and its products to our customers, investors, and the public (e.g., Instagram: @mullenusa; X (formerly Twitter): @mullen_usa; Facebook: @MullenUSA; LinkedIn: @mullen-technologies; and YouTube: @mullenautomotive). The information provided on social media channels is not incorporated by reference in this report or in any other report we file with the SEC.
The information we post throughout these channels may be deemed material. Accordingly, investors should monitor these channels, in addition to our following press releases, SEC filings and public conference calls and webcasts. In addition, you may automatically receive email alerts and other information about the Company when you enroll your email address and other information by visiting “Investor Resources” section of our website at www.mullenusa.com.
