BOLLINGER INNOVATIONS, 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.

The acquisition of a 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. Thefirst Bollinger vehicles were sold in* September 2024.*

Thesecond acquisition was in* October 2022,when the U.S. Bankruptcy Court approved the Company's 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. Thefirst vehicles were produced and delivered to customers during the* 12 months ended* * September 30, 2023.*

Basis of Presentation and Principles of Consolidation

These unaudited interim condensed 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 condensed consolidated financial statements and notes thereto in order to conform to the current period presentation. Noncontrolling interest presented in these condensed 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.

These unaudited interim condensed consolidated financial statements and the accompanying notes have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all normal recurring adjustments, necessary for a fair statement of the results of operations for the periods presented. The consolidated financial statements for any interim period arenot necessarily indicative of the results to be expected for the full year or for any other future years or interim periods. Comprehensive loss isnot separately presented as the amounts are equal to net loss for thethree months ended* December 31, 2024and2023*. These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form10-K for the year ended* September 30, 2024*. ("2024 Annual Report").

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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.

As further described in theNote20* - Subsequent events*, on* January 31, 2025,the Company held a Special Meeting of Stockholders, which approved a proposal to authorize a reverse stock split of the common stock of the Company at a ratio within the range of1*-for-2 to1-for-100, as determined by the Board of Directors of the Company. On* February 14, 2025,the Company filed a Certificate of Amendment to its Second Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to effect aone*-for-sixty (1-for-60) reverse stock split of its common stock. The Reverse Stock Split became effective on* February 18, 2025.*

In addition to the reverse stock split referred to above, the Company previously effected a1-for-25 reverse stock split on* May 4, 2023,a1*-for-9 reverse stock split on* August 11, 2023,a1*-for-100 reverse stock split on* December 21, 2023,and1*-for-100 reverse stock split on* September 17, 2024.*

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.

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 retroactively 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 retroactively adjusted to account for the reverse stock splits for all periods presented.

The retroactive impact of the latest reverse stock split on the shares of common stock previously reported for the fiscal year ended* September 30, 2024*was as follows:

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

These unaudited interim condensed 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 evaluated whether there are any conditions and events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern over the nexttwelve months from the date of filing this report. The Company's principal source of liquidity consists of existing cash and restricted cash of approximately $2.7 million as of* December 31, 2024*. During thethree months ended* December 31, 2024*, the Company used approximately $25.6 million of cash for operating activities. The net working capital deficit on* December 31, 2024* amounted to approximately $186.2 million, or $41.2 million after excluding derivative and warrant liabilities and liabilities to issue stock that are supposed to be settled by issuing common stock without using cash. For thethree months ended* December 31, 2024*, the Company incurred a net loss of $118.8 million and, and as of* December 31, 2024*, our accumulated deficit was $2.4 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 these unaudited interim condensed consolidated financial statements. Accordingly, the Company has concluded there is substantial doubt about its ability to continue as a going concern. During the quarter ended* December 31, 2024,the Company made the decision to temporarily shut down key production facilities due to short-term liquidity constraints. This action directly impacts our ability to produce vehicles. Should this shutdown continue, our cash flows from operating activities are expected to be further negatively impacted, which would further worsen the Company’s cash position. Management is pursuing several strategies to address liquidity concerns, including equity or debt financing and cost reduction and operational restructuring. Despite these efforts, there isno* assurance that these initiatives will be successful. 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.

These unaudited interim condensed consolidated financial statements donot include any adjustments to the carrying amounts of assets or liabilities that* may*result from the outcome of these uncertainties.

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

Significant accounting policies are defined as those that reflect significant judgments and uncertainties, and potentially result in materially different results under different assumptions and conditions. See our2024 Annual Report for a detailed discussion of our accounting policies.

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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.

Restricted Cash

Cash obtained from customer deposits is held by the Company and is restricted from use to fund operations.

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 by the Company as of* December 31, 2024* and* September 30, 2024*.

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.

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Property, Plant, and Equipment, net

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

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.

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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* December 31, 2024* and* September 30, 2024*

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 December 31, 2024* and* September 30, 2024*, 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.

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.

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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.

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.

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.

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 thethree* months ended* December 31, 2024* and2023 were approximately $0.4 million and $6.1 million, respectively.

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.

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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.

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.

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* December 31, 2024* and* September 30, 2024* are $2.2 million and $10.0 million, respectively.

Accounting Pronouncements

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

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 ASU2020-06 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.

The Company applied ASU2020-06 on a modified retrospective basis to financial instruments outstanding as of the beginning of the fiscal year of adoption (i.e. on* October 1, 2024).There has beenno* effect of the change on retained earnings or other components of equity in the statement of financial position as of the beginning of thefirst period of adoption.

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The following are accounting pronouncements that have been issued but arenot yet effective for the Company’s condensed 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.

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. Disclosure of 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.

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NOTE4 – 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 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 oftwo major operating segments:

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

The table below represents the main financial information pertaining to the segments (there wereno material differences from the last annual report regarding segmentation or measuring segment profit or loss).

NOTE 5 –** INVENTORY**

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.

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

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 thethree months ended* December 31, 2024*, we recorded a loss of $0.8 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.

NOTE 6 –** INTANGIBLE ASSETS**

Intangible assets with finite useful lives are amortized over the period of estimated benefit using the straight-line method. The weighted average remaining useful life of intangible assets is 7.6 years. The straight-line method of amortization represents management’s best estimate of the distribution of the economic value of the intangible assets.

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

For thethree months ended* December 31, 2024* and2023, amortization of the intangible assets was $0.9 million and $1.3 million, respectively.

NOTE 7 –** DEBT**

Short and Long-Term Debt

Short-term debt is defined as debt with principal maturities ofone year or less from the balance sheet date, as well as debt that has matured and remain unpaid; long-term debt has maturities greater thanone year from the balance sheet date.

The following is a summary of our indebtedness as of* December 31, 2024*:

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

Scheduled Debt Maturities

The following are scheduled debt maturities as of* December 31, 2024*:

Accrued interest

As of* December 31, 2024and September 30, 2024,accrued interest on outstanding notes payable was $0.04 million and $2.4 million, respectively. During thethree* monthsthree months ended* December 31, 2024* the main part of the accumulated interest was converted to shares of common stock, see below. The weighted average interest rate on short term borrowings outstanding as of* December 31, 2024was 15.8% (18.8% - as of September 30, 2024)and approximates effective interest rate as of those dates. Amortization of the debt discounts and issuance costs during thethree* months ended* December 31, 2024amounted to $17.7 million (during thethree* months ended* December 31, 2023 -$0.2 million). Contractual interest expense during thethree* months ended* December 31, 2024amounted to $0.9 million (during thethree* months ended* December 31, 2023 -*$0.1 million).

Matured notes and advances

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 21,280 shares of common stock in several installments. The transaction resulted in recognition of gain on extinguishment of $1.5 million.

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Bollinger loan

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 (or earlier, upon Event of Default). It is secured by part of the assets of Bollinger Motors (now owned or hereafter acquired), excluding inventory and certain intellectual property that doesnot* relate to commercial vehicles.

Senior secured convertible notes (issued before December 2024)**

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 ("Senior convertible notes") andfive-year warrants exercisable for shares of common stock (the “Warrants”).

The investors purchased an initial aggregate principal amount of $52.6 million, or $50 million, including the 5% original issue discount of Senior convertible notes (the “Initial Notes”). In connection with the issuance of the Senior convertible notes, the holders also received 5-year warrants exercisable for 200% of the shares of common stock underlying such Senior convertible notes, see further details in theNote8**.

The Senior convertible notes accrue interest at 15% 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 Senior convertible notes* maybe converted by the holder into shares of common stock at the lower of (i) $5.49 (after reverse stock splits - $32,940), (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 - $21,660), 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 adjustment for reverse stock splits).

As security for payment of the amounts due and payable under the Senior 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 Senior convertible notes are senior in right of payment to all other current and future notes to which the Company is a party. The Senior 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.

The Senior 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.

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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 Senior 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 were given the right, butnot the obligation, to purchase an additional $52.6 million of 5% Original Issue Discount Senior Secured Senior 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 Senior 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 Senior 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.

The Senior convertible notes that remained unconverted (in amount of $20.3 million as of* September 30, 2024and in amount of $3.8 million as of December 31, 2024)and relevant accumulated interest were in cross-default due to the non-payment of portion of the loan that matured in September 2024and the interest rate increased from 15% to 20% starting from October 1, 2024.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 immediate repayment in cash.

In* October 2024,the Company issued an additional aggregate principal amount of approximately $0.6 million of senior secured convertible notes under additional investment rights pursuant to the existing Securities Purchase Agreement dated May 14, 2024.In conjunction with the Notes, the Company issued 38 warrants (giving retroactive effect to reverse stock split, seeNote1 - Description of business and basis of presentation*). These Notes have identical terms and conditions to those previously issued and described above, including maturity in4 months.

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In* November 2024,the Company entered into a settlement agreement related to outstanding Senior convertible notes and accumulated interest, under a Securities Purchase Agreement dated May 14, 2024.The settlement involved the issuance of shares of Mullen’s common stock, which would 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 above, including the conversion price floor of $1.16,not subject to adjustment.

During thethree months ended* December 31, 2024,notes with a carrying amount of $15.5 million and interest with a carrying amount of $1.2 million have been converted to 197,947 shares of common stock, and issuance of 24,425 shares of common stock upon additional conversion of notes with carrying amount of $1.7 million was registered in January 2025 (giving retroactive effect to reverse stock split, seeNote1 - Description of business and basis of presentation*). 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,and received in October 2024,has been converted to shares of common stock under Section3*(a)(10) of the Securities Act of1933.

As of* December 31, 2024,the outstanding Senior convertible notes in default amounted to $3.8 million (with debt discount to Senior convertible notes of $0.6 million) were potentially convertible into 54,353 shares of common stock. Conversion of the notes depends on the lowest daily volume weighted average price of the Company's common stock ("VWAP") subject to a $1.16 floor (not subject to adjustment for reverse stock splits), and by December 31, 2024the lowest volume weighted average price (unadjusted to reverse stock split of February)was lower than the floor. If the February 2025**1:60* reverse stock split was made effective before* December 31, 2024,these notes would have been theoretically convertible into 67,847 shares of common stock. If the lowest daily VWAP in thefive* trading days prior to* December 31, 2024,was $1 less (and the February 20251:60 reverse stock split was made effective before December 31, 2024),the Company, upon full conversion of outstanding notes, would theoretically be liable to issue approximately 1,176 shares more. If the lowest daily VWAP in thefive* trading days prior to* December 31, 2024,was $1 higher (and the February 20251:60 reverse stock split was made effective before December 31, 2024),the Company, upon full conversion of outstanding notes, would theoretically be liable to issue approximately 1,137 shares less. The maximum number of shares that could theoretically be issued upon conversion of these notes, was 54,353, and would have been 3,261,181 if the February 20251:60 reverse stock split was made effective before December 31, 2024 (if the lowest daily VWAP in thefive* trading days prior to conversion date decreased to or below $1.16).

Senior secured convertible notes issued in December 2024**

On* December 12and13,* 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 additional investment rights pursuant to the existing Securities Purchase Agreement dated* May 14, 2024.In conjunction with the Notes, the Company issued 281 five-year warrants (giving retroactive effect to reverse stock split). These Notes have identical terms and conditions to those previously issued and described above, including maturity in4* months. In conjunction with this transaction, the Company entered into an Additional Investment Rights Agreement, granting investors the right, through* December**12/13,* 2025, to purchase up to $4.6 million in additional Notes and related Warrants on similar terms. These additional investment rights are subject to shareholders' approval.

As of* December 31, 2024,the outstanding Senior convertible notes issued on December 12, 2024under the initial May 14, 2024contract, amounted to $4.6 million (with debt discount to Senior convertible notes of $4.6 million) were potentially convertible into 66,519 shares of common stock. Conversion of the notes depends on the lowest daily volume weighted average price of the Company's common stock ("VWAP") subject to a $1.16 floor (not subject to adjustment for reverse stock splits), and by December 31, 2024the lowest volume weighted average price (unadjusted to reverse stock split of February)was lower than the floor. If the February 20251:60* reverse stock split was made effective before* December 31, 2024,these notes would have been theoretically convertible into 78,881 shares of common stock. If the lowest daily VWAP in thefive* trading days prior to* December 31, 2024,was$1* less (and the* February 20251:60* reverse stock split was made effective before* December 31, 2024),the Company, upon full conversion of outstanding notes, would theoretically be liable to issue approximately 1,439 shares more. If the lowest daily VWAP in thefive* trading days prior to* December 31, 2024,was $1 higher (and the February 2025**1:60* reverse stock split was made effective before* December 31, 2024),the Company, upon full conversion of outstanding notes, would theoretically be liable to issue approximately 1,391 shares less. The maximum number of shares that could theoretically be issued upon conversion of these notes, was 66,519, and would be 3,991,130 if the February 20251:60 reverse stock split was made effective before December 31, 2024 (if the lowest daily VWAP in thefive* trading days prior to conversion date decreased to or below $1.16).

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On* December 26and December 30, 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 additional investment rights pursuant to the existing Securities Purchase Agreement dated May 14, 2024,and issued of 137,599 five-year warrants. Except as set forth below, these notes and warrants have the similar terms and conditions as those previously issued (see above), including maturity in4* months. However, these notes* maybe converted into shares of common stock at the lower of (i) $61.20, (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 for reverse stock splits and similar transactions).

The new Additional Investment Rights granted in* Decemberas well as the notes and warrants issued on December 26and December 30, 2024are subject to stockholder approval under Nasdaq Listing Rule5635*(d), as the aggregate potential issuances could exceed20% of the Company’s outstanding common stock. Accordingly, this matter will be presented for stockholder approval at the Company’s Annual Meeting currently scheduled for* March 2025.If approval isnot* obtained, the issuance of additional shares under the Notes and Warrants will be limited as per Nasdaq requirements to approximately56 thousand shares of common stock.

As of* December 31, 2024,the outstanding Senior convertible notes issued on December 26and December 30, 2024,amounted to $4.2 million (with debt discount to Senior convertible notes of $4.2 million) were potentially convertible into 75,515 shares of common stock (subject to shareholders approval, see above). Conversion of the notes depends on the lowest daily volume weighted average price of the Company's common stock ("VWAP") subject to a $0.21 floor. If the lowest daily VWAP in thefive* trading days prior to* December 31, 2024,was$1* less, the Company, upon full conversion of outstanding notes, would theoretically be liable to issue approximately1,309 shares more. If the lowest daily VWAP in thefive trading days prior to* December 31, 2024,was$1* higher, the Company, upon full conversion of outstanding notes, would theoretically be liable to issue approximately1,265 shares less. The maximum number of shares that could theoretically be issued upon conversion of these notes was20,050,124 (if the lowest daily VWAP in thefive trading days prior to such conversion date decreased to or below*$0.21* and subject to shareholders approval, see above).

Upon initial recognition of all* December 2024Senior convertible notes, the fair value of issued warrants exceeded the amount of proceeds (seeNote8 - Warrants and other derivative liabilities and fair value measurements* ). The resulting discount to the carrying amount of the Senior convertible notes 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.

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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. 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

Fair value of financial liabilities of the Company, other than those measured at fair value on a recurring basis, is disclosed in theNote7* - Debt*.

Financial Liabilities Measured at Fair Value on a Recurring Basis

During thethree months ended* December 31, 2024,*the Company had the following financial liabilities measured at fair value on a recurring basis:

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Warrants issued with the Senior secured convertible notes (and additional investment rights)

As described in theNote7* - Debt*, in connection with the issuance of the Senior convertible notes under* May 14, 2024*contract, the holders also received 5-year warrants exercisable for 200% of the shares of common stock underlying such Senior 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 splits - $36,420), 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*$60* (after reverse stock splits, 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 - $36,420), (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 - $36,420), (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 warrant contracts provide that if the Company issues or sells, enters into a definitive, binding agreement pursuant to which the 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.

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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.

Out of the 3,957 warrants (hereinafter - giving effect to the reverse stock splits, seeNote1* - Description of business and basis of presentation*) issued as part of consideration for the funds provided under the $50 million senior secured Senior convertible notes contract and additional investment right,2,859 warrants remained unexercised as of* September 30, 2024,*with a carrying value of $79.7 million.

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 warrants and derivative liability revaluation" at each warrant exercise date and each accounting period end.

During thethree months ended* December 31, 2024,the Company issued 319 warrants as part of consideration for the$5* million provided under the Additional investment right of the* May 14, 2024contract in Octoberand on December 12, 2024 (seeNote7 - Debt*).

Upon initial recognition, the fair value of these warrants was $10.3 million and exceeded the amount of proceeds. The resulting discount to the carrying amount of the Senior convertible notes 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 is presented in the condensed consolidated statement of operations as "Other financing costs - initial recognition of warrants".

During thethree months ended* December 31, 2024,a part of these warrants in amount 210 (giving effect to the reverse stock split) was exercised on a cashless basis and 23,485 shares of common stock were issued by the Company by December 31, 2024and 49,545 shares were issued after December 31, 2024.*

On* December 31, 2024,the Company also issued 320 warrants as part of consideration for the$5* million receivable under additional investment right (similarly, to other investments, the Company has also issued a 5% original issue discount senior secured convertible note with a principal of $5.3 million, with the terms similar to other* May 14notes, see Note7* - Debt above). This amount was paid by the investor later, on* January 2, 2025.The$5* million due from investor was recorded as other current assets in the condensed consolidated balance sheets. Upon initial recognition, the fair value of these warrants was $11.3 million (based on the market price the day before transaction) and exceeded the amount of proceeds. Excess of initial fair value of warrant liabilities over the cash proceeds is presented in the condensed consolidated statement of operations as "Other financing costs - initial recognition of warrants". The Company has also provided additional investment rights to the investor for1 year for the same amount under similar conditions but based on market prices of the investment right execution. These additional investment rights are subject to shareholders' approval.

Exercise of remaining warrants (on a cash or cashless basis) is available to investors for a period of approximately 4.5 -5 years. Outstanding warrants in amount of3,288 with carrying value of $126.8 million as of* December 31, 2024*were potentially exercisable (under cashless basis) for approximately 1,760,968 shares of common stock.

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As described above, number of shares issuable upon cashless exercise of warrants depends on closing bid price in the last2 trading days, subject to floor of*$60* (after reverse stock splits), and by* December 31, 2024the lowest closing bid price (unadjusted to reverse stock split of February)was lower than the floor. Therefore, if the lowest closing bid price in the last2* days prior to* December 31, 2024was$1* lower or*$1* higher, the Company, upon full exercise of outstanding warrants, would potentially be liable to issue the same number of shares, which is the maximum number of shares that that could theoretically be issued upon exercise of all these warrants due to the floor fixed at*$60* (after reverse stock splits).

Additional warrants issued in December 2024

On* December 26and December 30, 2024,the Company received $4 million investments under the additional investment right and issued 137,599 warrants (hereinafter - giving retroactive effect to reverse stock split). These warrants have terms similar to those described above, except for the following main differences: (a) the floor in the lower of thetwo* Closing Bid Prices of the common stock in thetwo days prior the time of cashless exercise has been decreased to*$0.6* (after reverse stock split), and (b) exercise price of the warrants was reset and amounted to*$67* (after reverse stock split).

Upon initial recognition, the fair value of these warrants was $8.2 million and exceeded the amount of proceeds. Excess of initial fair value of warrant liabilities over the cash proceeds is presented in the condensed consolidated statement of operations as "Other financing costs - initial recognition of warrants".

These warrants were outstanding on* December 31, 2024,and had a carrying value of $10.2 million. They were potentially exercisable (under cashless basis) for 141,670 shares of common stock and their exercise (on a cash or cashless basis) is available to investors for a period of approximately5* years.

As described above, number of shares upon cashless exercise of these warrants depends on closing bid price in the last2 days, subject to floor of*$0.60.* If the lowest closing bid price in the last2 days prior to* December 31, 2024was$1* less (and the* February 20251:60 reverse stock split was made effective before December 31, 2024),the Company, upon full exercise of these warrants, would potentially be liable to issue approximately 2,067 shares more. If the lowest closing bid price in the last2* days prior to* December 31, 2024was$1* higher (and the* February 20251:60 reverse stock split was made effective before December 31, 2024),the Company, upon full exercise of these warrants, would potentially be liable to issue 2,839 shares less. The maximum number of shares that could theoretically be issued upon exercise of these warrants was 13,559,182 (if the lowest closing bid price in the last2* days prior to such date decreased to or below*$0.60*).

The conversion of warrants issued pursuant to the new investments referred to above is subject to stockholder approval under Nasdaq Listing Rule5635(d), as the aggregate potential issuances could exceed20% of the Company's outstanding common stock. Accordingly, the maximum number of shares that can be issued upon their exercise (and upon conversion of relevant notes) is limited to approximately 56,268 shares of common stock until stockholder approval is obtained.

The fair value of warrants (based on observable inputs, level2) on recognition date and on subsequent dates was estimated by the Company as current market value (on the day before transaction and on the end of the relevant period) of the number of shares the Company would be required to issue upon cashless warrant exercise (as a predominant exercise option providing higher economic benefits to investors and reflecting the pattern of the warrants exercise since the inception of the contracts) in accordance with warrant contract requirements.

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Breakdown of items recorded at fair value on a recurring basis in consolidated balance sheets by levels of observable and unobservable inputs as of* December 31, 2024* and on* September 30, 2024* is presented below:

A summary of all changes in liabilities recorded at fair value on a recurring basis is presented below:

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NOTE 9 –** STOCKHOLDERS**’** EQUITY**

Common Stock

At* December 31, 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 Presentationabove, 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 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.

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 December 31, 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).

There wereno transactions with Preferred Stock during thethree months ended* December 31, 2024* and during thethree months ended* December 31, 2023* as presented in the table below.

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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* December 31, 2024* was approximately $0.5 million.

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The 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* December 31, 2024*).

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* December 31, 2024*).

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* December 31, 2024*).

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* December 31, 2024*). “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 Series B Preferred Stock and/or Series C Preferred Stock, as applicable, could be converted.

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.

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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.

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 12,500 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 4,132 shares of common stock (giving effect to reverse stock splits).

In* October 2024,*the Company issued 8,368 shares in accordance with the ELOC Purchase Agreement and received $1 million proceeds.

Noncontrolling interest

See details in theNote16* - Noncontrolling interest*.

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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 thethree months ended* December 31, 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 – seeNote 1 - Description of Business and Basis of Presentation):

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* December 31, 2024*was 11,304,070 shares of common stock (not subject to reverse stock splits).

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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. 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* December 31, 2024*. 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 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 number of shares specified within individual agreements, or the monetary value of those shares, if applicable, is usually negotiated by our Chief Executive Officer and approved by the Compensation Committee of the Board of Directors. 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 ($0.7 million over thethree* months ended* December 31, 2024*).

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* December 31, 2024* amounted to $0.2 million. 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 amounted to $2.2 million as of* December 31, 2024*.

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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 and stock issuance" 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. As of* December 31, 2024*, the accrual for future awards under2023 PSA Agreement amounted to approximately $2.3 million.

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

NOTE 13 - LIABILITY TO ISSUE STOCK

The liability to issue stock on* December 31, 2024* in the amount of $8.0 million represents mainly shares to be issued to investors upon exercises of warrants and conversion of notes that were requested before* December 31, 2024* and have been completed in* January 2025 (*current liability in the amount of $5.0 million), CEO incentive award provision to be settled in shares of common stock upon the achievement of specific targets (current liability in the amount of $2.3 million), as well as certain liability-classified contracts with consultants (current liability in the amount of $0.2 million), directors (current liability in amount of $0.3 million) and other parties (current liability in amount of $0.2 million).

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

Property, plant, and equipment consist of the following:

Depreciation expense related to property, plant, and equipment for thethree months ended* December 31, 2024* and2023 was $3.9 million and $3.0 million, respectively.

NOTE 15 –** PREPAID EXPENSES AND OTHER CURRENT ASSETS**

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NOTE 16 –** NONCONTROLLING INTEREST**

In accordance with Stock purchase agreement signed on* July 26, 2024,during thethree* months ended* December 31, 2024,*the Company, as part of activities to launch production in the Bollinger segment, invested an additional $4.1 million in newly issued shares of Bollinger Motors, Inc, a majority owned subsidiary. This investment has been eliminated in the consolidated statement of cash flows but has adjusted noncontrolling interest in the consolidated balance sheets by $0.5 million.

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.

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

The following table reflects the maturities of operating lease liabilities on* December 31, 2024*:

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NOTE 18 –** RELATED PARTY TRANSACTIONS**

Director Provided Services

For thethree months ended* December 31, 2024*, our non-employee directors earned compensation for service on our Board of Directors and associated committees of $106 thousand in cash and $152 thousand in shares of common stock.

In addition, the following non-employee directors were engaged in certain other consulting contracts with the Company:

William Miltner

William Miltner is a litigation attorney who provides legal services to the Company. Mr. Miltner is also an elected Director of the Company. For thethree months ended* December 31, 2024*, Mr. Miltner was entitled to $142 thousand in legal fees.

Mary Winter

Mary Winter, Corporate Secretary and Director, is compensated for Corporate Secretary responsibilities at $5 thousand per month. For thethree months ended* December 31, 2024*, Ms. Winter was entitled to $15 thousand in consulting fees.

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.

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. The unpaid amount also generates interest at 9% per annum.

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. On February 6, 2025,The District Court affirmed the arbitration award and denied Mullen’s motion to vacate the award, ordering that the award be satisfiedno* later than* May 7, 2025.*

The Company has accrued $30.8 million as a probable settlement expense as of* December 31, 2024 (*in addition to $7 million that has been paid earlier).

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 paid $1.4 million and accrued $4 million as a probable remaining settlement expense as of* December 31, 2024.*

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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. Final approval of the settlement was granted by the court on January 24, 2025.*

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. The Caris Lawsuit is currently stayed.

No loss contingencies have been accrued in connection with this matter as of* December 31, 2024,*because the Company cannot reasonably estimate either the probability of a loss or its magnitude (if any) based on all information currently available to management.

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 connection with this matter as of* December 31, 2024,*because the Company cannot reasonably estimate either the probability of a loss or its magnitude (if any) based on all information currently available to management.

Jennifer Maloney v. Mullen Automotive, Inc., et al.

On* February 12, 2025,Plaintiff Jennifer Maloney, 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 its Chief Financial Officer, Jonathan New (the “Maloney Lawsuit”). The Maloney Lawsuit was brought by Maloney 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 financing, and alleging violations of Sections10*(b) and20(a) of the Securities Exchange Act of1934 (“Exchange Act”) and Rule10b-5 promulgated thereunder.

No loss contingencies have been accrued in connection with this matter as of* December 31, 2024,*because the Company cannot reasonably estimate either the probability of a loss or its magnitude (if any) based on all information currently available to management.

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NOTE 20 –** SUBSEQUENT EVENTS**

Company management has evaluated subsequent events through* February 19, 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:

Stock issuances after the balance sheet date

After the balance sheet date and by* February 17, 2025*, the Company issued 678,841 shares of common stock, mainly upon exercise of warrants and conversion of notes described in theNote7* and Note8 above, and in accordance with contracts with consultants (Note11*).

Additional investment right exercised for$5 million**

As described in theNote8* - Warrants and other derivative liabilities and fair value measurements,in January 2025,the Company received $5.0 million as a payment for senior secured convertible notes with an aggregate principal amount of approximately $5.3 million (or $5.0 million including the 5% original issue discount) and 320 five-year warrants issued on December 31, 2024pursuant to the existing additional investment rights under Securities Purchase Agreement dated May 14, 2024.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, the Company and the Investor entered into an Additional Investment Rights Agreement (pending shareholder's approval) 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.

Additional investments after the balance sheet date

On* January 23, 2025,the Company entered into a securities purchase agreement with certain investors for the sale of an aggregate principal amount of approximately $6.3 million of Senior Secured Convertible Notes and 539,811 five-year warrants. These Notes and Warrants have terms similar to those described in theNote7** andNote8** above, with the following main differences: (1) conversion price of the notes willnot* be less than $0.08 per share (not subject to adjustment), (2) exercise price of the warrants is $26 (giving effect to reverse stock split, seeNote1* - Description of business and basis of presentation*) and (3) the floor in cashless exercise of warrants (the lower of thetwo Closing Bid Prices of the common stock in thetwo days prior the time of exercise) is set at*$0.01* (not subject to adjustment).

On* February 5, 2025,the Company entered into another securities purchase agreement with certain investors. Under this agreement, investors purchased$3.1* million in 5% Original Issue Discount Secured Notes convertible into shares of common stock, alongside419,649 five-year warrants. These Notes and Warrants have terms similar to those described in theNote7** andNote8** above, with the following main differences: (1) conversion price of the notes willnot be less than*$0.05* per share (not subject to adjustment), (2) exercise price of the warrants is*$16* (giving effect to reverse stock split, seeNote1* - Description of business and basis of presentation*) and (3) the floor in cashless exercise of warrants (the lower of thetwo Closing Bid Prices of the common stock in thetwo days prior the time of exercise) is set at*$0.01* (not subject to adjustment).

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Both investments are (1) subject to an exchange cap, preventing conversions that would exceed19.9% of the outstanding common stock shares or voting power as of the agreement's execution, unless stockholder approval is obtained, (2) accompanied by registration rights agreements, and (3) provide the investors with additional investment rights under the same conditions for1 calendar year (pending stockholders' approval).

Warrant exchange contract

On* February 7, 2025,the Company and certain investors entered into a Warrant Exchange Agreement whereby the Company agreed to issue new warrants in exchange for the warrants listed in the subsections above and in theNote8 - Warrants and other derivative liabilities and fair value measurements*. The new warrants have the same terms and conditions as the existing warrants (described above and in theNote8**), including the number of shares issuable upon cash exercise and a term offive years from the date of original issuance, except that the exercise price floor in the formula for the cashless exercise of the new warrants is*$0.01,* not subject to adjustment for stock dividends, subdivisions, or combinations (including reverse stock splits). The contract is subject to stockholder shareholder approval under Nasdaq Listing Rule5635(d), as the aggregate potential issuances could exceed20% of the Company’s outstanding common stock.

Reverse stock split

On* January 31, 2025,Mullen Automotive Inc. (the “Company”) held a Special Meeting of Stockholders that approved amendment of the Company’s Second Amended and Restated Certificate of Incorporation, to effect a reverse stock split of the Company’s outstanding common stock at an exchange ratio between1*-for-2 to1-for-100, as determined by the Board 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.

On* February 14, 2025,the Company filed a Certificate of Amendment to its Second Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to effect aone*-for-sixty (1-for-60) the reverse stock split of its common stock (the “Reverse Stock Split”). The Reverse Stock Split became effective on* February 18, 2025at12:01* am Eastern Time (the “Effective Time”).

As a result of the Reverse Stock Split, at the Effective Time, every60 shares of the Company’s pre-Reverse Stock Split common stock combined and automatically becameone share of common stock. The Company’s common stock began trading on a split-adjusted basis when the Nasdaq Stock Market opened for trading on* February 18, 2025.The common stock will continue to trade on the Nasdaq Stock Market under the existing symbol “MULN”, but with a new CUSIP number of62526P604.* The Reverse Stock Split didnot change the authorized number of shares or the par value of the common stock nor modify any voting rights of the Common Stock.

Also, at the Effective Time, the number of shares of common stock issuable upon conversion or exercise of notes, warrants, preferred stock, options 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 Split. If applicable, the conversion price for each outstanding note and 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 the1-for-60 split ratio such that upon conversion or exercise, the aggregate conversion price for conversion of each note or preferred stock and the aggregate exercise price payable by the warrant holder to the Company for shares of common stock subject to such warrant would remain approximately the same as the aggregate conversion or exercise price, as applicable, prior to the Reverse Stock Split. Furthermore, pursuant to the terms of the Company’s2022 Equity Incentive Plan, as amended, shares of common stock available for issuance arenot subject to adjustment as a result of the Reverse Stock Split.

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No fractional shares were issued in connection with the Reverse Stock Split. All shares of common stock that are held by a stockholder were aggregated subsequent to the Reverse Stock Split and each fractional share resulting from such aggregation held by a stockholder was rounded up to the next whole share on a participant level.

S-1 Registration Effective

On* February 7, 2025,the Securities and Exchange Commission (SEC) declared the Company's registration statement on Form S-1 effective (FileNo.* 333-282516). This registration statement pertains to the resale of833,333 shares of common stock by the selling stockholders (giving effect to the Reverse Stock Split, see above). The shares are issuable upon conversion of the Notes and exercise of the Warrants previously issued by the Company (seeNote7* - Debt* andNote8* - Warrants and other derivative liabilities and fair value measurements)*.

Reduction in Workforce

Effective* February 1, 2025,*the Company implemented a reduction in force affecting a total of 78 positions as part of its strategic initiatives to reduce operational costs and enhance financial efficiency. This measure is expected to result in annualized cost savings of approximately $13 million, which includes savings from salaries and benefits of the positions eliminated.