You should read the following discussion and analysis of our financial condition
and results of operations together with our audited financial statements and
related notes included elsewhere in this Report. This discussion and analysis
contain forward-looking statements that involve risks, uncertainties and
assumptions. Our actual results may differ materially from those anticipated in
these forward-looking statements as a result of many factors, including but not
limited to those under the heading "Risk Factors" in Part I, Item 1A of this
Report. Certain amounts in this section may not foot due to rounding.

In connection with the Merger Agreement (as defined below), and as disclosed in
our Current Report on Form 8-K filed with the SEC on November 12, 2021, our
fiscal year end has changed from December 31 to September 30, effective for


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our fiscal year ended September 30, 2022. As a result, and unless otherwise
indicated, references to our fiscal year 2022 and prior years mean the
fiscal year ended on September 30 of such year.

Basis of Presentation

The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiary, Mullen Investment Properties, LLC, and its 60%
owned subsidiary, Bollinger Motors. Intercompany accounts and transactions have
been eliminated, if any. The financial statements reflect the consolidated
financial position and results of operations of Mullen, which have been prepared
in accordance with Generally Accepted Accounting Principles in the United States
As a result, we expect that the financial results of our reports for the periods
after we begin commercial operations will not be comparable to the financial
results included in this Annual Report.

Components of Results of Operations

We are an early-stage company, and our historical results may not be indicative
of our future results for reasons that may be difficult to anticipate.
Accordingly, the drivers of our future financial results, as well as the
components of such results, may not be comparable to our historical or projected
results of operations.


We do not currently generate any revenue. Once we commence production and
commercialization of our vehicles, we expect that most of our revenue will be
initially derived from direct sales of cargo vans, Class 4 through 6 delivery
vehicles, and Sport Utility Vehicles ("SUVs").

Cost of Goods Sold

To date, we have not recorded cost of goods sold, as we have not recorded
commercial revenue. Once we commence the commercial production and sale of our
EVs, we expect cost of goods sold to include mainly vehicle components and
parts, including batteries, direct labor costs, amortized tooling costs, and
reserves for estimated warranty expenses.

General and Administrative Expense

General and administrative ("G&A") expenses include all non-production expenses
incurred by us in any given period. This includes expenses such as professional
fees, salaries, rent, repairs and maintenance, utilities and office expense,
employee benefits, depreciation and amortization, advertising and marketing,
settlements and penalties, taxes, licenses and other expenses. Advertising costs
are expensed as incurred and are included in G&A expenses. We expense
advertising costs as incurred in accordance with ASC 720-35, "Other Expenses -
Advertising Cost."

Research and Development Expense

To date, our research and development expenses have consisted primarily of
external engineering services in connection with the design of our initial EV
and development of the first prototype. As we ramp up for commercial operations,
we anticipate that research and development expenses will increase for the
foreseeable future as we expand our hiring of engineers and designers and
continues to invest in new vehicle model design and development of technology.

Income Tax Expense / Benefit

Our 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. We maintain a valuation allowance
against the full value of our U.S. and state net deferred tax assets because we
believe the recoverability of the tax assets is not more likely than not.


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Results of Operations

Comparison of the Year Ended September 30, 2022, to the Year Ended September 30,

The following table sets forth our historical operating results for the periods

                                                   Year Ended
                                                 September 30,
                                             2022               2021            $ Change        % Change

                                                      (dollar amounts, except percentages)
Operating costs and expenses:
Research & development                  $    21,650,840    $    3,009,027    $    18,641,813         620 %
General and administrative                   75,338,256        19,393,141         55,945,115         288 %
Total operating costs and expenses           96,989,096        22,402,168  
      74,586,928         333 %
Loss from operations                       (96,989,096)      (22,402,168)       (74,586,928)         333 %

Other income (expense):
Loss on disposal of fixed assets               (50,574)                 -           (50,574)           - %
Other financing costs                                 -       (1,559,961)          1,559,961         100 %
Gain on extinguishment of
indebtedness, net                                33,413           890,581          (857,168)        (96) %
Penalty for insufficient authorized
shares                                      (3,495,000)                 -        (3,495,000)           - %
Revaluation of warrant liabilities        (122,803,715)                 -      (122,803,715)           - %
Other financing costs - initial
recognition of warrant liabilities        (484,421,258)                 -      (484,421,258)           - %
Other income (expense), net                 (5,647,841)                 -        (5,647,841)           - %
Interest expense                           (26,949,081)      (21,168,232)        (5,780,849)        (27) %
Total other income (expense)              (643,334,056)      (21,837,612)      (621,496,444)       2,846 %
Net loss before income taxes            $ (740,323,152)    $ (44,239,780)  

$ (696,083,372) 1,573 %

Provision for income tax                $         1,600               800  
             800           -

Net Loss                                $ (740,324,752)    $ (44,240,580)    $ (696,084,172)       1,573 %

Net loss attributable to
non-controlling interest                        791,946                 -            791,946         100 %
Net loss attributable to Mullen
Automotive Shareholders                 $ (739,532,806)    $ (44,240,580)  

$ (695,291,426) 1,572 %

Less; Preferred dividends                  (40,516,440)                 -       (40,516,440)           - %

Net loss attributable to
shareholders less preferred
dividends                               $ (780,049,246)    $ (44,240,580)  

$ (735,808,666) 1,663 %

Research and Development

Research and development expenses increased by approximately $18.6 million or
620% from approximately $3.0 million through the twelve months ended
September 30, 2021, to approximately $21.7 million through the twelve months
ended September 30, 2022. During the year, there was minimal activity due to the
COVID-19 pandemic. Research and Development costs are expensed as incurred.
Research and development expenses primarily consist of the Mullen FIVE EV show
car development and are primarily comprised of personnel-related costs for
employees and consultants.

General and Administrative

General and administrative expenses increased by approximately $55.9 million or
288% from approximately $19.4 million in the twelve months ended September 30,
2021, to approximately $75.3 million in the twelve months ended September 30,


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2022, primarily due to increases in professional services, marketing, and
payroll related expenses with the growth of personnel and resources.

Interest Expense

Interest expense increased by approximately $5.8 million or 27% from
approximately $21.2 million through the twelve months ended September 30, 2021,
to approximately $26.9 million through the twelve months ended September 30,
2022, primarily due to an increase in convertible debt.

Gain on extinguishment of debt

During November 2020, the U.S. Small Business Administration (“SBA”) approved
the CARES Act loan forgiveness amount of $875,426 in principal and accrued
interest on November 20, 2020.

Net Loss

Net loss was $740.3 million for the twelve months ended September 30, 2022, an
increase of $696.1 million or 1,573%  from $44.2 million in the twelve months
ended September 30, 2021.

Liquidity and Capital Resources

To date, we have yet to generate any revenue from our business operations. We
have funded our capital expenditure and working capital requirements through the
sale of equity and debt securities, as further discussed below. Our ability to
successfully commence commercial operations and expand our business will depend
on many factors, including our working capital needs, the availability of equity
or debt financing and, over time, our ability to generate cash flows from

As of September 30, 2022, our cash, restricted cash and cash equivalents
amounted to approximately $84.4 million and our total debt amounted to
approximately $9.0 million.


To date, our current working capital and development needs have been primarily
funded through the issuance of convertible indebtedness, convertible preferred
stock and Common Stock. Short-term debt comprises a component of our funding
needs. Short-term debt is generally defined as debt with principal maturities of
one-year or less. Long-term debt is defined as principal maturities of one
or more.

Short and Long-Term Debt
The short-term debt classification primarily is based upon loans due within
twelve-months from the balance sheet date, in addition to loans that have
matured and remain unpaid. Management plans to renegotiate matured loans with
creditors for favorable terms, such as reduce interest rate, extend maturities,
or both; however, there is no guarantee favorable terms will be reached. Until
negotiations with creditors are resolved, these matured loans remain outstanding
and will be classified within short-term debt on the balance sheet. Interest and
fees on loans are being accounted for within accrued interest. The loans are
secured by substantially all the Company's assets. Several principal
shareholders have provided loans to and hold convertible debt of the Company and
are related parties.


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The following is a summary of our debt as of September 30, 2022:

                                 Net Carrying Value
                                 Unpaid Principal                                                         Contractual
        Type of Debt                  Balance             Current       Long-Term     Interest Rate         Maturity
Matured Notes                   $          3,051,085    $ 3,051,085    $         -     0.00 - 10.00 %        2019-2021
Promissory Notes                           1,096,787              -      1,096,787               28 %             2024
Real Estate Note                           5,247,612        247,612      5,000,000       5.0 - 8.99 %      2023 - 2024
Loan Advances                                557,800        557,800              -     0.00 - 10.00 %      2016 - 2018
Less: Debt Discount                        (932,235)              -      (932,235)               NA                 NA
Total Debt                      $          9,021,049    $ 3,856,497    $ 5,164,552         NA                  NA

Cash Flows

The following table provides a summary of Mullen’s cash flow data for the years
ended September 30, 2022 and 2021:

                                    Years Ended September 30,
Net cash provided by (used in):       2022              2021
Operating activities             $ (65,795,610)    $ (17,522,115)
Investing activities               (47,154,109)         (161,783)
Financing activities                197,282,630        17,692,704

Cash Flows used in Operating Activities

Our cash flow used in operating activities to date has been primarily comprised
of costs related to research and development, payroll and other general and
administrative activities. As we continue to ramp up hiring ahead of starting
commercial operations, we expect our cash used in operating activities to
increase significantly before we start to generate any material cash flow from
our business.

Net cash used in operating activities was $65.8 million in the twelve months
ended September 30, 2022, an increase from $17.5 million net cash used in the
twelve months ended September 30, 2021. Net losses for the year ended September
30, 2022, were $740.3 million offset by non-cash operating activities of $484.4
million financing loss on warrants and $122.8 on revaluation of warrant
liabilities. Stock based compensation for employees, directors and consultants
totaled $43.7 million.

Cash Flows used in Investing Activities

Our cash flows used in investing activities, to date, have been comprised mainly
of purchases of equipment and have not been material. We expect these costs to
increase substantially in the near future as we ramp up activity ahead of
commencing commercial operations.

Net cash used in investing activities was $47.1 million in the year ended
September 30, 2022, a decrease from $0.2 million used in investing activities
the year ended September 30, 2021. The primary factor in the increased cash
outflows was the Bollinger Motors acquisition.

Cash Flows provided by Financing Activities

Through September 30, 2022, we have financed our operations primarily through
the issuance of convertible notes and equity securities.

Net cash provided by financing activities was $197.3 million for the year ended
September 30, 2022 primarily due to issuance of preferred shares, as compared to
$17.7 million net cash provided by financing activities for the year ended
September 30, 2021, which included (i) $12.2 million net proceeds from issuance
of notes payable; (ii) $42.3 million in net proceeds from issuance of Common
Stock; (iii) $142.9million in proceeds to issue Preferred C and D shares.


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Contractual Obligations and Commitments

The following tables summarizes our contractual obligations and other
commitments for cash expenditures as of September 30, 2022, and the years in
which these obligations are due:

Operating Lease Commitments

Years Ended September 30,               Payments
2023                                   $ 2,820,060
2024                                     2,706,912
2025                                     2,082,614
2026                                       243,539
2027                                        15,173
2028 and Thereafter                              -

Total Future Minimum Lease Payments $ 7,868,298

We currently lease our headquarters space in the Los Angeles area under a single
lease classified as an operating lease expiring in March 2026. We have not
executed any binding agreement for leases beyond 2026.

Scheduled Debt Maturities

The following are scheduled debt maturities as of September 30, 2022:

                                                         Years Ended September 30,
                       2023           2024         2025       2026       2027       2028      Thereafter        Total
Total Debt          $ 3,856,497    $ 5,164,552    $     -    $     -    $     -    $     -    $         -    $ 9,021,049

Off-Balance Sheet Arrangements

We are not a party to any off-balance sheet arrangements, as defined under SEC

Critical Accounting Policies and Estimates

Our financial statements have been prepared in accordance with U.S. GAAP. In the
preparation of these financial statements, our management is required to use
judgment in making estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent assets and liabilities
as of the date of the financial statements, as well as the reported expenses
incurred during the reporting periods. Management considers an accounting
judgment, estimate or assumption to be critical when (1) the estimate or
assumption is complex in nature or requires a high degree of judgment and
(2) the use of different judgments, estimates and assumptions could have a
material impact on the consolidated financial statements.

Stock-Based Compensation and Common Stock Valuation

We recognize the cost of share-based awards granted to employees and directors
based on the estimated grant-date fair value of the awards. Cost is recognized
on a straight-line basis over the service period, which is generally the vesting
period of the award. Our management reverses previously recognized costs for
unvested options in the period that forfeitures occur. Mullen determines the
fair value of stock options using the Black-Scholes option pricing model, which
is impacted by the following assumptions:

? Expected Term-We use the simplified method when calculating the expected term

   due to insufficient historical exercise data.


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Expected Volatility-As our shares were not actively traded during the periods

? presented, the volatility is based on a benchmark of comparable companies

within the automotive and energy storage industries.

Expected Dividend Yield-The dividend rate used is zero as we have never paid

? any cash dividends on Common Stock and does not anticipate doing so in the

foreseeable future.

Risk-Free Interest Rate-The interest rates used are based on the implied yield

? available on U.S. Treasury zero-coupon issues with an equivalent remaining term

equal to the expected life of the award.

Common Stock Valuations

The grant date fair value of our Common Stock (pre-merger with Net Element) was
typically determined by our board of directors with the assistance of management
and a third-party valuation specialist. Given our pre-revenue stage of
development, management believed that an Option Pricing Model ("OPM") was the
most appropriate method for allocating enterprise value to determine the
estimated fair value of our Common Stock. Application of the OPM involved the
use of estimates, judgment, and assumptions that are highly complex and
subjective, such as those regarding our expected future revenue, expenses, and
cash flows, discount rates, market multiples, the selection of comparable
companies, and the probability of future events. Once Mullen's stock became
publicly traded, the Board of Directors elected to determine the fair value of
our post-merger Common Stock based on the closing market price the day before
the date of grant.

Warrant Valuations
Management determined the fair value of the warrant liability for Series C
warrants on recognition date and on subsequent dates as a maximum of (i) Black
Scholes value for cash exercise of relevant warrants and (ii) current market
value of the number of shares the Company would be required to issue upon
cashless warrant exercise on a relevant date in accordance with warrant contract
conditions. At each warrant exercise date and each accounting period end the
warrant liability for the remaining unexercised warrants is marked-to-market
value and the resulting gain or loss is recorded. The contracts for the Series D
Warrants contain cashless exercise provisions similar to Series C Warrants
described above. Therefore, Management applied similar accounting treatment to
recognition, measurement and presentation of the warrant liabilities.

Recent Accounting Pronouncements

Accounting standard updates issued but not yet added were assessed and
determined to be either not applicable or not expected to have a material impact
on our consolidated financial statements.

© Edgar Online, source Glimpses


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