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SUBSEQUENT EVENTS

9 Months Ended

Jun. 30, 2023

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

NOTE 20 – SUBSEQUENT EVENTS

Company management has evaluated subsequent events through August 14, 2023, which is the date these condensed consolidated financial statements were available to be issued.

Results of Annual Stockholders Meeting

An annual meeting of stockholders was convened on August 3, 2023, with several key decisions being ratified (except for Proposal 4):

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Two Class II Directors were elected for a three-year term concluding in 2026 (Proposal 1).

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Amendments to the 2022 Equity Incentive Stock Plan were approved, resulting in an increase of the authorized issuance by 52,000,000 shares (not subject to adjustment for any decrease or increase in the number shares of common stock resulting from a stock spilt, reverse stock split, recapitalization, combination, reclassification, the payment of a stock dividend on the common stock or any other decrease in the number of such shares of common stock effected without receipt of consideration by the Company) (Proposal 2).

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An amendment to the Company’s Certificate of Incorporation to effect a reverse stock split at a ratio ranging from 1-for-2 to 1-for-100 was approved (Proposal 3).

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The conversion of Mullen Automotive Inc. from a Delaware Corporation to a Maryland Corporation was not approved (at a ratio ranging from 1-for-2 to 1-for-100).

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On an advisory basis, the compensation of named executive officers was approved (Proposal 5).

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On an advisory basis, the frequency for future votes on the compensation of named executive officers was approved for every three years (Proposal 6).

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The issuance of shares of common stock to our Chief Executive Officer, Mr. Michery, under the 2023 Performance Stock Award Agreement, was approved, subject to the achievement of certain milestones, in compliance with Nasdaq Listing Rule 5635(d), (see below) (Proposal 7).

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Amendments were approved, in compliance with Nasdaq Listing Rule 5635(d) to a securities purchase agreement, enabling the issuance of $7 million in additional shares and warrants, exercisable into shares of Common Stock, and any future adjustments of the exercise price of the warrants (Proposal 8).

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The appointment of RBSM LLP as the independent registered public accounting firm for the fiscal year ending September 30, 2023 was ratified (Proposal 9).

2023 Performance Stock Award to the CEO

The new 2023 Performance Stock Award (PSA) Agreement approved by the Board and stockholders of the Company, provides the Company's CEO, Mr. Michery (the “CEO”), with an opportunity to earn equity awards subject to achievement of specific milestones:

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Vehicle Completion Milestones: The CEO is eligible for awards when he procures full USA certification and homologation for the Class Three Van by December 2023, the Bollinger B1 SUV by June 2025, and the Bollinger B2 Pick Up Truck by June 2025. Each achievement corresponds to 3% of Mullen’s current total issued and outstanding shares.

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Revenue Benchmark Milestones: These are tied to every $25 million of revenue recognized by the Company, up to a total of $250 million. Each revenue benchmark reached corresponds to 1% of Mullen’s current total issued and outstanding shares.

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Battery Development Milestones: These are triggered by the development of new and advanced battery cells and their scaling to the vehicle pack level for specific vehicles by December 2024. Each achievement corresponds to 2% of Mullen’s current total issued and outstanding shares.

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JV-Acquisition Milestones: The CEO is awarded upon the Company's acquisition of a majority interest in an enterprise that manufactures or provides beneficial products to the Company. Each acquisition corresponds to 3% of Mullen’s current total issued and outstanding shares.

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Accelerated Development Milestone: This is triggered by the acquisition of a facility with existing equipment that expedites the scaling of battery pack production in the USA, corresponding to 2% of Mullen’s current total issued and outstanding shares.

The Company believes these equity incentives align the CEO’s interests with those of the stockholders and promote the Company's business plans. The CEO also has outstanding potential awards from the 2022 PSA Agreement, contingent on meeting the milestones specified in that plan (see Note 11).

Compensation for Non-employee Directors

Effective July 1, 2023, the Company’s Board of Directors approved the following compensation for non-employee directors for service on the Board and its committees:

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Each non-employee director will receive $50,000 annually as a cash retainer for their Board service, with additional annual cash retainers of (i) $5,000 for each member of the Company’s Compensation Committee or Nominating and Corporate Governance Committee; (ii) $7,500 for the Chairman of the Compensation Committee or Nominating and Corporate Governance Committee; (iii) $10,000 for each member of the Audit Committee; (iv) $45,000 for the chair of the Audit Committee; and (v) $25,000 to the Lead Independent Director. All cash retainers are paid quarterly in arrears.

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Additionally, each non-employee director shall receive an annual stock award under the Company’s equity plan equal to $100,000 divided by the closing trading price of the Company’s Common Stock on the date of each such grant.

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The non-employee directors are entitled to reimbursement of ordinary, necessary, and reasonable out-of-pocket travel expenses incurred in connection with attending in-person meetings of the Board or committees thereof. In the event non-employee directors are required to attend greater than four in-person meetings or 15 telephonic meetings during any fiscal year, such non-employee directors will be entitled to additional compensation in the amount of $500 for each additional telephonic meeting beyond the 15 telephonic meeting threshold, and $1,000 for each additional in-person meeting beyond the four in-person meeting threshold.

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 David Michery, its 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 Mr. Michery, upon a change in control of the Company, any unvested equity compensation will immediately vest in full and Mr. Michery 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.

$25 Million Stock Buyback Program

On July 6, 2023, the Board of Directors (the "Board") of the Company authorized a stock buyback program, pursuant to which the Company may, until Dec. 31, 2023, purchase up to $25 million in shares of its outstanding common stock. The shares may be repurchased, from time to time, in the open market or in privately negotiated transactions depending upon market conditions and other factors, and in accordance with applicable regulations of the Securities and Exchange Commission (the “SEC”). The authorization of the stock buyback program does not obligate the Company to purchase any shares and may be terminated or amended by the Board at any time prior to its expiration date. The purchases under the stock buyback program have not commenced by these consolidated financial statements release date.

Reverse Stock Split

On August 11, 2023, the Company effected a 1-for-9 reverse stock split (See Note 1). NASDAQ mandates companies to sustain a minimum bid price of $1.00 per share for compliance. Depending on various factors, including trading volume and stock price trend, the compliance duration can be extended up to 20 business days.

Exercise of Warrants

After the balance sheet date, the Company issued 97,405,972 shares of common stock due to the exercise of prefunded warrants and Preferred D Warrants (see Note 8).

Mullen Advanced Energy Operations LLC

On April 17, 2023, the Company entered into a binding Letter of Agreement with Lawrence Hardge, Global EV Technology, Inc., and EV Technology, LLC (collectively, “EVT”) to partner on a device known as a Battery Life Enhancing Technology. The parties formed a new corporation called Mullen Advanced Energy Operations to develop, manufacture, market, sell, lease, distribute, and service all products resulting from the technology. The Company holds a 51% equity interest in MAEO, and EVT holds a 49% equity interest. EVT was supposed to license the technology and intellectual property rights to MAEO and assign all rights to governmental and other contracts relating to the technology. The Company paid Mr. Hardge an upfront payment of $50,000 and an additional $5.0 million payment was due upon execution of definitive agreements and completion of IP assignment.

On July 10, 2023, the Company issued a notice terminating the Agreement dated April 17, 2023. The termination notice, which was sent after numerous attempts by the Company to obtain adherence by EVT to the terms of the Agreement, references several breaches by EVT including (1) failing to execute documents evidencing an irrevocable, royalty free, worldwide exclusive license to the Technology and IP, in perpetuity, to MAEO, (2) refusing to conduct any tests of the Technology at a Mullen approved facility after the LOA, (3) repeatedly refusing to honor the terms of the Mutual Non-Disclosure Agreement signed April 14, 2023, and (4) failing to disclose all claims or threatened legal actions by any third parties related to the Technology.