NET ELEMENT Item 7.01 Regulation FD Disclosure.
OnOctober 19, 2021 ,Mullen Technologies, Inc. , aCalifornia corporation ("Mullen Technologies"), andMullen Automotive, Inc. ("Mullen"), aCalifornia corporation and a wholly-owned subsidiary of Mullen Technologies, submitted to Listing Qualifications at Nasdaq, Inc. ("Nasdaq"), as part of Mullen's Nasdaq listing application process and at the request of Nasdaq, the following unaudited pro forma condensed balance sheet of Mullen for the purpose of evidencing adequate stockholder's equity to meet Nasdaq listing standards upon closing of the merger (the "Merger") contemplated by the Second Amended and Restated Agreement and Plan of Merger among Mullen, Mullen Technologies,Net Element, Inc. , aDelaware corporation (the "Company"), andMullen Acquisition, Inc. , aCalifornia corporation and wholly owned subsidiary of the Company (the "Merger Agreement"). UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET JUNE 30, 2021 (in thousands) Net Element Mullen - EV Pro Forma Pro Forma Pro Forma Pro Forma, Adjustments Combined Adjustments As Adjusted* ASSETS Current assets: Cash and cash equivalents$ 3,926 $ 664$ (3,926 ) [a]$ 40,304 $ 15,000 $ 55,304 20,000 [d] 10,000 [d] 11,200 [g] (1,560 ) [h] Accounts receivable, net 10,760 - (10,760 ) [a] - Due from Mullen Technologies, Inc. 2,040 - (2,040 ) [a] - Materials and supplies - 56 - 56 56 Note receivable, current - - 15,000 [i] 15,000 15,000 Other current assets 1,710 765 (1,710 ) [a] 765 765 Total current assets, net 18,436 1,485 36,204 56,125 15,000 71,125 Non-current assets: Property and equipment, net - 1,300 - 1,300 1,300 Goodwill 7,681 - (7,681 ) [a] - Intangibles, net 2,802 2,668 (2,802 ) [a] 2,668 2,668 Right-of-use assets 732 2,467 (732 ) [a] 2,467 2,467 Other assets 1,122 776 (1,122 ) [a] 776 776 Total non-current assets 12,337 7,211 (12,337 ) 7,211 7,211 TOTAL ASSETS 30,773 8,696 23,867 63,336 15,000 78,336 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable 10,043 4,607 (10,043 ) [a] 3,397 3,397 (1,560 ) [h] 350 [f] Accrued expenses and 3,083 15,498 (3,083 ) [a] 15,498 15,498 other current liabilities Deferred revenue 1,461 - (1,461 ) [a] - Lease liabilities, current portion 73 569 (73 ) [a] 569 569 Notes payable, current portion 520 35,740 (520 ) [a] 24,977 24,977 (10,763 ) [c] Due to related party 346 - (346 ) [a] - Total current liabilities 15,526 56,414 (27,499 ) 44,441 44,441 Non-current liabilities: Notes payable, net of current portion 8,428 257 (8,428 ) [a] 257 257 Lease liabilities, net of current portion 661 2,003 (661 ) [a] 2,003 2,003 Other liabilities - 4,500 - 4,500 4,500 Total non-current liabilities 9,089 6,760 (9,089 ) [a] 6,760 6,760 TOTAL LIABILITIES 24,615 63,174 (36,588 ) 51,201 51,201 STOCKHOLDERS' EQUITY Preferred stock - - 11 [c] 42 42 20 [d] 11 [g] Common stock 1 - (1 ) [a] 10 15 * 25 10 [e] Paid-in-capital 191,722 - (191,722 ) [a] 12,433 14,985 * 27,418 (54,478 ) [b] 10,752 [c] 19,980 [d] 9,990 [e] 11,189 [g] 15,000 [j] Accumulated OCI (2,147 ) - 2,147 [a] - Non-controlling interest (294 ) - 294 [a] - Accumulated deficit (183,124 ) 183,124 [a] - (350 ) [f] (350 ) (350 ) (54,478 ) 54,478 [b] - TOTAL STOCKHOLDERS' EQUITY 6,158 (54,478 ) 60,455 12,135 15,000 27,135 TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY$ 30,773 $ 8,696 $ 23,867 $ 63,336 $ 15,000 $ 78,336 2
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Adjustments to the pro forma condensed combined balance sheet:
[a] Reflects deconsolidation of
[b] Reclassifies Mullen deficit.
[c] Reflects the exchange agreement of
[d] Reflects equity purchase;
Note: Mullen has entered into an agreement with Esousa to provide a
[e] Pursuant to the Merger Agreement,
[f] Reflects the costs associated with the Merger of
[g] Reflect the amendments to the exchange agreement of
[h] Reflects the payment of
[i] Reflects the issuance of pre-funded warrants to purchase$15.0 million in shares of common stock for$15.0 million promissory note receivable pursuant to agreement with CEO cast, Inc.
[j] Does not give effect to the amended and restated employment agreement for the Chief Executive Officer and Chief Operating Officer.
[k] Within Current Notes Payable and Accrued Expenses is the$500K unsecured promissory note that Mullen borrowed fromNet Element, Inc. The principal amount of the loan carries an interest rate of 14% per annum compounded monthly and payable upon demand.
* Pro Forma Adjusted Financial Statements include 6 months of
The information contained in this Item 7.01 is furnished and shall not be deemed
to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), or otherwise subject to the liabilities of that
section, and such information shall not be deemed to be incorporated by
reference into any of the Company's filings under the Securities Act of 1933, as
amended, or the Exchange Act. Many of the equity transactions described in this
pro forma balance sheet have not yet occurred. They are expected to occur at the
time of or after consummation of the Merger. However, they are subject to a
variety of conditions and there is no guaranty that the equity issuances will be
made or that the Merger will be effected.
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The Company is furnishing the information contained in this Item 7.01 on behalf
of Mullen solely at the request of and as an accommodation to Mullen to assist
Mullen in complying with Nasdaq's specific request for Mullen to file this
information on a current report on Form 8-K (despite Mullen being not a
reporting company and unable to file its own current report on Form 8-K) as a
precondition to Nasdaq's providing a conditional approval of Mullen's listing
application with the Nasdaq.
The Company has had no involvement in the negotiation, preparation, drafting or
otherwise of the condensed balance sheet of Mullen or any of the documents and
agreements referenced in the footnotes thereto and cannot opine upon the
accuracy, completeness or otherwise of the condensed balance sheet of Mullen or
the documents and agreements referenced in the footnotes thereto furnished in
this Item 7.01 and disclaims any responsibility with respect to all such
information.
The Company and Mullen have agreed that, subject to and after the Merger
closing, the Company will hold a special meeting of its stockholders within 6
months of such closing to procure approval of an amendment of the Company's
certificate of incorporation to reflect a 3-year sunset provision pertaining to
the voting rights associated with the Series A preferred shares (the
"Amendment"). Nasdaq's approval of the post-Merger Company's listing application
will be conditioned on the Amendment becoming effective within 6 months of
closing the Merger. If the Amendment fails to become effective within 6 months
of closing the Merger, the post-Merger Company's common stock would become
subject to Nasdaq delisting procedures.
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