By Lisa Thompson



This morning, Net Element (NASDAQ:NETE) announced a Letter of Intent (LOI) for a triangular reverse merger with Mullen Technologies a private company based in California. The survivor company will be named Mullen Technologies, the ticker will be changed, and the payment processing business is to be sold. Mullen was expected to be a highly anticipated IPO but management decided that the cost of, and the time it would take to IPO, was too much compared with a reverse merger solution. This proposed transaction would allow Mullen to be public this year and then raise capital in a secondary transaction to support its plans. Mullen Technologies plans to sell Qiantu Motors’ electric vehicles. Qiantu is a Chinese manufacturer that is a subsidiary of CH Auto based in Beijing. It already sells vehicles in China. Mullen has an agreement to sell those vehicles in the US and plans to assemble them here. It needs capital to pay for an assembly plant. Mullen is expected to deliver its first vehicle, the Dragonfly K50, in Q2 2021.

Figure 1. Dragonfly K50 at the NY International Auto Show 2019

Source: Shutterstock

Last year, Mullen announced plans to assemble its Qiantu K50 electric sports car on the West Plains in Washington State, but that agreement expired on March 31. According to S3R3 Solutions, the public development authority that recruited Mullen Technologies to the region, Mullen needs $56 million for a deposit but expects to raise a total of about $1.3 billion in capital for the project. It believes Mullen hopes to be granted a $450 million loan from the Department of Energy, raise $450 million in private funding, and is exploring tax credits and opportunity zone funding as well.

The management of the remaining company will be from Mullen but Oleg Firer, CEO of Net Element, would remain on the board. Should this move forward after due diligence, and upon reaching a definitive agreement, the company will file a proxy statement and S-4 to gain approval from shareholders.

Mullen Technologies was founded in 2014 and is based in Brea, California. David Michery formerly of music production fame runs it. It currently sources cars from its Chinese OEM partner Qiantu Motor. Mullen currently has eight car dealerships in California and another in Arizona where it sells a variety of cars and showrooms its K50. It also owns CarHub, a platform that leverages AI for a solution for buying, selling, and owning a car. Early in 2020, the company launched Mullen Funding Corp. to provide direct auto financing and lease options for new and pre-owned Mullen vehicles. In April, Mullen Technologies began making portable ventilators out of its battery R&D center in Monrovia, CA. These units are expected to be available for delivery shortly to fulfill contracts already won.

Mullen Technologies is rumored to be highly valued based both on its business prospects and it intellectual property. It has valuable lithium battery patents to create batteries rivaling Tesla’s technology. It has a joint venture with Ukrainian company NextMetals Ltd. to create a solid-state battery under a new division called “Mullen Next.”

Net Element shareholders are expected to own 15% of the surviving company. If Mullen can reach revenues of $100 million in the next 24 months, it is entitled to another 5% of the shares leaving Net Element shareholders with 10%. If revenue is less than $80 million, then the Net Element shareholders will get another 5% leaving Mullen shareholders with 80% of the fully diluted common shares of the company.

At Net Element’s current enterprise value of $37 million (using a $6.90 stock price) this puts the entire valuation of Mullen Technologies at $248 million, far less than we expect it is currently valued in the private market. We will get financial information on the privately held Mullen once the S-4 is filed.

We expect this transaction to be completed at the earliest in Q3 2019, and will update investors when more information is provided when the upcoming the S-4 is filed or when Q2 is reported.

Mullen Technologies – company behind proposed West Plains electric sports car plant – building SUV facility in California


Mullen Technologies – company behind proposed West Plains electric sports car plant – building SUV facility in California

Tue., Oct. 13, 2020

Mullen Technologies announced this month it’s developing a preproduction facility for an electric SUV in California. The company appears to still be in the process of obtaining funding for Dragonfly K50 plant on the West Plains, but has not provided an update publicly since August. (Courtesy photo)

By Amy Edelen 459-5581

Mullen Technologies recently announced development of an electric SUV preproduction facility in California, but it’s unclear if the company’s new plans will affect the timeline for its proposed electric sports car assembly plant on Spokane’s West Plains.

The company said it began construction earlier this month to transform its high-voltage battery research and development center in Monrovia, California, into a preproduction pilot facility for its MX-05 all-wheel drive electric SUV, which will have a range of 325 miles and start at $55,000, according to a company release.

The pilot facility will employ 100 people and be used to assemble more than 1,000 MX-05 electric SUVs per year, in addition to assembling batteries, according to the company. It will include a research and development facility and warehouse. It would also be used to assemble future vehicle models, such as the company’s MX-03 and MX-07, according to the release.

Construction of the California plant is slated for completion in April with the first MX-05 SUVs delivered to customers in May 2022.

Mullen’s announcement in late September made no mention of its plans to assemble the Dragonfly K50 electric sports car on the West Plains, although the company is continuing to accept pre-orders for the vehicle, which it says will launch in the first half of 2021 using Independent Commercial Importers.

Independent Commercial Importers are entities that have obtained U.S. Environmental Protection Agency credentials to import vehicles into the country, according to a company release.

Mullen Technologies did not respond to a request for comment about the status or timeline of the proposed West Plains facility.

At the 2020 J.P. Morgan Virtual Auto Conference in August, Mullen Automotive CEO Calin Popa said during the company’s presentation that it was in the design phase for the West Plains manufacturing facility and the company would be ready to break ground in the next two months.

Mullen Automotive is a division of Mullen Technologies.

In July, Mullen Technologies renewed a letter of intent with S3R3 Solutions –formerly the West Plains Public Development Authority – that calls for the agency to build and lease 1.3 million square feet of assembly and manufacturing space to produce the Dragonfly K50 electric sports car.

The project is to be financed through a revenue bond that would be paid back through the lease agreement with Mullen Technologies.

Mullen Technologies said in July it intends to meet requirements of the letter of intent with S3R3 Solutions later this year and anticipates starting assembly and development of the Dragonfly K50’s battery packs in a 500,000-square-foot facility that will span an additional 800,000 square feet as battery production expands.

In August, Mullen Technologies announced plans to merge with Miami-based Net Element, a publicly-traded electronic payment company. The reverse merger, a process in which a privately-held company takes control of a publicly traded company, allows Mullen to acquire Net Element and bypass what could be a somewhat lengthy process to go public on its own. It also would provide Mullen with capital needed to grow the company.

The merger is pending due diligence, shareholder and Nasdaq approval.

S3R3 Solutions Executive Director Todd Coleman said in an email the agency’s requirement in the letter of intent with Mullen remain unchanged and according to Mullen Technologies CEO David Michery, Spokane is key to development and production of the company’s future battery technology.

“We continue to monitor the progress of Mullen Technologies and Spokane continues to be a part of their strategic facilities,” he said in the email. “Currently, we are tracking the reverse merger with Net Element. This merger is critical to raising the financing Mullen needs to move its plans forward. There have been many moving parts as their plans mature.”

Mullen Technologies has several subsidiaries, including Mullen Auto Sales, a group of preowned car dealerships in California and Arizona; CarHub, a digital platform for buying and selling cars; Mullen Energy, a division that focuses on advancing battery technology; and Mullen Finance Corp., which offers vehicle leases and loans.