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Shareholders of Net Element (NASDAQ:NETE) have approved the merger with Mullen Technologies and we expect the deal to close shortly. A capital raise is the final condition for the merger and we believe the receipt of the cash will determine the merger date. After the merger, all that will be left in the public company will be Mullen’s EV business. The dealerships are not included. The payment processing business will be divested from the entity just before the merger closes. After the merger the company plans to trade under the ticker MULN and will be renamed Mullen Automotive, Inc. The surviving public company will continue to make all normal 10Q and other filings.
The last financials given for Mullen are as of April 30, 2021. Then Mullen’s cash and cash equivalents amounted to $241,771 and its total debt amounted to $33 million, of which approximately $10.0 million will convert into shares of Series C Preferred Stock at the time of the merger. On a pro forma basis, Mullen would have looked as follows with a loss for 2020 of $28.3 million and liabilities of $47 million.
Recently Mullen announced that this month it would begin the final stages of engineering and the dry fit process of the Mullen FIVE in Irvine, California. The FIVE is built on an EV crossover skateboard platform that offers multiple powertrain configurations and trim levels which the company describes as a svelt design that is Strikingly Different™ and exciting to experience in person. Mullen is expects the FIVE to debut in November.
At its current enterprise value of $64 million, the stock is getting no premium for its pending merger and is even undervalued on its card processing business. The closing of the transaction is now conditional on the completion of a capital raise of $10 million. Net Element shareholders are expected to own at minimum 15% of the surviving company. If Net Element provides additional capital to Mullen in the way of notes, Net Element shareholders are entitled to an additional equity. At Net Element’s current fully diluted enterprise value of $64 million and a 15% holding, this puts the entire valuation of Mullen Technologies at $427 million.
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