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NETE: Net Element Announces LOI for Reverse Merger With Mullen Technologies, Maker of EVs

     NETE: Net Element Announces LOI for Reverse Merger With Mullen Technologies, Maker of Electric Vehicles

Annotation 2020-08-13 081328-1

BREA, California, June 16, 2020 - 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 2019 New York Auto Show 

Qiantu K50 at the NY Auto Show

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.


About Mullen Technologies:

Mullen Technologies is a Southern California-based licensed vehicle manufacturer that operates in various verticals of the businesses, focusing in the automotive industry: Mullen Automotive, Mullen Energy, Mullen Auto Sales, Mullen Funding Corp. and CarHub. Each of these divisions provide Mullen with diversity of different products and services within the automotive industry. For more information, please visit:


Forward-Looking Statements:
This press release contains "forward-looking statements." Words such as "may," "should," "could," "would," "predicts," "potential," "continue," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," and similar expressions, as well as statements in future tense, often signify forward-looking statements. These forward-looking statements include, without limitation, statements relating to the proposed production date of the MX-05 midsize and perceived advantages and future deployment of the solid-state polymer battery technology. These forward-looking statements are, by their nature, subject to significant risks and uncertainties.

Forward-looking statements should not be read as a guarantee of future performance or results and may not be accurate indications of when such performance or results will be achieved. Forward-looking statements are based on information that the Company has when those statements are made or management's good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements, including any changes in the laws, rules and regulations relating to any aspects of the Company's business operations, general economic, market and business conditions, including capital market developments, the actions and developments of the Company's competitors and the effects of competition in the EV industry on the demand for, and price of, the Company's current and proposed products and services, various business opportunities that the Company, and factors beyond the Company's control. As a result of these and other risks, uncertainties and assumptions, forward-looking events and circumstances discussed herein might not occur in the way the Company expects, or at all. Accordingly, you should not place reliance on any forward-looking information or statements. The Company assumes no obligation to publicly update or revise its forward-looking statements as a result of new information, future events or otherwise. All forward-looking statements herein are qualified by reference to the cautionary statements set forth in this section.


For Information, Please Contact:

Mullen Technologies, Inc.
+1 (714) 613-1900

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