Note 19 - Contingencies and Claims	6 Months Ended
Mar. 31, 2025
Notes to Financial Statements
Commitments and Contingencies Disclosure [Text Block]	NOTE 19 – CONTINGENCIES AND CLAIMS Occasionally, we are subject to asserted and actual claims and lawsuits arising in the ordinary course of business. Company management reviews any such legal proceedings and claims on an ongoing basis and follows appropriate accounting guidance when making accrual and disclosure decisions. As required by ASC 450, we recognize accruals for contingencies when incurrence of a loss is probable (likely to occur) and can be reasonably estimated, and disclose the amount accrued and the amount of a reasonably possible loss over the amount accrued if such disclosure is necessary for our consolidated financial statements. When the likelihood is not probable or when the likelihood is probable, but the amount cannot be reasonably estimated, liabilities are not recognized. To estimate whether a loss contingency should be accrued, management evaluates, among other factors, the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of the loss. The outcomes of our legal proceedings and other contingencies are inherently unpredictable, subject to significant uncertainties. They could be material to our operating results and cash flows for a particular period. At least quarterly, we evaluate developments in our legal proceedings and other contingencies that could affect the amount of liability, including amounts over any previous accruals and reasonably possible losses disclosed, and make adjustments and changes to our accruals and disclosures as appropriate. For the matters disclosed below without an estimate of the amount of loss or range of losses, such an estimate is not possible or is immaterial, and we may be unable to estimate the possible loss or range of losses that could potentially result from the application of non-monetary remedies. Until the final resolution of such matters, if any of our estimates and assumptions change or prove to have been incorrect, we may experience losses over the amounts recorded, which could have a material effect on our business, consolidated financial position, results of operations, or cash flows. *The GEM Group* On September 21, 2021, the GEM Group ("GEM") filed an arbitration demand and statement of claim against Mullen seeking declaratory relief and damages. This matter arises out of an alleged breach of a securities purchase agreement dated November 13, 2020. On November 17, 2023, the arbitrator issued the Partial Final Award on Liability finding that Mullen and Mullen Technologies, Inc. (“MTI”) had repudiated and breached the securities purchase agreement and a related agreement (the “GEM Agreements”). On January 29, 2024, the parties completed the briefing on the issues of damages and allocation. On May 10, 2024, the arbitrator issued his final award, awarding the GEM Group $26.8 million in damages for breach of the relevant agreements, and $3.8 million in attorney fees and certain administrative costs. The unpaid amount also generates interest at 9% per annum. On August 3, 2023, the Arbitrator ordered Mullen to deposit $7.0 million into an interest-bearing escrow account with a commercial bank or brokerage firm. That amount has been released to GEM. On January 24, 2024, the arbitrator ordered Mullen to deposit an additional $24.1 million into escrow on or before March 9, 2024. GEM has moved in the United States District Court to confirm that second interim order. On June 11, 2024, the United States District Court confirmed that order. On or about On December 28, 2023, Mullen and MTI filed a complaint against GEM and Christopher F. Brown in the United States District Court for the Southern District of New York alleging, among other things, that the GEM Group and Mr. Brown engaged in an unlawful securities transaction under the federal securities laws by entering into the GEM Agreements while GEM was operating as an unregistered dealer. The complaint seeks an order declaring, among other things, that the GEM Agreements are void ab initio. On April 8, 2024, the District Court stayed that action. On or about July 10, 2024, Mullen moved in the United States District Court for the Southern District of New York for an order vacating the arbitration awards and denying GEM’s anticipated motion to confirm those awards. On or about August 7, 2024, GEM filed an opposition to Mullen’s motion to vacate and cross-moved to confirm the arbitration awards. On or about August 21, 2024, Mullen filed a reply to GEM’s opposition. On February 6, 2025, The District Court affirmed the arbitration award and denied Mullen’s motion to vacate the award, ordering that the award be satisfied no later than May 7, 2025. The GEM Group issued a restraining notice on or about April 25, 2025, to Mullen and MTI pursuant to Rule 69 of the Federal Rules of Civil Procedure and Section 5222(b) of the New York Civil Practice Law and Rules. On May 9, 2025, Mullen and GEM executed a settlement agreement (the “Agreement”) in an effort to fully resolve all outstanding legal disputes between the parties. Under the terms of the Agreement, GEM has a 55-day due diligence period, subject to extension by GEM, to evaluate the transfer to GEM of the manufacturing plant located in Mishawaka, Indiana, and other related assets in complete satisfaction of the aforementioned award. On May 13, 2025, GEM withdrew the restraining notices that it issued to Mullen on April 25, 2025. However, if the relevant conditions agreed to in the Agreement are not satisfied, the judgment entered against Mullen in this action may be reinstated. The Company has accrued $31.2 million as a probable settlement expense as of March 31, 2025 (in addition to $7 million that has been paid earlier). The assets to be transferred to GEM are presented separately on the consolidated balance sheet as “Noncurrent assets held for sale due to settlement”. In addition, the Company recorded a $250,000 legal accrual associated with the settlement, classified under general and administrative expenses. *Bollinger Motors* On March 21, 2025, Robert Bollinger filed a complaint against Bollinger Motors, Inc., a majority-owned subsidiary of the Company, in the U.S. District Court for the Eastern District of Michigan. In the complaint, Mr. Bollinger alleges breach of contract in connection with failure by Bollinger Motors to make a payment under the Amended and Restated Secured Promissory Note for $10.0 million entered into on October 24, 2024 (the “Bollinger Note”). Mr. Bollinger is seeking $10.5 million plus interest, attorney’s fees and costs and other damages arising from the breach and the appointment of a receiver over Bollinger Motors. Pursuant to its terms, the Bollinger Note bears interest at 15% per annum, with interest-only payments starting November 29, 2024, and principal repayment due by October 30, 2026, or earlier, upon an event of default. The Bollinger Note is secured by assets of Bollinger Motors, excluding inventory and certain intellectual property that does not relate to commercial vehicles. On March 24, 2025, Mr. Bollinger filed an emergency motion to appoint a receiver of Bollinger Motors and on May 7, 2025, the court entered an order placing Bollinger Motors into receivership and appointing a receiver to manage its affairs. *Mullen Stockholder Litigation* In re Mullen Automotive Inc. Securities Litigation. On May 5, 2022, Plaintiff Margaret Schaub, a purported stockholder, filed a putative class action complaint in the United States District Court for the Central District of California against the Company, as well as its Chief Executive Officer, David Michery, and the Chief Executive Officer of a predecessor entity, Oleg Firer (the “Schaub Lawsuit”). The Schaub Lawsuit was brought by Schaub both individually and on behalf of a putative class of purchasers of the Company’s securities, claiming false or misleading statements regarding the Company’s business partnerships, technology, and manufacturing capabilities, and alleging violations of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder. On September 23, 2022, a court-appointed lead plaintiff filed a Consolidated Amended Class Action Complaint against the Company, Mr. Michery, and the Company’s predecessor, Mullen Technologies, Inc., premised on the same purported violations of the Exchange Act and Rule 10b-5, seeking to certify a putative class of shareholders, and seeking an award of monetary damages, as well as reasonable fees and expenses. On August 14, 2024, the parties entered a Stipulation and Agreement of Settlement to settle the securities class action matter subject to payment of $5.4 million by the Company and $1.8 million by the Company's D&O insurers. The settlement is subject to the court's final approval. The Company has paid $5.4 million as an expected settlement amount by March 31, 2025. In re Mullen Automotive Inc. Derivative Litigation. On August 1, 2022, Jeff Witt and Joseph Birbigalia, purported stockholders, filed a derivative action in the United States District Court for the Central District of California against the Company as a nominal defendant, Mr. Michery, Mr. Firer, and current or former Company directors Ignacio Novoa, Mary Winter, Kent Puckett, Mark Betor, William Miltner and Jonathan New (the “Witt Lawsuit”). The Witt lawsuit asserts claims for breach of fiduciary duty, unjust enrichment, abuse of control, waste of corporate assets, and violation of Section 14 of the Exchange Act primarily in connection with the issues and claims asserted in the Schaub Lawsuit. The Witt Lawsuit seeks monetary damages, as well as an award of reasonable fees and expenses. The case currently is stayed. On August 21, 2024, the parties entered a Stipulation and Agreement of Settlement to settle the derivative matter subject to certain governance enhancements and payment of $500,000 in attorney's fees to be paid by the Company's D&O insurers. Notice of this settlement can be found on the Investor Relations page of the Company’s website. Final approval of the settlement was granted by the court on January 24, 2025. Chosten Caris v. David Michery. On April 27, 2023, Chosten Caris, a purported stockholder, filed a complaint against Mr. Michery in the Eighth Judicial Circuit in and for Alachua County, Florida (the “Caris Lawsuit”). On May 17, 2023, Mr. Michery removed the Caris Lawsuit to the United States District Court for the Northern District of Florida. This lawsuit purports to seek damages for claims arising under Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder. The Caris Lawsuit is currently stayed. No loss contingencies have been accrued in connection with this matter as of March 31, 2025, because the Company cannot reasonably estimate either the probability of a loss or its magnitude (if any) based on all information currently available to management. Trinon Coleman v. David Michery et al. On December 8, 2023, Trinon Coleman, a purported stockholder, filed a derivative action in the Court of Chancery for the State of Delaware against the Company as a nominal defendant, Mr. Michery, and Company directors Mr. Puckett, Ms. Winter, Mr. Betor, Mr. Miltner, and Mr. New (the “Coleman Lawsuit”). This lawsuit asserts claims for breach of fiduciary duty, insider trading, and unjust enrichment primarily in connection with the issues and claims asserted in the Schaub Lawsuit. The Coleman Lawsuit seeks to direct the Company to improve its corporate governance and internal procedures and seeks monetary damages and an award of reasonable fees and expenses. The case currently is stayed. No loss contingencies have been accrued in connection with this matter as of March 31, 2025, because the Company cannot reasonably estimate either the probability of a loss or its magnitude (if any) based on all information currently available to management. Jennifer Maloney v. Mullen Automotive, Inc., et al. On February 12, 2025, Plaintiff Jennifer Maloney, a purported stockholder, filed a putative class action complaint in the United States District Court for the Central District of California against the Company, as well as its Chief Executive Officer, David Michery, and its Chief Financial Officer, Jonathan New (the “Maloney Lawsuit”). The Maloney Lawsuit was brought by Maloney both individually and on behalf of a putative class of purchasers of the Company’s securities, claiming false or misleading statements regarding the Company’s business partnerships, technology, and financing, and alleging violations of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder. No loss contingencies have been accrued in connection with this matter as of March 31, 2025, because the Company cannot reasonably estimate either the probability of a loss or its magnitude (if any) based on all information currently available to management. Cayden Crume v. Mullen Automotive, Inc., et al. On March 26, 2025, Plaintiffs Cayden Crume, James LeGrand, and Todd Holton; purported stockholders, filed a putative class action complaint in the United States District Court for the Central District of California against the Company, as well as Mr. New, and Mr. Firer (the “Crume Lawsuit”). The Crume Lawsuit was brought by Plaintiffs both individually and on behalf of a putative class of purchasers of the Company’s securities, alleging unjust enrichment and violations of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder. No loss contingencies have been accrued in connection with this matter as of March 31, 2025, because the Company cannot reasonably estimate either the probability of a loss or its magnitude (if any) based on all information currently available to management. In re Mullen Automotive Inc. Morga Derivative Litigation. On April 8, 2025, Gary Morga, a purported stockholder, filed a derivative action in the United States District Court for the Central District of California against the Company as a nominal defendant, Mr. Michery, and current or former Company directors Mr. New, Mr. Andersen, Mr. Betor, Mr. Miltner, Mr. Novoa, and Ms. Winter (the “Witt Lawsuit”). The Morga lawsuit asserts claims for breach of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement, and waste of corporate assets. It asserts one claim for violations of Section 10(b) and 21D of the Exchange Act against Mr. Michery and Mr. New.

Note 19 - Contingencies and Claims

6 Months Ended

Mar. 31, 2025

Commitments and Contingencies Disclosure [Text Block]

NOTE 19 – CONTINGENCIES AND CLAIMS

Occasionally, we are subject to asserted and actual claims and lawsuits arising in the ordinary course of business. Company management reviews any such legal proceedings and claims on an ongoing basis and follows appropriate accounting guidance when making accrual and disclosure decisions. As required by ASC 450, we recognize accruals for contingencies when incurrence of a loss is probable (likely to occur) and can be reasonably estimated, and disclose the amount accrued and the amount of a reasonably possible loss over the amount accrued if such disclosure is necessary for our consolidated financial statements. When the likelihood is not probable or when the likelihood is probable, but the amount cannot be reasonably estimated, liabilities are not recognized. To estimate whether a loss contingency should be accrued, management evaluates, among other factors, the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of the loss.

The outcomes of our legal proceedings and other contingencies are inherently unpredictable, subject to significant uncertainties. They could be material to our operating results and cash flows for a particular period. At least quarterly, we evaluate developments in our legal proceedings and other contingencies that could affect the amount of liability, including amounts over any previous accruals and reasonably possible losses disclosed, and make adjustments and changes to our accruals and disclosures as appropriate. For the matters disclosed below without an estimate of the amount of loss or range of losses, such an estimate is not possible or is immaterial, and we may be unable to estimate the possible loss or range of losses that could potentially result from the application of non-monetary remedies. Until the final resolution of such matters, if any of our estimates and assumptions change or prove to have been incorrect, we may experience losses over the amounts recorded, which could have a material effect on our business, consolidated financial position, results of operations, or cash flows.

The GEM Group

On September 21, 2021, the GEM Group ("GEM") filed an arbitration demand and statement of claim against Mullen seeking declaratory relief and damages. This matter arises out of an alleged breach of a securities purchase agreement dated November 13, 2020. On November 17, 2023, the arbitrator issued the Partial Final Award on Liability finding that Mullen and Mullen Technologies, Inc. (“MTI”) had repudiated and breached the securities purchase agreement and a related agreement (the “GEM Agreements”). On January 29, 2024, the parties completed the briefing on the issues of damages and allocation. On May 10, 2024, the arbitrator issued his final award, awarding the GEM Group $26.8 million in damages for breach of the relevant agreements, and $3.8 million in attorney fees and certain administrative costs. The unpaid amount also generates interest at 9% per annum.

On August 3, 2023, the Arbitrator ordered Mullen to deposit $7.0 million into an interest-bearing escrow account with a commercial bank or brokerage firm. That amount has been released to GEM. On January 24, 2024, the arbitrator ordered Mullen to deposit an additional $24.1 million into escrow on or before March 9, 2024. GEM has moved in the United States District Court to confirm that second interim order. On June 11, 2024, the United States District Court confirmed that order.

On or about On December 28, 2023, Mullen and MTI filed a complaint against GEM and Christopher F. Brown in the United States District Court for the Southern District of New York alleging, among other things, that the GEM Group and Mr. Brown engaged in an unlawful securities transaction under the federal securities laws by entering into the GEM Agreements while GEM was operating as an unregistered dealer. The complaint seeks an order declaring, among other things, that the GEM Agreements are void ab initio. On April 8, 2024, the District Court stayed that action.

On or about July 10, 2024, Mullen moved in the United States District Court for the Southern District of New York for an order vacating the arbitration awards and denying GEM’s anticipated motion to confirm those awards. On or about August 7, 2024, GEM filed an opposition to Mullen’s motion to vacate and cross-moved to confirm the arbitration awards. On or about August 21, 2024, Mullen filed a reply to GEM’s opposition. On February 6, 2025, The District Court affirmed the arbitration award and denied Mullen’s motion to vacate the award, ordering that the award be satisfied no later than May 7, 2025. The GEM Group issued a restraining notice on or about April 25, 2025, to Mullen and MTI pursuant to Rule 69 of the Federal Rules of Civil Procedure and Section 5222(b) of the New York Civil Practice Law and Rules.

On May 9, 2025, Mullen and GEM executed a settlement agreement (the “Agreement”) in an effort to fully resolve all outstanding legal disputes between the parties. Under the terms of the Agreement, GEM has a 55-day due diligence period, subject to extension by GEM, to evaluate the transfer to GEM of the manufacturing plant located in Mishawaka, Indiana, and other related assets in complete satisfaction of the aforementioned award. On May 13, 2025, GEM withdrew the restraining notices that it issued to Mullen on April 25, 2025. However, if the relevant conditions agreed to in the Agreement are not satisfied, the judgment entered against Mullen in this action may be reinstated.

The Company has accrued $31.2 million as a probable settlement expense as of March 31, 2025 (in addition to $7 million that has been paid earlier). The assets to be transferred to GEM are presented separately on the consolidated balance sheet as “Noncurrent assets held for sale due to settlement”. In addition, the Company recorded a $250,000 legal accrual associated with the settlement, classified under general and administrative expenses.

Bollinger Motors

On March 21, 2025, Robert Bollinger filed a complaint against Bollinger Motors, Inc., a majority-owned subsidiary of the Company, in the U.S. District Court for the Eastern District of Michigan. In the complaint, Mr. Bollinger alleges breach of contract in connection with failure by Bollinger Motors to make a payment under the Amended and Restated Secured Promissory Note for $10.0 million entered into on October 24, 2024 (the “Bollinger Note”). Mr. Bollinger is seeking $10.5 million plus interest, attorney’s fees and costs and other damages arising from the breach and the appointment of a receiver over Bollinger Motors. Pursuant to its terms, the Bollinger Note bears interest at 15% per annum, with interest-only payments starting November 29, 2024, and principal repayment due by October 30, 2026, or earlier, upon an event of default. The Bollinger Note is secured by assets of Bollinger Motors, excluding inventory and certain intellectual property that does not relate to commercial vehicles. On March 24, 2025, Mr. Bollinger filed an emergency motion to appoint a receiver of Bollinger Motors and on May 7, 2025, the court entered an order placing Bollinger Motors into receivership and appointing a receiver to manage its affairs.

Mullen Stockholder Litigation

In re Mullen Automotive Inc. Securities Litigation.

On May 5, 2022, Plaintiff Margaret Schaub, a purported stockholder, filed a putative class action complaint in the United States District Court for the Central District of California against the Company, as well as its Chief Executive Officer, David Michery, and the Chief Executive Officer of a predecessor entity, Oleg Firer (the “Schaub Lawsuit”). The Schaub Lawsuit was brought by Schaub both individually and on behalf of a putative class of purchasers of the Company’s securities, claiming false or misleading statements regarding the Company’s business partnerships, technology, and manufacturing capabilities, and alleging violations of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder.

On September 23, 2022, a court-appointed lead plaintiff filed a Consolidated Amended Class Action Complaint against the Company, Mr. Michery, and the Company’s predecessor, Mullen Technologies, Inc., premised on the same purported violations of the Exchange Act and Rule 10b-5, seeking to certify a putative class of shareholders, and seeking an award of monetary damages, as well as reasonable fees and expenses. On August 14, 2024, the parties entered a Stipulation and Agreement of Settlement to settle the securities class action matter subject to payment of $5.4 million by the Company and $1.8 million by the Company's D&O insurers. The settlement is subject to the court's final approval.

The Company has paid $5.4 million as an expected settlement amount by March 31, 2025.

In re Mullen Automotive Inc. Derivative Litigation.

On August 1, 2022, Jeff Witt and Joseph Birbigalia, purported stockholders, filed a derivative action in the United States District Court for the Central District of California against the Company as a nominal defendant, Mr. Michery, Mr. Firer, and current or former Company directors Ignacio Novoa, Mary Winter, Kent Puckett, Mark Betor, William Miltner and Jonathan New (the “Witt Lawsuit”). The Witt lawsuit asserts claims for breach of fiduciary duty, unjust enrichment, abuse of control, waste of corporate assets, and violation of Section 14 of the Exchange Act primarily in connection with the issues and claims asserted in the Schaub Lawsuit. The Witt Lawsuit seeks monetary damages, as well as an award of reasonable fees and expenses. The case currently is stayed.

On August 21, 2024, the parties entered a Stipulation and Agreement of Settlement to settle the derivative matter subject to certain governance enhancements and payment of $500,000 in attorney's fees to be paid by the Company's D&O insurers. Notice of this settlement can be found on the Investor Relations page of the Company’s website. Final approval of the settlement was granted by the court on January 24, 2025.

Chosten Caris v. David Michery.

On April 27, 2023, Chosten Caris, a purported stockholder, filed a complaint against Mr. Michery in the Eighth Judicial Circuit in and for Alachua County, Florida (the “Caris Lawsuit”). On May 17, 2023, Mr. Michery removed the Caris Lawsuit to the United States District Court for the Northern District of Florida. This lawsuit purports to seek damages for claims arising under Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder. The Caris Lawsuit is currently stayed.

No loss contingencies have been accrued in connection with this matter as of March 31, 2025, because the Company cannot reasonably estimate either the probability of a loss or its magnitude (if any) based on all information currently available to management.

Trinon Coleman v. David Michery et al.

On December 8, 2023, Trinon Coleman, a purported stockholder, filed a derivative action in the Court of Chancery for the State of Delaware against the Company as a nominal defendant, Mr. Michery, and Company directors Mr. Puckett, Ms. Winter, Mr. Betor, Mr. Miltner, and Mr. New (the “Coleman Lawsuit”). This lawsuit asserts claims for breach of fiduciary duty, insider trading, and unjust enrichment primarily in connection with the issues and claims asserted in the Schaub Lawsuit. The Coleman Lawsuit seeks to direct the Company to improve its corporate governance and internal procedures and seeks monetary damages and an award of reasonable fees and expenses. The case currently is stayed.

Jennifer Maloney v. Mullen Automotive, Inc., et al.

On February 12, 2025, Plaintiff Jennifer Maloney, a purported stockholder, filed a putative class action complaint in the United States District Court for the Central District of California against the Company, as well as its Chief Executive Officer, David Michery, and its Chief Financial Officer, Jonathan New (the “Maloney Lawsuit”). The Maloney Lawsuit was brought by Maloney both individually and on behalf of a putative class of purchasers of the Company’s securities, claiming false or misleading statements regarding the Company’s business partnerships, technology, and financing, and alleging violations of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder.

Cayden Crume v. Mullen Automotive, Inc., et al.

On March 26, 2025, Plaintiffs Cayden Crume, James LeGrand, and Todd Holton; purported stockholders, filed a putative class action complaint in the United States District Court for the Central District of California against the Company, as well as Mr. New, and Mr. Firer (the “Crume Lawsuit”). The Crume Lawsuit was brought by Plaintiffs both individually and on behalf of a putative class of purchasers of the Company’s securities, alleging unjust enrichment and violations of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder.

In re Mullen Automotive Inc. Morga Derivative Litigation.

On April 8, 2025, Gary Morga, a purported stockholder, filed a derivative action in the United States District Court for the Central District of California against the Company as a nominal defendant, Mr. Michery, and current or former Company directors Mr. New, Mr. Andersen, Mr. Betor, Mr. Miltner, Mr. Novoa, and Ms. Winter (the “Witt Lawsuit”). The Morga lawsuit asserts claims for breach of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement, and waste of corporate assets. It asserts one claim for violations of Section 10(b) and 21D of the Exchange Act against Mr. Michery and Mr. New.