Tomorrow, Mullen Automotive (NASDAQ:MULN) will hold its special meeting of stockholders. Shareholders will vote on a total of four proposals, as the proposal to move Mullen’s state of incorporation to Maryland from Delaware was withdrawn.

Proposal No. 1 and Proposal No. 2 seem to be the most significant. Proposal No. 1 seeks to enact a reverse stock split amendment in a range between 1-for-2 and 1-for-25. However, the proposal’s verbiage is confusing.

Mullen states that it would not file Proposal No. 1 “prior to the later of March 6, 2023 and 180 days after such date.” March 6 holds significance, as that is the Nasdaq-imposed deadline for shares of MULN stock to trade at a minimum price of $1 for 10 consecutive days. If Mullen fails to satisfy the requirement, it can apply for another 180-day extension as long as Mullen “provides written notice to Nasdaq of its intention to cure the deficiency during the second compliance period by effecting a reverse stock split.” A failure to satisfy the $1 minimum price during the second compliance period could result in delisting from the exchange.

MULN Stock: Mullen to Hold Its Special Meeting of Stockholders Tomorrow

There’s more to the first proposal. Mullen notes that the proposal information highlighted above will only go into effect if it doesn’t file the reverse split amendment before May 1, 2023. The month of May holds significance because that is when the Russell 2000 index conducts its rank day. On rank day, each index member must have a minimum price of $1 to be eligible for inclusion. Mullen was added to the index last June.

Furthermore, Proposal No. 1 states that the company may enact a reverse split “at any time” before December 1, 2023 if shareholders reject Proposal No. 2. Proposal No. 2 seeks to increase the number of authorized common stock to 5 billion from 1.75 billion. That is an increase of 185%. Proposal No. 2 foreshadows the continuation of shareholder dilution, which was been a major contributor to Mullen’s year-to-date decline of more than 95%.

With exchange delisting and index inclusion as major risks, shareholders don’t have much of an option here. The reverse stock split amendment will likely pass. In the event that shareholders vote against consolidation, Proposal No. 5 may provide an escape. That proposal seeks to adjourn the meeting to a later date if the other proposals are not approved.

On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.