Mullen Automotive (NASDAQ:MULN) held its special meeting of stockholders earlier today, and the preliminary results showed that shareholders voted in favor of Proposal No. 2, which seeks to increase authorized common stock to 5 billion from 1.75 billion. The final results for the proposal will be released within four business days via a Form 8-K. Generally, preliminary and final results offer the same outcome.
This doesn’t mean that shares of common stock will automatically go up to 5 billion pending the final results. Rather, it gives Mullen’s board the authority to issue up to 5 billion shares. During the meeting, Mullen did not provide any details on when or if it will do this.
The most likely scenario is that Mullen will slowly issue additional shares of common stock over time. Issuing additional equity will provide the electric vehicle (EV) company with funds to sustain its business operations and production plans. On the other hand, new shares will dilute existing shareholders.
MULN Stock Holders Preliminarily Approve Proposal No. 2
Meanwhile, Proposals No. 1 and No. 4 were approved at Mullen’s previous special meeting of stockholders on Jan. 19. The final results for these proposals have already been released.
Proposal No. 1 is a reverse stock split amendment in the range between 1-for-2 and 1-for-25. Meanwhile, Proposal No. 4 seeks to issue additional notes and Series D preferred stock. In addition, Proposal No. 1 carries a relationship with Proposal No. 2. If Proposal No. 2 were to be voted against by shareholders, then Mullen’s board would have the power to enact a reverse stock split at any time before Dec. 1.
During today’s special meeting, CEO David Michery noted that, “The company has no plans at the current time to effect a reverse stock split.”
This lines up with the stipulations of Proposal No. 1, which notes that the reverse stock split “amendment will not be filed prior to the later of March 6, 2023 and 180 days after such date,” which is Sept. 6. This statement will only hold true if Mullen chooses not to file the amendment before May 1, unless it does so in order to meet the minimum price of $1 necessary for Russell 2000 inclusion.
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.