Shares of Mullen Automotive (NASDAQ:MULN) are in full focus following a filing of a Form 8-K, or a current event filing. The filing details the fourth amendment enacted to an existing securities purchase agreement (SPA) dated June 7, 2022. Under the amendment, Mullen has agreed to issue Series D preferred stock and warrants to Esousa Holdings, Acuitas Capital, Davis-Rice Pty Limited and Ault Lending. The warrants are equal to 185% of the Series D preferred stock purchased while the Series D preferred stock can be converted into common stock.
In exchange, Mullen will receive the remaining commitment amount of $90 million, which will be paid out in two equal tranches on April 17 and May 15. On top of that, the electric vehicle (EV) company has agreed to not enact a reverse stock split during the five days prior to each date.
MULN Stock: Mullen Secures $110 Million
The Form 8-K also revealed that Mullen has entered into three promissory notes worth $20 million on April 3. The notes have an annual interest rate of 15% and will increase to 20% if the interest is not paid on time. In addition, the notes “enumerate events of default, which include, but are not limited to, failure to pay principal and interest, breach of a covenant included in the Securities Purchase Agreement, bankruptcy and delisting of the Company’s common stock.”
Principal and interest for the notes will be due on April 17, just two weeks after the notes were entered into. Interestingly enough, the due date of the note is the same day in which Mullen will receive $45 million from its SPA. This could imply that Mullen will use the proceeds from the SPA to pay off the promissory notes.
Still, the $110 million in funding lines up with a previous press release. In March, the company noted that it expected to receive $110 million in funding by June 1. It also disclosed that it had cash, restricted cash and cash equivalents of $87.4 million as of Feb. 28. With the cash balance and expected funding, Mullen believes that it will be able to operate its business plan over the next 12 months.
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.