Shares of Mullen Automotive (NASDAQ:MULN) stock are in the spotlight after the electric vehicle (EV) company announced that it had entered into a letter of agreement (LOA) with Acuitas Capital in connection with an existing securities purchase agreement (SPA). The LOA stated that Acuitas provided Mullen with $20 million of capital on June 1. The remaining $45 million of the SPA will be paid out on June 12.
However, instead of issuing and providing Acuitas with 27.56 million shares of Series D preferred stock as originally agreed upon, Mullen will instead provide Acuitas with 19.43 million shares of issued common stock and pre-funded warrants exercisable for 8.07 million shares of common stock. These warrants have an exercised price of $0.001 and are immediately exercisable. Mullen also provided to Acuitas warrants exercisable for 50.99 million shares of common stock. These warrants have an exercise price of 72.55 cents per share.
Mullen Receives $20 Million Cash Infusion, Announces Resale of MULN Stock
On top of that, Mullen announced a resale of up to 242.12 million shares of common stock this morning. This resale includes common stock issuable upon the exercise of pre-funded warrants and warrants. Meanwhile, Mullen will not receive any proceeds from the sale of common stock by its selling stockholders.
In the Risk Factors section of the resale, the company warned that “Our outstanding shares of convertible preferred stock contain anti-dilution protection, which may cause significant dilution to our stockholders.” Additionally, it said “Our commitments to issue shares of Common Stock or securities that are convertible into shares of Common Stock may cause significant dilution to our stockholders.”
So, who exactly are the selling stockholders? The three largest selling stockholders with respect to the maximum number of shares of common stock to be sold pursuant to the resale are Acuitas Capital, the Michael Wachs 2022 Dynasty Trust, and Davis-Rice Pty Limited. Acuitas is eligible to resell 161.17 million shares. Meanwhile, the Wachs Trust can resell 53.22 million shares, and Davis-Rice can resell 22.89 million shares.
As warned by Mullen, this resale means that millions of shares of MULN stock will likely hit the market, which can have dilutive effects on shareholders.
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.