Dilution, dilution, dilution. That seems to be the central theme for Mullen Automotive’s (NASDAQ:MULN) annual meeting of stockholders, which will take place on Aug. 3. At the meeting, shareholders will vote on a total of 11 proposals, which involve dilution, performance stock awards for CEO David Michery, a reverse stock split, and more.
Let’s start with proposal number two, which seeks to increase the number of authorized shares under the 2022 Equity Incentive Plan by 52 million. Mullen seems content with rewarding its management, while its shareholders have suffered a 95% loss this year.
The next proposal involves a reverse stock split in a range between 1-for-2 and 1-for-10. Let’s get into the details.
MULN Stock: Mullen Proposes Reverse Split, Move to Maryland
Mullen trades below the $1 Nasdaq threshold and risks being delisted from the exchange. MULN must trade above $1 by Sept. 5, and a reverse stock split in the proper ratio would help shares reach that price target. The electric vehicle (EV) company warned that:
“Delisting could adversely affect the liquidity of our Common Stock since alternatives, such as the OTC Bulletin Board and the pink sheets, are generally considered to be less efficient markets.”
With proposal number four, Mullen looks to gain approval to move its state of incorporation to Maryland from Delaware. It’s interesting that Mullen included this proposal, as they were previously sued for pursuing the same move. Class action participants alleged that a move to Maryland would protect its board of directors from litigation. The class action was eventually dropped, although it led to Mullen rescinding the state of incorporation change proposal. Now, it’s back.
Moving on, proposal number seven involves approving performance stock awards for Michery. These performance rewards involve Michery receiving 1% to 3% of all MULN stock issued and outstanding for milestones such as obtaining full U.S. certification and homologation of the Class 3 EV van by the end of December and for each $25 million earned in revenue.
Finally, proposal number eight seeks approval for issuing an additional $30 million in common stock and warrants pursuant to an existing securities purchase agreement. Mullen’s market capitalization currently tallies in at about $60 million, which means that the issuance is worth half of the current market cap.
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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.
