Shares of Mullen Automotive (NASDAQ:MULN) are down by about 5% today ahead of the company’s annual meeting of stockholders on Aug. 3. The date of record for the meeting was previously set for close of business on June 22. Shareholders as of that date will be able to cast votes for the 11 proposals outlined in the meeting, which includes a reverse stock split in a ratio between 1-for-2 and 1-for-100 and a state of incorporation change to Maryland from Delaware.
Last month, the emerging electric vehicle (EV) company announced that Bollinger Motors had received a $3 million job creation grant from the state of Michigan. Bollinger, which is majority-owned by Mullen, will receive the grant proceeds upon satisfying job creation milestones over the next five years.
MULN Stock Drops Ahead of Annual Stockholder Meeting
The reverse stock split proposal, or proposal No. 3, seems to be a focal point for the meeting. The proposal is important in order for Mullen to achieve Nasdaq’s $1 minimum stock price continued listing requirement. Back in May, Mullen announced that it had traded above $1 for 10 consecutive business days, before the deadline extension of Sept. 5. It added that it was awaiting confirmation from Nasdaq to confirm that it had met the requirement.
However, it appears that Mullen has not in fact satisfied the $1 minimum price requirement, as it remains on Nasdaq’s Noncompliant Companies list. This is because, in certain situations, the exchange can require a noncompliant company to trade above $1 for more than 10 consecutive business days but generally no more than 20 consecutive business days. Factors that affect the number of days a stock must trade above $1 include price trend, the amount that it has traded above $1, and volume.
The proposal to change Mullen’s state of incorporation to Maryland somewhat ties into the reverse stock split proposal. As explained by Mullen, companies incorporated in Maryland may enact a reverse split without shareholder approval. However, the company may not exceed a a reverse split ratio of more than 1-for-10 over any 12-month period. In addition, Maryland-based companies can also “increase or decrease the aggregate number of authorized shares of stock or the number of shares of any class or series of stock that the Maryland corporation is authorized to issue” without a stockholder vote.
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.
