Mullen Automotive Inc. Announces 1-for-100 Reverse Stock Split Effective December 21, 2023
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Insights
The announcement of Mullen Automotive Inc.'s 1-for-100 reverse stock split is a critical financial maneuver aimed at addressing the company's compliance with Nasdaq's minimum bid price requirement. This strategic decision is a response to the potential risk of being delisted if the stock price remains below $1.00. Reverse stock splits are often seen as a short-term measure to boost the nominal share price and in this case, it's a direct attempt to meet exchange listing standards.
From a financial perspective, while the split does not inherently change the company's market capitalization, it can lead to a negative market perception, as reverse splits are typically associated with companies in distress. For current shareholders, the consolidation of shares could result in increased market volatility due to a reduced number of shares available for trading. It's also important to note that while percentage ownership isn't materially affected, the rounding up of fractional shares can lead to a slight dilution of existing shareholders' equity.
In the long term, the success of this reverse stock split will largely depend on the company's operational performance and its ability to sustain a higher stock price. Investors should closely monitor the company's progress and future financial results, as the reverse split alone does not address underlying business challenges. The adjustments to equity awards, warrants, convertible notes and preferred stock conversion prices will also need to be scrutinized for their impact on the company's financial incentives and capital structure.
The reverse stock split by Mullen Automotive Inc. is a significant corporate action that requires a thorough understanding of the legal implications. The company has followed due process by obtaining stockholder approval and filing a Certificate of Amendment to its Certificate of Incorporation. The legal ramifications of not complying with Nasdaq's listing requirements could be severe, potentially leading to delisting. Such a move would have substantial consequences for the company's ability to raise capital and for investor confidence.
It is also essential to consider the effects on contracts and securities tied to the common stock, such as equity awards and convertible securities. The proportional adjustments are a standard procedure to ensure equitable treatment of all securities holders. However, the lack of adjustment to the number of shares reserved for issuance under the equity incentive plan could be a point of contention, as it may affect future compensation structures and dilution rates.
Furthermore, the legal aspect of rounding up fractional shares to the nearest whole share has been addressed to avoid the complexities and potential disputes that issuing fractional shares could entail. This decision, while seemingly minor, can have material financial effects, especially in the case of a significant number of fractional shares resulting from the reverse split.
The market's reaction to Mullen Automotive Inc.'s reverse stock split will be a key indicator of investor sentiment towards the company's financial health and future prospects. Historically, reverse stock splits have not guaranteed long-term success and can be viewed as a red flag by investors. Market analysts will be watching for changes in trading volume and price stability post-split, as these will be critical indicators of the market's confidence in the company's turnaround strategy.
Additionally, the reverse stock split may affect liquidity, which in turn can influence the stock's volatility. A decrease in the number of shares outstanding often leads to a decrease in liquidity, making the stock more susceptible to price swings. Analysts will also be considering the broader implications of this move on the electric vehicle industry, as it may signal broader challenges faced by emerging companies in this sector.
It is also notable that the reverse stock split will not change the authorized number of shares or the par value, which implies that the company retains the ability to issue more shares in the future, potentially leading to dilution. Market analysts will consider this when evaluating the company's capital raising strategies and its implications for future growth and financial stability.
BREA, Calif., Dec. 19, 2023 (GLOBE NEWSWIRE) -- via IBN -- Mullen Automotive Inc. (NASDAQ: MULN) (“Mullen” or the “Company”), an emerging electric vehicle manufacturer, announced today that it will effect a 1-for-100 reverse stock split (“Reverse Stock Split”) of its common stock, par value
At the Company’s 2023 Special Meeting of Stockholders held on December 15, 2023, and reconvened on December 18, 2023, the Company’s stockholders approved a proposal to authorize a reverse stock split of the Company’s Common Stock at a ratio within the range of 1-for-2 to 1-for-100. The Company’s board of directors approved a 1-for-100 reverse split ratio, and the Company will file a Certificate of Amendment to its Second Amended and Restated Certificate of Incorporation to effect the Reverse Stock Split effective December 21, 2023.
The Reverse Stock Split is primarily intended to bring the Company into compliance with the
The 1-for-100 reverse stock split will automatically combine and convert one hundred current shares of the Company’s Common Stock into one issued and outstanding share of Common Stock. Proportional adjustments may be made to outstanding equity awards, warrants and convertible notes, and certain existing agreements pursuant to their terms; however, pursuant to the terms of the Company’s 2022 Equity Incentive Plan, as amended, the number of shares then reserved for issuance under such plan will not be adjusted based upon the Reverse Stock Split ratio. Proportionate adjustments will also be made to the per share conversion price of the Company’s series of preferred stock, pursuant to their respective terms. The Reverse Stock Split will not change the par value of the Common Stock nor the authorized number of shares of Common Stock, preferred stock or any series of preferred stock.
No fractional shares will be issued in connection with the Reverse Stock Split. All fractional shares will be rounded up to the nearest whole share. The Reverse Stock Split will affect all stockholders uniformly and will not alter any stockholder’s percentage interest in the Company’s equity (other than as a result of the rounding of shares to the nearest whole share in lieu of issuing fractional shares).
The Company’s transfer agent, Continental Stock Transfer & Trust Company, will serve as exchange agent for the Reverse Stock Split. Registered stockholders holding pre-split shares of the Company’s Common Stock electronically in book-entry form are not required to take any action to receive post-split shares. Stockholders owning shares via a broker, bank, trust or other nominee will have their positions automatically adjusted to reflect the Reverse Stock Split, subject to such broker’s particular processes, and will not be required to take any action in connect with the Reverse Stock Split.
About Mullen
Mullen Automotive (NASDAQ: MULN) is a Southern California-based automotive company building the next generation of electric vehicles (“EVs”) that will be manufactured in its two United States-based assembly plants. Mullen's EV development portfolio includes the Mullen FIVE EV Crossover, Mullen-GO Commercial Urban Delivery EV, Mullen Commercial Class 1 -3 EVs and Bollinger Motors, which features both the B1 and B2 electric SUV trucks and Class 4-6 commercial offerings. On Sept. 7, 2022, Bollinger Motors became a majority-owned EV truck company of Mullen Automotive, and on Dec. 1, 2022, Mullen closed on the acquisition of all of Electric Last Mile Solutions' (“ELMS”) assets, including all IP and a 650,000-square-foot plant in Mishawaka, Indiana.
To learn more about the Company, visit www.MullenUSA.com.
Forward-Looking Statements
Certain statements in this press release that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Exchange Act of 1934, as amended. Any statements contained in this press release that are not statements of historical fact may be deemed forward-looking statements. Words such as "continue," "will," "may," "could," "should," "expect," "expected," "plans," "intend," "anticipate," "believe," "estimate," "predict," "potential" and similar expressions are intended to identify such forward-looking statements. All forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements, many of which are generally outside the control of Mullen and are difficult to predict. Examples of such risks and uncertainties include but are not limited to how Mullen’s stock will perform after the Reverse Stock Split, Mullen’s ability to timely implement the Reverse Stock Split, the success of the Reverse Stock Split, and Mullen’s ability to regain compliance with the Nasdaq Listing standards. Additional examples of such risks and uncertainties include but are not limited to: (i) Mullen’s ability (or inability) to obtain additional financing in sufficient amounts or on acceptable terms when needed; (ii) Mullen's ability to maintain existing, and secure additional, contracts with manufacturers, parts and other service providers relating to its business; (iii) Mullen’s ability to successfully expand in existing markets and enter new markets; (iv) Mullen’s ability to successfully manage and integrate any acquisitions of businesses, solutions or technologies; (v) unanticipated operating costs, transaction costs and actual or contingent liabilities; (vi) the ability to attract and retain qualified employees and key personnel; (vii) adverse effects of increased competition on Mullen’s business; (viii) changes in government licensing and regulation that may adversely affect Mullen’s business; (ix) the risk that changes in consumer behavior could adversely affect Mullen’s business; (x) Mullen’s ability to protect its intellectual property; and (xi) local, industry and general business and economic conditions. Additional factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements can be found in the most recent annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K filed by Mullen with the Securities and Exchange Commission. Mullen anticipates that subsequent events and developments may cause its plans, intentions and expectations to change. Mullen assumes no obligation, and it specifically disclaims any intention or obligation, to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by law. Forward-looking statements speak only as of the date they are made and should not be relied upon as representing Mullen’s plans and expectations as of any subsequent date.
Contact:
Mullen Automotive Inc.
+1 (714) 613-1900
www.MullenUSA.com
Corporate Communications:
InvestorBrandNetwork (IBN)
Los Angeles, California
www.InvestorBrandNetwork.com
310.299.1717 Office
Editor@InvestorBrandNetwork.com
FAQ
What is the reason behind Mullen Automotive Inc.'s reverse stock split?
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