Mullen Automotive (NASDAQ:MULN) stock is in full focus after the company released two 8-K forms. This comes as the Strikingly Different tour heads to Texas for its fourth stop. Notably, the first three stops of the tour were all completely sold out.
The first 8-K form discloses that Mullen had entered into a “Subscription and Investment Representation Agreement” with CEO David Michery. Under the agreement, Michery purchased one newly issued Series AA preferred stock for $25,000 in cash. Shares of MULN stock are currently trading in the 30-cent range, so why exactly did he pay $25,000 for a single share?
Well, the Series AA preferred stock carries 1.3 billion votes. The votes from the share will be counted alongside and be in the “same proportion” as the votes from the company’s common stock and Series A through D preferred stock. In addition, the share is not convertible or exchangeable and is not entitled to receive dividends either.
MULN Stock: CEO David Michery Purchases One Series AA Preferred Share
On top of that, Michery is allowed to redeem his share for $25,000 in cash “automatically upon the approval by the Company’s stockholders of an amendment to the Restated Certificate to implement a reverse stock split.” This hints at the possibility of a reverse stock split in the near future.
The second 8-K form approved a third amendment to Mullen’s bylaws. The amendment lowered the quorum for a stockholders meeting to be at least 33.33% of all shares issued and outstanding that are qualified to vote. Basically, the amendment effectively gives Michery more power over the voting process. The two forms hint heavily at the possibility of a reverse stock split and opposition from shareholders.
On Sept. 9, the Nasdaq notified Mullen that it was in noncompliance with its requirement for a minimum bid price of $1. Mullen has 180 calendar days, or until March 6 of next year, to regain compliance. In order to regain compliance, MULN must have a closing bid price of $1 for at least 10 business days before the deadline. If the $1 bid price is not satisfied by the deadline, Mullen is eligible for another 180-calendar-day extension, but must notify Nasdaq of its plans to do so.
After the submission of the 8-Ks, it seems likely that Mullen is planning to enact a reverse stock split. At a price of 30 cents per share, a 1-for-4 reverse stock split would regain compliance with Nasdaq. If shares rise to 34 cents, a 1-for-3 reverse split would do the trick.
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.
Eddie Pan specializes in institutional investments and insider activity. He writes for InvestorPlace’s Today’s Market team, which centers on the latest news involving popular stocks.
More From InvestorPlace
- Buy This $5 Stock BEFORE This Apple Project Goes Live
- The Best $1 Investment You Can Make Today
- Early Bitcoin Millionaire Reveals His Next Big Crypto Trade “On Air”
- It doesn’t matter if you have $500 or $5 million. Do this now.
The post CEO David Michery Just Got More Power Over Mullen (MULN) Stock appeared first on InvestorPlace.