The new Mullen Automotive (NASDAQ:MULN) $45m funding has been delayed for June 12.
The company filed aĀ Form 8-K disclosing that Mullenās reception of $45 million in connection with anĀ existing securities purchase agreementĀ (SPA) would be pushed back from May 15 to June 12.
Mullen Automotive had previously agreed to issue Series D preferred stock and warrants to Esousa HoldingsĀ andĀ Acuitas Capital, in exchange for $90 million, part of a $110 million deal.
The Series D preferred stock isĀ convertible into common stock.
The warrants are equal to 185% of the Series D preferred stock purchased, originally 110%.
$45 million of that $90 million was received on April 17.
The second payment was scheduled to be received on May 15 but has been delayed for June 12.
Mullen did not provide a reason for the delay, other than that Mullen and each of the buyers in the SPA had agreed to delay the issuance of Series D preferred stock and warrants until Mullen receives the $45 million, per IP.
A note in the company’s lastĀ earnings report Mullen detailed it had cash and cash equivalents of $60.3 million as of March 31.
That was up from $54.08 million a year ago.
It also announced it had $26.4 million in restricted cash.
MULN Stock Falls Below $1 Again
Mullen Automotive stock has fallen below Nasdaq’s $1 bid requirement again.
MULN stock began trading at $1.50 after the company announced its 1-for-25 reverse stock split but shares closed at $0.9502 on Monday.
This puts the company at risk for issuing another reverse stock split in order to regain Nasdaq compliance.
The company stock has already hit a 52-week low and investor confidence is up in the air at the moment.
Investors are criticizing CEO David Michery for allowing shares of the company to get this low.
But Mullen Automotive announced in late April the company was looking into investigating the possibility of manipulative trading.
“Mullen Automotive announced today that it is taking certain affirmative steps in light of the extraordinary trading volume and evidence of unusually high levels of failure to deliver on short sales as reported to the U.S. Securities and Exchange Commission.Ā
These steps include retaining outside counsel, which is working with Shareholder Intelligence Services LLC (āShareIntelā) to undertake a comprehensive analysis of data derived from broker-dealers, clearing firms and other sources to provide actionable intelligence on potential market manipulation and illegal short selling.
ShareIntel offers unique access and insight into shareholder position movements and the ability to proactively track equity flows and identify suspicious, aberrant and/or unusual trading activity.
As a fiduciary to its shareholders, the Company will do everything in its power to address any evidence of improper trading in Mullen securities.”
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MULN Stock Is Now Added to Short Sell Restriction List
Mullen Automotive stock has now been added to the short sell restriction list.
On Friday, MULN stock tripped the SECāsĀ short sale circuit breaker making the SSR list.
āThis rule is designed to restrict short selling from further driving down the price of a stock that has dropped more than 10 percent in one day compared to the closing price on the previous day,ā says the SEC.
The rule is only triggered once the shares of a company drops by 10% within a day. The ten percent starts from the previous dayās close.
Short sellĀ restriction remains for the remainder of the day and in many cases, the rule can extend to the next day.
The company has tradedĀ above its $1 minimum bid price requirementĀ for 10 consecutive days after enacting a reverse stock split, but shares have now fallen below $1 again.
Investor sentiment continues to be more bullish than bearish, but institutional short sellers have much stronger advantages in the market than retail investors do, hence why MULN stock continues to plunge.
More than 70%Ā of trading inĀ Mullen AutomotiveĀ stock is now happening in dark pools.
SEC Chairman Gary Gensler has stated inĀ various occasionsĀ that this is a real problem in the market; however, no proposal has been enforced to limit the use of dark pool and off exchange trading.
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