Mullen Automotive, Inc. (NASDAQ:MULN) (“Mullen” or the “Company”), an emerging electric vehicle (“EV”) manufacturer, today shares an open letter to Mullen shareholders addressing its recent reverse stock split.
Dear Mullen Shareholders:
As most of you are aware by now, at the recently reconvened shareholders meeting held on Dec. 18, 2023, Mullen shareholders approved the Company effecting a reverse stock split.
Presenting this reverse split proposal to the Company’s Board of Directors for consideration and thereafter to our shareholders was one of the most difficult decisions I have made as CEO, especially in light of the prior reverse stock splits implemented by the Company and the dilutive impact those have had on shareholders.
I have stated on multiple occasions that the price of our stock does not reflect the value of the Company. Mullen has achieved many important milestones, including the sales and delivery of vehicles assembled at its impressive facilities – but regardless of these achievements, our stock continued to decline. We also announced that we engaged law firms to investigate and file lawsuits based on manipulative trading activities that we believe have occurred with our stock. However, despite all of these actions, the Company stock continued to trade below Nasdaq’s minimum one dollar bid price beyond allowed timelines resulting in the Company receiving a delisting notice. On appeal, the Company was granted until Jan. 22, 2024, to demonstrate that the stock had traded above one dollar for at least 20 consecutive trading days, failing which the Company would be permanently delisted from the Nasdaq capital markets.
There was only one way to give the Company the best possible chance of regaining minimum bid compliance for the mandated 20 trading days and that was by doing a significantly large reverse stock split.
As mentioned, I did not come to this decision lightly and certainly took no pleasure in taking these initiatives, but in order for the Company to survive and prosper, which is certainly in the best interests of all shareholders, the Company needs to raise capital in 2024 to fund initiatives until such time as it is cash flow positive. Most sources of capital are not willing to provide financing to the Company if it is no longer on a major national exchange. Being demoted to an over-the-counter exchange where market making and trading volumes are significantly lower would put the Company – and hence its shareholders – at great risk.
I know many of our loyal shareholders were very outspoken about not wanting another reverse stock split, and I completely understand their sentiment. However, Mullen‘s Board and I weighed the alternatives of not doing the reverse and losing our Nasdaq listing and came to the difficult decision to recommend that shareholders vote in favor of the reverse split – thereby giving us the opportunity of creating long term value for all investors who have bought our stock.
I mentioned during the Q&A session at our reconvened shareholders meeting, I personally did not vote my shares, and they were not included in the count that resulted in passing the proposal. While I firmly believe the reverse stock split is in the best interest of the shareholders, I also understand many parties were opposed to the measure and so I decided I would leave this decision solely in the hands of shareholders.
In closing, I understand that many of you are disappointed, but please know that I remain fully committed to achieving the Company’s goals which I believe are within reach and will be made exponentially easier should the Company be able to maintain its publicly traded status on a major capital markets national exchange. The passing of the proposal to effect a reverse split gives us that opportunity.
Thanks for your support and understanding.
Sincerely,
David Michery
