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Shares of Mullen Automotive (NASDAQ:MULN) are rocketing higher by nearly 20% after the company held its annual meeting of stockholders, with a total of 11 proposals up for vote. Following the meeting, an X user posted a recording of the meeting host going over proposal three, which would allow Mullen to effect a reverse stock split in a range between 1-for-2 and 1-for-100. However, audio issues made it difficult to discern the preliminary results.
Financial Journey, an X influencer who has interviewed CEO David Michery in the past, stated that he spoke directly with Michery and received confirmation that proposal three had passed.
Just got confirmation from David that proposal 3 was passed.. $MULN
— Financial Journey (@FinJourney) August 3, 2023
For now, MULN stock holders will just have to wait until Mullen files with the SEC to receive the final, confirmed results.
MULN Stock: Mullen Holds Annual Meeting of Stockholders
Proposal four was also extremely important for Mullen. The proposal seeks a state of incorporation change to Maryland from Delaware, which some shareholders saw as a loophole if proposal three was rejected. That’s because Maryland allows a company to enact a reverse split without shareholder approval as long as the ratio does not exceed 1-for-10 over any 12-month period.
In addition, companies incorporated in Maryland have the power to “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.
Last year, Mullen burned through $927,000 seeking stockholder approval for an increase in authorized shares and a reverse split. Furthermore, Mullen explained that Maryland does not have a franchise tax for corporations. In the year ended Sept. 30, 2022, Mullen paid roughly $130,000 in franchise taxes and expects to pay $150,000 for the upcoming years if it remains incorporated in Delaware.
Going back to the reverse split proposal, Mullen has until Sept. 5 to regain Nasdaq’s minimum price requirement of $1. An approval of proposal three would allow the company to do that by consolidating shares.
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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.