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Mullen Automotive Inc. (NASDAQ:MULN) has initiated a financial maneuver by issuing convertible notes and warrants to certain investors, according to a recent 8-K filing with the U.S. Securities and Exchange Commission. On September 25 and 27, 2024, the company, based in Brea, California, engaged in a transaction that involved the sale of approximately $12.5 million in senior secured notes, which are convertible into shares of the company's common stock at $0.001 per share.
The transaction follows the terms of a Securities Purchase Agreement dated May 14, 2024, which was outlined in the company's Quarterly Report on Form 10-Q. The issued notes carry a 5% original issue discount, totaling an actual investment of about $11.9 million. Alongside the notes, investors received five-year warrants for a total of 46,664 shares of common stock. The warrants can be exercised on a cash basis or a cashless basis, as detailed in the previously filed Form 10-Q.
In other recent news, Mullen Automotive, an emerging electric vehicle manufacturer, has made significant strides in its operations. The company secured a $3.2 million purchase order from Papé Kenworth for a fleet of commercial EVs, marking a significant expansion in Mullen's market reach. The company also commenced production of commercial electric vehicles, including the Bollinger B4 electric truck, produced by its subsidiary Bollinger Motors.
Mullen Automotive has also transitioned from pre-revenue product development to revenue generation, with positive sales margins across three vehicle lines. The company has secured substantial orders domestically and internationally, including a $210 million order from Volt Mobility. Mullen Automotive has also expanded its employee equity incentive program and initiated a 1-for-100 reverse stock split.
Mullen Automotive has begun EV deliveries in the UAE as part of a $210 million contract with Volt Mobility. The company's vehicles have received certification from the California Air Resource Board and the Environmental Protection Agency, making them eligible for federal EV tax credits and cash vouchers for customers in the United States. The Bollinger B4 Chassis Cab has been priced at $158,758, with customer deliveries anticipated to begin in October 2024.
InvestingPro Insights
Mullen Automotive's recent financial maneuver comes at a critical time for the company, as reflected in the latest data from InvestingPro. The company's market capitalization stands at a modest $5.09 million, indicating significant challenges in the market. This is further emphasized by the stark decline in the company's stock price, with InvestingPro data showing a one-year price total return of -99.93% as of the latest available data.
The issuance of convertible notes and warrants appears to be a necessary step for Mullen, given its financial situation. InvestingPro Tips highlight that the company is "quickly burning through cash" and "may have trouble making interest payments on debt." These insights align with the company's decision to secure additional funding through the recent $12.5 million note issuance.
Moreover, Mullen's financial health raises concerns, as evidenced by its negative gross profit margin of -1364.48% for the last twelve months. This aligns with another InvestingPro Tip stating that the company "suffers from weak gross profit margins."
For investors seeking a more comprehensive analysis, InvestingPro offers 18 additional tips for Mullen Automotive, providing a deeper understanding of the company's financial position and market performance.
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