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Mullen Automotive Inc. (NASDAQ:MULN) has entered into an agreement with investors to secure an additional $4.4 million in financing through the issuance of senior secured convertible notes and related warrants, according to a recent 8-K filing with the Securities and Exchange Commission.
The financing comes at a crucial time for the company, which according to InvestingPro data, has been rapidly burning through cash with a weak financial health score of 0.48 and negative EBITDA of $267.71 million in the last twelve months. The transaction, which took place on Wednesday, is part of a previously arranged Securities Purchase Agreement from May 14, 2024.
The new funding consists of 5% Original Issue Discount Senior Secured Notes that are convertible into Mullen Automotive's common stock at $0.001 per share. Alongside the notes, investors received five-year warrants exercisable for a total of 16,862 shares of common stock. With a current ratio of 0.53, the company's short-term obligations exceed its liquid assets, highlighting the importance of this financing round. The terms, including a four-month maturity from the issuance date, are consistent with the conditions set forth in the May agreement.
Additionally, the company and investors signed an Additional Investment Rights Agreement on Wednesday, granting the investors the right to purchase up to approximately $4.6 million more of similar notes and warrants until December 12, 2025. This right is not an obligation and is on the same terms as the May Securities Purchase Agreement.
The issuance of the notes and warrants, as well as any future issuances under the Additional Investment Rights Agreement, are exempt from registration under the Securities Act of 1933, as amended, pursuant to Section 4(a)(2), which allows for transactions by an issuer not involving any public offering.
Mullen Automotive has previously transformed from Net Element Inc ., with several name changes over the years, and is now focused on the manufacturing of motor vehicles and passenger car bodies. The company's headquarters is located in Brea, California. InvestingPro analysis reveals the company's current market capitalization stands at just $13.85 million, with the stock trading near its 52-week low. Subscribers can access 16 additional ProTips and comprehensive financial metrics to better understand the company's position in the competitive automotive sector.
This latest financial maneuver is designed to strengthen Mullen Automotive's financial position as it continues its operations in the competitive automotive industry. The information provided is based on the company's latest SEC filing.
In other recent news, Mullen Automotive Inc. has been making significant strides in the electric vehicle market.
The company's subsidiary, Bollinger Motors, has expanded its national dealer network with the addition of Bergey’s Truck Centers and Broadway Ford (NYSE:F) Truck Center, extending its reach into the mid-Atlantic and Midwest regions respectively. The company has also resolved its outstanding liabilities totaling over $20 million by issuing common stock to creditors, as per an agreement approved by a Florida court.
Mullen Automotive has received substantial orders for its electric commercial vehicles. Associated Coffee ordered 10 Class 3 EV cab chassis trucks, while TEC Equipment placed a repeat order for seven Bollinger B4 all-electric trucks. Both orders are expected to contribute significantly to Mullen's revenue.
The company has also entered into strategic partnerships with Emerald Transportation Solutions and the National Auto Fleet Group. The partnership with Emerald aims to develop a refrigerated upfit for the Mullen THREE, a Class 3 all-electric truck. The collaboration with the National Auto Fleet Group is expected to distribute Bollinger B4 electric commercial trucks to government agencies.
Despite these advancements, InvestingPro analysis reveals potential financial challenges for Mullen Automotive, with a concerning current ratio of 0.53 suggesting potential difficulties in meeting short-term obligations.
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