NU RIDE INC. Annual Report - How They Did This Year

I’ve put together this guide to help you understand how Nu Ride Inc. (formerly Lordstown Motors) performed this year. My goal is to turn complex filings into plain English so you can decide if this company belongs in your portfolio.

1. What does this company do?

Nu Ride emerged from bankruptcy on March 1, 2024. It no longer builds the Endurance electric truck. Instead, it now acts as a holding company focused on selling off assets. Its main goals are winning a lawsuit against Foxconn, managing financial assets, and finding a new business to acquire or merge with to make use of its corporate structure.

2. Financial performance

Since the company stopped making cars, it has no sales revenue. Its financial health depends on:

• Cash on hand: The company has about $15.8 million in cash. This money covers legal bills and day-to-day operating costs.
• Loans: The company acts as a lender and issued an $8.2 million loan to Foxpoint Florida, LLC. This loan earns 15% interest annually, which helps pay for ongoing corporate expenses.
• Tax breaks: The company holds about $400 million in tax losses. These are valuable assets that can lower future tax bills, provided the company avoids a major change in ownership that would trigger government limits.

3. Major wins and challenges

• The Lawsuit: The company is currently suing Foxconn for breach of contract. While a win could bring in significant cash, the legal fees are expensive and reduce the company’s remaining cash reserves.
• The Strategy: Management is in a holding pattern, aiming to preserve cash while searching for a merger partner. They are specifically looking for a deal that creates profit while protecting their $400 million in tax assets.

4. Financial health and risks

This is a "micro-cap" stock with a small market value, making it prone to wild price swings and lower liquidity.

• Speculative Nature: The stock price moves based on news regarding the lawsuit or potential mergers rather than traditional business growth.
• Dilution: The board has the authority to issue more shares to fund operations or facilitate a merger, which would reduce your ownership percentage and the value of your shares.
• Transfer Restrictions: To protect their tax losses, the company enforces a "poison pill" policy. If you or any group buys 4.75% or more of the company without board approval, the company will issue more shares to dilute your position, effectively preventing such an acquisition.

5. Future outlook

The future is highly uncertain. Management is actively seeking a new business to acquire or a private company to merge with, but there is no set timeline for this process. If the lawsuit fails or no merger occurs, the company may dissolve, which would likely result in a total loss for shareholders.

Bottom Line: This is not a traditional investment in a product-based business. You are essentially betting on the outcome of a lawsuit and the management team’s ability to find a merger partner to salvage the company’s tax assets. Before investing, ask yourself if you are comfortable with the high risk of total loss in exchange for the potential upside of a successful legal settlement or corporate merger.