In a move to avoid bankruptcy and delisting on Nasdaq, Lordstown Motors announced on Tuesday that shareholders and the board of directors have approved a 1:15 reverse stock split of its Class A common stock that takes effect when the market opens Wednesday morning.

Having so far assembled 56 electric-powered Endurance pickup trucks and delivered 18 to customers, Lordstown Motors says the Reverse Stock Split will automatically cause shares of the Company’s issued and outstanding Class A common stock to be combined into one issued and outstanding share of Class A common stock.

Stockholders who would otherwise be entitled to receive a fractional share of Class A common stock will instead receive cash in an amount equal to such fraction multiplied by the closing price of the Class A common stock on Nasdaq on May 23, 2023, as adjusted to account for the Reverse Stock Split.

The Reverse Stock Split is intended to improve the marketability and liquidity of LMC’s Class A common stock, according to Lordstown Motors, with the intention of raising the market price to make Class A common stock more attractive to a broader range of institutional investors, professional investors, and other members of the investing public.

A month ago, Nasdaq notified Lordstown Motors that it was in jeopardy of being delisted because the price of the Class A common stock had fallen below the minimum bid price requirement for a month.

The Reverse Stock Split is intended to increase the per share market price of the Class A common stock to satisfy Nasdaq’s minimum bid price requirement.

Lordstown Motors is disputing Foxconn’s contention that the Nasdaq notification places LMC in violation of a condition to closing a multi-million deal with Foxconn, which owns the former GM assembly plant where Lordstown Motor’s production facility is located.

Foxconn has so far refused to close on the earlier agreement to purchase approximately 10% of the Company’s common stock for $47.3 million.

Lordstown Motors still hopes Foxconn will complete the deal if the reverse split causes the Class A common stock price to remain above $1.00 per share for 10 consecutive trading days and Nasdaq decides that the Bid Price Requirement has been satisfied.

However, Lordstown Motors states that there is no guarantee that the deal will close, or that Nasdaq will withdraw the delisting threat even if the stock price remains above $1.00 for the 10 trading-day period.

A news release from Lordstown Motors included a litany of uncertainties that the company says bring substantial doubt about its ability to continue as a going concern, adding that its ability to obtain additional financing is extremely limited under current market conditions.

Lordstown Motors reiterated that if it is unable to resolve the dispute with Foxconn in a timely manner as well as identify other sources of substantial funding and find a strategic partner and resolve what it calls “significant contingent liabilities”, LMC says it may need to further cut back or cease operations and seek protection by filing for relief under the United States Bankruptcy Code.

If bankruptcy occurs, Lordstown Motors says the value available to creditors and stockholders would be uncertain and trading prices for its securities may bear little or no relationship to the actual recovery, if any, by holders of our securities in bankruptcy proceedings,