NU Ride Inc (NRDE)

[Odessa99]

I remember reading, recently, that a bankruptcy court judge had ruled the net loss carryforwards from Lordstown motors would be preserved for a potential buyer of Lordstown Motors assets.

Here's my understanding of how it works. The vast majority of American corporations are profitable. With time, a line item in their balance sheets (one of several financial statements which is reported quarterly, to the SEC) called 'retained earnings', shows the cumulative earnings of the corporation. Since Lordstown Motors isn't (and hasn't been) profitable, they have a large balance in an account called 'Accumulated Deficit'. This account houses cumulative losses, and had a balance of more than $1.1 billion as of the balance sheet dated June 30, 2023. Tax loss carryforwards act as an asset, which serves to reduce future income tax liabilities. This $1.1 billion in cumulative losses could serve to reduce the tax liabilities of an acquirer of Lordstown Motors assets, to the tune of several hundred million dollars. For example, a corporation with an effective tax rate of 25% could save more than $250 million dollars in future income tax liabilities if they were to acquire $1 billion in tax loss carryforwards. I'm not well versed in the limitations, and qualifications, but it does serve as a valuable asset for any qualifying acquirer of such an asset.

That is my understanding, and I've seen companies benefit from acquiring such an asset (and have seen them pay dearly for them). This could affect the perceived value of the assets of Lordstown Motors, and therefore the share price.

As always, simply my opinion.

RIDEQ