On June 27, 2023, the Company Parties filed the Foxconn
Litigation with the Bankruptcy Court seeking enforcement of the Company’s rights under that certain Investment Agreement with
Foxconn entered into on November 7, 2022 (the “Investment Agreement”) and relief for other breaches and tortious
and fraudulent action by Foxconn that has caused substantial harm to the Company’s operations and prospects and significant
damages.
The Foxconn Litigation involves a dispute between the Company Parties
and Foxconn concerning, among other things, Foxconn’s obligations under the Investment Agreement, including with respect to Foxconn’s
obligation to purchase shares of the Company’s Class A common stock for $47.3 million and pursue and provide additional funding
for a joint vehicle development program. These breaches of the Investment Agreement follow a series of detrimental actions that Foxconn
has taken with respect to the Company Parties.
The Foxconn Litigation centers on a transformative, strategic partnership
the Company’s management team entered into with Foxconn to combine the Company’s innovation, technology, accomplished vehicle
engineering team and manufacturing facility in Lordstown, Ohio with Foxconn’s resources, supply chain capabilities and position
as one of the world’s largest electronics manufacturers with stated significant automotive capabilities to form a new, scalable
joint vehicle development platform.
Under the partnership, the Company agreed to divest its most valuable
assets to Foxconn, namely its Lordstown, Ohio manufacturing plant, which is one of the largest in North America, along with its highly
talented and experienced manufacturing and operational employees. The up-front purchase price for the Lordstown manufacturing plant reflected
the expected benefits of the contractual assurances from Foxconn that Foxconn would support the Endurance in a variety of ways and follow
through on a joint vehicle development program, leveraging what was purported to be Foxconn’s established and extensive EV ecosystem
and meeting its commitments to the Lordstown community.
The Foxconn Litigation details the fact that Foxconn had no
intention of living up to its commitments, particularly with respect to the new vehicle development platform. Foxconn simply used
its variety of contractual arrangements with the Company Parties as a tool to maliciously and in bad faith destroy the Company
Parties’ business—while leveraging resources gained through the partnership to advance its own business interests.
The Company Parties will vigorously pursue the Foxconn Litigation claims
against Foxconn accordingly.
However, no assurances can be provided that the Company Parties’
claims against Foxconn will be successful or that the Company will recover any damages as a result thereof.
Cautionary Note Regarding Trading in the Company’s Class A
Common Stock
The Company’s stockholders are cautioned that trading in shares
of the Company’s Class A common stock during the pendency of the Chapter 11 Cases will be highly speculative and will pose
substantial risks. The Company cannot be certain that holders of the Class A common stock will receive any payment or other distribution
on account of those shares following the Chapter 11 Cases. As a result, the Company expects that its currently outstanding shares of Class A
common stock may have little or no value. Trading prices for the Company’s Class A common stock may bear little or no relation
to actual recovery, if any, by holders thereof in the Company’s Chapter 11 Cases. Accordingly, the Company urges extreme caution
with respect to existing and future investments in its Class A common stock. Additionally, as a result of the Chapter 11 Cases, it
is possible that the Company’s Class A common stock may be delisted from trading on the Nasdaq Global Select Market.
Forward-looking Statements
This report includes forward looking statements. These statements are
made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements may
be identified by words such as “feel,” “believes,” expects,” “estimates,” “projects,”
“intends,” “should,” “is to be,” or the negative of such terms, or other comparable terminology. Forward-looking
statements are statements that are not historical facts. Such forward-looking statements are not guarantees of future performance and
are subject to risks and uncertainties, which could cause actual results to differ materially from the forward-looking statements contained
herein due to many factors. With respect to the matters addressed in this report, those factors include, but are not limited to the risks
and uncertainties regarding our ability to successfully complete the Chapter 11 Cases; our ability to obtain timely approval of the Bankruptcy
Court with respect to motions filed in the Chapter 11 Cases; the adverse impact of the Chapter 11 Cases on our business, financial condition
and results of operations; the outcome of the Foxconn Litigation, ongoing litigation, the SEC investigation and any litigation arising
out of the Chapter 11 Cases; the impact of the Chapter 11 Cases on the trading price and volatility of the Company’s Class A
common stock and the possible delisting of the Company’s Class A common stock; our ability to effect a plan of reorganization
or liquidation, or to negotiate and consummate a sale or other transaction with a third party; the sufficiency of our cash on hand and
ability to obtain sufficient financing to allow us to conduct our business and facilitate required actions during, and execute our business
plan following (should we emerge), the bankruptcy proceedings in an orderly fashion; our ability to comply with terms and conditions of
any financing; our ability to maintain our relationships with our employees, suppliers, vendors, customers and other third parties;
and the actions and decisions of our stakeholders and other third parties who have interests in our bankruptcy proceedings that may be
inconsistent with our operational and strategic plans. There can be no guarantees that we will emerge from bankruptcy protection as a
going concern or be able to sell some or all of our assets in an orderly fashion, that we will otherwise realize any significant value
for our assets or damages through the Foxconn Litigation, or that our creditors or stockholders (including holders of our Class A
common stock) will receive any recovery from the bankruptcy proceedings. Trading prices for our securities may bear little or no relationship
to the actual recovery, if any, by holders of our securities in bankruptcy proceedings.
Additional information on potential factors that could affect the Company
and its forward-looking statements is included in the Company’s Form 10-K, Form 10-Q and subsequent filings with the SEC.
All forward-looking statements are qualified in their entirety by this cautionary statement. Any forward-looking statements speak only
as of the date on which they are made, and the Company undertakes no obligation to update any forward-looking statement to reflect events
or circumstances after the date of this report.
