City, who have already endured one financial crisis this season, could go out of business if the deal does not go ahead.
Our sister site, Planet Imp, is reporting that in order to remain in business until the end of the season fans will be asked to donate loose change into buckets at the next home game.
In response to the current crisis facing the Imps their current chairman Rob Bradley said, "the existence of Lincoln City football club is very much in jeopardy.
"The present Board have tried to realise the sums required to run the company and to clear historic debts including new share offers, business investment packages, affinity cards and so on with modest success.
"Many debts have been cleared but the latest news concerning the loss of TV revenue may be a bridge too far.
"The Directors are taking advice on the way forward but it is clear that the club urgently needs new investment to survive and prosper.
"To this end they would welcome any new investor who would inject the appropriate funds and lead the club."
Sincil Bank will be sold for redevelopment to enable Lincoln City to pay off their debts before entering the deal.
The current club colours of both sides will be retained, with claret and blue providing one strip and red and whirte providing the other. The schemes will change roles every two seasons. (We have claret and blue home kit for two seasons, then next two seasons have red and white, before returning to claret and blue.)
The nickname of the new club will be the `Iron Imps`, which should provide a more imaginative mascot than our current Scunny Bunny.
United's chief executive Don Rowing told us today, " in realistic terms it is the only way to guarentee the future of professional football in North Lincolnshire.
"We are aware that fans might take a while to get used to it, but we ask them to see how North Lincs United look on the pitch before making their verdict.
"After all, it is likely that around 90% of the playing squad will come from the current Scunthorpe United squad."
Former Iron chairman Keith Wagstaff was also pleased with the news saying that he'd been suggesting it for years.
"Now I can follow my hometown team with pride," he said.
None of the playing staff were available to comment when the story was written, as they are preparing for this afternoon's clash at Leyton Orient.
If United gain promotion then the new side could start their life in September in the second division.
Iron-Bru.net, first with this historic announcement on Easter Monday, April 01st 2002.