 Reddit comment that I thought was pretty interesting from the Lordstown motors reddit This guy Will just leave his name out of this He went over the 10 Q in detail with the fine tooth comb and basically What he's discovered in the 10 Q is This clause which says that if the agreement is not approved by Cephas which is Basically a treasured Treasury Department program that clears foreign purchases of real estate As I understand it although it's in some sort of flux at the moment as well in the United States Large purchases have to be cleared by this particular unit of the Treasury and If it's not approved By the US government committee on foreign investment in the United States Cephas The company which is Lordstown is obligated to repay the down payments to Foxconn Plus accrued interest Such and such potential repayment obligation is secured by a first priority security interest in Substantially all of Lordstown EVs assets So this is pretty draconian What they're saying here is if we go through all this and the government doesn't approve the sale then it's going to be Really bad for Lordstown And it says here where are the odds of Cephas doesn't approve the purchase agreement? Could this be like a loan shark mob scenario or just normal normal corporate talk? And this comment is it's a way for Lordstown to quietly disappear with investors money course this is incorrect The Lordstown wouldn't be the one disappearing with the money in this scenario would be Foxconn but the question is Obviously this is in there for a reason and what are the odds of it happening or What do we think could could influence something like this happening I'll start by saying right up. I At this point Feel that this is not an issue But there's no way to tell the future. I'm going to go through some details on this agreement In the following clips, let's take a look. All right, so this is Mx ux. This is just a recent you can see November 10 Department of the Treasury public affairs And this is just an example of this. This is pretty deep state stuff definitions of accepted foreign exchange and accepted accepted real estate foreign state What this is talking about is firma, which is the foreign investment risk review modernization Act Which this is tied to What they do is they evaluate Purchases of real estate in the United States with regards to National Defense political policies Certain criteria and There are certain real estate Transactions by certain foreign persons so it's a foreign person or for a person from a foreign state These investors are defined in part by their close relations to accepted foreign states now what this is an Accepted real estate for instance the point is this this is kind of an amendment to the law and what it's going to do is add Australia Canada and the United Kingdom basically give them a Get out of jail free card in other words if they want to make major real estate purchases Agents or other parties in these countries They're not going to have to go through this rigorous review that other countries are going to have to do but Again, there are certain parameters that are set here and see this is in 2020 Cephas now this is the law they're talking about in the in the Reddit Cephas regulation Okay, so Unfortunately, Taiwan is not in The Cephas Amendment here and this isn't law yet anyway, but this just gives you an idea of what this bill is and What they're trying to do here is Put a fence around the country and decide who what foreign agents of or What foreign agents from what foreign countries are going to be allowed to buy large amounts of real estate and so forth in the country and This is what Foxconn has brought up If there's a determination Okay under Cephas Okay, that After all is said and done. They're not going to be allowed to buy the Lord's time plant Then they want all their money back So that's kind of the rub Let's move on to the next section Okay, so this is from Wisconsin text anyway, this is May 10th 2019 a bit dated Harvard Business School guy wrote this and this is about the Foxconn purchase of land and I believe an abandoned plant in Wisconsin and the idea here was they were going to build a LCD plant making liquid crystal display screens. I believe they've since abandoned that I believe the new context for this plant is Part of Foxconn's ed plan and they plan to base the cloud center for their connected cars at this location So it would be a cloud computing servers and so forth that would do the in-car updates and so forth the Autonomous driving perhaps all this computer hardware software computer technicians programmers would be based at this plant I think that's the goal of this plant now and It says where does Wisconsin fit in a tangled web of international business and political relationships and This is talking about President Trump here And Terry Gao now The thing is You've got and I'm gonna just simplify this So you Everybody gets a brief Idea of what's going on here. This is China. Okay? This is Taiwan down here These are two different countries As they say everybody has diplomatic relations with China, nobody has diplomatic relations with Taiwan Wisconsin Foxconn is headquartered in Taiwan not in mainland China many people feel this is a mainland China company it is not it is a Taiwanese company and Here we have down here Foxconn Honhai precision company in Wisconsin the point is I'm trying to make here is this deal was approved okay, and So this shows a past preference for approving Foxconn real estate purchases in the United States And this is just a brief history here of China and Taiwan After World War two the people's there was the revolution and The Republic of China took over the mainland and The kumatame Kumatang government of the Republic lost control and it retreated to the island of Taiwan and set up its exiled government there and The mainland feels Taiwan is the rebellious province and must be reunited the Taiwanese generally feel otherwise so Taiwan is separate from China It is not a communist country. It is a democratic country. It's got the capitalist economy The United States won't say whether they're gonna defend Taiwan or not if China Invades however, they're a joint military actions going on military hardware sold to Taiwan so In generally on the download the United States supports Taiwan's independence and again Foxconn is a Taiwanese company. Okay, Foxconn Taiwan not China so the point I'm making here is that This has been this the sort of deal has gone through in the past and Foxconn is not China China is not Foxconn Just want to make that clear now. We're just Want to go over just a bit. I don't want to get into deep on this as of 2019 Foxconn is one of the largest employers in China they build the iPhone there and Now 2017 the investment in Mount Pleasant, Wisconsin was announced and Now Terry Gao is the former CEO of Foxconn under which this deal was done and Terry Gao was gonna run for he his plan was to retire and run for the president of Taiwan The point is Terry Gao who was the CEO of Foxconn is no longer The Chinese Communist Party Global Times has suggested they're quite fond of mr. Gao. So mr Guy the former CEO of Foxconn was pro unification Reunification and this is like One country two systems kind of a thing and Guy was kind of backing that up and it's kind of like a Hong Kong thing that was going on over there I don't want to get political here. I'm not a political channel But now this this tilt of Gao, you know, this may have soured the US on approving the the purchase of this land, but He has stepped down from the CEO of Foxconn I believe he's still on the board so anyway, that's a that's just so a brief history here and and again This deal was done. This deal was approved okay We don't have direct diplomatic relations with Taiwan, but this deal was approved So i'm just going through a bit of history here to say that Foxconn has bought property in the united states before and in the past The CEO that was under that regime was a bit pro unification which might have been Something that would have touched the nerve at the treasury department. He has since left I believe he's still on the on the board or may be in a consultative nature with the company Anyway, let's move on to the next section All right now just moving forward with this A Former Foxconn chairman now. This is June 20 2019. Terry guy resigns as Fox chairman and runs for president of taiwan and Terry guy Foxconn He's leaving it. So he left Foxconn and he did a run for president of Taiwan he did not win I Anyway, he founded Foxconn Biggest shareholder and will remain on the company's board. I think he's still on the board. He might not be Anyway, the point of this is it relates to our topic today is During his run or lead up to his run Some chinese Mainland chinese ccp chinese officials were saying that Gao had said taiwan was part of china again the pro reunification move And that he had asked the president of the united states. This may have been trump at the time. I'm not sure To work on improving relationships between mainland china and the united states so This and again, i'm not going to get political here, but this Was disavowed by gao, but the point is Uh had he remained ceo Uh, this could have been a pressure point for the Evaluation of the buy because of course united states once taiwan to remain independent And had gao been still been ceo and been Backing reunification This is something that the Evaluated as a treasurer you would have looked at With a with a with a um, you know Would have been a negative. Anyway, that doesn't exist anymore because terry gao has resigned as The ceo foxconn so that's another plus Regarding this issue now just moving forward with this this is Pretty recent and um Foxconn chooses semiconductor head to succeed terry gao's chair So this is uh, uh, 11 1921 um so Again, this is the former ceo Here and founder of the company and he has stepped down so his uh Political reunification talks which he is I believe denied Which may have been a negative towards this whole evaluation are moot now And now they have picked Louis young To head the group the head of the group semiconductor arm to succeed terry gao. So they have new leadership Uh, I will never come back. Mr. Gao said And mr. Lee's background underscores how important semiconductors were for foxconn's future Together with artificial intelligence and robots. These are some some of the three areas they're looking into e.v Electric vehicles artificial intelligence and robotics But in any case, uh any, um negative event Cast that terry gao would have placed on this evaluation if there were even such a thing Has dissipated and it's no longer an issue so Why would it be denied by the treasury? We don't know Let's move on. Okay. Just moving forward. Uh, this is about hon hi. Hon hi is the Chinese designation of foxconn and we're talking about the chairman. This is the new chairman As mentioned previously young li and He is the chief executive officer and chairman of foxconn technology group Uh, so terry gao is out of the picture. Uh, I'm sure he's on a consultative basis He may or may not be on the board still I think he is still on the board But in any case there's a new face To the company and anything about reunification I cannot find any quotes from this individual regarding unification reunification or any other political issue He seems to be a pure technocrat, but uh, you know, again as mentioned previously Um, foxconn's emphasis on semiconductor and he was the head of their semiconductor group So the ceo's not an issue Uh, they approved the last purchase by foxcon Under the old ceo, uh, whose views is quite changed or supposedly changed And what they've done is replaced the ceo. So So we've got uh Approved last sale new ceo so, uh Again, uh, it looks like uh, this should breeze through approval. We don't know that Let's move on Moving on here. This is a very good recent article in commonwealth magazine I'm just going to skim over it But it's an interview with the new ceo of foxconn on his Evie ambitions and I'm just going to try to touch on a few points here. It's a rather lengthy article There's some things here involving lordstown that I think everybody would want to love and anyway, this is uh His evie ambition and moving forward 2019 he took office Uh, having like an apple, you know, when apple has a project launch day and they're talking about the electric vehicles And he says electric vehicles represent the most critical background for uh, the new ceo Uh It introduces three plus three model for transformation. They're moving from a cell phone company Basically what they make now they make a lot of electronics, but they're number one profit item is the iphone They want to move past that to electric vehicles robotics and artificial intelligence They want to lead this transformation by electric vehicles and they want in his plan is to increase net profits 5 to 10 percent with a thrust into evs Uh This is a primary goal of his and he sees it as Because you know cell phones aren't a growth industry anymore. Sorry apple. That's why apple's getting to the apple car Uh People wondered if haun hye had no experience in automobile manufacturing was serious and he is serious Now i've Failed to do this cookie thing. So there's some blocked areas in this article But just moving forward to give you an idea of the thrust and there's the ceo again uh Foxconn finds itself in a wild west situation during which global standards for these have not been set So, you know, everybody has a different platform. Everybody has a different way of manufacturing Uh foxconn seeks not just to make parts and components, but rather command the auto industry the future They want to build the platform as the android operating system is The platform for many many different cell phone brands. They want to build the chassis and supply line supply line to produce the android of skateboards and This will cut down costs and as you say linking with the supply wants to be a platform linking with side produce shared chassis In helping different ev makers produce multi brand chassis means it so in other words, they want to make all the operating Skateboard and have the manufacturers design their own body To go on top of that skateboard and they want to do it all over the world And they want this to be as android is present on all phones Most other than apple they want this chassis to be present on most most devs With the exception probably of tesla so tesla would be the apple here And just noting They're targeting automakers and governments rather than individual consumers And It says here fox gun can provide complete car design key parts Integrated module design and manufacturing and oem services. So they want to be a turnkey To all the brands oems that want to produce eb's and they want to make everything Fox gun in charge of the automobile specs. Honhain knows about the vertical division of labor and supplies and integrating pox. So Uh They're looking at a combined strategy here with this multi division corporation to Break into the ev and dominate the ev market here And i'm just going to move through this quickening. This is the Mi age program, which is their skateboard, which is open source in the chinese sense of that word um Movement in harmony, I believe that stands for and Open source of the lines again a different definition than what uh And they what we think of here in the united states the smart smart phone and cars are more complex than smart phones Now Just to let you know in addition to You law in a chinese fact company He's entered into joint ventures with geely Fiskers the lanus The pair. Okay. So in other words, he's he's building Alliances or offering to supply services and setting up supply lines and To supply these mih chassis to all these different manufacturers all over the world irregardless of company and country and It just mentions here fiskers second ev model the pair will use fox con's chassis platform And both hardware and software solutions From mih members in preparations for a 2023 launch. So um This whole fiskers whole car is going to be based on this fox con android ev model And they're going to be doing everything from the beginning to end on this car And that is the pair and that's going to be their first car that's going to use this Entire software hardware combination and And um, I don't believe that I don't believe that's a pair there, but I don't think we have any pictures of the pair for example Um, and of course I blocked this out with this thing here, but truck maker lords town motors Which is where they are going to make the fiskers pair With this move honhai is set to acquire our local production lines in the us In and in the future in addition to producing lords town motors trucks Fiskers production will likely be at the same plant. So in other words, they're saying They bought the lords time motors plant. They're going to make the truck first That's what they're stating here And fiskers production will likely be at the same plant to follow at the same plant um In any case Adopt shared platforms and they're talking about reducing costs and so forth Uh Lou is positioning positioning and compete key components motors batteries and semiconductors now It's funny because They have mentioned that they like the manufacturability of the hub motors at lords town lords town only has the rights to north america. I believe for those motors Whether they will incorporate these motors into their mih platform. I think this is a big question Look at going forward I don't know if they will Or not, of course if they did They would have to acquire international rights for those motors certainly I think we can all look at this is them saying we want to produce this lords town truck first and that is going to be Their first vehicle and they're going to make sure that that thing is perfect and runs great. Okay And I they may be testing evaluating the hub motors speculation on my part because to integrate those in an mih platform would seriously Simplify the manufacturing project process very simple, but anyway, that's just a thought Um, anyway, this article goes on the final piece of the puzzle is localized production Okay, build operate and localize bol is their theory and they want to have these plants in the local markets producing products for the local markets and Using this android skateboard With an oem branded Vehicle body on top of it. So that's just an idea And again, here's another project thailand petroleum. So they are signing contracts all over the world To get this going and he wants to move quickly to don't to gain market share. I think certainly from uh tesla But anyway, this is uh, this is his quote today's young people have been working on pc computers for the last 30 years Okay, that's what he's saying They want to go down the road a new road and that is the ev and I think he's right there um The next generation of car buyers They see the advantages of evs and You know, it is the future um so, um Fox con is undergoing transformation and a tywin these industry is in the midst of transformation So in other words, what he's saying he's putting a you know flag in the ground and saying, you know We're going to become an ev of manufacturer We're going to transition past phones to evs So anyway, I thought this was an interesting article. You might want to uh, Let me just go back to the masthead here Uh, take a look. This is a pretty good read. It'll it'll tell you exactly what and this is commonwealth magazine Of this year And you can take a look at that. Anyway, I thought that was an interesting aside And puts us in perspective with lords town Okay, this is the treasury department site Going over sifas Committee on foreign investment in the united states. Now. This is the original act sifas is an interagency committee authorized to review certain transactions involving foreign investment in the united states and certain real estate transactions by foreign persons In order to determine the effect on such transactions on national security of the united states So this is the original act and that's kind of Interagency so But it's basically what it's saying is we're going to we're going to check out all these People that we think are shady Anything that any purchases that might have anything to do with national defense. We're going to evaluate them Um This is the firma fir rrma, which is the modernization act of 2018 Basically what this says is it gives the president And sifas broader Authority overdoing these evaluations and I think the key here is giving the president more input Into this process. Of course, we have joe biden. Joe biden is Aiming for union u.s union auto manufacturers and auto manufacturing jobs Lordstown is a u.s manufacturer. Are they union? No, were they union? Yes, is fox con anti union They are agnostic on unions. They have worked with unions in the past I don't think any major corporation is pro union Will that be a factor we don't know Will they will biden want to Tamp down the competition with ford using this. I don't know I I think With the potential of this plant creating thousands of jobs in this area And these would be american jobs building vehicles in america for americans I would think That this is not going to be an issue. That would be my evaluation presently however We don't know anything could happen and they have as I mentioned earlier they have writing into this law some exceptions for you know Countries that get out of get out of jail free cards for certain countries uk australian so forth, but this is basically uh kind of deep state stuff kind of murky And kind of well, this is that and that and that so uh, anyway, this is uh What we're looking at as far as that reddit question and these are the two things that This is the original act. This is the modernization act and they just Put the accepted countries in so moving on Now this is uh from a law firm This is from the web april 2020 Cephas what is it and how does it affect on foreign investors? And this is kind of a Cephas for dummies What is cephas interagency committee that reviews covered transaction? foreign acquisitions and investment in us companies for national security concerns Okay Cephas can block or unwind a transaction or require the parties to order the transaction to mitigate any national security current concerns This is what that clause mentioned in the reddit q10 reading Is about so cephas can block it cephas can unwind the whole deal cephas can cause them to change parts of the deal if they feel This threatens national security and again with the latest upgrade to that particular law or concept The president has more input In this process um Just moving through the rest of this, uh, you know the companies that make these purchases supposed to file and so forth um Is there any exception for foreign investors and those from an accepted state and we mentioned Australia and the United Kingdom. I think canada is the third one We don't have diplomatic relations with taiwan. I don't believe they can be accepted accepted Without diplomatic relations, so There's no exemption there um What should I learn and i'm just going to skip over the rest of this uh There are there are going to be partnerships and so forth that are going to be considered as part of this What should I learn about the target company that might signal if I had if an investment could trigger a cephas review and this again refers to the uh reddit post As early as possible learn the following information about the us target company and that would be lordstand motors Is it involved in critical technology critical infrastructure or does it collect or maintain sensitive personal data? um I would say not really not really not really critical not really critical infrastructure. I mean we have Many competitors in this field. Uh, does it collect or maintain sensitive personal data? They are building a cloud computing center in uh, wisconsin Related to over-ear updates. Will they be collecting driving data? I don't know. Could this be a source thought spot? possibly um Who can say I don't know in any case This is a taiwanese company not a chinese company again We've gone through that uh, so sensitive personal data perhaps having to do with the Data interchange between the vehicles and their cloud computing center Uh, this is a physical location to have geographic proximity to yes government facility militia base airport or restricted airspace or seaport Uh, there is the revena arsenal that is not far from this location That is basically a retired base um I do not believe that is an issue and then This third thing mentions any Government contracts involved well the united uh lordstown has been talking to the government about the the military vehicle But I don't believe there's anything solid there Is there any government funding or investment? Uh in this company, I don't believe foxconn is getting any from there and and certainly lordstown You know, they did their spack and I don't even think they got any local rebates on taxes and their hands and they haven't received the advanced manufacturing loan Which would be part of this which foxconn is going to be involved in so I don't think that's an issue I would say Looking at all of this, uh, you know the personal data with the on-air updates with the cloud computing center Perhaps collecting driving data may be a sore spot. I can't see any others um I don't Ultimately think uh, this is going to be an issue. However Uh, as we it says here sieves could block unwind or require the party's dollar transaction so With the reform of this law President biden has more input into this process And that would be the wild card. I think um You know would he Would he block it? I don't think so. Would he Uh, want changes? Would he want some implication of uh, there being a Uh, uh Pathway to unionizing this plant possibly Would uh foxconn be agreeable to that possibly they would um This was a union plant under general motors uh I think that this local workforce um Would be, uh Ameanable to that and certainly I think the unions aren't what they used to be as far as battling with employers I don't think would be necessarily a bad thing if word's time to institute A union workshop there, but anyway That's my uh evaluation on all of this. Uh, is it an issue? I can't see an issue here except for possibly that cloud computing center And the over air updates and the collecting of the driving data possibly Uh, customer data possibly Um for the lord's time vehicles produced at this plant and the other please vehicles using the mih platform Maybe I can't think of any other reason again president biden's union bias may come into play Uh on a scale of one to ten Certainly below five is this a concern I would have to put it You know, it's not a one. Let's say a three on a scale of 10 um But you never know what's going to happen and uh Anyway, that's my take on this whole topic. It is what it is and um As with everything else lord's town is a pre-revenue spack and it's uh um Awaiting production next year. So this is a high risk investment This is one aspect of doing a high risk investment Uh, and anyone involved in lord's town needs to take a good hard look at their investment and What they're willing to lose There's of course a tremendous upside with this potential investment. There's also a very large Catastrophic loss on the downside. I'm not an investment advisor This is really a business case study Thanks for watching guys. I appreciate it and uh Any links, uh, that are interesting. I'll put in the description. Thanks a lot guys Hi, this is mxux. I'm just putting a close on this video. Thanks for watching a bit complex this topic Uh, if anyone has any input Uh further input on this topic and my analysis, please add it to the comments Thanks for watching guys Uh, that little round circle that's going to come up is the subscribe button Uh, thanks again guys. Catch you later