 This is MXUX. I'm just going to go over this. Just an update. Some more parsing of the Lordstown Motors Foxconn status here. Commercially reasonable. Okay. This has come up and this is the distinction between the production agreement and the MIH consulting agreement. The consulting agreement has the term commercially reasonable. This is a kind of a nebulous condition contract condition. I'm not a lawyer at best. A jailhouse lawyer. This is not legal advice. Do your own DD. Seek professional guidance on this. Commercially reasonable. A legal term. Efforts defined by what a similar person's reasonable efforts would be as judged by the standards of the relative business community. Okay. This is something that is coming to play in this announcement for the earnings call. It's used in licensing and collaboration agreements. And that is what the MIH thing will be. In this case, though, it's more about like marketing efforts undertaken by the licensor. It doesn't seem to apply here. This reading of commercially reasonable. M&A sales transactions, again, does not seem to apply. But the New York, the commercially reasonable, the New York courts and I think the New York courts are it when you come to NASDAQ has said the party need not act. This is what commercially reasonable boils down to. The party need not act against its own interest requires a concert effort to accomplish the agreed goal. Okay. So they have to have an acquired conscious efforts to accomplish to accomplish the goal. But these efforts have to be less than what might jeopardize the business interests of the other party. Based on industry standards. So they're going to make an effort to accomplish the goal. But the effort has to be less than anything that might jeopardize the business interests of the other party, which in this case is Foxconn. Less than jeopardize is Foxconn. So that's it in a nutshell. The party. Okay. And this would be, we are assuming Foxconn, the party in these types of agreements need not act against its own interests. So this is, I think, the operational definition we're looking for. They have to require conscious effort, but they, let's say Foxconn has to require conscious effort to reach an agreement. And they have to do good faith, but they do not have to act against their own interests. They do not have to enter an agreement that they feel jeopardizes Foxconn. And this is based on industry standards. So the question is, are Foxconn's efforts reasonable? And again, this is a the legal analysis. I'm not a lawyer. Best of jailhouse lawyer. This is not legal advice. Get your own attorney to go over this. Are Foxconn efforts reasonable? And there's a couple of things that kind of operationally define reasonableness in this type of commercially reasonable effort. Have they done due diligence? Yeah, they've gone all the way up to a personal visit by a member of the board. So the answer there is yes. Have they communicated their status to the other party? And endless agreements, no agreement reach. Yes, they have communicated. Are they going to use relative standards of judgment? This is something I think that is kind of hard to judge. If they go by old, if they go by electronic industry standards, those won't really apply. If they go by ice manufacturing, auto manufacturing standards, those don't apply. You know, what are the battery electric vehicle standards? We know that things move at the speed of past the warp speed in the BEV industry, you know, the one quarter is four years to Lordstown. Okay. So that's a question I have. It's kind of a fine legal point. I don't know if that's relative, but it certainly comes up in my mind. Is Foxconn acting against its own interests? Because this is, they have to make a reasonable estimate, but they do not have to act against their own interests. Okay. So the question is, perhaps LMC operational history and issue should be an issue. They got new management. They got new CEO, new CFO, new president. This is V2 Lordstown. Is the operational history an issue? You could argue it's not because they've changed and they've got the bad, they've got the vehicle at production levels. They're ready to go. So I don't know if the operational history is an issue. I think the relative standards of judgment in the industry might be more important in this case because LMC has changed, it reinvented itself. Now, acting against it, what are its own interests? Foxconn is a commercial, they're there to make money for their shareholders, right? This is the case for a commercially reasonable joint venture. Okay. And again, what are Foxconn's interests? Foxconn's interests are to make money for their shareholders. So this is, this is what I'm talking about as far as a commercially reasonable joint venture. This is, this is why Foxconn should do it or would want to do it. Their MIH, Motion and Harmory, has no BEV fleet program. Okay. They don't have a fleet program. They got a vehicle program. They don't have a fleet program at all of any kind. The current OEM fleet programs are nowhere. Okay. No one's selling vehicles really. They deliver in five vehicles here, 10 vehicles there, Rivians falling down. So there's no competition. I've gone over this in my past video. LMC, CEO Dan. Okay. And this, by the way, this MIH joint venture is to produce fleet vehicles for the domestic and international market. Uh, CEO and high tower say we can have two MIH vehicle production fleet vehicles production ready in 24 months. Okay. And LMC is BB fleet vehicle specialists designing engineering. They have a vehicle ready. So maybe the past operational history was an issue, but the present industry standards would say that this is in there. This is not against their own interest to enter into this agreement. And that LMC is qualified to do this for them. So I don't know if, uh, you know, what's the rub here with Foxconn if we are interpreting this correctly. Maybe Lordstown is the one that has the rub. Maybe Lordstown is trying to negotiate a higher fee structure and Foxconn is mocking. We don't know that, but I'm just saying according to, uh, uh, industry standards, I don't think, and operational history of Lordstown, I don't think there's any reason to avoid this joint venture. I think it's a financial negotiation that's going on and international rights and so forth. And as I said, we, we are assuming Foxconn does not want to agree. Perhaps it is Lordstown that does not want to agree. Maybe they are holding out for a better deal. We don't know. So anyway, the whole rub on all of this is MIH, Ken Anner. Okay. Plug and play entry into BB fleets in 24 months for MIH. Again, industry standards. They're there to make money for their stockholders. What, what can make them more money than this? And let me just go over this fleet market and we're talking a global fleet market here, uh, because, uh, Lord, uh, that's what Foxconn brings an international flavor to this. 1.31 billion vehicles in 2020. Okay. Billion here, billion there. That's a lot of vehicles. Uh, now I did some research on this for previous videos and this is somewhat dated, but the most recent figure I have is that fleets now want to convert 30% of all their new purchases to battery electric vehicles. Okay. That's where they're at as per my last market research on this. That would translate to about 400 million units worldwide. So this is what, uh, let's say Foxconn is not agreeing to. This is what they're walking away from. This is what Foxconn's walking away from. 393 million total sales annual worldwide. There is essentially no competition right now, even if they just took 25% of that market, that would be 100 million vehicles a year. Okay. So there, there's, there's a case for a commercially reasonable joint venture here. Okay. And, you know, I think, uh, if Foxconn is going to, is going to back out of this, if Foxconn is the issue, it may be Lordstown, they're going to use that they were acting against their own interests, their own economic interests, but there is, I don't believe they have, you know, I don't know. I don't see that. Okay. So that's my valuation of what's going on there. And this is again, what's at stake here. Let's say 100 million units in two years. Will the other competitors be more up to speed in two years? Probably. But will Foxconn be in the game? You bet. And how much longer would it take them to do this without Lordstown? Now they have a bus, which is a fleet vehicle on the road. Um, you know, that's an MIH inspired product that's supposedly on the road. A few units have been in place in, uh, in Taiwan, I believe. But anyway, what we're looking at here, like I say, a billion here, a billion there pretty soon. You got a lot of numbers there, a lot of numbers. And, and I believe when, when CEO Dan said very specifically, you know, we're going to highlight this in green, Lordstown is all in on the joint venture. And I think that this number here operation, operationally defines the joint venture and what CEO Dan meant by all in. You look at this and you look at the Lordstown fleet vehicle pickup truck, which I've already gone over, has no competition now. And the high top van has zero competition. And then you add these, uh, Foxtron fleet vehicles. Come on. Anyway, there's a big argument for doing this. A big argument for Foxconn shareholders, uh, to be a little PO'd. If this does not go through, if I were a Foxconn shareholder and this deal, this joint venture development that MIH should program didn't go through. Come on. There's some, somebody's got to answer some questions in my mind, but it doesn't have to go through as of today. We have the status is no, there is no MIH agreement. Okay. There is no design and engineering agreement. Okay. But I believe this is what's at stake, uh, with that agreement. Anyway, going forward. Now there's an alternate likely outcome here. Okay. The plant sale is complete. Okay. The endurance contract manufacturing agreement is reached. That seems to be the case. The AI pay requirements are met with these two functions. The APA or asset purchase agreement goes into effect. Endurance goes into limited production ramp 500 units in the second half of 2022. Endurance USA sales start. This is a big catalyst. Uh, there's a potential to raise funds public or private. And I think providing the endurance does go into limited production ramp. Now the question is, does Lord sound have enough money to go into this ramp? I did an analysis. I don't know. It seems like a hundred years ago stating that even with their limited balance sheet, they could have reached their previously projected start of manufacturing SOP, which I believe was September of last year. They had just enough money to do it. The thing is, I do believe that once the endurance sales start, okay, once this happens, okay, that is going to be a big catalyst. So if they just have enough money to go into this startup ramp, if they can big borrow or steal the money, once the trucks get sold, once, you know, people see, you know, how, you know, it's a good product. It's a good manufacturing process. I think there's a potential to raise funds public or private. Okay. And this is with the MIH joint venture paused or canceled. So there would be no revenue generated by four Lordstown Motors in this case. Okay. So the MIH JV is paused or canceled. Let's say right now everyone's thinking Foxconn would pause or cancel it. Perhaps Lordstown would pause or cancel it. We don't know, but let's go with the notion that Foxconn would cancel it. No revenue would be generated for Lordstown Motors. So the question is, do they have enough money to pay for the manufacturing costs that Foxconn is going to charge and the bill of materials for each unit? I did an analysis, as I said, and basically with all the income from the plant sale, Lordstown is in about the same position it was when I did that analysis. I've gone over these numbers before. Can they reach production? Squeaking. Squeaking by. Okay. I don't know. Close call. Once they start sales, it's a big catalyst. I did a stock analysis. I think the sales are going to jump. I think that the price of the stock is going to jump. And there's a potential to raise funds. And this is without the MIH program. Okay. And I think that this is a likely, I think actually right now I am betting the agreement is going to come through because I do not think they would be extending these deadlines if there was in progress. But this is an alternative likely outcome. So would this happen? Would Lordstown, under this outcome, Lordstown doesn't have to pay back all the sales agreements and all the monies and so on and so forth. They have a balance sheet. Do they have enough money on their balance sheet to do these 500 units to start that revenue wheel spinning? Now the LMC financials are key to this whole thing. Okay. And the Q122 earnings call on May 9th is going to be critical for all these numbers. Now there's an, let's go with the alternative likely outcome that the joint venture doesn't take place or it's paused. Let's say they pause it. That's another outcome that could happen. So they don't have any income coming from the MIH program. We're going to the LMC financials on May 9th for the Q122 earnings. Now you got to understand the plant has been formally sold to Foxconn. Lordstown has been reimbursed for expenses from September of last year, which I think that's going to be a bigger number than anyone feels. There's a $50 million payment. I believe there was a $100 million payment made. As I said, I think they're in the same shape of a quarter or maybe two quarters of 90 million expenses based on prior balance sheets that could provide them with some income to reach this start of production of 500 units. Now the question is, when we have this earnings call, Foxconn is taking over the plant. The endurance is at production. R&D costs going to diminish. I would say, yeah. SAG costs, are they going to diminish with the Foxconn purchase? I say, yeah. I think a lot of the staff is moving over. One of the costs that are going to maintain, which are about $8 million a quarter, are the legal costs, but a lot of the other costs are going to diminish. Will the OPEX costs diminish for Lordstown? Yeah, they don't have the plan anymore. They don't have to operate it. They have whatever infrastructure they have. They have to operate the hub motor line and the battery line, but that's orders of magnitude smaller. Will CAPEX cost diminish? They have been making tooling expenditures this whole time while this has been going on, which may or may not be reimbursed by Foxconn. Will CAPEX cost diminish? I think so. By what magnitude? I don't know, because they still have the battery line. They still have the hub motor line, but again, Foxconn is going to be operating the hub motor line. So how are they going to split the costs? We don't know, but I do believe all of these costs could likely diminish. This may take down Lordstown's cash burn and they're going to be buoyed by the income from the payments from the Foxconn purchase of the plant. So with those two factors together, is that going to add up to enough money to produce the endurance? And then the question becomes, what will the endurance per unit cost be? We got the bill of materials, which Foxconn could very likely reduce the cost of with their distribution, with their sourcing and distribution. And we got a Foxconn manufacturing fee. So what are the unit costs going to be? I mean, we're going to have all these diminished costs, but we're going to have this increased cost, but this is a variable cost. They can say only make 20 vehicles, only make 100. It's not a fixed cost. It's not like owning a factory. This is the beauty of this arrangement. So as, for example, Lordstown gets financing, it could increase production as financing diminishes. It could stop production. But anyway, what are these costs going to be? This is what they're negotiating as well. And I have down here, how many units will LMC be able to pay for? Now, they have said they're not predicting to be profitable on these units. I think the whole goal of this is going to be to raise capital, raise stock, raise the stock price and so forth. But anyway, how many, you know, how is this is all going to add up all these pluses and minus? How many production units will be LMC be able to pay for? Okay. And how many quarters can LMC stay funded? I think the question is, do they have enough money without the MIH income to start production? If they can, I think that can raise the stock price and fund the company. That would be my opinion. I'm not a financial advisor, accountant or lawyer or engineer. But that would be what this was, according to my last analysis on this same topic. And the last thing here is, will any new funding arrangement be announced at the earnings call? I mean, they may already be working behind the scenes to get supplemental funding for the startup production, perhaps a contingency plan. And I just want to say, the startup production is going to be huge in my opinion. You can see, let's just talk competition. The only competition for the endurance right now is the Ford Lightning Pro, which is their fleet pickup truck, which they are no longer taking orders for. Okay. I think they said they were going to make, what, 40,000 units available to fleet and retail customers buying the fleet model? That's it. So the market is wide open. At least I would say for the next year for the endurance, all they got to do is start production. Okay. So based on that, do they have any funding arrangements made? Are they working behind the scenes to get more funding as a contingency plan for this? That's a possibility as well. So I think, although the MIH joint venture, I think makes fantastic sense. It's a big, big idea from Danny Avaji, I believe. And I think it's the way to go. I think if that aspect of the agreement isn't reached, and I am not an accountant, financial advisor or anything else, Ken Lordstowns squeak by. We've got it. Listen to the earnings call. And who knows? They may announce really bad news that they can no longer operate at that call. But being so close to the start of production, I can't believe that they haven't been working behind the scenes to ensure that they're going to start production. Anyway, that's my personal opinion. The other alternative here, of course, is that everything falls apart. And as I mentioned previously, you know, here we go. This is the alternative, unlikely outcome in my opinion. I'm not giving any percentages on this. I am of the opinion that they are working again to repeat myself. They are working to complete the MIH joint venture issue. That is why they have extended the deadlines. I think they see these numbers. I think they see the chain. I mean, the macro changes, just since this has started with the oil prices, with the Ukraine issue, I mean, there's even more impotence to do that MIH program. Anyway, the point is, this is an alternative unlikely outcome. CEO Dan walks away from the table to pressure Foxconn. Okay. I mean, this could happen. He's a New York guy. You might say, okay, you know, I'm walking away from the table, you know, you guys want to come back with a counter offer. There you go. This would imply that he has another suitor with funding to cancel the APA deal. Who knows? He might. This is speculation on my part, but you know, this is just an unlikely outcome. We're more spitballing here. We're brainstorming here. He walks away to pressure Foxconn. He tells him, I have another suitor, you know, and he files a badly faith lawsuit against Foxconn in New York City and stalls the Foxconn repayment. And I think he could very easily do this, even with the wording in the contract in the AIP. And I think they have a chance to win something like that. But again, he could just walk away from the table and say that the deal is off and we're working on arrangements, you know, and we hear nothing for two weeks and Foxconn comes back from another with a counteroffer. Again, could have another suitor with funding to pay off Foxconn and take over the deal. Okay. That is something also that could happen because there's been massive investments in the plant. The vehicle's ready to go into production. Could they have another suitor in the wings? Yeah, I think they could. You know, the money owed to Foxconn in the automotive industry ain't that much. Okay. What is it? It's less than 500 million. I mean, that's nothing. That's nothing in the auto industry. So could somebody else come up with the money to pay off Foxconn to get out of the deal and take over the Lordstown deal? I think so. I think that's a real possibility. So could he walk away? Hey, he's a New York money guy. You bet he could walk away. This guy's hardcore. Okay. And by the way, I had mentioned in my comments that Foxconn is hardcore. They are known for winning their contract negotiations and getting the terms they want, but they're up against a New York money guy. Okay. This is not your average bear. This isn't somebody they run into every day. Believe me. Anyway, that's an unlikely outcome. And just from the last conference call, there was a question, what are you going to do if this doesn't work out? What did CEO Dan said? Well, if this doesn't work out, we will just do something else. Okay. So nobody's thrown in the towel. Anyway, this is my update. I wanted to go through this for all the stockholders out there of a ride and go over this commercially reasonable terminology and potential outcomes. As I see them, I have a skinny bull case on Lordstown. It is a very high risk investment. I am not a financial advisor. Do your own DD. Please. Catastrophic glasses could result very easily. This is on the edge, the outer edge of risk, of the risk envelope. Anyway, I also, I would say I have a skinny bull case on this contract coming through. I think they are extending deadlines. I think they are working to meet, reach an agreement. Again, we are all assuming that it is Foxconn that is not coming to terms. It may be Lordstown holding out for more money as far as the MIH thing on what royalties they would receive over the units they produced and so forth. You look at this $400 million fleet vehicle market. Okay. This is big business, fellas. All right. Let's see what happens. It's very exciting. This is a case study on the myth of entrepreneurship in America. This is MXX signing off. Thanks for watching. Okay. Just want to close this out by saying again, high risk investments. We're all going to know what's going to happen on May 9. There are other opinions on the web. I got a skinny bull on this agreement. I got a skinny bull on ride. Guys, do your own DD. Super high risk catastrophic losses could be incurred. Also gains possibly. Thanks for watching.