Apparently LMC hasn’t even raised the initial funding to purchase the facility, and they tell you this in the filings. They include the word “acquisition” and “endeavor” — meaning attempt to do something; something that hasn’t been completed yet — when describing the process with which they intend to raise the money that is necessary to conduct this massive project; what they specify as “the Capital Raise”.
“LMC will endeavor (meaning attempt; try) to, among other things, raise sufficient third-party capital to cover the acquisition, retrofitting, and restart of the Lordstown Assembly Complex, and the ongoing operating costs it expects to incur, which amounts are expected to be material (the “Capital Raise”). The Agreements provide that LMC would manufacture electric pickup trucks or similar vehicles under 10,001 gross vehicle weight (GVW) using the Licensed Intellectual Property (the “Vehicles”).
So what we can only assume is that they haven’t actually raised the money that is needed to purchase the plant. Also, what is even more unusual is that when you look at Workhorses balance sheet, they have zero intangible assets. If LMC is giving Workhorse 10% of the Lordstown complex, you would expect that this “Intellectual Property” would be important enough that it is accounted for somewhere — right? Lordstown is a monstrosity, but this intellectual property is not accounted for anywhere on their balance sheet. This should raise serious alarm bells.
Below is a table that lists their “IP”(Intellectual Property)
“In May 2017, we unveiled a working prototype of our W-15 range-extended electric pickup truck to address the specific needs of commercial fleet work truck operators, including utilities, municipalities, construction, airports and service businesses”.
Most companies include intangible assets on their balance sheets, and sometimes this can account for a significant proportion of their assets. Tech start-ups and software companies are a great example of this. Most of their value is intangible because they are in their infancy, so they technically have no tangible value whatsoever, similar to Workhorse.
Why this is so important is because Lordstown Motors just announced they will be giving Workhorse 10% ownership in a factory that is equal in size to 685 football fields, and remember, this is after they do the retrofitting, and after they purchase — and refurbish — all the equipment. It’s a big job. It takes months of planning, and thousands of hours of manpower. You don’t just walk into a plant such as Lordstown and start producing cars right away. It can even take years sometimes.
The Licensed Intellectual Property, which relates to the Company’s W-15 electric pickup truck platform and its related technology, excludes the Company’s intellectual property relating to cargo vans for last-mile delivery or commercial use
What’s worse is that in exchange for 10% of this massive facility, Lordstown doesn’t even get access to the most important part of Workhorses business; the only part of their business that has generated any kind of significant revenue — their production of cargo vans
(Workhorses 10-K’ for 12/31/18) “To date, we have built and delivered over 360 electric and range extended medium-duty delivery trucks to our customers”. https://www.secinfo.com/d151E3.y46g.htm
Also, this agreement isn’t even definitive, and they admit this:
“The success of the Capital Raise is not within the Company’s control, and it therefore cannot provide assurance that it will receive the Royalty Advance or receive the projected underlying royalty from the production of Vehicles”.
They admit very clearly that they haven’t even raised the necessary funds. Also, for some strange reason LMC is only now making a website. Doesn’t this strike you as a little odd?
****DISCLAIMER****This is all my opinion, and I am not a financial adviser. You should consult a financial adviser before making any decision with regard to publicly traded securities. This company carries an extremely high degree of risk, and you should not use this information as the basis for an investment decision. . You should consider this information as similar to personal insight from a peer/friend/acquaintance, and thus it should, obviously, not be the primary source material for basing an investment decision, because, similar to any opinion from a peer/friend/acquaintance, it could be completely and utterly incorrect! Good luck and happy trading everyone****