Based on what there last quarterly shows:
**They have more then just issues regarding declining sales. They are currently in default on several notes not to mention there liabilities are quite large when compared to the asset level. Total Assets
1,161,371, Total Liabilities: 9,227,637
??
??IMO unless they are bought by another company, I don't see them surviving for very much longer. All IMO of course.
NOTE 3 – NOTES PAYABLE - IN DEFAULT
Notes payable are comprised as follows:
March 31, December 31, 2013 2013
129,402
?????(294,662)
??
???
Senior secured note payable to a bank, secured by all assets of Saleen Signature Cars, guaranteed by the U.S. Small Business Administration and personally guaranteed by the Company’s CEO, payable in monthly installments of $5,833, including interest at a rate of 6% per annum payable monthly, through October 26, 2019, currently in default (1)
Subordinated secured bonds payable, interest at 6% per annum payable at various maturity dates, currently in default (2)
Subordinated secured note payable, interest at 10% per annum payable March 31, 2009, in default as of March 31, 2013, paid in full
Unsecured notes payable, interest at 10% per annum payable on various dates from July 31 to March 31, 2010, currently in default
Less: current portion of notes payable
414,500
—
320,000
(1,370,437)
414,500
124,513
320,000
(1,044,074)
Subordinated secured note payable, interest at 10% per annum, payable December 16, 2010, currently
in default (3) 65,972
Subordinated secured note payable for legal services rendered, non interest bearing, payable on October
25, 2013, currently in default (4) 42,749
$ 527,216
$ 582,258
???105,312
???47,749
Total notes payable
1,370,437
??
???1,594,332
Notes payable, net of current portion
$—
??
???$ 550,258
???
???1) On February 6, 2014, Saleen Signature Cars received a Complaint from the bank filed in California Superior Court, Riverside County alleging, among other matters, breach of contract due to non timely payment of November and December 2013 principal amounts owed, which were paid as of December 31, 2013, and change in control as a result of the Merger. The case seeks immediate principal payment of $520,388 plus accrued and unpaid interest. The Company currently is involved in discussions with the bank to seek a mutually agreeable outcome of the claim; however, the outcome is uncertain at the present time.
2) Bonds issued on December 1, 2008, 2009 and 2010, payable in full upon one year from issuance. The Bonds accrue interest at 6% per annum and are secured by the personal property of Saleen Signature Cars. As of December 31, 2013 and March 31, 2013, respectively, the bonds were in default due to non-payment.
3) Note payable issued on December 16, 2010 due in full on December 16, 2011. The note accrues interest at 10% per annum and was secured by three vehicles held in inventory by Saleen Signature Cars. On June 7, 2013, the Company entered into a Settlement Agreement and Mutual General Release by canceling this note and issuing a new unsecured 6% note payable due on or before August 19, 2013. The note was in default on December 31, 2013 due to non-payment.
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??????
?4) Non-interest bearing note payable dated January 25, 2013 due in full on October 25, 2013 or earlier upon the occurrence of certain events that have not occurred. The note is secured by interest in certain intellectual property. The note was in default as of December 31, 2013 due to non-payment. The Company made a payment of $5,000 during the nine months ended December 31, 2013.
Total interest expense was $362,784 and $138,281 for the nine months ended December 31, 2013 and 2012, respectively. As of December 31, 2013 and March 31, 2013, $350,630 and $318,836 , respectively, of interest on notes payable remains unpaid.
NOTE 4 – NOTES PAYABLE TO RELATED PARTIES
Notes payable to related parties are as follows:
Note payable to a shareholder, secured by S7 Supercar automobile, interest at 10% per annum payable quarterly, due and paid off on May 23, 2013.
$
December 31, 2013
—
500,000
684,452 $
March 31, 2013
200,000
—
360,500
????????????Unsecured note payable to a shareholder, non interest bearing, due on April 1, 2014. (1)
102,000
?????Unsecured note payable to a shareholder, interest at 10% per annum payable at various maturity
dates, currently in default. (2) 32,452
Note payable to a shareholder, secured by S7 Supercar automobile, interest at 8% per annum payable in full on October 7, 2014.
Total notes payable, related parties
$
60,000
Unsecured $100,000 revolving primissory note to a shareholder, interest at 12% per annum payable in full on November 14, 2014. $50,000 available at December 31, 2013.
?50,000
????????????????????(1) As of March 31, 2013, the Company had a bond payable of $63,000 issued to a shareholder on December 1, 2008, 2009 and 2010, payable in full upon one year from issuance. The bond accrues interest at 6% per annum and is secured by the real and personal property of Saleen Signature Cars. The Company also had a $37,500 note payable to the same shareholder payable on various dates ranging from September 2008 to August 2010. The bond and the note were in default as of March 31, 2013. On May 21, 2013, the Company entered into a Settlement Agreement and Mutual General Release by cancelling the note and bond and agreeing to pay $135,000 on or before April 1, 2014, which represents principal plus interest to be accrued through April 1, 2014. The Company also issued 264 shares of Super Voting Preferred Stock valued at $12,500 in conjunction with this Agreement and accounted for this issuance of shares as interest expense.
(2) Unsecured note payable to a related party issued on November 3, 2008 for original principal of $60,000 with interest bearing at 10% per annum and due in full on February 10, 2009. The note was in default at March 31, 2013. On May 22, 2013, the Company entered into a Settlement Agreement and Mutual General Release by agreeing to pay $35,000 , of which $5,000 is due by June 3, 2013, $10,000 due by July 31, 2013, $10,000 due by October 31, 2013, and $10,000 by December 31, 2013. The Company also issued 739 shares of Super Voting Preferred Stock in conjunction with this Agreement valued at $35,000 , of which $22,803 was applied toward the principal balance of the note and $12,197 was accounted for interest expense. The note was in default as of December 31, 2013 due to non-payment.
NOTE 5- SENIOR SECURED CONVERTIBLE NOTES PAYABLE
December 31, 2013 March 31, 2013
?????????????Senior secured convertible notes payable to private accredited investor group, convertible into 40,000,000 shares of common stock, interest accrued at 3% per annum, notes mature on June 25, 2017
$$ Less: discount on notes payable (1,448,524)
$
—
2,924,422
$ 100,500
—
—
Notes payable, net of discount
?$
???1,475,898
????????????—
????????On June 26, 2013, pursuant to a Securities Purchase Agreement, the Company issued senior secured convertible notes, having a total principal amount of $3,000,000 , to 12 accredited investors. The Notes were issued in a private placement, exempt from the Securities Act registration requirements. The Notes will pay 3.0% interest per annum with a maturity of 4 years (June 25, 2017). No cash interest payments will be required, except that accrued and unconverted interest shall be due on the maturity date and on each
15
??????????
conversion date with respect to the principal amount being converted, provided that such interest may be added to and included with the principal amount being converted.
Each Note is convertible at any time into common stock at a specified conversion price, which currently is $0.075 per share The Note conversion price is subject to specified adjustments for certain changes in the numbers of outstanding shares of the Company's common stock, including conversions or exchanges of such. If the Company's shares are issued, except in specified exempt issuances, including the conversion of the Super Voting Preferred Stock, for consideration which is less than the then existing Note conversion price, then such conversion price will be reduced by full ratchet anti-dilution adjustments that will reduce the conversion price to equal the price in the dilutive issuance, regardless of the size of the dilutive issuance. During the nine months ended December 31, 2013, certain note holders converted $75,578 of principal and $3,216 of interest for 1,050,593 shares the common stock.
Each of the agreements governing the notes includes an anti-dilution provision that allows for the automatic reset of the conversion or exercise price upon any future sale of common stock instruments at or below the current exercise price. The Company considered the current FASB guidance of “Determining Whether an Instrument Indexed to an Entity’s Own Stock” which indicates that any adjustment to the fixed amount (either conversion price or number of shares) of the instrument regardless of the probability or whether or not within the issuers’ control, means the instrument is not indexed to the issuers own stock. Accordingly, the Company determined that the conversion prices of the notes are not a fixed amount because they are subject to fluctuation based on the occurrence of future offerings or events. As a result, the Company determined that the conversion features are not considered indexed to the Company’s own stock and characterized the fair value of these conversion features as derivative liabilities upon issuance. The Company determined that upon issuance on June 26, 2013, the initial fair value of the embedded beneficial conversion feature of the notes to be $1,660,656 . These amounts were determined by management with the use of an independent valuation specialist using a Monte Carlo simulation option pricing model. As such, the Company recorded a $1,660,656 derivative liability with an offsetting change to valuation discount upon issuance for financial reporting purposes (see note 6). During the nine months ended December 31, 2013, the Company amortized $215,348 of the valuation discount, and the remaining unamortized valuation discount of $1,448,524 as of December 31, 2013, has been offset against the face amount of the notes for financial statement purposes. The remainder of the valuation discount will be amortized as interest expense over the remaining four year term of the senior secured convertible notes payable.
