This is why SLNN is a SCAM and always was.
I could ask you a bunch of rhetorical questions about the possibility of SLNN to turnaround, but I’m not going to do that because it’s simply useless.
This is an investment website and we are supposed to look at SLNN as an investment opportunity. In some cases, great businesses are not necessarily great investment opportunities. I’m not saying that Saleen is either of these things (because it’s not), but it highlights the fact that on the stock market you can’t just look at the core business of a company, but also at its ownership structure.
In 2013, Saleen was a private company. Its majority shareholder was Steve Saleen. After the reverse-merger with the publicly traded shell company, Saleen decided to make a public offering. There were no underwriter. They did the offering themselves. They offered 10,656,000 shares
at $0.49. Again, this was a price Saleen and his accomplices pretty much determined themselves since they were all the shareholders at that point. They had 96,333,332 shares outstanding. This means that Saleen determined that his company was worth $47 million at that point in time.
What made Saleen think his company was worth that much? Well by the time of the offering, Saleen Automotive had an accumulated deficit of $11 million. They lost $3 million each of the prior 2 years. The financials were worsening and we are not talking about a tech start-up incurring loss before launching a software product with 90% gross margin. We are talking about a bunch of guys tuning cars for decades and rarely being able to get a 20% gross margin. The company had only $1.4 million of assets, but an impressive $5 million of liabilities. The $47 million valuation a was gross overvaluation.
But wait a minute, SLNN was offering $5 million worth of shares. Certainly they could have used that to turn a failing former private company into a profitable public company? Well if only they had used that money for the company, but no. Saleen’s biggest offering was to bail out their private shareholders. It was clearly stated in the S1 filling:
We will not receive any of the proceeds from the sale of the shares. We will bear all expenses of registration incurred in connection with this offering. The selling stockholders whose shares are being registered will bear all selling and other expenses.
Again from the "USE PF PROCEEDS" section:
USE OF PROCEEDS
We will not receive any proceeds from the sale of shares to be offered by the selling stockholders. The proceeds from the sale of each selling
stockholder’s common stock will belong to that selling stockholder.
Who beneficiated from the sale of these shares?
- Europa International Inc – car dealer and auto repair
- W-Net Fund I, L.P – the shell company’s Saleen merged with.
- Verdad Telecom inc – Supposedly a “telecom” company, but it is owned by the former secretary of the shell company: Eric Stoppenhagen
- Adam Liebross – banker at Union Bank
- Lee Mendelson – Not sure? Maybe the EP of Peanuts?
- Elisabeth Wedam – Not sure?
- Gardner Syndication Management, Inc. – Thomas Gardner
- Kartic Enterprises, Inc – A no longer active corporation owned by Tulsidas Bharadwa
- MyLi Burger Holdings, LLC – holding company
- Murray Markiles – An attorney
- Scott and Sandra Alderton Family Trust – Attorney from the same firm as the previous one
- Louis Wharton – Again an attorney from the same firm
- Forglen LLC – Not clear, but it looks like they do loans to pennystocks
- William H. Bokovoy – from Gramercy Enterprises
- Brian Christopher Ray Pierson – no clue
These are the people who beneficiated from SLNN's offering, certainly not the OTC investors. Again, you can find all these information in Saleen’s S1 SEC filling.
I think it's clear from this that Saleen went public to bail out private investors, not to grow the company and let OTC investors benefit from it. Therefore it's a scam on OTC investors.
Today is the last business day before the end of the month. They should give an update on the $400,000 due to the bank by end of November. Investors should know if they got another extension or if they are defaulting on the loan.