Saleen Automotive, Inc. (fka SLNN)

[AutoInvestor]

Huge differences between TSLA & SLNN Regarding R&D Expenses.

TSLA would have made $77 million in net gain in 2014 or $0.61 per share while SLNN would still have net loss of $12.6 million or $0.07 per share.

There was a time when R&D expenses could be capitalized.
There is a pretty good accounting arguement that is based on the
Matching Principle that R&D is an expense incurred today
for a future benefit. And that the expense should really be
capitalized and recognized when the associated revenue is recorded
in a future period. There were too many issues around
when the revenue and expense actually matched up so
FASB elected the most conservative ruling to expense
all R&D in the period it was incurred. Well that
is fine for tax reporting it is always a consideration
when analyst are reviewing the income statement
of Manufacturing, Hi Tech, or Start up company.

To a large degree investors discount the R&D expense
knowing that if spent well positions the company favorably
against it's competition and will likely lead to
an increase in future market share.

Also, R&D expense is discretionary. Management at
TESLA can reduce next year budget by $77M and achieve
break-even (on = revenue) after the benefit of the R&D has
been incorporated into the product.

As you indicated, Saleen's R&D is a significantly
lower percentage of revenue and even if cut
this year would not even come close to achieving
break-even.

Saleen's R&D expense is alarmingly
low considering where they are in the evolution of their
business. A much higher percentage investor's dollars should
have been spent on the development of the 2015 Mustang
during a new model change over. This is another
large indicator that Saleen is mismanaged.
Investors want their money to advance the company
not to pay for PR, Advertising, Car Giveaways, Hotels and
Entertainment expenses.

If the dollars received from investors was spent smartly and efficiently,
Saleen could have been a real company, but Steve preferred the
short cut to riches. Issue 500M shares and use
the money for a Pump and Dump scheme.