Saleen Automotive, Inc. (fka SLNN)

[BigBake1]

The increase in revenue is pointless when the increase in loss has increased by far more. To present the increase in revenue of 142% is complete omission of the facts, when presented with the loss incurred at 162%, a full picture is presented, pointing out revenue is meaningless when the operations are costing more than they take in. Gross profit was $2.4 Million, yet the Administrative expenses alone were $2.8 Million, that does not include the rest of Overhead and Operations of another $2.3 Million, when combined were $5.3 Million in total. Total Liabilities are 3 times the total assets on hand in the balance sheet, it is as upside down as you can get. Worse yet is the amount of debt carried and converted into shares, they were simply trying to get back to a public trading status to unload that debt onto unaware pennystock investors yet again.

Since inception, our principal sources of liquidity have been cash provided by financing, including through the private issuance of notes and sale of equity securities, and gross profit from sales of high performance vehicles and engineering development and design services. Our principal uses of cash have been primarily for production and purchase of parts for our high performance vehicles; expansion of operations; development of new products and improvement of existing products; expansion of marketing efforts to promote our products and company; and capital expenditures primarily for tooling. Significant additional expenditures are necessary to develop and expand our automotive assets before sufficient and consistent positive operating cash flows will be achieved. Additional funds may be needed in order to continue production and operations, obtain profitability and to achieve our objectives.

During the nine months ended December 31, 2018, we used cash in operations of $199,000, and at December 31, 2018, had a stockholders’ deficit of $579,000, a working capital deficit of $1.0 million, and owed $785,000 in past due payroll and other taxes, which were subsequently repaid in full. In addition, during the year ended March 31, 2018, we incurred a net loss of $5.5 million, and used cash in operations of $1.6 million. The above factors raise substantial doubt about our ability to continue as a going concern, as noted by our independent registered public accounting firm in its report on our March 31, 2018 financial statements.

Our ability to continue as a going concern is dependent upon our ability to raise additional capital and to ultimately generate revenues at a level that will result in sustained profitability and positive cash flows from operations. During the fiscal year ended March 31, 2018, we raised $2.2 million through proceeds received from a private placement transaction, and $8.4 million of convertible debt and accrued interest was converted into common stock. At December 31, 2018, we had cash on hand of approximately $220,000 and we may not be able to generate sufficient funds from future operations to meet our cash flow requirements. We may need additional funds to meet our cash flow requirements to operate our business through December 31, 2019. Subsequent to March 31, 2018 and through December 31, 2018, we received payments of $6.4 million, in accordance with the terms of an engineering development and design contract, and received additional payments in excess of $10.0 million through March 2019 pursuant to this contract. In addition, in September 2018, we received $400,000 in proceeds from the private placement of Series B Preferred Stock. If we need funds in addition to the funds received from the engineering development and design contract, no assurance can be given that financing will be available or, if available, that it will be on terms that are satisfactory to us. Even if we are able to obtain additional financing, it may contain undue restrictions and covenants on our operations, in the case of debt financing, or cause substantial dilution for our stockholders in the case of convertible debt or equity financing.