Saleen 2015 10K Financial Highlights:
Saleen's Customer Deposits of ($1,896K) vs Current Assets (exclude $250K S7 which is unsellable)
of $661K =($1,235K) .We have utilized funding to operate the business during the year ended March 31, 2015 with funds obtained from $1,702,656 of customer deposits received in advance of shipment from orders placed by customers. Saleen spent all the customer's deposit money. This amounts to theft and is prosecutable.
When these approximately 63 deposit customer's find out, the lawsuits will be coming.
Accounts Payable = ($1,677K) Accounts Receivable = $5K
The vendors are not going to get paid. More lawsuits coming.
($1,204,840) of accounts payable was greater than 90 days past due;
($745,503) in past unpaid payroll and other taxes; IRS repossession.
($933,271) of outstanding notes payable were in default; Collateral repossession.
There goes that old S7 in inventory.
($288,900) is owed on past due rent.
$48,150 per month = 6 Months past due . Eviction notice coming.
In addition, in May 2015, the Company received a complaint from Citizens bank alleging breach of the loan agreement and breach of a commercial guaranty by Steve Saleen and demanding full payment of principal, interest and fees of ($369,302). Law Suite filed.
In addition, the Company does not currently maintain workers’ compensation, product liability and other general insurance. Ilegal.
Saleen is losing ($709K) per month avg loss
($8.8M) annual loss
Revenue reduced 26%
88.6% COGs
5 Cars in WIP
Inventory $475K
In addition, in May 2015, the Company received a complaint from Citizens bank alleging breach of the loan agreement and breach of a commercial guaranty by Steve Saleen and demanding full payment of principal, interest and fees of $369,302.
A default under the loan agreement triggers a cross default under the Company’s 3% Senior Secured Convertible Notes and 7% Convertible Notes (see Note 5) enabling the holders thereof to, at their election until the later of 30 days after such default is cured or otherwise resolved or the holder becomes aware of such cure or resolution, accelerate the maturity of the Company’s indebtedness.
In addition, the Company does not currently maintain workers’ compensation, product liability and other general insurance
We currently do not maintain workers’ compensation or general liability insurance.
Due to our cash constraints, we currently do no maintain insurance ordinarily customary for businesses our size and type such as workers’ compensation, garage and general liability insurance. As such, we may incur losses against us such as employee worker accidents, losses due to natural disasters or other business risks for which we currently are not insured. Such damages could have a material adverse effect on our business and results of operations. While we do anticipate in the future purchasing adequate insurance against our potential risks, there can be no assurance that we will be able to obtain, afford or qualify for insurance to address such potential risks or if such insurance will adequately cover any potential matters encountered.
Q. Do I have to have Workers’ Compensation Insurance?
A. Yes, every California employer using employee labor, including family members, must purchase Workers’ Compensation Insurance (Labor Code Section 3700). If you fail to have Workers’ Compensation Insurance for your employees, it can be expensive as the DLSE is required to issue and serve a stop order/penalty assessment prohibiting further use of employee labor until you do purchase Workers’ Compensation
Insurance. Effective January 1, 2011, the penalty assessed for failure to have Workers’ Compensation Insurance is based upon the greater of (1) twice the amount the employer would have paid in workers’ compensation insurance premiums during the period the employer was uninsured, or (2) $1,500 per employee.
(a) The failure to secure the payment of compensation as required by this article by one who knew, or because of his or her knowledge or experience should be reasonably expected to have known, of the obligation to secure the payment of compensation, is a misdemeanor punishable by imprisonment in the county jail for up to one year, or by a fine of up to double the amount of premium, as determined by the court, that would otherwise have been due to secure the payment of compensation during the time compensation was not secured, but not less than ten thousand dollars ($10,000), or by both that imprisonment and fine.
Employees
As of June 30, 2015, we had 22 employees all of whom were full-time employees. Since inception, we have never had a work stoppage, and our employees are not represented by labor unions. We consider our relationship with our employees to be positive.
Our current and future warranty reserves may be insufficient to cover future warranty claims, which could adversely affect our financial performance.
If our warranty reserves are inadequate to cover future warranty claims on our vehicles, our business, prospects, financial condition and operating results could be materially and adversely affected. We provide a three-year or 36,000 miles New Vehicle Limited Warranty with every Saleen 302 Mustang, Saleen 570 Challenger, Saleen 620 Camaro and Saleen GTX high performance vehicle. The vehicle limited warranty applies to installed parts and/or assemblies in new high performance vehicles. All of the unaltered parts are covered under the original full warranty of the OEM manufacturer of the base vehicles (Ford, Chevrolet, Dodge, and Tesla). Although unaltered parts are covered by the original full warranty of the OEM manufacturer, such OEM manufacturers could deny any warranty claims due to our work, which could adversely impact us if we cannot successfully overturn such claims.
We have limited operating experience with our vehicles, and therefore little experience with warranty claims for these vehicles or with estimating warranty reserves. Our warranty claims to date have been negligible and we currently do not have reserves recorded for warranty claims.
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