10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For Quarterly Period Ended September 30, 2019

or

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number 000-55236

SALEEN AUTOMOTIVE, INC.

(Exact name of registrant issuer as specified in its charter)

Nevada	45-2808694
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

2735 Wardlow Road, Corona, California	92882
(Address of Principal Executive Offices)	(Zip Code)

(714) 400-2121

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
N/A	N/A	N/A

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [  ] No [X]

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [  ] No [X]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	[  ]	Accelerated filer	[  ]
Non-accelerated filer	[X]	Smaller reporting company	[X]
		Emerging growth company	[  ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [X]

The number of shares of registrant’s common stock outstanding as of June 1, 2020 was 24,536,963.

SALEEN AUTOMOTIVE, INC.

FORM 10-Q

INDEX

			Page
PART I – FINANCIAL INFORMATION
ITEM 1.	Condensed Consolidated Financial Statements:
	a)	Condensed Consolidated Balance Sheets (Unaudited)	F-1
	b)	Condensed Consolidated Statements of Operations (Unaudited)	F-2
	c)	Condensed Consolidated Statements of Stockholders’ Equity (Deficit) (Unaudited)	F-3
	d)	Condensed Consolidated Statements of Cash Flows (Unaudited)	F-4
	e)	Notes to Condensed Consolidated Financial Statements (Unaudited)	F-5
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		3
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk		9
ITEM 4.	Controls and Procedures		9
	PART II - OTHER INFORMATION
ITEM 1	Legal Proceedings		10
ITEM 1A	Risk Factors		10
ITEM 2	Unregistered sales of equity securities and use of proceeds		10
ITEM 3	Defaults upon senior securities		10
ITEM 4	Mine safety disclosures		10
ITEM 5	Other information		10
ITEM 6	Exhibits		11
SIGNATURES			12

2

Saleen Automotive, Inc.

Condensed Consolidated Balance Sheets (Unaudited)

	September 30, 2019			March 31, 2019
ASSETS
Current Assets
Cash	$	4,151,805		$	3,374,234
Accounts receivable (including $0 as of September 30, 2019 and $133,742 as of March 31, 2019 due from related party)		634,755			136,387
Inventory		264,084			108,498
Other current assets		14,591			-
Total Current Assets		5,065,235			3,619,119
Property and equipment, net		1,353,003			650,353
Intellectual property		1,482,304			-
Right-of-use assets		4,001,449			-
Security deposits		70,780			70,800
TOTAL ASSETS	$	11,972,771		$	4,340,272
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current Liabilities
Accounts payable	$	125,603		$	351,726
Accrued compensation		455,887			632,689
Customer deposits		99,692			511,081
Accrued liabilities		2,745,134			167,554
Due to related parties		61,672			519,364
Income taxes payable		1,128,985			503,000
Notes payable		87,179			224,159
Convertible note payable, past due		100,000			100,000
Accrued interest on notes payable		37,131			37,131
Contract liabilities		1,323,696			1,068,150
Deferred rent		-			263,955
Operating lease liabilities		246,473			-
Accrued warranties		20,000			20,000
Total Current Liabilities		6,431,452			4,398,809
Operating lease liabilities – non-current		3,755,622			-
Total Liabilities		10,187,074			4,398,809
Commitments and Contingencies (Note 11)
Stockholders’ Equity (Deficit)
Preferred stock; $0.001 par value; 1,000,000 shares authorized; 667 Series B shares issued and outstanding as of September 30, 2019 and March 31, 2019		1			1
Common stock; $0.001 par value; 100,000,000 shares authorized; 24,536,963 issued and outstanding as of September 30, 2019 and March 31, 2019		24,537			24,537
Additional paid-in capital		36,406,842			36,406,842
Accumulated deficit		(34,645,683	)		(36,489,917	)
Total Stockholders’ Equity (Deficit)		1,785,697			(58,537	)
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)	$	11,972,771		$	4,340,272

SEE ACCOMPANYING NOTES TO THESE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

F-1

Saleen Automotive, Inc.

Condensed Consolidated Statements of Operations (Unaudited)

	Three Months Ended September 30,				Six Months Ended September 30,
	2019		2018		2019		2018
Revenues
Services	$	9,869,690	$	3,162,136	$	21,102,053	$	4,179,011
Products		1,955,949		658,297		2,652,169		1,201,626
Royalties		32,656		-		39,623		4,043
Total revenues, net		11,858,295		3,820,433		23,793,845		5,384,680
Costs of revenues
Services		7,465,787		944,332		16,622,538		1,439,618
Products		1,637,783		742,828		2,035,929		1,149,132
Total costs of revenues		9,103,570		1,687,160		18,658,467		2,588,750
Gross profit		2,754,725		2,133,273		5,135,378		2,795,930
Operating expenses
Advertising, sales, and marketing		251,058		167,805		682,488		294,951
General and administrative		1,276,530		1,344,326		2,051,785		2,294,811
Research and development		-		16,964		-		24,321
Depreciation and amortization		37,168		10,843		97,724		38,530
Total operating expenses		1,564,756		1,539,938		2,831,997		2,652,613
Income from operations		1,189,969		593,335		2,303,381		143,317
Other expense
Interest and financing costs		101,011		7,809		102,109		17,880
Total other expense		101,011		7,809		102,109		17,880
Net income before income tax expense		1,088,958		585,526		2,201,272		125,437
Income tax expense		297,903		-		620,993		-
Net income	$	791,055	$	585,526	$	1,580,279	$	125,437
Deemed dividend related to beneficial conversion feature of Series B Preferred Stock		-		-		-		92,000
Net income attributable to common stockholders	$	791,055	$	585,526	$	1,580,279	$	33,437
Net income per share attributable to common stockholders:
Basic	$	0.03	$	0.02	$	0.06	$	0.00
Diluted	$	0.03	$	0.02	$	0.06	$	0.00
Shares used in computing net income per share attributable to common stockholders:
Basic		24,536,963		24,536,963		24,536,963		24,536,963
Fully diluted		27,036,953		27,036,953		27,036,953		27,036,953

SEE ACCOMPANYING NOTES TO THESE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

F-2

Saleen Automotive, Inc.

Condensed Consolidated Statements of Stockholders’ Equity (Deficit) (Unaudited)

For the Six Months Ended September 30, 2019

									Additional
	Preferred Shares				Common Stock				Paid-in		Accumulated
	Shares		Amount		Shares		Amount		Capital		(Deficit)			Total
Balance at March 31, 2019		667	$	1		24,536,963	$	24,537	$	36,406,842	$	(36,489,917	)	$	(58,537	)
Cumulative-effect of change in accounting policy (ASC 842)		-		-		-		-		-		263,955			263,955
Net income		-		-		-		-		-		789,224			789,224
Balance at June 30, 2019		667		1		24,536,963		24,537		36,406,842		(35,436,738	)		994,642
Net income		-		-		-		-		-		791,055			791,055
Balance at September 30, 2019		667	$	1		24,536,963	$	24,537	$	36,406,842	$	(34,645,683	)	$	1,785,697

Saleen Automotive, Inc.

Condensed Consolidated Statements of Stockholders’ Equity (Deficit) (Unaudited)

For the Six Months Ended September 30, 2018

									Additional
	Preferred Shares				Common Stock				Paid-in			Accumulated
	Shares		Amount		Shares		Amount		Capital			(Deficit)			Total
Balance at March 31, 2018		-	$	-		24,536,963	$	24,537	$	36,006,843		$	(39,001,178	)	$	(2,969,798	)
Net loss		-		-		-		-		-			(460,089	)		(460,089	)
Balance at June 30, 2018		-		-		24,536,963		24,537		36,006,843			(39,461,267	)		(3,429,887	)
Cash proceeds from sales of Series B Preferred Stock and warrants in private placement to related party		667		1		-		-		399,999			-			400,000
Beneficial conversion feature of Series B Preferred Stock		-		-		-		-		92,000			-			92,000
Deemed dividend on beneficial conversion feature of Series B Preferred Stock		-		-		-		-		(92,000	)		-			(92,000	)
Net income		-		-		-		-		-			585,526			585,526
Balance at September 30, 2018		667	$	1		24,536,963	$	24,537	$	36,406,842		$	(38,875,741	)	$	(2,444,361	)

SEE ACCOMPANYING NOTES TO THESE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

F-3

Saleen Automotive Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

	Six Months Ended September 30,
	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	1,580,279		$	125,437
Adjustments to reconcile net income to net cash provided by (used) in operating activities
Depreciation		97,724			38,530
Income tax expense		620,993			-
Operating lease payments		(57,397	)		-
Amortization of right of use assets		58,043			-
Changes in Assets and Liabilities
Accounts receivable		(498,368	)		36,093
Inventory		(155,586	)		(22,768	)
Other current assets		(14,571	)		(185,400	)
Accounts payable		(226,123	)		(729,632	)
Accrued compensation		(176,802	)		(83,658	)
Accrued interest on notes payable		-			(24,618	)
Customer deposits		(411,389	)		(172,160	)
Accrued liabilities		2,582,572			58,776
Contract liabilities		255,546			650,614
Net cash provided by (used in) operating activities		3,654,921			(308,786	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		(800,374	)		(52,812	)
Purchase of S7 Supercars asset		(1,482,304	)		-
Net cash (used in) provided by investing activities		(2,282,678	)		(52,812	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of Series B Preferred Stock and warrants in private placement to related party		-			400,000
Due to related parties, net		(457,692	)		(103,956	)
Repayment of notes payable and advances to related party		-			(200,000	)
Repayment of notes payable		(136,980	)		(49,000	)
Net cash (used in) provided by financing activities	$	(594,672	)	$	47,044
Net change in cash		777,571			(314,554	)
Cash at beginning of the period		3,374,234			523,120
Cash at end of the period	$	4,151,805		$	208,566
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for interest	$	-		$	42,497
Fair value of beneficial conversion feature of Series B Preferred Stock	$	-		$	92,000

SEE ACCOMPANYING NOTES TO THESE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

F-4

Saleen Automotive Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 1 – NATURE OF BUSINESS AND BASIS OF PRESENTATION

Basis of Presentation

The accompanying condensed consolidated balance sheet as of March 31, 2019, which has been derived from audited consolidated financial statements, and the accompanying interim condensed consolidated financial statements as of September 30, 2019 and for the three-months and six-months ended September 30, 2019 and 2018, have been prepared by management pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial reporting. These interim condensed consolidated financial statements are unaudited and, in the opinion of management, include all adjustments (consisting only of normal recurring adjustments and accruals) necessary to present fairly the financial condition, results of operations and cash flows of Saleen Automotive, Inc. (the “Company”) as of and for the periods presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Operating results for the three-months and six months ended September 30, 2019 are not necessarily indicative of the results that may be expected for the year ending March 31, 2020, or for any other interim period during such year. Certain information and footnote disclosures normally included in condensed consolidated financial statements prepared in accordance with GAAP have been omitted in accordance with the rules and regulations of the SEC, although the Company believes that the disclosures made are adequate to make the information not misleading. The accompanying condensed consolidated financial statements should be read in conjunction with the audited condensed consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2019 filed with the SEC on October 4, 2019.

Description of the Company

Saleen Automotive, Inc. (the “Company”) is an original equipment manufacturer (“OEM”) of high-performance vehicles (“Saleen Original”) that are built from the ground up. The Company also designs, develops, manufactures, and sells high-performance vehicles built from base chassis of major American automobile manufacturers (“Saleen Signature Cars”). The Company also provides engineering, development, and design consulting services on a project basis for automotive manufacturers worldwide. The Company currently has customers worldwide, including muscle and high-performance car enthusiasts, collectors, automotive dealers, exotic car retail dealers, television and motion picture productions, and consumers in the luxury supercar and motorsports markets.

Saleen Automotive, Inc. was incorporated under the laws of the State of Nevada on June 24, 2011. On May 23, 2013, the Company entered into a merger agreement with Saleen California Merger Corporation, Saleen Florida Merger Corporation, Saleen Automotive, Inc., and SMS Signature Cars (“SMS”) (collectively, the “Saleen Entities”), and Steve Saleen (“Saleen”). The merger closed on June 26, 2013, and the Saleen Entities merged with the Company and approximately 93% of the Company’s common stock was owned, collectively, by Saleen and the former holders of the outstanding capital stock of Saleen Automotive. The transaction was accounted for as a recapitalization with the Saleen Entities deemed the acquiring companies for accounting purposes, and the Company deemed the legal acquirer. In June 2013, the Company amended its articles of incorporation to change its name to Saleen Automotive, Inc.

On December 19, 2017, the Company effected a 1-for-2,000 reverse stock split of its common stock (“reverse stock split”) following approval by the Company’s Board of Directors and stockholders. All common stock share and per-share amounts for all periods presented in these condensed consolidated financial statements have been adjusted retroactively to reflect the reverse stock split.

The Company’s common stock is not currently quoted or traded on any market. Prior to deregistration on October 13, 2017, the Company’s common stock traded on the OTC Pink Sheets under the symbol “SLNN.” We intend to apply for quotation of our common stock on the OTCQB, although there is no assurance that our application will be accepted. 

F-5

Saleen OEM

The Company manufacturers the Saleen S7 supercar (“S7”), a limited production supercar with a 1,500-horsepower engine, in the Company’s production facility in Corona, California. The S7 was previously produced under a joint venture agreement with S7 Supercars, LLC (“S7 Supercars”), a related party owned by a significant shareholder, which owned the “S7” name and related intellectual property and assets. Under the agreement, S7 Supercars provided the chassis and all other costs to build the vehicle, and the Company was entitled to a fee for engineering and manufacturing services, plus an additional markup for these services. Separately, upon the sale of the vehicle to the end-users, the Company became entitled to a fee of approximately 33% of the net profit from the sale of the vehicle by S7 Supercars. On May 31, 2019, the Company entered into an asset purchase agreement with S7 Supercars, LLC pursuant to which S7 Supercars sold all of its assets, chassis and other automotive parts relating to the manufacture of the S7 supercar, and related intellectual property, to the Company for an initial purchase price of $1,165,000 comprised of a cash payment of $800,000, and the elimination of an accounts receivable balance of $365,000 owed to us by S7 Supercars. Furthermore, the amount of accounts receivable balance eliminated increased by $317,304 to $682,304 increasing the final purchase price to $1,482,304. Given that the purchase assets did not qualify as a business under the definition of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) ASC 805 Business Combinations, the Company recognized this transaction as the purchase of an intangible asset consisting of the “S7” tradename. In the previous quarter, the Company had classified the purchased assets as fixed assets and subsequently reclassified these assets as an intangible asset on the accompanying condensed consolidated balance sheet. In addition, the Company is required to pay S7 Supercars, LLC up to four additional payments of $50,000 each, upon sales by the Company of S7 supercars within the two-year period following the closing, subject to the conditions provided for in the purchase agreement. Pursuant to the purchase agreement, the joint venture agreement between the Company and S7 Supercars was terminated, except for indemnification obligations of the Company thereunder. However, the Company does not intend to sell S7s to customers but instead will manufacture S7s for promotional purposes to build its brand. See Note 7 for more details.

The Company is also in the process of completing the engineering, design, and certification of a new high-performance sports car, the Saleen 1 (or “S1”), under an engineering development and design contract with Jiangsu Saleen Automotive Technology Co. (“JSAT”), an unaffiliated corporation located in China which holds the intellectual property rights related to the S1 developed under the agreement and licenses the Saleen name from Saleen Motors International, an un-related third-party.

Saleen Signature Cars

The Company’s Saleen Signature Cars are built from base chassis of major American automobile manufacturers, including Ford Mustangs, Tesla Model S vehicles, and Ford trucks. The Company is a specialist in vehicle design, engineering and manufacturing focusing on the mass customization (the process of customizing automobiles that are mass produced by manufacturers) of American sports and electric vehicles and the production of high-performance USA-engineered sports cars. Saleen-branded products include a line of high performance and upgraded muscle and electric cars, automotive aftermarket specialty parts and lifestyle accessories.

Liquidity

The Company cannot give assurance that it can maintain its cash balances or limit its cash consumption and maintain sufficient cash balances for its planned operations. Also, future business demands may lead to cash utilization at levels greater than recently experienced or anticipated. While we believe that our existing cash balances will be sufficient to fund our currently planned level of operations and investment activity, we may require additional financing to fund our planned future operations if we encounter unanticipated difficulties, or if our estimates of the amount of cash necessary to operate our business prove to be wrong, and we use our available financial resources faster than we currently expect. No assurance can be given that any future financing, if needed, will be available or, if available, that it will be on terms that are satisfactory to the Company. Subject to the foregoing, management and the Board of Directors have adopted a budget that we believe will allow the Company sufficient capital and liquidity to fund its operations for at least one year from the date these condensed consolidated financial statements are issued.

In response to the COVID-19 pandemic which impacted operations in early 2020, we have reduced manufacturing schedules to balance production with our demand and our supply chain constraints. We have also taken actions to reduce overhead to mitigate the negative impacts of a reduced manufacturing schedule. While we currently expect any negative impact on sales to be temporary during the COVID-19 pandemic, the actions to contain the pandemic and treat its impacts, and the effects on our operations are highly uncertain and cannot be predicted at this time. 

F-6

Consolidation Policy

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Saleen Signature Cars, a California corporation, and Saleen Sales Corporation, a California corporation. All intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Among other things, management estimates include the estimated collectability of its accounts receivable, warranty reserves, and the valuation of deferred tax assets. Actual results could differ from those estimates.

Revenue recognition

The Company recognizes revenue using ASC 606, Revenue from Contracts with Customers (“ASC 606”). ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contracts, which includes

(1) identifying the contracts or agreements with a customer,

(2) identifying performance obligations in the contract or agreement,

(3) determining the transaction price,

(4) allocating the transaction price to the separate performance obligations, and

(5) recognizing revenue as each performance obligation is satisfied.

The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the services it transfers to its clients.

The Company’s revenue consists of primarily from the sale of its Signature Cars and services provided under its engineering and design, and development consulting services contracts. See Note 2 for further discussion of Revenues.

Cash

The Company considers all highly liquid investments with an original maturity of three months or less at the date of acquisition to be cash equivalents. As of September 30, 2019 and March 31, 2019, the Company did not have cash equivalents. From time to time, including as of September 30,2019, the Company’s cash account balances exceed the balances as covered by federally insured limits. The Company uses high quality financial institutions and believes the risk of loss due to exceeding federally insured limits to be low.

Accounts Receivable

The Company evaluates the collectability of its accounts receivable based on a number of factors. In circumstances where the Company becomes aware of a specific customer’s inability to meet its financial obligations to the Company, a specific reserve for bad debts is estimated and recorded, which reduces the recognized receivable to the estimated amount the Company believes will ultimately be collected. In addition to specific customer identification of potential bad debts, bad debt charges are recorded based on the Company’s historical losses and an overall assessment of past due trade accounts receivable outstanding.

The Company recognizes an allowance for doubtful accounts to ensure trade receivables are not overstated due to collectability. For the most part, the Company generally requires advance payments for its Signature Cars and credit card payments for parts and merchandise. As of September 30, 2019 and March 31, 2019, the Company deemed an allowance for doubtful accounts was not required against its receivables.

F-7

Inventory

Inventory are stated at the lower of cost or net realizable value. Cost is determined principally on a first-in-first-out cost basis for automobile parts. Inventory consists of parts for the Company’s Signature Car models. Management has determined that no inventory reserve is required because automobile parts are utilized consistently through the manufacturing process and has a high turnover.

	September 30, 2019		March 31, 2019
Automobile parts	$	147,623	$	108,498
Finished goods		116,461		-
Total inventory	$	264,084	$	108,498

Property and Equipment, net

Property and equipment are stated at cost, net of accumulated depreciation and amortization. Expenditures for major renewals and improvements that extend the useful lives of property and equipment or increase production capacity are capitalized, and expenditures for repairs and maintenance are charged to expense as incurred. The cost of property and equipment is depreciated or amortized on a straight-line basis over the following estimated useful lives:

Computer equipment and software	3-7 years
Tooling	3-7 years
Furniture and fixtures	5-7 years
Automobiles and trailer	5-7 years
Machinery and equipment	3-7 years
Leasehold improvement	Shorter of the lease term or useful life

Management assesses the carrying value of property and equipment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If there is an indication of impairment, management prepares an estimate of future cash flows expected to result from the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment loss is recognized to write down the asset to its estimated fair value. The Company did not record an impairment loss for the three and six months ended September 30, 2019 and September 30, 2018.

The Company’s museum collection of automobiles held for exhibition purposes is not depreciated, as the estimated useful life of the museum collection is so long so that depreciation would not be necessary, and the residual value of such vehicles may exceed their acquisition cost. The Company’s museum collection is currently being exhibited in automobile museums around the country to further market the Company’s brand.

F-8

Customer Deposits

Sales orders received from customers of Signature Cars generally require customers to make deposits at the time of signing the related sales order. The Company receives either partial or full deposits related to Signature Car sales orders in advance of shipment and is generally paid in full prior to the shipment of the finished Signature Cars. Customer deposits as of September 30, 2019 and March 31, 2019 comprised of funds received in advance of shipment and amounted to $99,692 and $511,081, respectively, which will be recorded as revenue upon shipment of finished Signature Cars and satisfaction of the revenue recognition requirements discussed above.

Warranty Policy

The Company provides a three-year or 36,000 miles New Vehicle Limited Warranty for its Signature Cars. The vehicle limited warranty applies to installed parts and/or assemblies in new Saleen high performance cars. All of the unaltered parts are covered under the original full warranty of the OEM manufacturer of the base vehicles.

Advertising, Sales, and Marketing Costs

Advertising, sales, and marketing costs are expensed as incurred and are included in sales and marketing expenses on the accompanying condensed consolidated statement of operations. During the six-months ended September 30, 2019 and 2018, advertising, sales and marketing expenses were $682,488 and $294,951, respectively. During the three-months ended September 30, 2019 and 2018, advertising, sales and marketing expenses were $251,058 and $167,805, respectively.

Income Taxes

The Company accounts for income taxes using an asset and liability approach which allows for the recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits or that future deductibility is uncertain.

Changes in circumstances, such as the Company generating taxable income, could cause a change in judgment about the realizability of the related deferred tax asset. Any change in the valuation allowance will be included in income in the year of the change in estimate.

Fair Value of Financial Instruments

The Company accounts for the fair value of financial instruments in accordance with the FASB ASC topic 820, “Fair Value Measurements and Disclosures” (“ASC 820”). ASC 820 defines “fair value” as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

Authoritative guidance provided by the FASB defines the following levels directly related to the amount of subjectivity associated with the inputs to fair valuation of these financial assets:

Level 1 Quoted prices in active markets for identical assets or liabilities.

Level 2 Inputs, other than the quoted prices in active markets, that is observable either directly or indirectly.

Level 3 Unobservable inputs based on the Company’s assumptions.

F-9

The Company’s financial instruments consist principally of cash, accounts receivable, accounts payable, accrued liabilities, and customer deposits. The carrying amounts of such financial instruments in the accompanying balance sheets approximate their fair values due to their relatively short-term nature. The carrying values of notes payable approximate their fair values due to the fact that the interest rates on these obligations are based on prevailing market interest rates. It is management’s opinion that the Company is not exposed to any significant currency or credit risks arising from these financial instruments.

Net Income per Share

Basic income per common share is computed by dividing income attributable to common stockholders by the weighted average number of common shares outstanding. Diluted net income per common share is computed by dividing net income attributable to common stockholders by the weighted average number of common shares that would have been outstanding during the period assuming the issuance of common stock for all potential dilutive common shares outstanding. Potential common shares consist of shares issuable upon the exercise of stock options and warrants and the conversion of convertible notes payable.

The following table sets forth the computation of basic and diluted net income per common share for the three-months and six months ended:

	Three Months Ended September 30,				Six Months Ended September 30,
	2019		2018		2019		2018
Numerator:
Net income attributable to common stockholders	$	791,055	$	585,526	$	1,580,279	$	33,437
Denominator:
Weighted average number of shares outstanding, basic		24,536,963		24,536,963		24,536,963		24,536,963
Adjustment for dilutive effects of warrants		1,666,663		1,666,663		1,666,663		1,666,663
Adjustment for Series B convertible preferred shares		666,660		666,660		666,660		666,660
Adjustment for dilutive effects of convertible note payable		166,667		166,667		166,667		166,667
Weighted average number of common shares outstanding, fully diluted		27,036,953		27,036,953		27,036,953		27,036,953
Net income per common share, basic	$	0.03	$	0.02	$	0.06	$	0.00
Net income per common share, fully diluted	$	0.03	$	0.02	$	0.06	$	0.00

The following table sets forth the number of potential common shares excluded from the calculations of net loss per diluted share because their inclusion would be anti-dilutive:

	Three Months Ended September 30,				Six Months Ended September 30,
	2019		2018		2019		2018
Outstanding options to purchase common stock		2,602		2,602		2,602		2,602
Total		2,602		2,602		2,602		2,602

Significant Concentrations

Sales to China-based customer, JSAT (see Note 2) comprised 68% and 76% of revenues for the three-months ended September 30, 2019 and 2018, respectively. Sales to China-based customer, JSAT comprised 78% and 71% of revenues for the six-months ended September 30, 2019 and 2018, respectively.

F-10

Two customers comprised 88% of accounts receivable as of September 30, 2019. One customer, a related party, comprised 98% of accounts receivable as of March 31, 2019.

The Company utilizes automobile platform vehicles for its Signature Cars from major manufacturers including Ford and Tesla and generally receives the base vehicle platforms directly from dealers. The Company enters into sourcing agreements with individual car dealerships but does not have supply agreements with the major manufacturers. Accordingly, the Company’s supply of base vehicle platforms may be limited to the allocation allotted from its source dealerships.

Recently Adopted Accounting Standards

In February 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-02, Leases, which was subsequently amended in 2018 by ASU 2018-10, ASU 2018-11, and ASU 2018-20 (collectively, Topic 842). Topic 842 will require the recognition of a right-of-use asset and a corresponding lease liability, initially measured at the present value of the lease payments, for all leases with terms longer than 12 months. For operating leases, the asset and liability will be expensed over the lease term on a straight-line basis, with all cash flows included in the operating section of the statement of cash flows. For finance leases, interest on the lease liability will be recognized separately from the amortization of the right-of-use asset in the statement of comprehensive income and the repayment of the principal portion of the lease liability will be classified as a financing activity while the interest component will be included in the operating section of the statement of cash flows. Topic 842 is effective for annual and interim reporting periods beginning after December 15, 2018. Early adoption is permitted. Topic 842 allows for a cumulative-effect adjustment in the period the new lease standard is adopted and will not require restatement of prior periods. The Company adopted Topic 842 using the modified retrospective approach, using a date of initial application of April 1, 2019. The adoption of this standard on April 1, 2019 resulted in the Company recording right-of-use assets and operating lease liabilities on its condensed consolidated balance sheets as of that date in the amounts of $4,059,492 each. The adoption of this standard did not have a significant effect on the amount of lease expense recognized by the Company.

Operating lease assets are included within operating lease right-of-use assets, and the corresponding operating lease liabilities are on our condensed consolidated balance sheet as of September 30, 2019.

We have elected not to present short-term leases on the condensed consolidated balance sheet as these leases have a lease term of 12 months or less at lease inception and do not contain purchase options or renewal terms that we are reasonably certain to exercise. All other lease assets and lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date. Because our leases do not provide an implicit rate of return, we used our incremental borrowing rate of 10% based on the information available at adoption date in determining the present value of lease payments.

The cumulative effect of the changes made to our condensed consolidated balance sheet as of January 1, 2019 for the adoption of the new lease standard was as follows:

	Balances at March 31, 2019			Adjustments from Adoption of New Lease Standard			Balances at April 1, 2019
Assets
Right-of-use assets		-			4,059,492			4,059,492
Liabilities
Deferred rent liability		263,955			(263,955	)		-
Operating lease liability – current		-			246,473			246,473
Operating lease liability – non-current		-			3,813,019			3,813,019
Equity
Accumulated deficit	$	(36,489,917	)		263,955		$	(36,225,962	)

See Note 11 for details regarding the Company’s operating leases.

F-11

Recent accounting pronouncements are not believed by management to have a material impact on the Company’s present or future condensed consolidated financial statements. During the three-months ended September 30, 2019, there have been no other changes to the Company’s significant accounting policies as described in the Annual Report on Form 10-K for the fiscal year ended March 31, 2019.

NOTE 2 – REVENUE FROM CONTRACTS WITH CUSTOMERS

The Company recognizes revenue from the following sources:

Revenue from services

The Company recognizes revenue from its engineering and design contracts and consulting services contracts as the services are provided and accepted by the customer over time. Contract liabilities are recorded for any payments received for services yet to be completed. Under the terms of its engineering design and development contract, costs are invoiced as incurred plus a markup.

Revenue from Saleen S1

The Company provides engineering, design, and development services to Jiangsu Saleen Automotive Technology Co., Ltd (“JSAT”) an unaffiliated corporation located in China, under a consulting agreement entered into in September 2016, and an engineering services contract entered into in April 2018. Under the engineering services contract, the Company agreed to provide engineering, design, and development services for the S1 and an SUV to be distributed in the United States and China. The Company entered into two addendums on the engineering services contract, one dated September 29, 2019 (the “September Addendum”) and the other dated December 20, 2019 (the “December Addendum”). Management evaluates contract modifications based on the terms of the modification and determined the appropriate accounting under ASC 606 which results in one of three outcomes: 1) a modification of the original contract with cumulative catch-up adjustment; 2) a modification of the original contract with the change being accounted for prospectively; or 3) a separate and new contract. The September Addendum increased the scope of the contract, price and added distinct deliverables and performance obligations. Based on the terms of September Addendum, management has determined to account for this contract as a completely separate and distinct contract. The December Addendum increased the price but did not add any distinct deliverables, and thus based on management’s evaluation has been accounted for as a modification of the original contract with the change being accounted for prospectively. The Company expects to complete the engineering, designing and developing of the S1 in the calendar year 2020. Under the terms of the engineering services contract, as amended, the total contract amount is approximately $31,605,000. An early termination fee based on a percentage of the remaining unbilled contract amount will apply in the event the contract is cancelled by JSAT.

The Company also entered into a Saleen S1 Cup Vehicle Development and Production Agreement (“Cup Agreement”) with JSAT in November 2018, as amended in May 2019. Based on management’s evaluation of the amendment, the amendment clarified the terms of the original Cup Agreement and was accounted for as a modification of the original contract. Under the Cup Agreement, the Company agreed to provide engineering, design, and development services for the Saleen S1 racing vehicle, including prototype development and assembly of racing vehicles to be used in the S1 Cup Racing Series in the United States and China. The Cup Agreement provides for aggregate revenues to the Company of approximately $15,631,000.

F-12

In addition to these two agreements, the Company provides ad hoc consulting related to JSAT. Furthermore, for logistical expediency, JSAT sometimes requests that the Company pay for some of JSAT’s expenses, and subsequently JSAT reimburses the Company. These reimbursement of expenses to the Company have no mark-up and totaled $2,309,503 and $0 for the three-months ended September 30, 2019 and 2018, respectively, and $4,309,503 and $0 for the six-months ended September 30, 2019 and 2018, respectively.

During the three-months ended September 30, 2019 and 2018, the Company recognized revenue of $2,403,666 and $3,848,927, respectively, related to its completed performance under the engineering services contract. During the three-months ended September 30, 2019 and 2018, the Company recognized revenue of $7,456,024 and $0, respectively, related to its completed performance under the Cup Agreement. During the three-months ended September 30, 2019 and 2018, the Company recognized revenue of $0 and $162,048, respectively, of consulting fees related to JSAT.

During the six-months ended September 30, 2019 and 2018, the Company recognized revenue of $2,977,666 and $3,130,611, respectively, related to its completed performance under the engineering services contract. During the six-month periods ended September 30, 2019 and 2018, the Company recognized revenue of $17,295,719 and $0, respectively, related to its completed performance under the Cup Agreement. During the three-months ended September 30, 2019 and 2018, the Company recognized revenue of $0 and $162,048, respectively, of consulting fees related to JSAT.

Revenue from Saleen S7

Prior to the May 31, 2019 purchase of the S7 Supercars assets, the Company recognized revenue for engineering and manufacturing services as these services were performed. Separately, upon the sale by S7 Supercars of an S7 to the end user, the Company recognized a fee of approximately 33% of the net profit from the sale of the vehicle by S7 Supercars when such sale was completed, the title transferred to the buyer, and the buyer has accepted the vehicle. Prior to May 31, 2019 and the purchase of the S7 Supercars assets, the Company recognized revenue from S7 Supercars of $410,535 during the first fiscal quarter ending June 30, 2019. See Note 7 for more details.

Revenue from Products

Revenue from sale of Signature Cars

The Company recognizes revenue from the sale of its Signature Cars when control is transferred which generally occurs upon shipment or delivery of the Signature Cars from its manufacturing facility to the destination specified by the customer. Signature Cars revenue represents the amount of consideration which the Company expects to be entitled in exchange for the delivery of the modified vehicle. The Company determines whether delivery has occurred based on when title transfers and the risks of ownership have transferred to the buyer, which usually occurs when the Company places the cars on the carrier. The Company regularly reviews its customers’ financial positions to ensure that collectability is reasonably assured and generally collects deposits before work is started and final payments are received prior to shipment. Except for warranties, the Company has no post-sales obligations nor does the Company accept returns. During the three-months ended September 30, 2019 and 2018, the Company recognized revenue of $1,388,018 and $645,986, respectively, from the sale of Signature cars. During the six-months ended September 30, 2019 and 2018, the Company recognized revenue of $1,872,123 and $1,164,673, respectively, from sale of Signature cars.

Revenue from Saleen S7 Product Sales

Subsequent to the S7 supercars asset purchase agreement, the Company records the sale of S7 cars upon shipment and delivery of the completed S7 car to the buyer. During the three-months ended September 30, 2019, the Company recognized revenue of $556,300, from the sale of S7 vehicle. During the six-months ended September 30, 2019, the Company recognized revenue of $764,433, from the sale of S7 vehicle.

F-13

Contract Liabilities

As of September 30, 2019 and March 31, 2019, the Company’s contract liabilities balances included advances received prior to revenue being recognized of $1,323,696 and $1,068,150, respectively related to the engineering services agreement for JSAT. For service contracts where the performance obligation is not completed, contract liabilities is recorded for any payments received in advance of the performance obligation being completed.

NOTE 3 – PROPERTY AND EQUIPMENT

Property and equipment, net consisted of the following as of September 30, 2019 and March 31, 2019:

	September 30, 2019			March 31, 2019
Tooling	$	1,023,092		$	937,554
Automobiles and trailers		223,030			167,063
Museum collection automobiles		422,466			-
Machinery and equipment		264,001			100,233
Furniture and fixtures		156,711			147,960
Computer equipment and software		90,729			89,246
Leasehold improvements		142,091			79,691
		2,322,120			1,521,747
Accumulated depreciation and amortization		(969,117	)		(871,394	)
Total Property and Equipment	$	1,353,003		$	650,353

Depreciation and amortization expense were $37,168 and $10,843 for the three-months ended September 30, 2019 and 2018, respectively. Depreciation and amortization expense were $97,724 and $38,530 for the six-month periods ended September 30, 2019 and 2018, respectively.

NOTE 4 – NOTES PAYABLE

Notes payable consisted of the following as of September 30, 2019 and March 31, 2019:

		September 30, 2019		March 31, 2019
(1)	Settlement agreement for senior secured note	$	-	$	40,000
(2)	Unsecured note payable, interest at 5% per annum, due on demand		63,753		67,753
(3)	Unsecured note payable, interest at 10% per annum, due July 27, 2017, past due		-		83,980
(4)	Payment plan with credit card issuer		23,426		32,426
	Total notes payable	$	87,179	$	224,159

(1)	In December 2016, the Company entered into a settlement agreement with Citizens Business Bank for a $400,000 loan, was initially issued in 2009, and secured by all assets of the Company. On May 17, 2019, the balance of the loan was paid off.
(2)	In June 2016, the Company entered into an unsecured note payable with its landlord for past due rent of $389,922, covering the period from September 2013 to June 2016. The note bears interest at 5% per annum and is due on demand. As of September 30, 2019, the landlord has waived interest charges and has not sent any request for interest to be paid on the debt.
(3)	The note bears interest at 10% per annum, and for the three-month period ended September 30, 2019, the lender waived interest charges. As of September 30, 2019, the Company has paid this balance in full.
(4)	Per a settlement reached with the credit card issuer, the Company makes monthly payments of $1,500 against prior balances due.

F-14

NOTE 5 – CONVERTIBLE NOTES PAYABLE, PAST DUE

As of September 30, 2019 and March 31, 2019, the Company had one unsecured convertible note outstanding for $100,000. The note bears interest at 7% per annum, was due in March 2017 and is currently in default. The note is convertible into 166,667 shares of common stock.

NOTE 6 – ACCRUED LIABILITIES

Accrued liabilities consisted of the following as of September 30, 2019 and March 31, 2019:

	September 30, 2019		March 31, 2019
Accrued expenses related to JSAT contracts	$	2,215,608	$	-
Deferred vendor consideration		-	$	150,000
Other current payables		529,526		17,544
	$	2,745,134	$	167,544

NOTE 7 – RELATED PARTY TRANSACTIONS

Jeffrey Kraws, Top Hat Capital, and Crystal Research

As of September 30, 2019 and March 31, 2019, the Company owed Top Hat Capital and Crystal Research, whose co-founder and Managing Partner, Jeffrey Kraws, is a director of the Company, $61,672 for investment advisor and research services provided to the Company.

S7 Supercars, LLC

The Company served as the OEM for the Saleen S7, a limited production supercar. Prior to May 31, 2019, the S7 was produced under a joint venture with S7 Supercars, LLC, an entity that is controlled by affiliates of two of the Company’s principal shareholders. Under the agreement, S7 Supercars provided the chassis and all other costs to build the vehicle, and the Company was entitled to a fee for engineering and manufacturing services, plus an additional markup for these services. The agreement did not meet the scope for joint venture or equity method accounting under ASC 323-30-15, as neither party could make decisions for the other party and a formal entity was not created. The Company recognized revenue as these engineering and manufacturing services were performed. The cars produced under this agreement were owned by S7 Supercars until title passed to the ultimate buyer. Separately, upon the sale of the vehicle to the end users, the Company became entitled to a fee of approximately 33% of the net profit from the sale of the vehicle by S7 Supercars when such sale was completed, the title transferred to the buyer, and the buyer accepted the vehicle.

During the three and six month periods ended September 31, 2018, the Company recognized revenue from S7 Supercars of $379,969 and $288,597, respectively, for engineering and manufacturing services provided to S7 Supercars, LLC. Prior to May 31, 2019 and the purchase of the S7 Supercars assets, the Company recognized revenue from S7 Supercars of $410,535 during the first fiscal quarter ending June 30, 2019. As of September 30, 2019 and March 31, 2019, the Company had accounts receivable due from S7 Supercars of $0 and $133,742, respectively. As of September 30, 2019 and March 31, 2019, deposits of $0 and $100,000 from S7 Supercars were included in customer deposits, respectively.

On May 31, 2019, the Company entered into an asset purchase agreement with S7 Supercars, LLC pursuant to which S7 Supercars sold all of its assets, consisting of chassis and other automotive parts relating to the manufacture of the S7 supercar, and related intellectual property, to the Company for an initial purchase price of $1,482,304 comprised of a cash payment of $800,000, and the elimination of an accounts receivable balance of $682,304 owed to us by S7 Supercars. Based on management’s analysis, the S7 purchase did not meet the definition of a “business” under ASC 805-10-55, the entire purchase price of $1,482,304 was allocated to the intellectual property purchased, which is a reclassification of the prior fixed assets balance. In addition, the Company is required to pay S7 Supercars, LLC up to four additional payments of $50,000 each, upon sales by the Company of S7 supercars within the two-year period following the closing, subject to the conditions provided for in the purchase agreement. However, the Company does not intend to sell S7s to customers but instead will manufacture S7s for promotional purposes to build its brand. Pursuant to the purchase agreement, the joint venture agreement between the Company and S7 Supercars was terminated, except for indemnification obligations of the Company thereunder.

F-15

NOTE 8 – INCOME TAXES

For the three and six months-months ended September 30, 2019 and 2018, a reconciliation of the effective income tax rate to the U.S. statutory rate was as follows:

	Three Months Ended September 30,						Six Months Ended September 30,
	2019			2018			2019			2018
Tax expense at the U.S. statutory income tax		21	%		21	%		21	%		21	%
State tax net of federal tax benefit		7			7			7			7
Other		(1	)		-			-			-
Increase (decrease) in the valuation allowance		-			(28	)		-			(28	)
Effective tax rate		27	%		-	%		28	%		-	%

In assessing the realizability of the net deferred tax assets, the Company considered all relevant positive and negative evidence to determine whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The realization of the gross deferred tax assets was dependent on several factors, including the generation of sufficient taxable income prior to the expiration of the net operating loss carryforwards. As of September 30, 2019 and March 31, 2019, the Company believed that it is more likely than not that the Company’s deferred income tax assets will not be realized. As such, there is a full valuation allowance against the net deferred tax assets as of September 30, 2019 and March 31, 2019.

F-16

As of September 30, 2019, the Company generated regular tax federal net operating losses (“NOLs”) of approximately $19.2 million. The Company’s ability to realize tax benefit from the NOLs is subject to Internal Revenue Code Section 382 (“Section 382”), which generally imposes an annual limitation on the amount of net operating loss carryforwards that may be used to offset taxable income when a corporation has undergone significant changes in its stock ownership. It was previously estimated that the Company could not use the NOLs. For the three and six month period ended September 30, 2019, the Company did not benefit from or use any NOLs. However, management will be undergoing a study in order to determine if the NOLs are usable for future use which could result in a change to the valuation allowance in future periods.

The Company’s operations are based in California and it is subject to Federal and California state income tax. Tax years after 2014 are open to examination by Federal and state tax authorities.

NOTE 9 – STOCKHOLDERS’ EQUITY (DEFICIT)

Series B Preferred Stock

In August 2018, the Company filed a Certificate of Designation designating the rights and restrictions of its Series B Preferred Stock. Of the 1,000,000 preferred shares authorized at a par value of $0.001, 1,000 were designated as Series B Preferred Stock. The Series B Preferred Stock is convertible at the option of the holder into 1,000 common shares per one share of Series B Preferred Stock. The Series B Preferred Stock provides for liquidation and dividend rights on an as-if-converted basis into equivalent common shares. The Series B Preferred Stockholders have voting rights with the common shareholders on an as-if-converted basis. The holders of Series B Preferred Stock have the right, voting as a separate class, following a “Change of Control” (as defined), to elect a majority of the members of the Company’s Board of Directors and to remove from office such directors and to fill any vacancy caused by the resignation, death or removal of such directors.

In September 2018, the Company issued 666.66 units of Series B Preferred Stock and warrants for $600 per unit, for total cash proceeds of $400,000 to a related party. Each unit consisted of one share of Series B Preferred Stock that is convertible into 1,000 shares of the Company’s common stock, and a three-year warrant to purchase 500 shares of the Company’s common stock at an exercise price of $.70 per share. A total of 666.66 shares of Series B Preferred Stock convertible into 666,666 shares of common stock and warrants exercisable into 333,330 shares of common stock were issued. The warrants have a term of three years and vested immediately. The aggregate value of the warrants issued was $92,000 and were valued using the Black-Scholes-Merton option valuation model with the following assumptions: risk-free interest rate of 2.83%; dividend yield of 0%; and volatility of 100. The Company also determined that the Series B Preferred Stock contained a beneficial conversion feature of $92,000 which was recorded as a deemed dividend.

A portion of the proceeds from the sale of the Series B Preferred Stock was allocated to the warrants based on their relative fair value, which amounted to $92,000, using the Black Scholes option pricing model. The assumptions used in the Black Scholes model were as follows: risk-free interest rate of 2.83%; dividend yield of 0%; and volatility rate of 100%. The $92,000 has been recorded as a deemed dividend to the preferred shareholders and as a charge to additional paid-in capital (as there is a deficit in the Company’s retained earnings).

Issuance of Common Stock

During the three and six months ended September 30, 2019 and 2018, there were no shares of common stock issued.

F-17

Options

Omnibus Incentive Plan

In December 2013, the Company’s board of directors approved the 2013 Omnibus Incentive Plan (the “Plan”), which is administered by the Company’s board of directors or a committee thereof (the “Administrator”) as set forth in the Plan. The Plan provides for the granting of stock options, stock appreciation rights, restricted share awards, and restricted stock units to employees, directors (including non-employee directors), advisors and consultants. Grants under the Plan vest and expire based on periods determined by the Administrator, but in no event can the expiration date be later than ten years from the date of grant (five years after the date of grant if the grant is an incentive stock option to an employee who owns more than 10% of the total combined voting power of all classes of the Company’s capital stock (a “10% owner”)). Grants of stock options may be either incentive stock options or nonqualified stock options. The per share exercise price on an option, other than with respect to substitute awards, shall not be less than 100% of the fair market value of the Company’s Common Stock on the date the option is granted (110% of the fair market value if the grant is to a 10% owner). A total of 14,153 shares of common stock have been authorized for issuance and reserved under the Plan. The Plan was approved by the Company’s stockholders on December 11, 2013.

The Company utilizes the Black-Scholes option valuation model to estimate the fair value of stock options granted. The Company’s assessment of the estimated fair value of stock options is affected by the Company’s stock price as well as assumptions regarding a number of complex and subjective variables and the related tax impact.

Stock option activity is set forth below:

	Number of Shares		Weighted Average Exercise Price per Share		Average Intrinsic Value		Weighted Average Remaining Contractual Term (in years)
Outstanding at April 1, 2018		2,602	$	108	$	—		6.50
Granted		—		—		—		—
Cancelled		—		—		—		—
Exercised		—		—		—		—
Outstanding at September 30, 2018		2,602		108		—		6.50
Outstanding at April 1, 2019		2,602		108		—		5.50
Granted		—		—		—		—
Cancelled		—		—		—		—
Exercised		—		—		—		—
Outstanding at September 30, 2019		2,602	$	108	$	—		5.0

The aggregate intrinsic value shown in the table above represents the difference between the fair market value of the Company’s Common Stock per share on September 30, 2019 and the exercise price of each option.

During the six-months ended September 30, 2019 and 2018, the Company recorded no stock-based compensation expense related to stock options.

F-18

Warrants

Warrant activity is set forth below:

	Number of Shares		Weighted Average Exercise Price per Share		Average Intrinsic Value		Weighted Average Remaining Contractual Term (in years)
Outstanding at April 1, 2018		1,333,333	$	0.60		-		3.75
Granted		333,330		0.70				3.00
Cancelled		-		-		-		-
Exercised		-		-		-		-
Outstanding at September 30, 2018		1,666,663	$	0.62		-		3.25
Outstanding at April 1, 2019		1,666,663	$	0.62		-		2.67
Granted		-		-		-		-
Cancelled		-		-		-		-
Exercised		-		-		-		-
Outstanding at September 30, 2019		1,666,663	$	0.62		-		2.17

In January 2018, warrants exercisable into 1,333,333 shares of common stock were issued by the Company in conjunction with the issuance of 1,333,333 shares of common stock. The warrants have a term of two years and an exercise price of $0.60 per share. In September 2018, warrants exercisable into 333,330 shares of common stock were issued by the Company in conjunction with the issuance of Series B Preferred Stock. The warrants have a term of three years and an exercise price of $.70 per share. The intrinsic value of the Company’s warrants was nil at September 30, 2019, March 31, 2019, and March 31, 2018.

NOTE 10 –ROYALTY REVENUE FROM INTELLECTUAL PROPERTY LICENSE

In June 2015, the Company entered into an Intellectual Property License Agreement with Saleen Motors International, LLC (“SMI”), an unrelated party and wholly owned subsidiary of GreenTech Automotive, Inc. The license agreement had an initial term of 10 years. As part of the license agreement, SMI advanced the Company $500,000. In March 2018, SMI filed for bankruptcy and the Company provided notice to SMI of immediate termination of the license agreement. Pursuant to the termination provisions provided in the license agreement, the Company recorded $478,000 as royalty revenue during the year ended March 31, 2018. The Company was later informed that SMI had in fact not filed for bankruptcy. In October 2019, the Company retracted the termination notice.

NOTE 11 – COMMITMENTS AND CONTINGENCIES

Facilities Leases

In January 2015, the Company entered into lease agreements for the lease of two buildings totaling approximately 76,000 square feet under non-cancellable operating leases (the “Leases”). The Leases were on a triple net basis and required aggregate monthly payments of approximately $45,000 with annual rent escalations as negotiated. The Leases covered the period from February 2015 through January 2018. In September 2017, the Company entered into amendments to the Leases to renew the lease terms for the period from February 1, 2018, through January 31, 2028 (the “New Leases”). The New Leases require monthly payments beginning at approximately $57,000 with annual rent escalations at a negotiated rate plus the usual additional triple net costs. The Company has also entered into a sublease agreement that requires monthly payments of $17,700 from the sub-lessee on a month-to-month basis which terminated in November 2018.

Since our leases do not provide an implicit rate of return, we used our incremental borrowing rate of 10% based on the information available at adoption date in determining the present value of lease payments.

F-19

The following table sets forth the recorded assets and liabilities related to the Company’s operating leases:

	Balances at March 31, 2019			Adjustments from Adoption of New Lease Standard			Balances at April 1, 2019
Assets
Right-of-use assets		-			4,059,492			4,059,492
Liabilities
Deferred rent liability		263,955			(263,955	)		-
Operating lease liability – current		-			246,473			246,473
Operating lease liability – non-current		-			3,813,019			3,813,019
Stockholders’ Equity (Deficit)
Accumulated deficit	$	(36,489,917	)		263,955		$	(36,225,962	)

	September 30, 2019		March 31, 2019
Right-of-use asset	$	4,001,449	$	-
Deferred rent liability – current	$	-	$	263,955
Operating lease liabilities		246,473	$	-
Operating lease liabilities – non-current		3,755,622		-
Lease liabilities – total	$	4,002,095	$	263,955

The contractual future maturities of the Company’s operating lease liabilities are as follows:

Fiscal Year	Lease Commitment
2020	$	428,153
2021		655,910
2022		675,587
2023		695,855
2024		716,731
Thereafter		2,943,233
Total lease payments		6,115,469
Less: Future interest expense		2,113,374
Total	$	4,002,095

F-20

Litigation

The Company is involved in certain legal proceedings that arise from time to time in the ordinary course of its business. The Company is currently a party to several legal proceedings related to claims for payment that are currently accrued for in its condensed consolidated financial statements as other current liabilities or accounts payable. The Company records accruals for contingencies to the extent that management concludes that the occurrence is probable and that the related amount of loss can be reasonably estimated. Legal expenses associated with the contingency are expensed as incurred. The Company is not currently involved in any legal proceedings that could potentially have a material impact on its statement of operations.

NOTE 12 – SEGMENT REPORTING

Our Chief Executive Officer, as the chief operating decision maker (“CODM”), organizes the Company, manages resource allocations, and measures performance among two operating and reportable segments: (i) products and (ii) services. The products segment includes our signature cars, sales of S7 supercars and merchandises. The services segment includes engineering, development, design, and consulting services for JSAT, S7, and other customers.

The following table provides information about disaggregated revenue based on revenue by service lines and revenue by area:

	Three-Months Ended September 30,				Six-Months Ended September 30,
	2019		2018		2019		2018
Revenue by service lines:
Services provided to JSAT	$	9,859,690	$	2,923,151	$	20,486,518	$	3,848,927
S7 agreement (related party)		-		238,985		410,535		330,084
Other		10,000		-		205,000		-
Services – total		9,869,690		3,162,136		21,102,053		4,179,011
Products
S7 Sales (non-related party)		556,300		-		764,433		-
Signature cars		1,388,018		645,986		1,872,123		1,164,673
Merchandise		11,631		12,311		15,613		36,953
Products – total		1,955,949		658,297		2,652,169		1,201,626
Royalties		32,656		-		39,623		4,043
Total revenue	$	11,858,295	$	3,820,433	$	23,793,845	$	5,384,680

	Three-Months Ended September 30,					Six-Months Ended September 30,
	2019		2018			2019		2018
Gross profit
Services	$	2,403,903	$	2,217,804		$	4,479,515	$	2,739,393
Products		318,166		(84,531	)		616,240		52,494
Total	$	2,722,069	$	2,133,273		$	5,095,755	$	2,791,887

F-21

NOTE 13 – SUBSEQUENT EVENTS

In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic, which continues to spread throughout the United States. Although the Company is not currently required to suspend all of its business under local or federal laws, the Company has allowed certain non-essential employees to work remotely. Nonetheless, the Company s faces certain risks caused by COVID-19, including, without limitation:

● Interruptions of production due to supply chain disruptions;

● Reduced customer demand due to the overall state of the economy; and

● Delayed cash collections (most notably, from JSAT and automobile dealerships).

All of the above will have a material adverse impact on the Company. While the disruption is currently expected to be temporary, there is uncertainty around the duration. Therefore, while we expect this matter to negatively impact our business, results of operations, and financial position, the extent of this impact cannot be reasonably estimated at this time. In the interim, the Company has furloughed some employees in expectation of reduced business and may consider other mitigating actions in the short-term.

In April 2020, the Company received a loan in the amount of approximately $894,000 (the “PPP Loan”) under the new Paycheck Protection Program legislation administered by the U.S. Small Business Administration. The proceeds of the PPP Loan must be used for payroll costs, lease payments on agreements before February 15, 2020 and utility payments under agreements before February 1, 2020. At least 60% of the proceeds must be used for payroll costs and certain other expenses, and no more than 40% on non-payroll expenses. Proceeds from the PPP Loan used by the Company for the approved expense categories will generally be fully forgiven by the lender if the Company satisfies applicable employee headcount and compensation requirements. The Company currently believes that a majority of the PPP Loan proceeds will qualify for debt forgiveness; however, there can be no assurance that we will qualify for forgiveness from the Small Business Administration until it occurs.

F-22

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion summarizes the significant factors affecting the operating results, financial condition and liquidity and cash flows of the Company for the three and six-months ended September 30, 2019 and 2018. You should read this discussion together with the condensed consolidated financial statements, related notes and other financial information included in this Form 10-Q. Except for historical information, the matters discussed in this Management’s Discussion and Analysis of Financial Condition and Results of Operations are forward looking statements that involve risks and uncertainties and are based upon judgments concerning various factors that are beyond our control. Such forward-looking statements include any expectation of earnings, revenues or other financial items; any statements regarding the use of working capital, anticipated growth strategies and the development of and applications for new technology; factors that may affect our operating results; statements concerning our customers and expansion of our customer base; statements concerning new products; statements related to future economic conditions or performance; and other matters that do not relate strictly to historical facts or statements of assumptions underlying any of the foregoing. These statements are often identified by the use of words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “will,” or “plan,” and similar expressions or variations. These statements are based on the beliefs and assumptions of our management based on information currently available to management. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Actual events or results may differ materially from our expectations. Important factors that could cause actual results to differ materially from those stated or implied by our forward-looking statements include, but are not limited to the risks as set forth under “Part I, Item 1A – Risk Factors” which are included in our Report on Form 10-K for the year ended March 31, 2019 as filed on October 4, 2019. These risks could cause our actual results to differ materially from any future performance suggested below.

Overview

The Company provides engineering, development, and design consulting services on a project basis for automotive manufacturers worldwide. The Company’s engineering, development and design consulting service portfolio includes projects for major American automobile manufacturers and international start-up. The Company is also an OEM of high-performance vehicles that are built from the ground up. The Company also designs, develops, manufactures, and sells high-performance vehicles built from base chassis of major American automobile manufacturers. The Company currently has customers worldwide, including muscle and high-performance car enthusiasts, collectors, automotive dealers, exotic car retail dealers, television and motion picture productions, and consumers in the luxury supercar and motorsports markets.

Critical Accounting Policies and Estimates

The condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”). The preparation of the condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures. We base our estimates on historical experience, as appropriate, and on various other assumptions that we believe to be reasonable under the circumstances. Changes in the accounting estimates are reasonably likely to occur from period to period. Accordingly, actual results could differ significantly from the estimates made by our management. We evaluate our estimates and assumptions on an ongoing basis. To the extent that there are material differences between these estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected.

For a description of the Company, the basis of presentation, and the Company’s critical accounting policies and estimates, refer to Note 1, Nature of Business and Basis of Presentation, to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

3

Results of Operations

Comparison of the Three Months Ended September 30, 2019 to the Three Months Ended September 30, 2018

Our revenue, operating expenses, and net income from operations for the three-month period ended September 30, 2019, as compared to the three-month period ended September 30, 2018, were as follows:

	Three Months Ended September 30, 2019					Three Months Ended September 30, 2018								Percentage Change
	$		% of Sales			$		% of Sales			Change			Inc. (Dec.)
Revenues
Services		9,869,690		83	%		3,162,136		83	%		6,707,554			212	%
Products, net		1,955,949		16	%		658,297		17	%		1,297,652			197	%
Royalties		32,656		0	%		-		0	%		32,656			100	%
Total revenues, net		11,858,295		100	%		3,820,433		100	%		8,037,862			210	%
Cost of revenues
Services		7,465,787		63	%		944,332		25	%		6,521,455			691	%
Products		1,637,783		14	%		742,828		19	%		894,955			120	%
Total cost of revenues		9,103,570		77	%		1,687,160		44	%		7,416,410			440	%
Gross profit		2,754,725		23	%		2,133,273		56	%		621,452			29	%
Operating expenses
Advertising, sales, and marketing		251,058		2	%		167,805		4	%		83,253			50	%
General and administrative		1,276,530		11	%		1,344,326		35	%		(67,796	)		-5	%
Research and development		-		0	%		16,964		0	%		(16,964	)		-100	%
Depreciation and amortization		37,168		0	%		10,843		0	%		26,325			243	%
Total operating expenses		1,564,756		13	%		1,539,938		40	%		24,818			2	%
Income from operations		1,189,969		10	%		593,335		16	%		596,634			101	%
Other expense
Interest and financing costs		101,011		1	%		7,809		0	%		93,202			1194	%
Total other expense		101,011		1	%		7,809		0	%		93,202			1194	%
Net income before income tax expense		1,088,958		9	%		585,526		15	%		503,432			86	%
Income tax expense		297,903					-		0	%		297,903			100	%
Net income		791,055		7	%		585,526		15	%		205,529			35	%
Net income attributable to common shareholders		791,055		7	%		585,526		15	%		205,529			35	%

4

Revenue

Revenue, net increased by approximately $8,037,000 (210%) to approximately $11,858,000 for the three-months ended September 30, 2019, compared to approximately $3,820,000 for the three-months ended September 30, 2018. The majority of the increase in revenue was attributable to increased revenue from the Cup Vehicle Development and Production Agreement (“Cup Agreement”) with JSAT. Revenue from JSAT increased by $6,941,539 (237%) to $9,864,690 for the three-months ended September 30, 2019, compared to $2,9213,151 for the three-months ended September 30, 2018. The increase relates to the Cup Agreement. Revenue from the Cup Agreement was $7,456,024 and $0 for the three-months ended September 30, 2019 and September 30, 2018, respectively.

Revenue for products increased mainly due to increased revenue from our Signature Cars and S7. Revenue from Signature Cars increased by 732,989 (113%) to $1,383,018 for the three-month period ended September 30, 2019, compared to $650,029 for the three-month period ended September 30, 2018. Revenue from S7 increased by $556,300 (100%) to $556,300 for the three-month period ended September 30, 2019, compared to $0 for the three-month period ended September 30, 2018.

Cost of Revenue

Cost of revenue for our Signature Cars, and S7 supercar consists primarily of parts, labor and manufacturing overhead related to shop and warehouse supplies and expenses. Cost of revenue for our S1 supercars consists primarily of labor and outside service costs related to the engineering and design of the S1, and overhead related to our facilities costs and administration. Lifestyle accessories and other Saleen-branded products are purchased directly from third-party vendors. Cost of revenue increased by approximately $7,416,410 (440%) to $9,103,570 for the three-month period ended September 30, 2019, compared to $1,687,160 for the three-month period ended September 30, 2018. The increase in the cost of revenue was primarily attributable to increased costs related to JSAT.

Gross Profit

Gross profit as a percentage of net revenue decreased by 33% to 23% for the three-month period ended September 30, 2019, compared to 56% for the three-month period ended September 30, 2018. The decrease in gross profit percentage related to the increased revenue from JSAT which had a lower gross profit percentage as to compared to our product revenue.

Operating Expenses

Operating costs include research and design, sales and marketing, general and administrative, non-cash stock-based compensation and depreciation.

Advertising, sales, and marketing expenses increased $83,253 (50%) to $251,058 during the three-month period ended September 30, 2019, compared to $167,805 during the three-month period ended September 30, 2018. The increase relates to new advertising efforts that were not in place in 2018 and increased sales salaries and marketing costs related to promotional events and car shows.

General and administrative expenses decreased $67,796 (5%) to $1,276,530 during the three-month period ended September 30, 2019, compared to $1,344,326 during the three-month period ended September 30, 2018. The decrease in general and administrative expenses was due primarily to decreased officer salaries, accounting, and legal fees during the quarter.

We had no research and development costs during the three-month period ended September 30, 2019, compared to $16,964 during the three-month period ended September 30, 2018.

Depreciation and amortization expense increased by $26,325 (243%) to $37,168 for the three-month period ended September 30, 2019, compared to $10,843 for the three-month period ended September 30, 2018.

5

Income from Operations

During the three-month period ended September 30, 2019, we generated income from operations of $1,189,969, compared to income from operations of $593,335 we generated during the three-month period ended September 30, 2018. Income from operations for the three-month period ended September 30, 2019, was due primarily to increased revenue and gross profit, offset in part by increased operating expenses.

Other Expense

Other expenses include interest and financing costs. Interest and financing costs increase $93,202 (1194%) to $101,011 during the three-month period ended September 30, 2019, compared to $7,809 during the three-month period ended September 30, 2018. The increase in interest and financing costs during the three-month period ended September 30, 2019, was due primarily to changes related to adoption of the new lease standard offset by an overall reduction in debt and two debtors that have waived interest.

Income Tax Expense

During the three-month period ended September 30, 2019, we reported income tax expense of $297,903. We had no income tax expense during the three-month period ended September 30, 2018.

Comparison of the Six Months Ended September 30, 2019 to the Six Months Ended September 30, 2018

Our revenue, operating expenses, and net income from operations for the six-months ended September 30, 2019, as compared to the six-months ended September 30, 2018, were as follows:

	Six Months Ended September 30, 2019					Six Months Ended September 30, 2018								Percentage Change
	$		% of Sales			$		% of Sales			Change			Inc. (Dec.)
Revenues
Services		21,102,053		89	%		4,179,011		78	%		16,923,042			405	%
Products, net		2,652,169		11	%		1,201,626		22	%		1,450,543			121	%
Royalties		39,623		0	%		4,043		0	%		35,580			880	%
Total revenues, net		23,793,845		100	%		5,384,680		100	%		18,409,165			342	%
Cost of revenues
Services		16,622,538		70	%		1,439,618		27	%		15,182,920			1055	%
Products		2,035,929		9	%		1,149,132		21	%		886,797			77	%
Total cost of revenues		18,658,467		78	%		2,588,750		48	%		16,069,717			621	%
Gross profit		5,135,378		22	%		2,795,930		52	%		2,339,448			84	%
Operating expenses
Advertising, sales, and marketing		682,488		3	%		294,951		5	%		387,537			131	%
General and administrative		2,051,785		9	%		2,294,811		43	%		(243,026	)		-11	%
Research and development		-		-	%		24,321		0	%		(24,321	)		-100	%
Depreciation and amortization		97,724		0	%		38,530		1	%		59,194			154	%
Total operating expenses		2,831,997		12	%		2,652,613		49	%		179,384			7	%
Income from operations		2,303,381		10	%		143,317		3	%		2,160,064			1507	%
Other expense
Interest and financing costs		102,109		0	%		17,880		0	%		84,229			471	%
Total other expense		102,109		0	%		17,880		0	%		84,229			471	%
Net income before income tax expense		2,201,272		9	%		125,437		2	%		2,075,835			1655	%
Income tax expense		620,993		3	%		-		-	%		620,993			100	%
Net income		1,580,279		7	%		125,437		2	%		1,454,842			1160	%
Net income attributable to common shareholders		1,580,279		7	%		33,437		1	%		1,546,842			4626	%

6

Revenue

Revenue, net increased by $16,923,042 (405%) to $21,102,053 for the six-months ended September 30, 2019, compared to $4,179,011 for the three-months ended September 30, 2018. The majority of the increase in revenue was attributable to increased revenue from JSAT under the Cup Agreement. Revenue from JSAT increased by $16,637,591 (432%) to $20,483,518 for the six-months ended September 30, 2019, compared to $3,848,927 for the six-months ended September 30, 2018. Revenue from the Cup Agreement was $17,295,719 and $0 for the three-months ended September 30, 2019 and September 30, 2018, respectively.

Revenue for products increased mainly due to increased revenue from our Signature Cars and S7. Revenue from Signature Cars increased by $703,407 (60%) to $1,872,123 for the six-months ended September 30, 2019, compared to $1,168,716 for the six-months ended September 30, 2018. Product revenue from S7 increased by $764,433 (100%) to $764,433 for the six-months ended September 30, 2019, compared to $0 for the six-months ended September 30, 2018.

Cost of Revenue

Cost of Revenue for our Signature Cars, and S7 supercar consists primarily of parts, labor and manufacturing overhead related to shop and warehouse supplies and expenses. Cost of revenue for our S1 supercars consists primarily of labor and outside service costs related to the engineering and design of the S1, and overhead related to our facilities costs and administration. Lifestyle accessories and other Saleen-branded products are purchased directly from third-party vendors. Cost of revenue increased by approximately $16,069,717 (621%) to $18,658,467 for the six-months ended September 30, 2019, compared to $2,588,750 for the six-months ended September 30, 2018. The increase in the cost of revenue was primarily attributable to increased costs related to JSAT.

Gross Profit

Gross profit as a percentage of net revenue decreased by 30% to 43% for the six-months ended September 30, 2019, compared to 73% for the six-months ended September 30, 2018. The decrease in gross profit percentage related to the increased revenue to JSAT which had a lower gross profit percentage as to compared to our product revenue.

7

Operating Expenses

Operating costs include research and design, sales and marketing, general and administrative, non-cash stock-based compensation and depreciation.

Advertising, sales, and marketing expense increased $387,537 (131%) to $682,488 during the six-months ended September 30, 2019, compared to $294,951 during the six-months ended September 30, 2018. The increase relates to new advertising efforts that were not in place in 2018.

General and administrative expenses decreased $243,026 (11%) to $2,051,785 during the six-months ended September 30, 2019, compared to $2,294,811 during the six-months ended September 30, 2018. The decrease in general and administrative expenses was due primarily to decreased officer and general and administrative employee salaries and headcount and a decrease in accounting fees for the period.

We had no research and development costs during the six-months ended September 30, 2019, compared to $24,321 during the six-months ended September 30, 2018.

Depreciation and amortization expense increased by $59,194 (154%) to $97,724 for the six-months ended September 30, 2019, compared to $38,530 for the six-months ended September 30, 2018.

Income from Operations

During the six-months ended September 30, 2019, we generated income from operations of $2,303,381, compared to income from operations of $143,317 incurred during the six-months ended September 30, 2018. Income from operations for the six-months ended September 30, 2019, was due primarily to increased revenue and gross profit, offset in part by increased sales and marketing efforts.

Other Expense

Other expenses include interest and financing costs. Interest and financing costs increased $84,229 (471%) to $102,109 during the six-months ended September 30, 2019, compared to $17,880 during the six-months ended September 30, 2018. The increase in interest and financing costs during the six-months ended September 30, 2019, was due primarily to changes related to adoption of the new lease standard offset by an overall reduction in debt and two debtors that have waived interest.

Income Tax Expense

During the six-months ended September 30, 2019, we reported income tax expense of $620,993. We had no income tax expense during the six-months ended September 30, 2018.

Liquidity and Capital Resources

Our working capital deficiency as of September 30, 2019, and March 31, 2018, was as follows:

	As of			As of
	September 30, 2019			March 31, 2019
Current assets	$	5,065,235		$	3,619,119
Current liabilities		6,431,452			4,398,809
Net working capital deficiency	$	(1,366,217	)	$	(779,690	)

8

The following summarizes our cash flow activity for the six-months ended September 30, 2019, and 2018:

Cash Flows

	Six-Months			Six-Months
	Ended			Ended
	September 30, 2019			September 30, 2018
Net cash provided by (used in) Operating Activities	$	3,654,921		$	(308,786	)
Net cash used in Investing Activities		(2,282,678	)		(52,812	)
Net cash (used in) provided by Financing Activities		(594,672	)		47,044
Change in Cash during the period		777,571			(314,554	)
Cash, Beginning of Period		3,374,234			523,120
Cash, End of Period	$	4,151,805		$	208,566

The Company has incurred significant net losses since inception. However, during the six-months ended September 30, 2019, the Company’s financial performance significantly improved, and we recorded net income of $1,878,181 and generated cash flows from operations of $3,197,229, primarily due to revenues from JSAT. Our ability to continue to generate net income and positive cash flows from operations is primarily dependent on our ability to continue to generate revenue from our contracts with JSAT and to generate revenue from the sale of our Signature Cars.

The Company cannot give assurance that it can maintain its cash balances or limit its cash consumption and maintain sufficient cash balances for its planned operations. Also, future business demands may lead to cash utilization at levels greater than recently experienced or anticipated. While we believe that our existing cash balances will be sufficient to fund our currently planned level of operations and investment activity, we may require additional financing to fund our planned future operations if we encounter unanticipated difficulties, or if our estimates of the amount of cash necessary to operate our business prove to be wrong, and we use our available financial resources faster than we currently expect. No assurance can be given that any future financing, if needed, will be available or, if available, that it will be on terms that are satisfactory to the Company. Subject to the foregoing, we believe the Company has sufficient capital and liquidity to fund its operations for at least one year from the date of filing of this Quarterly Report on Form 10-Q.

New Accounting Standards

See Note 1 of the condensed consolidated financial statements for a discussion of recent accounting pronouncements.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

A smaller reporting company is not required to provide any information in response to Item 305 of Regulation S-K.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As of September 30, 2019, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based upon that evaluation, as a result in the delay in filing this Quarterly Report on 10-Q, and notwithstanding that there were no accounting errors with respect to our financial statements, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of that date to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and to ensure that information required to be disclosed by us in such reports is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

9

Our disclosure controls or internal controls over financial reporting were designed to provide only reasonable assurance that such disclosure controls or internal control over financial reporting will prevent all errors or all instances of fraud, even as the same are improved to address any deficiencies. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be only reasonable, not absolute assurance that any design will succeed in achieving its stated goals under all potential future conditions. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.

Because of the inherent limitation of a cost-effective control system, misstatements due to error or fraud may occur and not be detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls.

Changes in Internal Control

Effective June 21, 2019, Amy Boylan resigned as the President and Chief Operating Officer of the Company.

Effective October 31, 2019, Lawrence Balingit was appointed the Chief Financial Officer and Chief Operating Officer of the Company. On March 6, 2020, Lawrence Balingit resigned as the Company’s Chief Financial Officer.

Effective April 30, 2020, Michael Roe was appointed the Chief Financial Officer of the Company.

Other than the items discussed above, during the three and six-months ended September 30, 2019, there were no changes in internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

None.

ITEM 1A. RISK FACTORS.

Not applicable.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

Effective June 21, 2019, Amy Boylan resigned as the President and Chief Operating Officer of the Company.

Effective October 31, 2019, Lawrence Balingit was appointed the Chief Financial Officer and Chief Operating Officer of the Company. On March 6, 2020, Lawrence Balingit resigned as the Company’s Chief Financial Officer.

Effective April 30, 2020, Michael Roe was appointed the Chief Financial Officer of the Company.

10

ITEM 6. EXHIBITS.

Exhibit	Description
3.1	Articles of Incorporation. Incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-1 filed with the Securities and Exchange Commission on August 18, 2011.
3.2	Certificate of Amendment of Articles of Incorporation. Incorporated by reference to Exhibit A to the Preliminary Information Statement on Schedule 14C filed with the Securities and Exchange Commission on December 13, 2013.
3.3	Articles of Merger effective June 17, 2013. Incorporated by reference to Exhibit 3.1.3 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on June 27, 2013.
3.4	Certificate of Amendment to Articles of Incorporation. Incorporated by reference to Exhibit A to the Preliminary Information Statement on Schedule 14C filed with the Securities and Exchange Commission on September 30, 2016
3.5	Certificate of Amendment to Articles of Incorporation filed December 7, 2017. Incorporated by reference to Exhibit 3.1.5 to the Registration Statement on Form 10 filed with the Securities and Exchange Commission on February 8, 2019.
3.6	Certificate of Amendment to Articles of Incorporation filed December 19, 2017. Incorporated by reference to Exhibit 3.1.6 to the Registration Statement on Form 10 filed with the Securities and Exchange Commission on February 8, 2019.
3.7	Certificate of Amendment to Articles of Incorporation filed December 21, 2017. Incorporated by reference to Exhibit 3.1.7 to the Registration Statement on Form 10 filed with the Securities and Exchange Commission on February 8, 2019.
3.7	Certificate of Designation of the Series B Preferred Stock of Saleen Automotive, Inc. Incorporated by reference to Exhibit 4.2 to the Registration Statement on Form 10 filed with the Securities and Exchange Commission on February 8, 2019.
3.9	Bylaws. Incorporated by reference to Exhibit 3.2 to the Registration Statement on Form S-1 filed with the Securities and Exchange Commission on August 18, 2011.
10.1	Asset Purchase Agreement, dated as of May 31, 2019, between Saleen Automotive, Inc. and S7 Supercars LLC. Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed with the Securities and Exchange Commission on June 27, 2019.
31.1*	Section 302 Certification of Chief Executive Officer and Chief Financial Officer
32.1*	Section 906 Certification of Chief Executive Officer and Chief Financial Officer
101.INS*	XBRL Instance Document
101.SCH*	XBRL Schema Document
101.CAL*	XBRL Calculation Linkbase Document
101.DEF*	XBRL Definition Linkbase Document
101.LAB*	XBRL Labels Linkbase Document
101.PRE*	XBRL Presentation Linkbase Document

11

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: July 8, 2020

SALEEN AUTOMOTIVE, INC.
By:	/s/ Steve Saleen
Name:	Steve Saleen
Title:	Chief Executive and Chief Financial Officer

12

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
PURSUANT TO SECURITIES EXCHANGE ACT RULES 13A-14 AND 15D-14

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Steve Saleen, certify that:

1.	I have reviewed this quarterly report on Form 10-Q for the fiscal quarter ended September 30, 2019 of Saleen Automotive, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.

Dated: July 8, 2020

/s/ Steve Saleen

Steve Saleen, Chief Executive Officer

(Principal Executive, Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Saleen Automotive, Inc. on Form 10-Q for the period ending September 30, 2019 (the “Report”) I, Steve Saleen, Chief Executive Officer of the Company, certify, pursuant to 18 USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge and belief:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: July 8, 2020

/s/ Steve Saleen

Steve Saleen, Chief Executive Officer

(Principal Executive, Financial and Accounting Officer)

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

XML

Document and Entity Information - shares	6 Months Ended
	Sep. 30, 2019	Jun. 01, 2020
Document And Entity Information
Entity Registrant Name	Saleen Automotive, Inc.
Entity Central Index Key	0001528098
Document Type	10-Q
Document Period End Date	Sep. 30, 2019
Amendment Flag	false
Current Fiscal Year End Date	--03-31
Entity Current Reporting Status	No
Entity Interactive Data Current	No
Entity Filer Category	Non-accelerated Filer
Entity Small Business Flag	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		24,536,963
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2020

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($)	Sep. 30, 2019	Mar. 31, 2019
Current Assets
Cash	$ 4,151,805	$ 3,374,234
Accounts receivable (including $0 as of September 30, 2019 and $133,742 as of March 31, 2019 due from related party)	634,755	136,387
Inventory	264,084	108,498
Other current assets	14,591
Total Current Assets	5,065,235	3,619,119
Property and equipment, net	1,353,003	650,353
Intellectual property	1,482,304
Right-of-use assets	4,001,449
Security deposits	70,780	70,800
TOTAL ASSETS	11,972,771	4,340,272
Current Liabilities
Accounts payable	125,603	351,726
Accrued compensation	455,887	632,689
Customer deposits	99,692	511,081
Accrued liabilities	2,745,134	167,554
Due to related parties	61,672	519,364
Income taxes payable	1,128,985	503,000
Notes payable	87,179	224,159
Convertible note payable, past due	100,000	100,000
Accrued interest on notes payable	37,131	37,131
Contract liabilities	1,323,696	1,068,150
Deferred rent		263,955
Operating lease liabilities	246,473
Accrued warranties	20,000	20,000
Total Current Liabilities	6,431,452	4,398,809
Operating lease liabilities - non-current	3,755,622
Total Liabilities	10,187,074	4,398,809
Commitments and Contingencies (Note 11)
Stockholders' Equity (Deficit)
Preferred stock; $0.001 par value; 1,000,000 shares authorized; 667 Series B shares issued and outstanding as of September 30, 2019 and March 31, 2019	1	1
Common stock; $0.001 par value; 100,000,000 shares authorized; 24,536,963 issued and outstanding as of September 30, 2019 and March 31, 2019	24,537	24,537
Additional paid-in capital	36,406,842	36,406,842
Accumulated deficit	(34,645,683)	(36,489,917)
Total Stockholders' Equity (Deficit)	1,785,697	(58,537)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	$ 11,972,771	$ 4,340,272

XML

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($)	Sep. 30, 2019	Mar. 31, 2019
Statement of Financial Position [Abstract]
Accounts receivable related party	$ 0	$ 133,742
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	1,000,000	1,000,000
Series B Preferred stock, shares issued	667	667
Series B Preferred stock, shares outstanding	667	667
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	24,536,963	24,536,963
Common stock, shares outstanding	24,536,963	24,536,963

XML

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Revenues
Total revenues, net	$ 11,858,295	$ 3,820,433	$ 23,793,845	$ 5,384,680
Costs of revenues
Total costs of revenues	9,103,570	1,687,160	18,658,467	2,588,750
Gross profit	2,754,725	2,133,273	5,135,378	2,795,930
Operating expenses
Advertising, sales, and marketing	251,058	167,805	682,488	294,951
General and administrative	1,276,530	1,344,326	2,051,785	2,294,811
Research and development		16,964		24,321
Depreciation and amortization	37,168	10,843	97,724	38,530
Total operating expenses	1,564,756	1,539,938	2,831,997	2,652,613
Income from operations	1,189,969	593,335	2,303,381	143,317
Other expense
Interest and financing costs	101,011	7,809	102,109	17,880
Total other expense	101,011	7,809	102,109	17,880
Net income before income tax expense	1,088,958	585,526	2,201,272	125,437
Income tax expense	297,903		620,993
Net income	791,055	585,526	1,580,279	125,437
Deemed dividend related to beneficial conversion feature of Series B Preferred Stock				92,000
Net income attributable to common stockholders	$ 791,055	$ 585,526	$ 1,580,279	$ 33,437
Net income per share attributable to common stockholders:
Basic	$ 0.03	$ 0.02	$ 0.06	$ 0.00
Diluted	$ 0.03	$ 0.02	$ 0.06	$ 0.00
Shares used in computing net income per share attributable to common stockholders:
Basic	24,536,963	24,536,963	24,536,963	24,536,963
Fully diluted	27,036,953	27,036,953	27,036,953	27,036,953
Services [Member]
Revenues
Total revenues, net	$ 9,869,690	$ 3,162,136	$ 21,102,053	$ 4,179,011
Costs of revenues
Total costs of revenues	7,465,787	944,332	16,622,538	1,439,618
Products [Member]
Revenues
Total revenues, net	1,955,949	658,297	2,652,169	1,201,626
Costs of revenues
Total costs of revenues	1,637,783	742,828	2,035,929	1,149,132
Royalties [Member]
Revenues
Total revenues, net	32,656		39,623	4,043
Costs of revenues
Total costs of revenues

XML

Condensed Consolidated Statements of Stockholders' Equity (Deficit) (Unaudited) - USD ($)	Preferred Stock [Member]	Common Stock [Member]	Additional Paid-In Capital [Member]	Accumulated Deficit [Member]	Total
Beginning balance at Mar. 31, 2018		$ 24,537	$ 36,006,843	$ (39,001,178)	$ (2,969,798)
Beginning balance, shares at Mar. 31, 2018		24,536,963
Net income (loss)				(460,089)	(460,089)
Ending balance at Jun. 30, 2018		$ 24,537	36,006,843	(39,461,267)	(3,429,887)
Ending balance, shares at Jun. 30, 2018		24,536,963
Beginning balance at Mar. 31, 2018		$ 24,537	36,006,843	(39,001,178)	(2,969,798)
Beginning balance, shares at Mar. 31, 2018		24,536,963
Deemed dividend on beneficial conversion feature of Series B Preferred Stock					(92,000)
Net income (loss)					125,437
Ending balance at Sep. 30, 2018	$ 1	$ 24,537	36,406,842	(38,875,741)	(2,444,361)
Ending balance, shares at Sep. 30, 2018	667	24,536,963
Beginning balance at Jun. 30, 2018		$ 24,537	36,006,843	(39,461,267)	(3,429,887)
Beginning balance, shares at Jun. 30, 2018		24,536,963
Cash proceeds from sales of Series B Preferred Stock and warrants in private placement to related party	$ 1		399,999		400,000
Cash proceeds from sales of Series B Preferred Stock and warrants in private placement to related party, shares	667
Beneficial conversion feature of Series B Preferred Stock			92,000		92,000
Deemed dividend on beneficial conversion feature of Series B Preferred Stock			(92,000)
Net income (loss)				585,526	585,526
Ending balance at Sep. 30, 2018	$ 1	$ 24,537	36,406,842	(38,875,741)	(2,444,361)
Ending balance, shares at Sep. 30, 2018	667	24,536,963
Beginning balance at Mar. 31, 2019	$ 1	$ 24,537	36,406,842	(36,489,917)	(58,537)
Beginning balance, shares at Mar. 31, 2019	667	24,536,963
Cumulative-effect of change in accounting policy (ASC 842)				263,955	263,955
Net income (loss)				789,224	789,224
Ending balance at Jun. 30, 2019	$ 1	$ 24,537	36,406,842	(35,436,738)	994,642
Ending balance, shares at Jun. 30, 2019	667	24,536,963
Beginning balance at Mar. 31, 2019	$ 1	$ 24,537	36,406,842	(36,489,917)	(58,537)
Beginning balance, shares at Mar. 31, 2019	667	24,536,963
Deemed dividend on beneficial conversion feature of Series B Preferred Stock
Net income (loss)					1,580,279
Ending balance at Sep. 30, 2019	$ 1	$ 24,537	36,406,842	(34,645,683)	1,785,697
Ending balance, shares at Sep. 30, 2019	667	24,536,963
Beginning balance at Jun. 30, 2019	$ 1	$ 24,537	36,406,842	(35,436,738)	994,642
Beginning balance, shares at Jun. 30, 2019	667	24,536,963
Deemed dividend on beneficial conversion feature of Series B Preferred Stock
Net income (loss)				791,055	791,055
Ending balance at Sep. 30, 2019	$ 1	$ 24,537	$ 36,406,842	$ (34,645,683)	$ 1,785,697
Ending balance, shares at Sep. 30, 2019	667	24,536,963

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$ 1,580,279	$ 125,437
Adjustments to reconcile net income to net cash provided by (used) in operating activities
Depreciation	97,724	38,530
Income tax expense	620,993
Operating lease payments	(57,397)
Amortization of right of use assets	58,043
Changes in Assets and Liabilities
Accounts receivable	(498,368)	36,093
Inventory	(155,586)	(22,768)
Other current assets	(14,571)	(185,400)
Accounts payable	(226,123)	(729,632)
Accrued compensation	(176,802)	(83,658)
Accrued interest on notes payable		(24,618)
Customer deposits	(411,389)	(172,160)
Accrued liabilities	2,582,572	58,776
Contract liabilities	255,546	650,614
Net cash provided by (used in) operating activities	3,654,921	(308,786)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment	(800,374)	(52,812)
Purchase of S7 Supercars asset	(1,482,304)
Net cash (used in) provided by investing activities	(2,282,678)	(52,812)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of Series B Preferred Stock and warrants in private placement to related party		400,000
Due to related parties, net	(457,692)	(103,956)
Repayment of notes payable and advances to related party		(200,000)
Repayment of notes payable	(136,980)	(49,000)
Net cash (used in) provided by financing activities	(594,672)	47,044
Net change in cash	777,571	(314,554)
Cash at beginning of the period	3,374,234	523,120
Cash at end of the period	4,151,805	208,566
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for interest		42,497
Fair value of beneficial conversion feature of Series B Preferred Stock		$ 92,000

XML

Nature of Business and Basis of Presentation

6 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

Nature of Business and Basis of Presentation

NOTE 1 – NATURE OF BUSINESS AND BASIS OF PRESENTATION

Basis of Presentation

The accompanying condensed consolidated balance sheet as of March 31, 2019, which has been derived from audited consolidated financial statements, and the accompanying interim condensed consolidated financial statements as of September 30, 2019 and for the three-months and six-months ended September 30, 2019 and 2018, have been prepared by management pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial reporting. These interim condensed consolidated financial statements are unaudited and, in the opinion of management, include all adjustments (consisting only of normal recurring adjustments and accruals) necessary to present fairly the financial condition, results of operations and cash flows of Saleen Automotive, Inc. (the “Company”) as of and for the periods presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Operating results for the three-months and six months ended September 30, 2019 are not necessarily indicative of the results that may be expected for the year ending March 31, 2020, or for any other interim period during such year. Certain information and footnote disclosures normally included in condensed consolidated financial statements prepared in accordance with GAAP have been omitted in accordance with the rules and regulations of the SEC, although the Company believes that the disclosures made are adequate to make the information not misleading. The accompanying condensed consolidated financial statements should be read in conjunction with the audited condensed consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2019 filed with the SEC on October 4, 2019.

Description of the Company

Saleen Automotive, Inc. (the “Company”) is an original equipment manufacturer (“OEM”) of high-performance vehicles (“Saleen Original”) that are built from the ground up. The Company also designs, develops, manufactures, and sells high-performance vehicles built from base chassis of major American automobile manufacturers (“Saleen Signature Cars”). The Company also provides engineering, development, and design consulting services on a project basis for automotive manufacturers worldwide. The Company currently has customers worldwide, including muscle and high-performance car enthusiasts, collectors, automotive dealers, exotic car retail dealers, television and motion picture productions, and consumers in the luxury supercar and motorsports markets.

Saleen Automotive, Inc. was incorporated under the laws of the State of Nevada on June 24, 2011. On May 23, 2013, the Company entered into a merger agreement with Saleen California Merger Corporation, Saleen Florida Merger Corporation, Saleen Automotive, Inc., and SMS Signature Cars (“SMS”) (collectively, the “Saleen Entities”), and Steve Saleen (“Saleen”). The merger closed on June 26, 2013, and the Saleen Entities merged with the Company and approximately 93% of the Company’s common stock was owned, collectively, by Saleen and the former holders of the outstanding capital stock of Saleen Automotive. The transaction was accounted for as a recapitalization with the Saleen Entities deemed the acquiring companies for accounting purposes, and the Company deemed the legal acquirer. In June 2013, the Company amended its articles of incorporation to change its name to Saleen Automotive, Inc.

On December 19, 2017, the Company effected a 1-for-2,000 reverse stock split of its common stock (“reverse stock split”) following approval by the Company’s Board of Directors and stockholders. All common stock share and per-share amounts for all periods presented in these condensed consolidated financial statements have been adjusted retroactively to reflect the reverse stock split.

The Company’s common stock is not currently quoted or traded on any market. Prior to deregistration on October 13, 2017, the Company’s common stock traded on the OTC Pink Sheets under the symbol “SLNN.” We intend to apply for quotation of our common stock on the OTCQB, although there is no assurance that our application will be accepted. 

Saleen OEM

The Company manufacturers the Saleen S7 supercar (“S7”), a limited production supercar with a 1,500-horsepower engine, in the Company’s production facility in Corona, California. The S7 was previously produced under a joint venture agreement with S7 Supercars, LLC (“S7 Supercars”), a related party owned by a significant shareholder, which owned the “S7” name and related intellectual property and assets. Under the agreement, S7 Supercars provided the chassis and all other costs to build the vehicle, and the Company was entitled to a fee for engineering and manufacturing services, plus an additional markup for these services. Separately, upon the sale of the vehicle to the end-users, the Company became entitled to a fee of approximately 33% of the net profit from the sale of the vehicle by S7 Supercars. On May 31, 2019, the Company entered into an asset purchase agreement with S7 Supercars, LLC pursuant to which S7 Supercars sold all of its assets, chassis and other automotive parts relating to the manufacture of the S7 supercar, and related intellectual property, to the Company for an initial purchase price of $1,165,000 comprised of a cash payment of $800,000, and the elimination of an accounts receivable balance of $365,000 owed to us by S7 Supercars. Furthermore, the amount of accounts receivable balance eliminated increased by $317,304 to $682,304 increasing the final purchase price to $1,482,304. Given that the purchase assets did not qualify as a business under the definition of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) ASC 805 Business Combinations, the Company recognized this transaction as the purchase of an intangible asset consisting of the “S7” tradename. In the previous quarter, the Company had classified the purchased assets as fixed assets and subsequently reclassified these assets as an intangible asset on the accompanying condensed consolidated balance sheet. In addition, the Company is required to pay S7 Supercars, LLC up to four additional payments of $50,000 each, upon sales by the Company of S7 supercars within the two-year period following the closing, subject to the conditions provided for in the purchase agreement. Pursuant to the purchase agreement, the joint venture agreement between the Company and S7 Supercars was terminated, except for indemnification obligations of the Company thereunder. However, the Company does not intend to sell S7s to customers but instead will manufacture S7s for promotional purposes to build its brand. See Note 7 for more details.

The Company is also in the process of completing the engineering, design, and certification of a new high-performance sports car, the Saleen 1 (or “S1”), under an engineering development and design contract with Jiangsu Saleen Automotive Technology Co. (“JSAT”), an unaffiliated corporation located in China which holds the intellectual property rights related to the S1 developed under the agreement and licenses the Saleen name from Saleen Motors International, an un-related third-party.

Saleen Signature Cars

The Company’s Saleen Signature Cars are built from base chassis of major American automobile manufacturers, including Ford Mustangs, Tesla Model S vehicles, and Ford trucks. The Company is a specialist in vehicle design, engineering and manufacturing focusing on the mass customization (the process of customizing automobiles that are mass produced by manufacturers) of American sports and electric vehicles and the production of high-performance USA-engineered sports cars. Saleen-branded products include a line of high performance and upgraded muscle and electric cars, automotive aftermarket specialty parts and lifestyle accessories.

Liquidity

The Company cannot give assurance that it can maintain its cash balances or limit its cash consumption and maintain sufficient cash balances for its planned operations. Also, future business demands may lead to cash utilization at levels greater than recently experienced or anticipated. While we believe that our existing cash balances will be sufficient to fund our currently planned level of operations and investment activity, we may require additional financing to fund our planned future operations if we encounter unanticipated difficulties, or if our estimates of the amount of cash necessary to operate our business prove to be wrong, and we use our available financial resources faster than we currently expect. No assurance can be given that any future financing, if needed, will be available or, if available, that it will be on terms that are satisfactory to the Company. Subject to the foregoing, management and the Board of Directors have adopted a budget that we believe will allow the Company sufficient capital and liquidity to fund its operations for at least one year from the date these condensed consolidated financial statements are issued.

In response to the COVID-19 pandemic which impacted operations in early 2020, we have reduced manufacturing schedules to balance production with our demand and our supply chain constraints. We have also taken actions to reduce overhead to mitigate the negative impacts of a reduced manufacturing schedule. While we currently expect any negative impact on sales to be temporary during the COVID-19 pandemic, the actions to contain the pandemic and treat its impacts, and the effects on our operations are highly uncertain and cannot be predicted at this time. 

Consolidation Policy

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Saleen Signature Cars, a California corporation, and Saleen Sales Corporation, a California corporation. All intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Among other things, management estimates include the estimated collectability of its accounts receivable, warranty reserves, and the valuation of deferred tax assets. Actual results could differ from those estimates.

Revenue recognition

The Company recognizes revenue using ASC 606, Revenue from Contracts with Customers (“ASC 606”). ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contracts, which includes

(1) identifying the contracts or agreements with a customer,

(2) identifying performance obligations in the contract or agreement,

(3) determining the transaction price,

(4) allocating the transaction price to the separate performance obligations, and

(5) recognizing revenue as each performance obligation is satisfied.

The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the services it transfers to its clients.

The Company’s revenue consists of primarily from the sale of its Signature Cars and services provided under its engineering and design, and development consulting services contracts. See Note 2 for further discussion of Revenues.

Cash

The Company considers all highly liquid investments with an original maturity of three months or less at the date of acquisition to be cash equivalents. As of September 30, 2019 and March 31, 2019, the Company did not have cash equivalents. From time to time, including as of September 30,2019, the Company’s cash account balances exceed the balances as covered by federally insured limits. The Company uses high quality financial institutions and believes the risk of loss due to exceeding federally insured limits to be low.

Accounts Receivable

The Company evaluates the collectability of its accounts receivable based on a number of factors. In circumstances where the Company becomes aware of a specific customer’s inability to meet its financial obligations to the Company, a specific reserve for bad debts is estimated and recorded, which reduces the recognized receivable to the estimated amount the Company believes will ultimately be collected. In addition to specific customer identification of potential bad debts, bad debt charges are recorded based on the Company’s historical losses and an overall assessment of past due trade accounts receivable outstanding.

The Company recognizes an allowance for doubtful accounts to ensure trade receivables are not overstated due to collectability. For the most part, the Company generally requires advance payments for its Signature Cars and credit card payments for parts and merchandise. As of September 30, 2019 and March 31, 2019, the Company deemed an allowance for doubtful accounts was not required against its receivables.

Inventory

Inventory are stated at the lower of cost or net realizable value. Cost is determined principally on a first-in-first-out cost basis for automobile parts. Inventory consists of parts for the Company’s Signature Car models. Management has determined that no inventory reserve is required because automobile parts are utilized consistently through the manufacturing process and has a high turnover.

	September 30, 2019		March 31, 2019
Automobile parts	$	147,623	$	108,498
Finished goods		116,461		-
Total inventory	$	264,084	$	108,498

Property and Equipment, net

Property and equipment are stated at cost, net of accumulated depreciation and amortization. Expenditures for major renewals and improvements that extend the useful lives of property and equipment or increase production capacity are capitalized, and expenditures for repairs and maintenance are charged to expense as incurred. The cost of property and equipment is depreciated or amortized on a straight-line basis over the following estimated useful lives:

Computer equipment and software	3-7 years
Tooling	3-7 years
Furniture and fixtures	5-7 years
Automobiles and trailer	5-7 years
Machinery and equipment	3-7 years
Leasehold improvement	Shorter of the lease term or useful life

Management assesses the carrying value of property and equipment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If there is an indication of impairment, management prepares an estimate of future cash flows expected to result from the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment loss is recognized to write down the asset to its estimated fair value. The Company did not record an impairment loss for the three and six months ended September 30, 2019 and September 30, 2018.

The Company’s museum collection of automobiles held for exhibition purposes is not depreciated, as the estimated useful life of the museum collection is so long so that depreciation would not be necessary, and the residual value of such vehicles may exceed their acquisition cost. The Company’s museum collection is currently being exhibited in automobile museums around the country to further market the Company’s brand.

Customer Deposits

Sales orders received from customers of Signature Cars generally require customers to make deposits at the time of signing the related sales order. The Company receives either partial or full deposits related to Signature Car sales orders in advance of shipment and is generally paid in full prior to the shipment of the finished Signature Cars. Customer deposits as of September 30, 2019 and March 31, 2019 comprised of funds received in advance of shipment and amounted to $99,692 and $511,081, respectively, which will be recorded as revenue upon shipment of finished Signature Cars and satisfaction of the revenue recognition requirements discussed above.

Warranty Policy

The Company provides a three-year or 36,000 miles New Vehicle Limited Warranty for its Signature Cars. The vehicle limited warranty applies to installed parts and/or assemblies in new Saleen high performance cars. All of the unaltered parts are covered under the original full warranty of the OEM manufacturer of the base vehicles.

Advertising, Sales, and Marketing Costs

Advertising, sales, and marketing costs are expensed as incurred and are included in sales and marketing expenses on the accompanying condensed consolidated statement of operations. During the six-months ended September 30, 2019 and 2018, advertising, sales and marketing expenses were $682,488 and $294,951, respectively. During the three-months ended September 30, 2019 and 2018, advertising, sales and marketing expenses were $251,058 and $167,805, respectively.

Income Taxes

The Company accounts for income taxes using an asset and liability approach which allows for the recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits or that future deductibility is uncertain.

Changes in circumstances, such as the Company generating taxable income, could cause a change in judgment about the realizability of the related deferred tax asset. Any change in the valuation allowance will be included in income in the year of the change in estimate.

Fair Value of Financial Instruments

The Company accounts for the fair value of financial instruments in accordance with the FASB ASC topic 820, “Fair Value Measurements and Disclosures” (“ASC 820”). ASC 820 defines “fair value” as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

Authoritative guidance provided by the FASB defines the following levels directly related to the amount of subjectivity associated with the inputs to fair valuation of these financial assets:

Level 1 Quoted prices in active markets for identical assets or liabilities.

Level 2 Inputs, other than the quoted prices in active markets, that is observable either directly or indirectly.

Level 3 Unobservable inputs based on the Company’s assumptions.

The Company’s financial instruments consist principally of cash, accounts receivable, accounts payable, accrued liabilities, and customer deposits. The carrying amounts of such financial instruments in the accompanying balance sheets approximate their fair values due to their relatively short-term nature. The carrying values of notes payable approximate their fair values due to the fact that the interest rates on these obligations are based on prevailing market interest rates. It is management’s opinion that the Company is not exposed to any significant currency or credit risks arising from these financial instruments.

Net Income per Share

Basic income per common share is computed by dividing income attributable to common stockholders by the weighted average number of common shares outstanding. Diluted net income per common share is computed by dividing net income attributable to common stockholders by the weighted average number of common shares that would have been outstanding during the period assuming the issuance of common stock for all potential dilutive common shares outstanding. Potential common shares consist of shares issuable upon the exercise of stock options and warrants and the conversion of convertible notes payable.

The following table sets forth the computation of basic and diluted net income per common share for the three-months and six months ended:

	Three Months Ended September 30,				Six Months Ended September 30,
	2019		2018		2019		2018
Numerator:
Net income attributable to common stockholders	$	791,055	$	585,526	$	1,580,279	$	33,437
Denominator:
Weighted average number of shares outstanding, basic		24,536,963		24,536,963		24,536,963		24,536,963
Adjustment for dilutive effects of warrants		1,666,663		1,666,663		1,666,663		1,666,663
Adjustment for Series B convertible preferred shares		666,660		666,660		666,660		666,660
Adjustment for dilutive effects of convertible note payable		166,667		166,667		166,667		166,667
Weighted average number of common shares outstanding, fully diluted		27,036,953		27,036,953		27,036,953		27,036,953
Net income per common share, basic	$	0.03	$	0.02	$	0.06	$	0.00
Net income per common share, fully diluted	$	0.03	$	0.02	$	0.06	$	0.00

The following table sets forth the number of potential common shares excluded from the calculations of net loss per diluted share because their inclusion would be anti-dilutive:

	Three Months Ended September 30,				Six Months Ended September 30,
	2019		2018		2019		2018
Outstanding options to purchase common stock		2,602		2,602		2,602		2,602
Total		2,602		2,602		2,602		2,602

Significant Concentrations

Sales to China-based customer, JSAT (see Note 2) comprised 68% and 76% of revenues for the three-months ended September 30, 2019 and 2018, respectively. Sales to China-based customer, JSAT comprised 78% and 71% of revenues for the six-months ended September 30, 2019 and 2018, respectively.

Two customers comprised 88% of accounts receivable as of September 30, 2019. One customer, a related party, comprised 98% of accounts receivable as of March 31, 2019.

The Company utilizes automobile platform vehicles for its Signature Cars from major manufacturers including Ford and Tesla and generally receives the base vehicle platforms directly from dealers. The Company enters into sourcing agreements with individual car dealerships but does not have supply agreements with the major manufacturers. Accordingly, the Company’s supply of base vehicle platforms may be limited to the allocation allotted from its source dealerships.

Recently Adopted Accounting Standards

In February 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-02, Leases, which was subsequently amended in 2018 by ASU 2018-10, ASU 2018-11, and ASU 2018-20 (collectively, Topic 842). Topic 842 will require the recognition of a right-of-use asset and a corresponding lease liability, initially measured at the present value of the lease payments, for all leases with terms longer than 12 months. For operating leases, the asset and liability will be expensed over the lease term on a straight-line basis, with all cash flows included in the operating section of the statement of cash flows. For finance leases, interest on the lease liability will be recognized separately from the amortization of the right-of-use asset in the statement of comprehensive income and the repayment of the principal portion of the lease liability will be classified as a financing activity while the interest component will be included in the operating section of the statement of cash flows. Topic 842 is effective for annual and interim reporting periods beginning after December 15, 2018. Early adoption is permitted. Topic 842 allows for a cumulative-effect adjustment in the period the new lease standard is adopted and will not require restatement of prior periods. The Company adopted Topic 842 using the modified retrospective approach, using a date of initial application of April 1, 2019. The adoption of this standard on April 1, 2019 resulted in the Company recording right-of-use assets and operating lease liabilities on its condensed consolidated balance sheets as of that date in the amounts of $4,059,492 each. The adoption of this standard did not have a significant effect on the amount of lease expense recognized by the Company.

Operating lease assets are included within operating lease right-of-use assets, and the corresponding operating lease liabilities are on our condensed consolidated balance sheet as of September 30, 2019.

We have elected not to present short-term leases on the condensed consolidated balance sheet as these leases have a lease term of 12 months or less at lease inception and do not contain purchase options or renewal terms that we are reasonably certain to exercise. All other lease assets and lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date. Because our leases do not provide an implicit rate of return, we used our incremental borrowing rate of 10% based on the information available at adoption date in determining the present value of lease payments.

The cumulative effect of the changes made to our condensed consolidated balance sheet as of January 1, 2019 for the adoption of the new lease standard was as follows:

	Balances at March 31, 2019			Adjustments from Adoption of New Lease Standard			Balances at April 1, 2019
Assets
Right-of-use assets		-			4,059,492			4,059,492
Liabilities
Deferred rent liability		263,955			(263,955	)		-
Operating lease liability – current		-			246,473			246,473
Operating lease liability – non-current		-			3,813,019			3,813,019
Equity
Accumulated deficit	$	(36,489,917	)		263,955		$	(36,225,962	)

See Note 11 for details regarding the Company’s operating leases.

Recent accounting pronouncements are not believed by management to have a material impact on the Company’s present or future condensed consolidated financial statements. During the three-months ended September 30, 2019, there have been no other changes to the Company’s significant accounting policies as described in the Annual Report on Form 10-K for the fiscal year ended March 31, 2019.

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Revenue from Contracts with Customers

6 Months Ended

Sep. 30, 2019

Revenue from Contract with Customer [Abstract]

Revenue from Contracts with Customers

NOTE 2 – REVENUE FROM CONTRACTS WITH CUSTOMERS

The Company recognizes revenue from the following sources:

Revenue from services

The Company recognizes revenue from its engineering and design contracts and consulting services contracts as the services are provided and accepted by the customer over time. Contract liabilities are recorded for any payments received for services yet to be completed. Under the terms of its engineering design and development contract, costs are invoiced as incurred plus a markup.

Revenue from Saleen S1

The Company provides engineering, design, and development services to Jiangsu Saleen Automotive Technology Co., Ltd (“JSAT”) an unaffiliated corporation located in China, under a consulting agreement entered into in September 2016, and an engineering services contract entered into in April 2018. Under the engineering services contract, the Company agreed to provide engineering, design, and development services for the S1 and an SUV to be distributed in the United States and China. The Company entered into two addendums on the engineering services contract, one dated September 29, 2019 (the “September Addendum”) and the other dated December 20, 2019 (the “December Addendum”). Management evaluates contract modifications based on the terms of the modification and determined the appropriate accounting under ASC 606 which results in one of three outcomes: 1) a modification of the original contract with cumulative catch-up adjustment; 2) a modification of the original contract with the change being accounted for prospectively; or 3) a separate and new contract. The September Addendum increased the scope of the contract, price and added distinct deliverables and performance obligations. Based on the terms of September Addendum, management has determined to account for this contract as a completely separate and distinct contract. The December Addendum increased the price but did not add any distinct deliverables, and thus based on management’s evaluation has been accounted for as a modification of the original contract with the change being accounted for prospectively. The Company expects to complete the engineering, designing and developing of the S1 in the calendar year 2020. Under the terms of the engineering services contract, as amended, the total contract amount is approximately $31,605,000. An early termination fee based on a percentage of the remaining unbilled contract amount will apply in the event the contract is cancelled by JSAT.

The Company also entered into a Saleen S1 Cup Vehicle Development and Production Agreement (“Cup Agreement”) with JSAT in November 2018, as amended in May 2019. Based on management’s evaluation of the amendment, the amendment clarified the terms of the original Cup Agreement and was accounted for as a modification of the original contract. Under the Cup Agreement, the Company agreed to provide engineering, design, and development services for the Saleen S1 racing vehicle, including prototype development and assembly of racing vehicles to be used in the S1 Cup Racing Series in the United States and China. The Cup Agreement provides for aggregate revenues to the Company of approximately $15,631,000.

In addition to these two agreements, the Company provides ad hoc consulting related to JSAT. Furthermore, for logistical expediency, JSAT sometimes requests that the Company pay for some of JSAT’s expenses, and subsequently JSAT reimburses the Company. These reimbursement of expenses to the Company have no mark-up and totaled $2,309,503 and $0 for the three-months ended September 30, 2019 and 2018, respectively, and $4,309,503 and $0 for the six-months ended September 30, 2019 and 2018, respectively.

During the three-months ended September 30, 2019 and 2018, the Company recognized revenue of $2,403,666 and $3,848,927, respectively, related to its completed performance under the engineering services contract. During the three-months ended September 30, 2019 and 2018, the Company recognized revenue of $7,456,024 and $0, respectively, related to its completed performance under the Cup Agreement. During the three-months ended September 30, 2019 and 2018, the Company recognized revenue of $0 and $162,048, respectively, of consulting fees related to JSAT.

During the six-months ended September 30, 2019 and 2018, the Company recognized revenue of $2,977,666 and $3,130,611, respectively, related to its completed performance under the engineering services contract. During the six-month periods ended September 30, 2019 and 2018, the Company recognized revenue of $17,295,719 and $0, respectively, related to its completed performance under the Cup Agreement. During the three-months ended September 30, 2019 and 2018, the Company recognized revenue of $0 and $162,048, respectively, of consulting fees related to JSAT.

Revenue from Saleen S7

Prior to the May 31, 2019 purchase of the S7 Supercars assets, the Company recognized revenue for engineering and manufacturing services as these services were performed. Separately, upon the sale by S7 Supercars of an S7 to the end user, the Company recognized a fee of approximately 33% of the net profit from the sale of the vehicle by S7 Supercars when such sale was completed, the title transferred to the buyer, and the buyer has accepted the vehicle. Prior to May 31, 2019 and the purchase of the S7 Supercars assets, the Company recognized revenue from S7 Supercars of $410,535 during the first fiscal quarter ending June 30, 2019. See Note 7 for more details.

Revenue from Products

Revenue from sale of Signature Cars

The Company recognizes revenue from the sale of its Signature Cars when control is transferred which generally occurs upon shipment or delivery of the Signature Cars from its manufacturing facility to the destination specified by the customer. Signature Cars revenue represents the amount of consideration which the Company expects to be entitled in exchange for the delivery of the modified vehicle. The Company determines whether delivery has occurred based on when title transfers and the risks of ownership have transferred to the buyer, which usually occurs when the Company places the cars on the carrier. The Company regularly reviews its customers’ financial positions to ensure that collectability is reasonably assured and generally collects deposits before work is started and final payments are received prior to shipment. Except for warranties, the Company has no post-sales obligations nor does the Company accept returns. During the three-months ended September 30, 2019 and 2018, the Company recognized revenue of $1,388,018 and $645,986, respectively, from the sale of Signature cars. During the six-months ended September 30, 2019 and 2018, the Company recognized revenue of $1,872,123 and $1,164,673, respectively, from sale of Signature cars.

Revenue from Saleen S7 Product Sales

Subsequent to the S7 supercars asset purchase agreement, the Company records the sale of S7 cars upon shipment and delivery of the completed S7 car to the buyer. During the three-months ended September 30, 2019, the Company recognized revenue of $556,300, from the sale of S7 vehicle. During the six-months ended September 30, 2019, the Company recognized revenue of $764,433, from the sale of S7 vehicle.

Contract Liabilities

As of September 30, 2019 and March 31, 2019, the Company’s contract liabilities balances included advances received prior to revenue being recognized of $1,323,696 and $1,068,150, respectively related to the engineering services agreement for JSAT. For service contracts where the performance obligation is not completed, contract liabilities is recorded for any payments received in advance of the performance obligation being completed.

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Property and Equipment

6 Months Ended

Sep. 30, 2019

Property, Plant and Equipment [Abstract]

Property and Equipment

NOTE 3 – PROPERTY AND EQUIPMENT

Property and equipment, net consisted of the following as of September 30, 2019 and March 31, 2019:

	September 30, 2019			March 31, 2019
Tooling	$	1,023,092		$	937,554
Automobiles and trailers		223,030			167,063
Museum collection automobiles		422,466			-
Machinery and equipment		264,001			100,233
Furniture and fixtures		156,711			147,960
Computer equipment and software		90,729			89,246
Leasehold improvements		142,091			79,691
		2,322,120			1,521,747
Accumulated depreciation and amortization		(969,117	)		(871,394	)
Total Property and Equipment	$	1,353,003		$	650,353

Depreciation and amortization expense were $37,168 and $10,843 for the three-months ended September 30, 2019 and 2018, respectively. Depreciation and amortization expense were $97,724 and $38,530 for the six-month periods ended September 30, 2019 and 2018, respectively.

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Notes Payable

6 Months Ended

Sep. 30, 2019

Debt Disclosure [Abstract]

Notes Payable

NOTE 4 – NOTES PAYABLE

Notes payable consisted of the following as of September 30, 2019 and March 31, 2019:

		September 30, 2019		March 31, 2019
(1)	Settlement agreement for senior secured note	$	-	$	40,000
(2)	Unsecured note payable, interest at 5% per annum, due on demand		63,753		67,753
(3)	Unsecured note payable, interest at 10% per annum, due July 27, 2017, past due		-		83,980
(4)	Payment plan with credit card issuer		23,426		32,426
	Total notes payable	$	87,179	$	224,159

(1)	In December 2016, the Company entered into a settlement agreement with Citizens Business Bank for a $400,000 loan, was initially issued in 2009, and secured by all assets of the Company. On May 17, 2019, the balance of the loan was paid off.
(2)	In June 2016, the Company entered into an unsecured note payable with its landlord for past due rent of $389,922, covering the period from September 2013 to June 2016. The note bears interest at 5% per annum and is due on demand. As of September 30, 2019, the landlord has waived interest charges and has not sent any request for interest to be paid on the debt.
(3)	The note bears interest at 10% per annum, and for the three-month period ended September 30, 2019, the lender waived interest charges. As of September 30, 2019, the Company has paid this balance in full.
(4)	Per a settlement reached with the credit card issuer, the Company makes monthly payments of $1,500 against prior balances due.

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Convertible Notes Payable, Past Due

6 Months Ended

Sep. 30, 2019

Debt Disclosure [Abstract]

Convertible Notes Payable, Past Due

NOTE 5 – CONVERTIBLE NOTES PAYABLE, PAST DUE

As of September 30, 2019 and March 31, 2019, the Company had one unsecured convertible note outstanding for $100,000. The note bears interest at 7% per annum, was due in March 2017 and is currently in default. The note is convertible into 166,667 shares of common stock.

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Accrued Liabilities

6 Months Ended

Sep. 30, 2019

Accrued Liabilities

Accrued Liabilities

NOTE 6 – ACCRUED LIABILITIES

Accrued liabilities consisted of the following as of September 30, 2019 and March 31, 2019:

	September 30, 2019		March 31, 2019
Accrued expenses related to JSAT contracts	$	2,215,608	$	-
Deferred vendor consideration		-	$	150,000
Other current payables		529,526		17,544
	$	2,745,134	$	167,544

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Related Party Transactions

6 Months Ended

Sep. 30, 2019

Related Party Transactions [Abstract]

Related Party Transactions

NOTE 7 – RELATED PARTY TRANSACTIONS

Jeffrey Kraws, Top Hat Capital, and Crystal Research

As of September 30, 2019 and March 31, 2019, the Company owed Top Hat Capital and Crystal Research, whose co-founder and Managing Partner, Jeffrey Kraws, is a director of the Company, $61,672 for investment advisor and research services provided to the Company.

S7 Supercars, LLC

The Company served as the OEM for the Saleen S7, a limited production supercar. Prior to May 31, 2019, the S7 was produced under a joint venture with S7 Supercars, LLC, an entity that is controlled by affiliates of two of the Company’s principal shareholders. Under the agreement, S7 Supercars provided the chassis and all other costs to build the vehicle, and the Company was entitled to a fee for engineering and manufacturing services, plus an additional markup for these services. The agreement did not meet the scope for joint venture or equity method accounting under ASC 323-30-15, as neither party could make decisions for the other party and a formal entity was not created. The Company recognized revenue as these engineering and manufacturing services were performed. The cars produced under this agreement were owned by S7 Supercars until title passed to the ultimate buyer. Separately, upon the sale of the vehicle to the end users, the Company became entitled to a fee of approximately 33% of the net profit from the sale of the vehicle by S7 Supercars when such sale was completed, the title transferred to the buyer, and the buyer accepted the vehicle.

During the three and six month periods ended September 31, 2018, the Company recognized revenue from S7 Supercars of $379,969 and $288,597, respectively, for engineering and manufacturing services provided to S7 Supercars, LLC. Prior to May 31, 2019 and the purchase of the S7 Supercars assets, the Company recognized revenue from S7 Supercars of $410,535 during the first fiscal quarter ending June 30, 2019. As of September 30, 2019 and March 31, 2019, the Company had accounts receivable due from S7 Supercars of $0 and $133,742, respectively. As of September 30, 2019 and March 31, 2019, deposits of $0 and $100,000 from S7 Supercars were included in customer deposits, respectively.

On May 31, 2019, the Company entered into an asset purchase agreement with S7 Supercars, LLC pursuant to which S7 Supercars sold all of its assets, consisting of chassis and other automotive parts relating to the manufacture of the S7 supercar, and related intellectual property, to the Company for an initial purchase price of $1,482,304 comprised of a cash payment of $800,000, and the elimination of an accounts receivable balance of $682,304 owed to us by S7 Supercars. Based on management’s analysis, the S7 purchase did not meet the definition of a “business” under ASC 805-10-55, the entire purchase price of $1,482,304 was allocated to the intellectual property purchased, which is a reclassification of the prior fixed assets balance. In addition, the Company is required to pay S7 Supercars, LLC up to four additional payments of $50,000 each, upon sales by the Company of S7 supercars within the two-year period following the closing, subject to the conditions provided for in the purchase agreement. However, the Company does not intend to sell S7s to customers but instead will manufacture S7s for promotional purposes to build its brand. Pursuant to the purchase agreement, the joint venture agreement between the Company and S7 Supercars was terminated, except for indemnification obligations of the Company thereunder.

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Income Taxes

6 Months Ended

Sep. 30, 2019

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 8 – INCOME TAXES

For the three and six months-months ended September 30, 2019 and 2018, a reconciliation of the effective income tax rate to the U.S. statutory rate was as follows:

	Three Months Ended September 30,						Six Months Ended September 30,
	2019			2018			2019			2018
Tax expense at the U.S. statutory income tax		21	%		21	%		21	%		21	%
State tax net of federal tax benefit		7			7			7			7
Other		(1	)		-			-			-
Increase (decrease) in the valuation allowance		-			(28	)		-			(28	)
Effective tax rate		27	%		-	%		28	%		-	%

In assessing the realizability of the net deferred tax assets, the Company considered all relevant positive and negative evidence to determine whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The realization of the gross deferred tax assets was dependent on several factors, including the generation of sufficient taxable income prior to the expiration of the net operating loss carryforwards. As of September 30, 2019 and March 31, 2019, the Company believed that it is more likely than not that the Company’s deferred income tax assets will not be realized. As such, there is a full valuation allowance against the net deferred tax assets as of September 30, 2019 and March 31, 2019.

As of September 30, 2019, the Company generated regular tax federal net operating losses (“NOLs”) of approximately $19.2 million. The Company’s ability to realize tax benefit from the NOLs is subject to Internal Revenue Code Section 382 (“Section 382”), which generally imposes an annual limitation on the amount of net operating loss carryforwards that may be used to offset taxable income when a corporation has undergone significant changes in its stock ownership. It was previously estimated that the Company could not use the NOLs. For the three and six month period ended September 30, 2019, the Company did not benefit from or use any NOLs. However, management will be undergoing a study in order to determine if the NOLs are usable for future use which could result in a change to the valuation allowance in future periods.

The Company’s operations are based in California and it is subject to Federal and California state income tax. Tax years after 2014 are open to examination by Federal and state tax authorities.

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Stockholders' Equity (Deficit)

6 Months Ended

Sep. 30, 2019

Equity [Abstract]

Stockholders' Equity (Deficit)

NOTE 9 – STOCKHOLDERS’ EQUITY (DEFICIT)

Series B Preferred Stock

In August 2018, the Company filed a Certificate of Designation designating the rights and restrictions of its Series B Preferred Stock. Of the 1,000,000 preferred shares authorized at a par value of $0.001, 1,000 were designated as Series B Preferred Stock. The Series B Preferred Stock is convertible at the option of the holder into 1,000 common shares per one share of Series B Preferred Stock. The Series B Preferred Stock provides for liquidation and dividend rights on an as-if-converted basis into equivalent common shares. The Series B Preferred Stockholders have voting rights with the common shareholders on an as-if-converted basis. The holders of Series B Preferred Stock have the right, voting as a separate class, following a “Change of Control” (as defined), to elect a majority of the members of the Company’s Board of Directors and to remove from office such directors and to fill any vacancy caused by the resignation, death or removal of such directors.

In September 2018, the Company issued 666.66 units of Series B Preferred Stock and warrants for $600 per unit, for total cash proceeds of $400,000 to a related party. Each unit consisted of one share of Series B Preferred Stock that is convertible into 1,000 shares of the Company’s common stock, and a three-year warrant to purchase 500 shares of the Company’s common stock at an exercise price of $.70 per share. A total of 666.66 shares of Series B Preferred Stock convertible into 666,666 shares of common stock and warrants exercisable into 333,330 shares of common stock were issued. The warrants have a term of three years and vested immediately. The aggregate value of the warrants issued was $92,000 and were valued using the Black-Scholes-Merton option valuation model with the following assumptions: risk-free interest rate of 2.83%; dividend yield of 0%; and volatility of 100. The Company also determined that the Series B Preferred Stock contained a beneficial conversion feature of $92,000 which was recorded as a deemed dividend.

A portion of the proceeds from the sale of the Series B Preferred Stock was allocated to the warrants based on their relative fair value, which amounted to $92,000, using the Black Scholes option pricing model. The assumptions used in the Black Scholes model were as follows: risk-free interest rate of 2.83%; dividend yield of 0%; and volatility rate of 100%. The $92,000 has been recorded as a deemed dividend to the preferred shareholders and as a charge to additional paid-in capital (as there is a deficit in the Company’s retained earnings).

Issuance of Common Stock

During the three and six months ended September 30, 2019 and 2018, there were no shares of common stock issued.

Options

Omnibus Incentive Plan

In December 2013, the Company’s board of directors approved the 2013 Omnibus Incentive Plan (the “Plan”), which is administered by the Company’s board of directors or a committee thereof (the “Administrator”) as set forth in the Plan. The Plan provides for the granting of stock options, stock appreciation rights, restricted share awards, and restricted stock units to employees, directors (including non-employee directors), advisors and consultants. Grants under the Plan vest and expire based on periods determined by the Administrator, but in no event can the expiration date be later than ten years from the date of grant (five years after the date of grant if the grant is an incentive stock option to an employee who owns more than 10% of the total combined voting power of all classes of the Company’s capital stock (a “10% owner”)). Grants of stock options may be either incentive stock options or nonqualified stock options. The per share exercise price on an option, other than with respect to substitute awards, shall not be less than 100% of the fair market value of the Company’s Common Stock on the date the option is granted (110% of the fair market value if the grant is to a 10% owner). A total of 14,153 shares of common stock have been authorized for issuance and reserved under the Plan. The Plan was approved by the Company’s stockholders on December 11, 2013.

The Company utilizes the Black-Scholes option valuation model to estimate the fair value of stock options granted. The Company’s assessment of the estimated fair value of stock options is affected by the Company’s stock price as well as assumptions regarding a number of complex and subjective variables and the related tax impact.

Stock option activity is set forth below:

	Number of Shares		Weighted Average Exercise Price per Share		Average Intrinsic Value		Weighted Average Remaining Contractual Term (in years)
Outstanding at April 1, 2018		2,602	$	108	$	—		6.50
Granted		—		—		—		—
Cancelled		—		—		—		—
Exercised		—		—		—		—
Outstanding at September 30, 2018		2,602		108		—		6.50
Outstanding at April 1, 2019		2,602		108		—		5.50
Granted		—		—		—		—
Cancelled		—		—		—		—
Exercised		—		—		—		—
Outstanding at September 30, 2019		2,602	$	108	$	—		5.0

The aggregate intrinsic value shown in the table above represents the difference between the fair market value of the Company’s Common Stock per share on September 30, 2019 and the exercise price of each option.

During the six-months ended September 30, 2019 and 2018, the Company recorded no stock-based compensation expense related to stock options.

Warrants

Warrant activity is set forth below:

	Number of Shares		Weighted Average Exercise Price per Share		Average Intrinsic Value		Weighted Average Remaining Contractual Term (in years)
Outstanding at April 1, 2018		1,333,333	$	0.60		-		3.75
Granted		333,330		0.70				3.00
Cancelled		-		-		-		-
Exercised		-		-		-		-
Outstanding at September 30, 2018		1,666,663	$	0.62		-		3.25
Outstanding at April 1, 2019		1,666,663	$	0.62		-		2.67
Granted		-		-		-		-
Cancelled		-		-		-		-
Exercised		-		-		-		-
Outstanding at September 30, 2019		1,666,663	$	0.62		-		2.17

In January 2018, warrants exercisable into 1,333,333 shares of common stock were issued by the Company in conjunction with the issuance of 1,333,333 shares of common stock. The warrants have a term of two years and an exercise price of $0.60 per share. In September 2018, warrants exercisable into 333,330 shares of common stock were issued by the Company in conjunction with the issuance of Series B Preferred Stock. The warrants have a term of three years and an exercise price of $.70 per share. The intrinsic value of the Company’s warrants was nil at September 30, 2019, March 31, 2019, and March 31, 2018.

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Royalty Revenue from Intellectual Property License

6 Months Ended

Sep. 30, 2019

Royalty Revenue From Intellectual Property License

Royalty Revenue from Intellectual Property License

NOTE 10 –ROYALTY REVENUE FROM INTELLECTUAL PROPERTY LICENSE

In June 2015, the Company entered into an Intellectual Property License Agreement with Saleen Motors International, LLC (“SMI”), an unrelated party and wholly owned subsidiary of GreenTech Automotive, Inc. The license agreement had an initial term of 10 years. As part of the license agreement, SMI advanced the Company $500,000. In March 2018, SMI filed for bankruptcy and the Company provided notice to SMI of immediate termination of the license agreement. Pursuant to the termination provisions provided in the license agreement, the Company recorded $478,000 as royalty revenue during the year ended March 31, 2018. The Company was later informed that SMI had in fact not filed for bankruptcy. In October 2019, the Company retracted the termination notice.

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Commitments and Contingencies

6 Months Ended

Sep. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

NOTE 11 – COMMITMENTS AND CONTINGENCIES

Facilities Leases

In January 2015, the Company entered into lease agreements for the lease of two buildings totaling approximately 76,000 square feet under non-cancellable operating leases (the “Leases”). The Leases were on a triple net basis and required aggregate monthly payments of approximately $45,000 with annual rent escalations as negotiated. The Leases covered the period from February 2015 through January 2018. In September 2017, the Company entered into amendments to the Leases to renew the lease terms for the period from February 1, 2018, through January 31, 2028 (the “New Leases”). The New Leases require monthly payments beginning at approximately $57,000 with annual rent escalations at a negotiated rate plus the usual additional triple net costs. The Company has also entered into a sublease agreement that requires monthly payments of $17,700 from the sub-lessee on a month-to-month basis which terminated in November 2018.

Since our leases do not provide an implicit rate of return, we used our incremental borrowing rate of 10% based on the information available at adoption date in determining the present value of lease payments.

The following table sets forth the recorded assets and liabilities related to the Company’s operating leases:

	Balances at March 31, 2019			Adjustments from Adoption of New Lease Standard			Balances at April 1, 2019
Assets
Right-of-use assets		-			4,059,492			4,059,492
Liabilities
Deferred rent liability		263,955			(263,955	)		-
Operating lease liability – current		-			246,473			246,473
Operating lease liability – non-current		-			3,813,019			3,813,019
Stockholders’ Equity (Deficit)
Accumulated deficit	$	(36,489,917	)		263,955		$	(36,225,962	)

	September 30, 2019		March 31, 2019
Right-of-use asset	$	4,001,449	$	-
Deferred rent liability – current	$	-	$	263,955
Operating lease liabilities		246,473	$	-
Operating lease liabilities – non-current		3,755,622		-
Lease liabilities – total	$	4,002,095	$	263,955

The contractual future maturities of the Company’s operating lease liabilities are as follows:

Fiscal Year	Lease Commitment
2020	$	428,153
2021		655,910
2022		675,587
2023		695,855
2024		716,731
Thereafter		2,943,233
Total lease payments		6,115,469
Less: Future interest expense		2,113,374
Total	$	4,002,095

Litigation

The Company is involved in certain legal proceedings that arise from time to time in the ordinary course of its business. The Company is currently a party to several legal proceedings related to claims for payment that are currently accrued for in its condensed consolidated financial statements as other current liabilities or accounts payable. The Company records accruals for contingencies to the extent that management concludes that the occurrence is probable and that the related amount of loss can be reasonably estimated. Legal expenses associated with the contingency are expensed as incurred. The Company is not currently involved in any legal proceedings that could potentially have a material impact on its statement of operations.

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Segment Reporting

6 Months Ended

Sep. 30, 2019

Segment Reporting [Abstract]

Segment Reporting

NOTE 12 – SEGMENT REPORTING

Our Chief Executive Officer, as the chief operating decision maker (“CODM”), organizes the Company, manages resource allocations, and measures performance among two operating and reportable segments: (i) products and (ii) services. The products segment includes our signature cars, sales of S7 supercars and merchandises. The services segment includes engineering, development, design, and consulting services for JSAT, S7, and other customers.

The following table provides information about disaggregated revenue based on revenue by service lines and revenue by area:

	Three-Months Ended September 30,				Six-Months Ended September 30,
	2019		2018		2019		2018
Revenue by service lines:
Services provided to JSAT	$	9,859,690	$	2,923,151	$	20,486,518	$	3,848,927
S7 agreement (related party)		-		238,985		410,535		330,084
Other		10,000		-		205,000		-
Services – total		9,869,690		3,162,136		21,102,053		4,179,011
Products
S7 Sales (non-related party)		556,300		-		764,433		-
Signature cars		1,388,018		645,986		1,872,123		1,164,673
Merchandise		11,631		12,311		15,613		36,953
Products – total		1,955,949		658,297		2,652,169		1,201,626
Royalties		32,656		-		39,623		4,043
Total revenue	$	11,858,295	$	3,820,433	$	23,793,845	$	5,384,680

	Three-Months Ended September 30,					Six-Months Ended September 30,
	2019		2018			2019		2018
Gross profit
Services	$	2,403,903	$	2,217,804		$	4,479,515	$	2,739,393
Products		318,166		(84,531	)		616,240		52,494
Total	$	2,722,069	$	2,133,273		$	5,095,755	$	2,791,887

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Subsequent Events

6 Months Ended

Sep. 30, 2019

Subsequent Events [Abstract]

Subsequent Events

NOTE 13 – SUBSEQUENT EVENTS

In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic, which continues to spread throughout the United States. Although the Company is not currently required to suspend all of its business under local or federal laws, the Company has allowed certain non-essential employees to work remotely. Nonetheless, the Company s faces certain risks caused by COVID-19, including, without limitation:

● Interruptions of production due to supply chain disruptions;

● Reduced customer demand due to the overall state of the economy; and

● Delayed cash collections (most notably, from JSAT and automobile dealerships).

All of the above will have a material adverse impact on the Company. While the disruption is currently expected to be temporary, there is uncertainty around the duration. Therefore, while we expect this matter to negatively impact our business, results of operations, and financial position, the extent of this impact cannot be reasonably estimated at this time. In the interim, the Company has furloughed some employees in expectation of reduced business and may consider other mitigating actions in the short-term.

In April 2020, the Company received a loan in the amount of approximately $894,000 (the “PPP Loan”) under the new Paycheck Protection Program legislation administered by the U.S. Small Business Administration. The proceeds of the PPP Loan must be used for payroll costs, lease payments on agreements before February 15, 2020 and utility payments under agreements before February 1, 2020. At least 60% of the proceeds must be used for payroll costs and certain other expenses, and no more than 40% on non-payroll expenses. Proceeds from the PPP Loan used by the Company for the approved expense categories will generally be fully forgiven by the lender if the Company satisfies applicable employee headcount and compensation requirements. The Company currently believes that a majority of the PPP Loan proceeds will qualify for debt forgiveness; however, there can be no assurance that we will qualify for forgiveness from the Small Business Administration until it occurs.

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Nature of Business and Basis of Presentation (Policies)

6 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying condensed consolidated balance sheet as of March 31, 2019, which has been derived from audited consolidated financial statements, and the accompanying interim condensed consolidated financial statements as of September 30, 2019 and for the three-months and six-months ended September 30, 2019 and 2018, have been prepared by management pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial reporting. These interim condensed consolidated financial statements are unaudited and, in the opinion of management, include all adjustments (consisting only of normal recurring adjustments and accruals) necessary to present fairly the financial condition, results of operations and cash flows of Saleen Automotive, Inc. (the “Company”) as of and for the periods presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Operating results for the three-months and six months ended September 30, 2019 are not necessarily indicative of the results that may be expected for the year ending March 31, 2020, or for any other interim period during such year. Certain information and footnote disclosures normally included in condensed consolidated financial statements prepared in accordance with GAAP have been omitted in accordance with the rules and regulations of the SEC, although the Company believes that the disclosures made are adequate to make the information not misleading. The accompanying condensed consolidated financial statements should be read in conjunction with the audited condensed consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2019 filed with the SEC on October 4, 2019.

Description of the Company

Description of the Company

Saleen Automotive, Inc. (the “Company”) is an original equipment manufacturer (“OEM”) of high-performance vehicles (“Saleen Original”) that are built from the ground up. The Company also designs, develops, manufactures, and sells high-performance vehicles built from base chassis of major American automobile manufacturers (“Saleen Signature Cars”). The Company also provides engineering, development, and design consulting services on a project basis for automotive manufacturers worldwide. The Company currently has customers worldwide, including muscle and high-performance car enthusiasts, collectors, automotive dealers, exotic car retail dealers, television and motion picture productions, and consumers in the luxury supercar and motorsports markets.

Saleen Automotive, Inc. was incorporated under the laws of the State of Nevada on June 24, 2011. On May 23, 2013, the Company entered into a merger agreement with Saleen California Merger Corporation, Saleen Florida Merger Corporation, Saleen Automotive, Inc., and SMS Signature Cars (“SMS”) (collectively, the “Saleen Entities”), and Steve Saleen (“Saleen”). The merger closed on June 26, 2013, and the Saleen Entities merged with the Company and approximately 93% of the Company’s common stock was owned, collectively, by Saleen and the former holders of the outstanding capital stock of Saleen Automotive. The transaction was accounted for as a recapitalization with the Saleen Entities deemed the acquiring companies for accounting purposes, and the Company deemed the legal acquirer. In June 2013, the Company amended its articles of incorporation to change its name to Saleen Automotive, Inc.

On December 19, 2017, the Company effected a 1-for-2,000 reverse stock split of its common stock (“reverse stock split”) following approval by the Company’s Board of Directors and stockholders. All common stock share and per-share amounts for all periods presented in these condensed consolidated financial statements have been adjusted retroactively to reflect the reverse stock split.

The Company’s common stock is not currently quoted or traded on any market. Prior to deregistration on October 13, 2017, the Company’s common stock traded on the OTC Pink Sheets under the symbol “SLNN.” We intend to apply for quotation of our common stock on the OTCQB, although there is no assurance that our application will be accepted. 

Saleen OEM

The Company manufacturers the Saleen S7 supercar (“S7”), a limited production supercar with a 1,500-horsepower engine, in the Company’s production facility in Corona, California. The S7 was previously produced under a joint venture agreement with S7 Supercars, LLC (“S7 Supercars”), a related party owned by a significant shareholder, which owned the “S7” name and related intellectual property and assets. Under the agreement, S7 Supercars provided the chassis and all other costs to build the vehicle, and the Company was entitled to a fee for engineering and manufacturing services, plus an additional markup for these services. Separately, upon the sale of the vehicle to the end-users, the Company became entitled to a fee of approximately 33% of the net profit from the sale of the vehicle by S7 Supercars. On May 31, 2019, the Company entered into an asset purchase agreement with S7 Supercars, LLC pursuant to which S7 Supercars sold all of its assets, chassis and other automotive parts relating to the manufacture of the S7 supercar, and related intellectual property, to the Company for an initial purchase price of $1,165,000 comprised of a cash payment of $800,000, and the elimination of an accounts receivable balance of $365,000 owed to us by S7 Supercars. Furthermore, the amount of accounts receivable balance eliminated increased by $317,304 to $682,304 increasing the final purchase price to $1,482,304. Given that the purchase assets did not qualify as a business under the definition of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) ASC 805 Business Combinations, the Company recognized this transaction as the purchase of an intangible asset consisting of the “S7” tradename. In the previous quarter, the Company had classified the purchased assets as fixed assets and subsequently reclassified these assets as an intangible asset on the accompanying condensed consolidated balance sheet. In addition, the Company is required to pay S7 Supercars, LLC up to four additional payments of $50,000 each, upon sales by the Company of S7 supercars within the two-year period following the closing, subject to the conditions provided for in the purchase agreement. Pursuant to the purchase agreement, the joint venture agreement between the Company and S7 Supercars was terminated, except for indemnification obligations of the Company thereunder. However, the Company does not intend to sell S7s to customers but instead will manufacture S7s for promotional purposes to build its brand. See Note 7 for more details.

The Company is also in the process of completing the engineering, design, and certification of a new high-performance sports car, the Saleen 1 (or “S1”), under an engineering development and design contract with Jiangsu Saleen Automotive Technology Co. (“JSAT”), an unaffiliated corporation located in China which holds the intellectual property rights related to the S1 developed under the agreement and licenses the Saleen name from Saleen Motors International, an un-related third-party.

Saleen Signature Cars

The Company’s Saleen Signature Cars are built from base chassis of major American automobile manufacturers, including Ford Mustangs, Tesla Model S vehicles, and Ford trucks. The Company is a specialist in vehicle design, engineering and manufacturing focusing on the mass customization (the process of customizing automobiles that are mass produced by manufacturers) of American sports and electric vehicles and the production of high-performance USA-engineered sports cars. Saleen-branded products include a line of high performance and upgraded muscle and electric cars, automotive aftermarket specialty parts and lifestyle accessories.

Liquidity

Liquidity

The Company cannot give assurance that it can maintain its cash balances or limit its cash consumption and maintain sufficient cash balances for its planned operations. Also, future business demands may lead to cash utilization at levels greater than recently experienced or anticipated. While we believe that our existing cash balances will be sufficient to fund our currently planned level of operations and investment activity, we may require additional financing to fund our planned future operations if we encounter unanticipated difficulties, or if our estimates of the amount of cash necessary to operate our business prove to be wrong, and we use our available financial resources faster than we currently expect. No assurance can be given that any future financing, if needed, will be available or, if available, that it will be on terms that are satisfactory to the Company. Subject to the foregoing, management and the Board of Directors have adopted a budget that we believe will allow the Company sufficient capital and liquidity to fund its operations for at least one year from the date these condensed consolidated financial statements are issued.

In response to the COVID-19 pandemic which impacted operations in early 2020, we have reduced manufacturing schedules to balance production with our demand and our supply chain constraints. We have also taken actions to reduce overhead to mitigate the negative impacts of a reduced manufacturing schedule. While we currently expect any negative impact on sales to be temporary during the COVID-19 pandemic, the actions to contain the pandemic and treat its impacts, and the effects on our operations are highly uncertain and cannot be predicted at this time. 

Consolidation Policy

Consolidation Policy

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Saleen Signature Cars, a California corporation, and Saleen Sales Corporation, a California corporation. All intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Among other things, management estimates include the estimated collectability of its accounts receivable, warranty reserves, and the valuation of deferred tax assets. Actual results could differ from those estimates.

Revenue Recognition

Revenue recognition

The Company recognizes revenue using ASC 606, Revenue from Contracts with Customers (“ASC 606”). ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contracts, which includes

(1) identifying the contracts or agreements with a customer,

(2) identifying performance obligations in the contract or agreement,

(3) determining the transaction price,

(4) allocating the transaction price to the separate performance obligations, and

(5) recognizing revenue as each performance obligation is satisfied.

The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the services it transfers to its clients.

The Company’s revenue consists of primarily from the sale of its Signature Cars and services provided under its engineering and design, and development consulting services contracts. See Note 2 for further discussion of Revenues.

Cash

Cash

The Company considers all highly liquid investments with an original maturity of three months or less at the date of acquisition to be cash equivalents. As of September 30, 2019 and March 31, 2019, the Company did not have cash equivalents. From time to time, including as of September 30,2019, the Company’s cash account balances exceed the balances as covered by federally insured limits. The Company uses high quality financial institutions and believes the risk of loss due to exceeding federally insured limits to be low.

Accounts Receivable

Accounts Receivable

The Company evaluates the collectability of its accounts receivable based on a number of factors. In circumstances where the Company becomes aware of a specific customer’s inability to meet its financial obligations to the Company, a specific reserve for bad debts is estimated and recorded, which reduces the recognized receivable to the estimated amount the Company believes will ultimately be collected. In addition to specific customer identification of potential bad debts, bad debt charges are recorded based on the Company’s historical losses and an overall assessment of past due trade accounts receivable outstanding.

The Company recognizes an allowance for doubtful accounts to ensure trade receivables are not overstated due to collectability. For the most part, the Company generally requires advance payments for its Signature Cars and credit card payments for parts and merchandise. As of September 30, 2019 and March 31, 2019, the Company deemed an allowance for doubtful accounts was not required against its receivables. 

Inventory

Inventory

Inventory are stated at the lower of cost or net realizable value. Cost is determined principally on a first-in-first-out cost basis for automobile parts. Inventory consists of parts for the Company’s Signature Car models. Management has determined that no inventory reserve is required because automobile parts are utilized consistently through the manufacturing process and has a high turnover.

	September 30, 2019		March 31, 2019
Automobile parts	$	147,623	$	108,498
Finished goods		116,461		-
Total inventory	$	264,084	$	108,498

Property and Equipment, Net

Property and Equipment, net

Property and equipment are stated at cost, net of accumulated depreciation and amortization. Expenditures for major renewals and improvements that extend the useful lives of property and equipment or increase production capacity are capitalized, and expenditures for repairs and maintenance are charged to expense as incurred. The cost of property and equipment is depreciated or amortized on a straight-line basis over the following estimated useful lives:

Computer equipment and software	3-7 years
Tooling	3-7 years
Furniture and fixtures	5-7 years
Automobiles and trailer	5-7 years
Machinery and equipment	3-7 years
Leasehold improvement	Shorter of the lease term or useful life

Management assesses the carrying value of property and equipment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If there is an indication of impairment, management prepares an estimate of future cash flows expected to result from the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment loss is recognized to write down the asset to its estimated fair value. The Company did not record an impairment loss for the three and six months ended September 30, 2019 and September 30, 2018.

The Company’s museum collection of automobiles held for exhibition purposes is not depreciated, as the estimated useful life of the museum collection is so long so that depreciation would not be necessary, and the residual value of such vehicles may exceed their acquisition cost. The Company’s museum collection is currently being exhibited in automobile museums around the country to further market the Company’s brand.

Customer Deposits

Customer Deposits

Sales orders received from customers of Signature Cars generally require customers to make deposits at the time of signing the related sales order. The Company receives either partial or full deposits related to Signature Car sales orders in advance of shipment and is generally paid in full prior to the shipment of the finished Signature Cars. Customer deposits as of September 30, 2019 and March 31, 2019 comprised of funds received in advance of shipment and amounted to $99,692 and $511,081, respectively, which will be recorded as revenue upon shipment of finished Signature Cars and satisfaction of the revenue recognition requirements discussed above.

Warranty Policy

Warranty Policy

The Company provides a three-year or 36,000 miles New Vehicle Limited Warranty for its Signature Cars. The vehicle limited warranty applies to installed parts and/or assemblies in new Saleen high performance cars. All of the unaltered parts are covered under the original full warranty of the OEM manufacturer of the base vehicles.

Advertising, Sales, and Marketing Costs

Advertising, Sales, and Marketing Costs

Advertising, sales, and marketing costs are expensed as incurred and are included in sales and marketing expenses on the accompanying condensed consolidated statement of operations. During the six-months ended September 30, 2019 and 2018, advertising, sales and marketing expenses were $682,488 and $294,951, respectively. During the three-months ended September 30, 2019 and 2018, advertising, sales and marketing expenses were $251,058 and $167,805, respectively.

Income Taxes

Income Taxes

The Company accounts for income taxes using an asset and liability approach which allows for the recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits or that future deductibility is uncertain.

Changes in circumstances, such as the Company generating taxable income, could cause a change in judgment about the realizability of the related deferred tax asset. Any change in the valuation allowance will be included in income in the year of the change in estimate.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The Company accounts for the fair value of financial instruments in accordance with the FASB ASC topic 820, “Fair Value Measurements and Disclosures” (“ASC 820”). ASC 820 defines “fair value” as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

Authoritative guidance provided by the FASB defines the following levels directly related to the amount of subjectivity associated with the inputs to fair valuation of these financial assets:

Level 1 Quoted prices in active markets for identical assets or liabilities.

Level 2 Inputs, other than the quoted prices in active markets, that is observable either directly or indirectly.

Level 3 Unobservable inputs based on the Company’s assumptions.

The Company’s financial instruments consist principally of cash, accounts receivable, accounts payable, accrued liabilities, and customer deposits. The carrying amounts of such financial instruments in the accompanying balance sheets approximate their fair values due to their relatively short-term nature. The carrying values of notes payable approximate their fair values due to the fact that the interest rates on these obligations are based on prevailing market interest rates. It is management’s opinion that the Company is not exposed to any significant currency or credit risks arising from these financial instruments.

Net Income Per Share

Net Income per Share

Basic income per common share is computed by dividing income attributable to common stockholders by the weighted average number of common shares outstanding. Diluted net income per common share is computed by dividing net income attributable to common stockholders by the weighted average number of common shares that would have been outstanding during the period assuming the issuance of common stock for all potential dilutive common shares outstanding. Potential common shares consist of shares issuable upon the exercise of stock options and warrants and the conversion of convertible notes payable.

The following table sets forth the computation of basic and diluted net income per common share for the three-months and six months ended:

	Three Months Ended September 30,				Six Months Ended September 30,
	2019		2018		2019		2018
Numerator:
Net income attributable to common stockholders	$	791,055	$	585,526	$	1,580,279	$	33,437
Denominator:
Weighted average number of shares outstanding, basic		24,536,963		24,536,963		24,536,963		24,536,963
Adjustment for dilutive effects of warrants		1,666,663		1,666,663		1,666,663		1,666,663
Adjustment for Series B convertible preferred shares		666,660		666,660		666,660		666,660
Adjustment for dilutive effects of convertible note payable		166,667		166,667		166,667		166,667
Weighted average number of common shares outstanding, fully diluted		27,036,953		27,036,953		27,036,953		27,036,953
Net income per common share, basic	$	0.03	$	0.02	$	0.06	$	0.00
Net income per common share, fully diluted	$	0.03	$	0.02	$	0.06	$	0.00

The following table sets forth the number of potential common shares excluded from the calculations of net loss per diluted share because their inclusion would be anti-dilutive:

	Three Months Ended September 30,				Six Months Ended September 30,
	2019		2018		2019		2018
Outstanding options to purchase common stock		2,602		2,602		2,602		2,602
Total		2,602		2,602		2,602		2,602

Significant Concentrations

Significant Concentrations

Sales to China-based customer, JSAT (see Note 2) comprised 68% and 76% of revenues for the three-months ended September 30, 2019 and 2018, respectively. Sales to China-based customer, JSAT comprised 78% and 71% of revenues for the six-months ended September 30, 2019 and 2018, respectively.

Two customers comprised 88% of accounts receivable as of September 30, 2019. One customer, a related party, comprised 98% of accounts receivable as of March 31, 2019.

The Company utilizes automobile platform vehicles for its Signature Cars from major manufacturers including Ford and Tesla and generally receives the base vehicle platforms directly from dealers. The Company enters into sourcing agreements with individual car dealerships but does not have supply agreements with the major manufacturers. Accordingly, the Company’s supply of base vehicle platforms may be limited to the allocation allotted from its source dealerships.

Recently Adopted Accounting Standards

Recently Adopted Accounting Standards

In February 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-02, Leases, which was subsequently amended in 2018 by ASU 2018-10, ASU 2018-11, and ASU 2018-20 (collectively, Topic 842). Topic 842 will require the recognition of a right-of-use asset and a corresponding lease liability, initially measured at the present value of the lease payments, for all leases with terms longer than 12 months. For operating leases, the asset and liability will be expensed over the lease term on a straight-line basis, with all cash flows included in the operating section of the statement of cash flows. For finance leases, interest on the lease liability will be recognized separately from the amortization of the right-of-use asset in the statement of comprehensive income and the repayment of the principal portion of the lease liability will be classified as a financing activity while the interest component will be included in the operating section of the statement of cash flows. Topic 842 is effective for annual and interim reporting periods beginning after December 15, 2018. Early adoption is permitted. Topic 842 allows for a cumulative-effect adjustment in the period the new lease standard is adopted and will not require restatement of prior periods. The Company adopted Topic 842 using the modified retrospective approach, using a date of initial application of April 1, 2019. The adoption of this standard on April 1, 2019 resulted in the Company recording right-of-use assets and operating lease liabilities on its condensed consolidated balance sheets as of that date in the amounts of $4,059,492 each. The adoption of this standard did not have a significant effect on the amount of lease expense recognized by the Company.

Operating lease assets are included within operating lease right-of-use assets, and the corresponding operating lease liabilities are on our condensed consolidated balance sheet as of September 30, 2019.

We have elected not to present short-term leases on the condensed consolidated balance sheet as these leases have a lease term of 12 months or less at lease inception and do not contain purchase options or renewal terms that we are reasonably certain to exercise. All other lease assets and lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date. Because our leases do not provide an implicit rate of return, we used our incremental borrowing rate of 10% based on the information available at adoption date in determining the present value of lease payments.

The cumulative effect of the changes made to our condensed consolidated balance sheet as of January 1, 2019 for the adoption of the new lease standard was as follows:

	Balances at March 31, 2019			Adjustments from Adoption of New Lease Standard			Balances at April 1, 2019
Assets
Right-of-use assets		-			4,059,492			4,059,492
Liabilities
Deferred rent liability		263,955			(263,955	)		-
Operating lease liability – current		-			246,473			246,473
Operating lease liability – non-current		-			3,813,019			3,813,019
Equity
Accumulated deficit	$	(36,489,917	)		263,955		$	(36,225,962	)

See Note 11 for details regarding the Company’s operating leases.

Recent accounting pronouncements are not believed by management to have a material impact on the Company’s present or future condensed consolidated financial statements. During the three-months ended September 30, 2019, there have been no other changes to the Company’s significant accounting policies as described in the Annual Report on Form 10-K for the fiscal year ended March 31, 2019.

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Nature of Business and Basis of Presentation (Tables)

6 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

Schedule of Inventories

	September 30, 2019		March 31, 2019
Automobile parts	$	147,623	$	108,498
Finished goods		116,461		-
Total inventory	$	264,084	$	108,498

Schedule of Estimated Useful Lives

The cost of property and equipment is depreciated or amortized on a straight-line basis over the following estimated useful lives:

Computer equipment and software	3-7 years
Tooling	3-7 years
Furniture and fixtures	5-7 years
Automobiles and trailer	5-7 years
Machinery and equipment	3-7 years
Leasehold improvement	Shorter of the lease term or useful life

Summary of Computation of Basic and Diluted Net Income (Loss) Per Common Share

The following table sets forth the computation of basic and diluted net income per common share for the three-months and six months ended:

	Three Months Ended September 30,				Six Months Ended September 30,
	2019		2018		2019		2018
Numerator:
Net income attributable to common stockholders	$	791,055	$	585,526	$	1,580,279	$	33,437
Denominator:
Weighted average number of shares outstanding, basic		24,536,963		24,536,963		24,536,963		24,536,963
Adjustment for dilutive effects of warrants		1,666,663		1,666,663		1,666,663		1,666,663
Adjustment for Series B convertible preferred shares		666,660		666,660		666,660		666,660
Adjustment for dilutive effects of convertible note payable		166,667		166,667		166,667		166,667
Weighted average number of common shares outstanding, fully diluted		27,036,953		27,036,953		27,036,953		27,036,953
Net income per common share, basic	$	0.03	$	0.02	$	0.06	$	0.00
Net income per common share, fully diluted	$	0.03	$	0.02	$	0.06	$	0.00

Schedule of Anti-Dilutive Securities

The following table sets forth the number of potential common shares excluded from the calculations of net loss per diluted share because their inclusion would be anti-dilutive:

	Three Months Ended September 30,				Six Months Ended September 30,
	2019		2018		2019		2018
Outstanding options to purchase common stock		2,602		2,602		2,602		2,602
Total		2,602		2,602		2,602		2,602

Schedule of Cumulative Effect on Consolidated Balance Sheet

The cumulative effect of the changes made to our condensed consolidated balance sheet as of January 1, 2019 for the adoption of the new lease standard was as follows:

	Balances at March 31, 2019			Adjustments from Adoption of New Lease Standard			Balances at April 1, 2019
Assets
Right-of-use assets		-			4,059,492			4,059,492
Liabilities
Deferred rent liability		263,955			(263,955	)		-
Operating lease liability – current		-			246,473			246,473
Operating lease liability – non-current		-			3,813,019			3,813,019
Equity
Accumulated deficit	$	(36,489,917	)		263,955		$	(36,225,962	)

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Property and Equipment (Tables)

6 Months Ended

Sep. 30, 2019

Property, Plant and Equipment [Abstract]

Schedule of Property and Equipment

Property and equipment, net consisted of the following as of September 30, 2019 and March 31, 2019:

	September 30, 2019			March 31, 2019
Tooling	$	1,023,092		$	937,554
Automobiles and trailers		223,030			167,063
Museum collection automobiles		422,466			-
Machinery and equipment		264,001			100,233
Furniture and fixtures		156,711			147,960
Computer equipment and software		90,729			89,246
Leasehold improvements		142,091			79,691
		2,322,120			1,521,747
Accumulated depreciation and amortization		(969,117	)		(871,394	)
Total Property and Equipment	$	1,353,003		$	650,353

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Notes Payable (Tables)

6 Months Ended

Sep. 30, 2019

Debt Disclosure [Abstract]

Schedule of Notes Payable

Notes payable consisted of the following as of September 30, 2019 and March 31, 2019:

		September 30, 2019		March 31, 2019
(1)	Settlement agreement for senior secured note	$	-	$	40,000
(2)	Unsecured note payable, interest at 5% per annum, due on demand		63,753		67,753
(3)	Unsecured note payable, interest at 10% per annum, due July 27, 2017, past due		-		83,980
(4)	Payment plan with credit card issuer		23,426		32,426
	Total notes payable	$	87,179	$	224,159

(1)	In December 2016, the Company entered into a settlement agreement with Citizens Business Bank for a $400,000 loan, was initially issued in 2009, and secured by all assets of the Company. On May 17, 2019, the balance of the loan was paid off.
(2)	In June 2016, the Company entered into an unsecured note payable with its landlord for past due rent of $389,922, covering the period from September 2013 to June 2016. The note bears interest at 5% per annum and is due on demand. As of September 30, 2019, the landlord has waived interest charges and has not sent any request for interest to be paid on the debt.
(3)	The note bears interest at 10% per annum, and for the three-month period ended September 30, 2019, the lender waived interest charges. As of September 30, 2019, the Company has paid this balance in full.
(4)	Per a settlement reached with the credit card issuer, the Company makes monthly payments of $1,500 against prior balances due.

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Accrued Liabilities (Tables)

6 Months Ended

Sep. 30, 2019

Accrued Liabilities

Schedule of Accrued Liabilities

Accrued liabilities consisted of the following as of September 30, 2019 and March 31, 2019:

	September 30, 2019		March 31, 2019
Accrued expenses related to JSAT contracts	$	2,215,608	$	-
Deferred vendor consideration		-	$	150,000
Other current payables		529,526		17,544
	$	2,745,134	$	167,544

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Income Taxes (Tables)

6 Months Ended

Sep. 30, 2019

Income Tax Disclosure [Abstract]

Schedule of Effective Income Tax Rate Reconciliation

For the three and six months-months ended September 30, 2019 and 2018, a reconciliation of the effective income tax rate to the U.S. statutory rate was as follows:

	Three Months Ended September 30,						Six Months Ended September 30,
	2019			2018			2019			2018
Tax expense at the U.S. statutory income tax		21	%		21	%		21	%		21	%
State tax net of federal tax benefit		7			7			7			7
Other		(1	)		-			-			-
Increase (decrease) in the valuation allowance		-			(28	)		-			(28	)
Effective tax rate		27	%		-	%		28	%		-	%

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Stockholders' Equity (Deficit) (Tables)

6 Months Ended

Sep. 30, 2019

Equity [Abstract]

Schedule of Stock Option Plan Activity

Stock option activity is set forth below:

	Number of Shares		Weighted Average Exercise Price per Share		Average Intrinsic Value		Weighted Average Remaining Contractual Term (in years)
Outstanding at April 1, 2018		2,602	$	108	$	—		6.50
Granted		—		—		—		—
Cancelled		—		—		—		—
Exercised		—		—		—		—
Outstanding at September 30, 2018		2,602		108		—		6.50
Outstanding at April 1, 2019		2,602		108		—		5.50
Granted		—		—		—		—
Cancelled		—		—		—		—
Exercised		—		—		—		—
Outstanding at September 30, 2019		2,602	$	108	$	—		5.0

Schedule of Warrant Activity

Warrant activity is set forth below:

	Number of Shares		Weighted Average Exercise Price per Share		Average Intrinsic Value		Weighted Average Remaining Contractual Term (in years)
Outstanding at April 1, 2018		1,333,333	$	0.60		-		3.75
Granted		333,330		0.70				3.00
Cancelled		-		-		-		-
Exercised		-		-		-		-
Outstanding at September 30, 2018		1,666,663	$	0.62		-		3.25
Outstanding at April 1, 2019		1,666,663	$	0.62		-		2.67
Granted		-		-		-		-
Cancelled		-		-		-		-
Exercised		-		-		-		-
Outstanding at September 30, 2019		1,666,663	$	0.62		-		2.17

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Commitments and Contingencies (Tables)

6 Months Ended

Sep. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

Schedule of Operating Leases Assets and Liabilities

The following table sets forth the recorded assets and liabilities related to the Company’s operating leases:

	Balances at March 31, 2019			Adjustments from Adoption of New Lease Standard			Balances at April 1, 2019
Assets
Right-of-use assets		-			4,059,492			4,059,492
Liabilities
Deferred rent liability		263,955			(263,955	)		-
Operating lease liability – current		-			246,473			246,473
Operating lease liability – non-current		-			3,813,019			3,813,019
Stockholders’ Equity (Deficit)
Accumulated deficit	$	(36,489,917	)		263,955		$	(36,225,962	)

Schedule of Components of Operating Lease Liabilities

	September 30, 2019		March 31, 2019
Right-of-use asset	$	4,001,449	$	-
Deferred rent liability – current	$	-	$	263,955
Operating lease liabilities		246,473	$	-
Operating lease liabilities – non-current		3,755,622		-
Lease liabilities – total	$	4,002,095	$	263,955

Schedule of Contractual Future Maturities of Operating Lease Liabilities

The contractual future maturities of the Company’s operating lease liabilities are as follows:

Fiscal Year	Lease Commitment
2020	$	428,153
2021		655,910
2022		675,587
2023		695,855
2024		716,731
Thereafter		2,943,233
Total lease payments		6,115,469
Less: Future interest expense		2,113,374
Total	$	4,002,095

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Segment Reporting (Tables)

6 Months Ended

Sep. 30, 2019

Segment Reporting [Abstract]

Schedule of Disaggregated Revenue Based On Service Lines and Area

The following table provides information about disaggregated revenue based on revenue by service lines and revenue by area:

	Three-Months Ended September 30,				Six-Months Ended September 30,
	2019		2018		2019		2018
Revenue by service lines:
Services provided to JSAT	$	9,859,690	$	2,923,151	$	20,486,518	$	3,848,927
S7 agreement (related party)		-		238,985		410,535		330,084
Other		10,000		-		205,000		-
Services – total		9,869,690		3,162,136		21,102,053		4,179,011
Products
S7 Sales (non-related party)		556,300		-		764,433		-
Signature cars		1,388,018		645,986		1,872,123		1,164,673
Merchandise		11,631		12,311		15,613		36,953
Products – total		1,955,949		658,297		2,652,169		1,201,626
Royalties		32,656		-		39,623		4,043
Total revenue	$	11,858,295	$	3,820,433	$	23,793,845	$	5,384,680

	Three-Months Ended September 30,					Six-Months Ended September 30,
	2019		2018			2019		2018
Gross profit
Services	$	2,403,903	$	2,217,804		$	4,479,515	$	2,739,393
Products		318,166		(84,531	)		616,240		52,494
Total	$	2,722,069	$	2,133,273		$	5,095,755	$	2,791,887

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Nature of Business and Basis of Presentation (Details Narrative)			3 Months Ended		6 Months Ended		12 Months Ended
	May 31, 2019 USD ($)	Dec. 19, 2017	Sep. 30, 2019 USD ($)	Sep. 30, 2018 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2018 USD ($)	Mar. 31, 2019 USD ($)	Apr. 02, 2019 USD ($)	Jun. 26, 2013
Related Party Transaction [Line Items]
Reverse stock split		1-for-2,000 reverse stock split
Payments to acquire assets					$ 1,482,304
Cash equivalents
Asset impairment charges
Customer deposits			99,692		99,692		511,081
Advertising, sales and marketing expenses			251,058	$ 167,805	682,488	$ 294,951
Right-of-use assets			4,001,449		4,001,449			$ 4,059,492
Operating lease liabilities			$ 246,473		$ 246,473			246,473
Incremental borrowing rate			10.00%		10.00%
Adjustments from Adoption of New Lease Standard [Member]
Related Party Transaction [Line Items]
Right-of-use assets							4,059,492	4,059,492
Operating lease liabilities							$ 246,473	$ 4,059,492
Lease term								1 year
Incremental borrowing rate								10.00%
Customer Concentration Risk [Member] | Revenues [Member] | Customer [Member]
Related Party Transaction [Line Items]
Concentration risk percentage			68.00%	76.00%	78.00%	71.00%
Customer Concentration Risk [Member] | Accounts Receivable [Member] | Two Customer [Member]
Related Party Transaction [Line Items]
Concentration risk percentage					88.00%
Customer Concentration Risk [Member] | Accounts Receivable [Member] | One Customer [Member]
Related Party Transaction [Line Items]
Concentration risk percentage							98.00%
S7 Agreement (Related Party) [Member]
Related Party Transaction [Line Items]
Percentage of net profit from sale of vehicle					0.33
Saleen Entities [Member]
Related Party Transaction [Line Items]
Equity method investment ownership percentage									93.00%
S7 Supercars, LLC [Member] | Asset Purchase Agreement [Member]
Related Party Transaction [Line Items]
Asset purchase price	$ 1,482,304
Payments to acquire assets	800,000
Elimination of accounts receivable	682,304
S7 Supercars, LLC [Member] | Asset Purchase Agreement [Member] | Final Purchase Price [Member]
Related Party Transaction [Line Items]
Asset purchase price	1,482,304
S7 Supercars, LLC [Member] | Asset Purchase Agreement [Member] | First Payment [Member]
Related Party Transaction [Line Items]
Payments to acquire assets	50,000
S7 Supercars, LLC [Member] | Asset Purchase Agreement [Member] | Second Payment [Member]
Related Party Transaction [Line Items]
Payments to acquire assets	50,000
S7 Supercars, LLC [Member] | Asset Purchase Agreement [Member] | Third Payment [Member]
Related Party Transaction [Line Items]
Payments to acquire assets	50,000
S7 Supercars, LLC [Member] | Asset Purchase Agreement [Member] | Fourth Payment [Member]
Related Party Transaction [Line Items]
Payments to acquire assets	50,000
S7 Supercars, LLC [Member] | Asset Purchase Agreement [Member] | Minimum [Member]
Related Party Transaction [Line Items]
Accounts receivable balance eliminated increased	317,304
S7 Supercars, LLC [Member] | Asset Purchase Agreement [Member] | Maximum [Member]
Related Party Transaction [Line Items]
Accounts receivable balance eliminated increased	$ 682,304

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Nature of Business and Basis of Presentation - Schedule of Inventories (Details) - USD ($)	Sep. 30, 2019	Mar. 31, 2019
Accounting Policies [Abstract]
Automobile parts	$ 147,623	$ 108,498
Finished goods	116,461
Total inventories	$ 264,084	$ 108,498

XML

Nature of Business and Basis of Presentation - Schedule of Estimated Useful Lives (Details)	6 Months Ended
	Sep. 30, 2019
Computer Equipment and Software [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	3 years
Computer Equipment and Software [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	7 years
Tooling [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	3 years
Tooling [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	7 years
Furniture and Fixtures [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	5 years
Furniture and Fixtures [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	7 years
Automobiles and Trailer [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	5 years
Automobiles and Trailer [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	7 years
Machinery and Equipment [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	3 years
Machinery and Equipment [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	7 years
Leasehold improvement [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives, description	Shorter of the lease term or useful life

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Nature of Business and Basis of Presentation - Summary of Computation of Basic and Diluted Net Income (Loss) Per Common Share (Details) - USD ($)	3 Months Ended		6 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Accounting Policies [Abstract]
Numerator: Net income attributable to common stockholders	$ 791,055	$ 585,526	$ 1,580,279	$ 33,437
Denominator: Weighted average number of shares outstanding, basic	24,536,963	24,536,963	24,536,963	24,536,963
Denominator: Adjustment for dilutive effects of warrants	1,666,663	1,666,663	1,666,663	1,666,663
Denominator: Adjustment for Series B convertible preferred shares	666,660	666,660	666,660	666,660
Denominator: Adjustment for dilutive effects of convertible note payable	166,667	166,667	166,667	166,667
Denominator: Weighted average number of common shares outstanding, fully diluted	27,036,953	27,036,953	27,036,953	27,036,953
Net income per common share, basic	$ 0.03	$ 0.02	$ 0.06	$ 0.00
Net income per common share, fully diluted	$ 0.03	$ 0.02	$ 0.06	$ 0.00

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Nature of Business and Basis of Presentation - Schedule of Anti-Dilutive Securities (Details) - shares	3 Months Ended		6 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Outstanding Options to Purchase Common Stock [Member]
Total anti-dilutive securities	2,602	2,602	2,602	2,602

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Nature of Business and Basis of Presentation - Schedule of Cumulative Effect on Consolidated Balance Sheet (Details) - USD ($)	Sep. 30, 2019	Apr. 02, 2019	Mar. 31, 2019
Assets: Right-of-use assets	$ 4,001,449	$ 4,059,492
Liabilities: Deferred rent liability			263,955
Liabilities: Operating lease liability - current	246,473	246,473
Liabilities: Operating lease liability - non-current	3,755,622	3,813,019
Equity: Accumulated deficit	$ (34,645,683)	(36,225,962)	(36,489,917)
Adjustments from Adoption of New Lease Standard [Member]
Assets: Right-of-use assets		4,059,492	4,059,492
Liabilities: Deferred rent liability			(263,955)
Liabilities: Operating lease liability - current		$ 4,059,492	246,473
Liabilities: Operating lease liability - non-current			3,813,019
Equity: Accumulated deficit			$ 263,955

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Revenue from Contracts with Customers (Details Narrative)		1 Months Ended	3 Months Ended		6 Months Ended
	May 30, 2019	May 31, 2019 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2018 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2018 USD ($)	Mar. 31, 2019 USD ($)
Disaggregation of Revenue [Line Items]
Revenue recognized			$ 11,858,295	$ 3,820,433	$ 23,793,845	$ 5,384,680
Reimbursement of Costs and Expenses [Member]
Disaggregation of Revenue [Line Items]
Revenue recognized			2,309,503	0	4,309,503	0
Engineering Services Contract [Member]
Disaggregation of Revenue [Line Items]
Revenue recognized			2,403,666	3,848,927	2,977,666	3,130,611
Consulting Fees [Member]
Disaggregation of Revenue [Line Items]
Revenue recognized			0	162,048	0	261,048
Sale of S7 [Member]
Disaggregation of Revenue [Line Items]
Percentage of net profit from sale of vehicle	0.33
Revenue of Engineering and Manufacturing Services [Member]
Disaggregation of Revenue [Line Items]
Revenue recognized			410,535
Cup Agreement [Member]
Disaggregation of Revenue [Line Items]
Revenue recognized			7,456,024	0	17,295,719	0
Engineering Services Agreement [Member]
Disaggregation of Revenue [Line Items]
Deferred revenue			1,323,696		1,323,696		$ 1,068,150
Saleen S1 [Member]
Disaggregation of Revenue [Line Items]
Contract amount			31,605,000		31,605,000
Saleen S1 [Member] | Amended Cup Agreement [Member]
Disaggregation of Revenue [Line Items]
Expected to generate aggregate revenue		$ 15,631,000
Signature Cars [Member]
Disaggregation of Revenue [Line Items]
Revenue recognized			1,388,018	$ 645,986	1,872,123	$ 1,164,673
S7 Car [Member]
Disaggregation of Revenue [Line Items]
Revenue recognized			$ 556,300		$ 764,433

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Property and Equipment (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Property, Plant and Equipment [Abstract]
Depreciation and amortization expense	$ 37,168	$ 10,843	$ 97,724	$ 38,530

XML

Property and Equipment - Schedule of Property and Equipment (Details) - USD ($)	Sep. 30, 2019	Mar. 31, 2019
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 2,322,120	$ 1,521,747
Accumulated depreciation and amortization	(969,117)	(871,394)
Total Property and Equipment	1,353,003	650,353
Tooling [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	1,023,092	937,554
Automobiles and Trailer [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	223,030	167,063
Museum Collection Automobiles [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	422,466
Machinery and Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	264,001	100,233
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	156,711	147,960
Computer Equipment and Software [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	90,729	89,246
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 142,091	$ 79,691

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Notes Payable - Schedule of Notes Payable (Details) - USD ($)		Sep. 30, 2019		Mar. 31, 2019		Dec. 31, 2016	Jun. 30, 2016
Debt Instrument [Line Items]
Total notes payable		$ 87,179		$ 224,159
Senior Secured Note [Member] | Settlement Agreement [Member]
Debt Instrument [Line Items]
Total notes payable			[1]	40,000	[1]	$ 400,000
5% Unsecured Note Payable [Member]
Debt Instrument [Line Items]
Total notes payable		63,753	[2]	67,753	[2]		$ 389,922
10% Unsecured Note Payable [Member]
Debt Instrument [Line Items]
Total notes payable	[3]			83,980
Credit Card Issuer [Member]
Debt Instrument [Line Items]
Total notes payable	[4]	$ 23,426		$ 32,426

[1] In December 2016, the Company entered into a settlement agreement with Citizens Business Bank for a $400,000 loan, was initially issued in 2009, and secured by all assets of the Company. On May 17, 2019, the balance of the loan was paid off.

[2] In June 2016, the Company entered into an unsecured note payable with its landlord for past due rent of $389,922, covering the period from September 2013 to June 2016. The note bears interest at 5% per annum and is due on demand. As of September 30, 2019, the landlord has waived interest charges and has not sent any request for interest to be paid on the debt.

[3] The note bears interest at 10% per annum, and for the three-month period ended September 30, 2019, the lender waived interest charges. As of September 30, 2019, the Company has paid this balance in full.

[4] Per a settlement reached with the credit card issuer, the Company makes monthly payments of $1,500 against prior balances due.

XML

Notes Payable - Schedule of Notes Payable (Details) (Parenthetical) - USD ($)		3 Months Ended		6 Months Ended
		Sep. 30, 2019		Sep. 30, 2019		Sep. 30, 2018	Mar. 31, 2019		Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016
Debt Instrument [Line Items]
Notes payable		$ 87,179		$ 87,179			$ 224,159
Repayments of notes payable				136,980		$ 49,000
Lender [Member]
Debt Instrument [Line Items]
Repayments of notes payable		1,500
Senior Secured Note [Member] | Settlement Agreement [Member]
Debt Instrument [Line Items]
Notes payable			[1]		[1]		40,000	[1]	$ 400,000
5% Unsecured Note Payable [Member]
Debt Instrument [Line Items]
Notes payable		63,753	[2]	63,753	[2]		67,753	[2]			$ 389,922
Debt instrument, interest rate											5.00%
10% Unsecured Note Payable [Member]
Debt Instrument [Line Items]
Notes payable	[3]						$ 83,980
Debt instrument, interest rate										10.00%

[1] In December 2016, the Company entered into a settlement agreement with Citizens Business Bank for a $400,000 loan, was initially issued in 2009, and secured by all assets of the Company. On May 17, 2019, the balance of the loan was paid off.

[2] In June 2016, the Company entered into an unsecured note payable with its landlord for past due rent of $389,922, covering the period from September 2013 to June 2016. The note bears interest at 5% per annum and is due on demand. As of September 30, 2019, the landlord has waived interest charges and has not sent any request for interest to be paid on the debt.

[3] The note bears interest at 10% per annum, and for the three-month period ended September 30, 2019, the lender waived interest charges. As of September 30, 2019, the Company has paid this balance in full.

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Convertible Notes Payable, Past Due (Details Narrative) - Unsecured Convertible Note [Member] - USD ($)	6 Months Ended
	Sep. 30, 2019	Mar. 31, 2019
Debt Instrument [Line Items]
Notes payable	$ 100,000	$ 100,000
Debt instrument, interest rate	7.00%	7.00%
Debt instrument, due date	Mar. 31, 2017
Debt instrument, conversion into common stock	166,667

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Accrued Liabilities - Schedule of Accrued Liabilities (Details) - USD ($)	Sep. 30, 2019	Mar. 31, 2019
Payables and Accruals [Abstract]
Accrued expenses related to JSAT contracts	$ 2,215,608
Deferred vendor consideration		150,000
Other current payables	529,526	17,544
Total accrued liabilities	$ 2,745,134	$ 167,544

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Related Party Transactions (Details Narrative)		3 Months Ended		6 Months Ended
	May 31, 2019 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2018 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2018 USD ($)	Mar. 31, 2019 USD ($)
Due to related party		$ 61,672		$ 61,672		$ 519,364
Revenue recognized		11,858,295	$ 3,820,433	23,793,845	$ 5,384,680
Payments to acquire assets				1,482,304
S7 Supercars, LLC [Member]
Accounts receivable		0		0		133,742
Deposits		$ 0		$ 0		$ 100,000
S7 Supercars, LLC [Member] | Asset Purchase Agreement [Member]
Asset purchase price	$ 1,482,304
Payments to acquire assets	800,000
Elimination of accounts receivable	682,304
S7 Supercars, LLC [Member] | Asset Purchase Agreement [Member] | Final Purchase Price [Member]
Asset purchase price	1,482,304
S7 Supercars, LLC [Member] | Asset Purchase Agreement [Member] | First Payment [Member]
Payments to acquire assets	50,000
S7 Supercars, LLC [Member] | Asset Purchase Agreement [Member] | Second Payment [Member]
Payments to acquire assets	50,000
S7 Supercars, LLC [Member] | Asset Purchase Agreement [Member] | Third Payment [Member]
Payments to acquire assets	50,000
S7 Supercars, LLC [Member] | Asset Purchase Agreement [Member] | Fourth Payment [Member]
Payments to acquire assets	$ 50,000
Reimbursement of Engineering and Manufacturing Services [Member]
Revenue recognized			$ 379,969		$ 288,597
S7 Agreement (Related Party) [Member]
Percentage of net profit from sale of vehicle				0.33

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Income Taxes (Details Narrative)	Sep. 30, 2019 USD ($)
Income Tax Disclosure [Abstract]
Federal net operating losses	$ 19,200,000

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Income Taxes - Schedule of Effective Income Tax Rate Reconciliation (Details)	3 Months Ended		6 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Income Tax Disclosure [Abstract]
Tax expense at the U.S. statutory income tax	21.00%	21.00%	21.00%	21.00%
State tax net of federal tax benefit	7.00%	7.00%	7.00%	7.00%
Other	(1.00%)
Increase (decrease) in the valuation allowance		(28.00%)		(28.00%)
Effective tax rate	27.00%		28.00%

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Stockholders' Equity (Deficit) (Details Narrative) - USD ($)		1 Months Ended
	Aug. 31, 2018	Sep. 30, 2018	Dec. 31, 2013	Sep. 30, 2019	Mar. 31, 2019	Mar. 31, 2018	Jan. 31, 2018
Preferred stock, shares authorized				1,000,000	1,000,000
Preferred stock, par value				$ 0.001	$ 0.001
Warrant term		3 years					2 years
Warrant to purchase shares		333,330					1,333,333
Warrant exercise price		$ 0.70					$ 0.60
Intrinsic value of warrants
2013 Omnibus Incentive Plan [Member]
Incentive stock option plan description			Grants under the Plan vest and expire based on periods determined by the Administrator, but in no event can the expiration date be later than ten years from the date of grant (five years after the date of grant if the grant is an incentive stock option to an employee who owns more than 10% of the total combined voting power of all classes of the Company's capital stock (a "10% owner")). Grants of stock options may be either incentive stock options or nonqualified stock options. The per share exercise price on an option, other than with respect to substitute awards, shall not be less than 100% of the fair market value of the Company's Common Stock on the date the option is granted (110% of the fair market value if the grant is to a 10% owner).
Number of shares reserved			14,153
Series B Preferred Stock and Warrants [Member]
Preferred stock, conversion description		Each unit consisted of one share of Series B Preferred Stock that is convertible into 1,000 shares of the Company's common stock, and a three-year warrant to purchase 500 shares of the Company's common stock at an exercise price of $.70 per share
Number of shares of common stock issued		666.66
Price per share		$ 600
Proceeds from sale of stock		$ 400,000
Warrant term		3 years
Warrant to purchase shares		500
Warrant exercise price		$ 0.70
Preferred stock deemed dividends		$ 92,000
Warrant [Member]
Warrant to purchase shares		333,330
Fair value of warrants issued		$ 92,000
Risk-free interest rate		2.83%
Dividend yield rate		0.00%
Volatility rate		100.00%
Common Stock [Member]
Warrant to purchase shares							1,333,333
Series B Preferred Stock [Member]
Preferred stock, shares authorized	1,000,000
Preferred stock, par value	$ 0.001
Preferred stock, shares designated	1,000
Preferred stock, conversion description	The Series B Preferred Stock is convertible at the option of the holder into 1,000 common shares per one share of Series B Preferred Stock.
Preferred stock converted into common stock		666,666

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Stockholders' Equity (Deficit) - Schedule of Stock Option Plan Activity (Details) - USD ($)	6 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Equity [Abstract]
Number of Shares, Outstanding, Beginning Balance	2,602	2,602
Number of Shares, Granted
Number of Shares, Cancelled
Number of Shares, Exercised
Number of Shares, Outstanding, Ending Balance	2,602	2,602
Weighted Average Price per Share, Outstanding, Beginning Balance	$ 108	$ 108
Weighted Average Price per Share, Granted
Weighted Average Price per Share, Cancelled
Weighted Average Price per Share, Exercised
Weighted Average Price per Share, Outstanding, Ending Balance	$ 108	$ 108
Average Intrinsic Value, Outstanding, Beginning Balance
Average Intrinsic Value, Granted
Average Intrinsic Value, Cancelled
Average Intrinsic Value, Exercised
Average Intrinsic Value, Outstanding, Ending Balance
Weighted Average Remaining Contractual Term (in years), Outstanding, Beginning Balance	5 years 6 months	6 years 6 months
Weighted Average Remaining Contractual Term (in years), Granted	0 years	0 years
Weighted Average Remaining Contractual Term (in years), Cancelled	0 years	0 years
Weighted Average Remaining Contractual Term (in years), Exercised	0 years	0 years
Weighted Average Remaining Contractual Term (in years), Outstanding, Ending Balance	5 years 6 months	6 years 6 months

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Stockholders' Equity (Deficit) - Schedule of Warrant Activity (Details) - USD ($)	6 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Equity [Abstract]
Warrants, Outstanding, Beginning Balance	1,666,663	1,333,333
Warrants, Granted		333,330
Warrants, Cancelled
Warrants, Exercised
Warrants, Outstanding, Ending Balance	1,666,663	1,666,663
Weighted Average Price per Share, Outstanding, Beginning Balance	0.62	0.60
Weighted Average Price per Share, Granted		0.70
Weighted Average Price per Share, Cancelled
Weighted Average Price per Share, Exercised
Weighted Average Price per Share, Outstanding, Ending Balance	0.62	0.62
Average Intrinsic Value, Outstanding, Beginning Balance
Average Intrinsic Value, Granted
Average Intrinsic Value, Cancelled
Average Intrinsic Value, Exercised
Average Intrinsic Value, Outstanding, Ending Balance
Weighted Average Remaining Contractual Term (in years), Outstanding, Beginning Balance	2 years 8 months 2 days	3 years 9 months
Weighted Average Remaining Contractual Term (in years), Granted	0 years	3 years
Weighted Average Remaining Contractual Term (in years), Exercised	0 years	0 years
Weighted Average Remaining Contractual Term (in years), Cancelled	0 years	0 years
Weighted Average Remaining Contractual Term (in years), Outstanding, Ending Balance	2 years 2 months 1 day	3 years 2 months 30 days

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Royalty Revenue from Intellectual Property License (Details Narrative) - USD ($)	1 Months Ended	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2015	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Mar. 31, 2018
Revenue recognized		$ 11,858,295	$ 3,820,433	$ 23,793,845	$ 5,384,680
Royalties [Member]
Revenue recognized		$ 32,656		$ 39,623	$ 4,043
Intellectual Property License Agreement [Member] | Royalties [Member]
Revenue recognized						$ 478,000
Intellectual Property License Agreement [Member] | Saleen Motors International, LLC [Member]
License agreement initial term	10 years
Advance amount	$ 500,000

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Commitments and Contingencies (Details Narrative)	1 Months Ended
	Sep. 30, 2017 USD ($)	Jan. 31, 2015 USD ($) ft²	Sep. 30, 2019
Rent expense	$ 57,000
Lease term	The Company entered into amendments to the Leases to renew the lease terms for the period from February 1, 2018, through January 31, 2028 (the "New Leases").
Incremental borrowing rate			10.00%
Lease Agreements [Member] | Two Buildings [Member]
Area of square | ft²		76,000
Rent expense		$ 45,000
Lease term		The Leases covered the period from February 2015 through January 2018.
Sublease Agreement [Member]
Rent expense	$ 17,700

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Commitments and Contingencies - Schedule of Operating Leases Assets and Liabilities (Details) - USD ($)	Sep. 30, 2019	Apr. 02, 2019	Mar. 31, 2019
Assets: Right-of-use assets	$ 4,001,449	$ 4,059,492
Liabilities: Deferred rent liability			263,955
Liabilities: Operating lease liability - current	246,473	246,473
Liabilities: Operating lease liability - non-current	3,755,622	3,813,019
Stockholders' Equity (Deficit): Accumulated deficit	$ (34,645,683)	(36,225,962)	(36,489,917)
Adjustments from Adoption of New Lease Standard [Member]
Assets: Right-of-use assets		4,059,492	4,059,492
Liabilities: Deferred rent liability			(263,955)
Liabilities: Operating lease liability - current		$ 4,059,492	246,473
Liabilities: Operating lease liability - non-current			3,813,019
Stockholders' Equity (Deficit): Accumulated deficit			$ 263,955

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Commitments and Contingencies - Schedule of Components of Operating Lease Liabilities (Details) - USD ($)	Sep. 30, 2019	Apr. 02, 2019	Mar. 31, 2019
Commitments and Contingencies Disclosure [Abstract]
Right-of-use asset	$ 4,001,449	$ 4,059,492
Deferred rent liability - current			263,955
Operating lease liabilities	246,473	246,473
Operating lease liabilities - non-current	3,755,622	$ 3,813,019
Lease liabilities - total	$ 4,002,095		$ 263,955

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Commitments and Contingencies - Schedule of Contractual Future Maturities of Operating Lease Liabilities (Details) - USD ($)	Sep. 30, 2019	Mar. 31, 2019
Commitments and Contingencies Disclosure [Abstract]
2020	$ 428,153
2021	655,910
2022	675,587
2023	695,855
2024	716,731
Thereafter	2,943,233
Total lease payments	6,115,469
Less: Future interest expense	2,113,374
Total	$ 4,002,095	$ 263,955

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Segment Reporting (Details Narrative)	6 Months Ended
	Sep. 30, 2019 Integer
Segment Reporting [Abstract]
Number of operating segments	2
Number of reporting segments	2

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Segment Reporting - Schedule of Disaggregated Revenue Based On Service Lines and Area (Details) - USD ($)	3 Months Ended		6 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Total revenue	$ 11,858,295	$ 3,820,433	$ 23,793,845	$ 5,384,680
Total Gross profit	2,754,725	2,133,273	5,135,378	2,795,930
Services [Member]
Total revenue	9,869,690	3,162,136	21,102,053	4,179,011
Products [Member]
Total revenue	1,955,949	658,297	2,652,169	1,201,626
Royalties [Member]
Total revenue	32,656		39,623	4,043
Services Provided to JSAT [Member] | Services [Member]
Total revenue	9,859,690	2,923,151	20,486,518	3,848,927
S7 Agreement (Related Party) [Member] | Services [Member]
Total revenue		238,985	410,535	330,084
Other [Member] | Services [Member]
Total revenue	10,000		205,000
S7Sales (non-related party) [Member] | Products [Member]
Total revenue	556,300		764,433
Signature Cars [Member] | Products [Member]
Total revenue	1,388,018	645,986	1,872,123	1,164,673
Merchendise [Member] | Products [Member]
Total revenue	11,631	12,311	15,613	36,953
Segments Reporting [Member] | Services [Member]
Total Gross profit	2,403,903	2,217,804	4,479,515	2,739,393
Segments Reporting [Member] | Products [Member]
Total Gross profit	$ 318,166	$ (84,531)	$ 616,240	$ 52,494

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Subsequent Events (Details Narrative) - Subsequent Event [Member] - Paycheck Protection Program [Member]	1 Months Ended
	Apr. 30, 2020 USD ($)
Loan received	$ 894,000
Description on loan	The proceeds of the PPP Loan must be used for payroll costs, lease payments on agreements before February 15, 2020 and utility payments under agreements before February 1, 2020. At least 60% of the proceeds must be used for payroll costs and certain other expenses, and no more than 40% on non-payroll expenses.