UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

~~WASHINGTON~~Washington, D.C. 20549

FORM 10-Q

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

For ~~the~~Quarterly ~~quarterly~~Period ~~period~~Ended ~~ended~~June ~~December 31~~30, ~~2015~~2019

ORor

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

For the transition period from ~~_________~~__________ to ~~_________~~__________

Commission File Number 000-55236

SALEEN AUTOMOTIVE, INC.

(Exact ~~Name~~name of ~~Registrant~~registrant issuer as ~~Specified~~specified in ~~Charter~~its charter)

Nevada	~~333~~45-~~176388~~2808694	~~45-2808694~~
(State or Other Jurisdiction	(Commission	(I.R.S. Employer
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
of Incorporation)	File No.)	Identification No.)
2735 Wardlow Road Corona, California		92882
(Address of Principal Executive Offices)		(Zip Code)

(800) 888-8945

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

~~Registrant’s~~(714) ~~telephone~~400-2121 ~~number, including area code:~~

~~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~~Registrant’s ~~Act~~telephone ~~of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports)~~number, ~~and~~ ~~(2)~~including ~~has~~area ~~been subject to such filing requirements for the past 90 days.~~code)

~~Yes~~Securities ~~[ ]~~registered Nopursuant ~~[X]~~to Section 12(b) of the Act:

~~Indicate by~~Title ~~check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted to Rule 405~~ of ~~Regulation~~each ~~S-T~~class ~~during~~Trading ~~the preceding 12 months~~ Symbol(ors) ~~for~~Name ~~such~~of ~~shorter period~~each ~~that~~exchange ~~the~~on ~~registrant~~which ~~was~~registered ~~required~~N/A toN/A ~~submit and post such files).~~N/A

~~Yes~~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 [X ] No [ X]

Indicate by check mark whether the registrant ishas asubmitted ~~large~~electronically ~~accelerated~~every ~~filer,~~Interactive anData ~~accelerated~~File ~~filer,~~required ato ~~non-accelerated~~be ~~filer,~~submitted orpursuant to aRule ~~smaller reporting~~405 ~~company.~~of ~~See~~Regulation ~~the~~S-T ~~definitions~~(§232.405 of ~~“large~~this ~~accelerated~~chapter) ~~filer,”~~during ~~“accelerated~~the ~~filer”~~preceding ~~and~~12 ~~“smaller reporting~~months ~~company”~~(or infor ~~Rule~~such ~~12b-2~~shorter ofperiod that the ~~Exchange~~registrant ~~Act~~was required to submit such files). Yes [ ] No [X]

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

~~Indicate by~~Large ~~check~~accelerated ~~mark~~filer ~~whether~~[ ~~the~~] ~~registrant~~Accelerated isfiler a[ ~~shell~~] ~~company~~Non-accelerated ~~(as~~filer ~~defined~~[X] bySmaller ~~Rule~~reporting ~~12b-2~~company of[X] ~~the~~Emerging ~~Exchange~~growth ~~Act).~~company [ ]

~~Yes~~If ~~[ ]~~an Noemerging 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. [X ]

AsIndicate ofby ~~March~~check ~~21,~~mark ~~2016,~~whether ~~there~~the ~~were~~Registrant ~~2,072,139,662~~is ~~shares~~a ofshell ~~the~~company ~~issuer’s~~(as ~~common~~defined ~~stock,~~in ~~$0.001~~Rule ~~par~~12b-2 ~~value~~of ~~per~~the ~~share,~~Exchange ~~outstanding~~Act). Yes [ ] No [X]

The number of shares of registrant’s common stock outstanding as of April 3, 2020 was 24,536,963.

SALEEN AUTOMOTIVE, INC.

FORM 10-Q

INDEX

			Page
PART I - FINANCIAL INFORMATION
PART I – FINANCIAL INFORMATION
ITEM 1.	~~Unaudited~~ Condensed Consolidated Financial Statements:
	a)	Condensed Consolidated Balance Sheets as of ~~December~~June 3130, ~~2015~~2019 (Unaudited) and March 31, ~~2015~~2019	F-1
	b)	Condensed Consolidated Statements of Operations ~~(Unaudited)~~ for the three ~~and nine~~ -month periods ended ~~December~~June 3130, ~~2015~~2019 and ~~2014~~2018 (Unaudited)	F-2
	c)	Condensed Consolidated ~~Statement~~Statements of Stockholders’ ~~Deficit~~Equity (~~Unaudited~~Deficit) ~~for~~as ~~the~~of ~~nine~~June ~~month~~30, ~~period~~2019 ~~ended~~and ~~December~~2018 ~~31, 2015~~(Unaudited)	F-3
	d)	Condensed Consolidated Statements of Cash Flows ~~(Unaudited)~~ for the ~~nine~~ three-month periods ended ~~December~~June 3130, ~~2015~~2019 and ~~2014~~2018 (Unaudited)	F-4
	e)	Notes to Condensed Consolidated Financial Statements (Unaudited)	F-65
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		3
ITEM 3.	Quantitative and Qualitative Disclosures ~~About~~about Market Risk		116
ITEM 4.	Controls and Procedures		116
~~PART II - OTHER INFORMATION~~	PART II - OTHER INFORMATION
ITEM 1.	Legal Proceedings		13
ITEM 1	Legal Proceedings		7
ITEM 5.	Other Information		13
ITEM 1A	Risk Factors		7
ITEM 6.	Exhibits		13
ITEM 2	Unregistered sales of equity securities and use of proceeds		7
ITEM 3	Defaults upon senior securities		7
ITEM 4	Mine safety disclosures		7
ITEM 5	Other information		7
ITEM 6	Exhibits		7
SIGNATURES			8

~~PART~~Saleen IAutomotive, ~~- FINANCIAL INFORMATION~~Inc.

Item 1. Unaudited Condensed Financial Statements:

Saleen Automotive, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

	December 31, 2015			March 31, 2015
	June 30, 2019 (Unaudited)			March 31, 2019
	(unaudited)
ASSETS
Current Assets
Cash	$	603,~~850~~722,688		$	~~143~~3,~~083~~374,234
Accounts receivable, net of allowance for doubtful accounts of $271,658 at December 31, 2015 and March 31, 2015		22,218			4,945
Accounts receivable (including $0 as of June 30, 2019 and $133,742 as of March 31, 2019 due from related party)		71,337			136,387
Inventory		128,088			725,687
Inventories		127,048			108,498
Prepaid expenses and other current assets		4,337			37,079
Other current assets		400,000			-
Total Current Assets		~~215~~4,~~493~~321,073			~~910~~3,~~794~~619,119
Property and equipment, net		~~525~~2,~~262~~287,567			~~592~~650,~~116~~353
Other assets		5,000			5,000
Right-of-use assets		4,059,492			-
TOTAL ASSETS	$	745,755		$	1,507,910
Security deposits		70,780			70,800
LIABILITIES AND STOCKHOLDERS’ DEFICIT
TOTAL ASSETS	$	10,738,912		$	4,340,272
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current Liabilities
Accounts payable	$	1201,~~616,048~~848		$	1351,~~677,309~~726
Due to related parties		191,602			326,512
Accrued compensation, payroll taxes, and other taxes payable		313,062			632,689
Notes payable		571,750			671,750
Customer deposits (including $100,000 as of June 30, 2019 and $100,000 as of March 31, 2019 due to related party)		412,025			511,081
Current portion of convertible notes, net of discount of nil and $250,892 at December 31, 2015 and March 31, 2015, respectively		922,254			267,332
Other current liabilities		2,491,238			167,554
Notes payable to related parties		345,584			267,000
Due to related parties		61,672			519,364
Payroll and other taxes payable		762,639			745,503
Income taxes payable		831,083			503,000
Accrued interest on notes payable		617,786			387,005
Notes payable		148,569			224,159
Customer deposits		1,491,240			1,896,568
Convertible note payable, past due		100,000			100,000
Deferred royalty revenue		500,000			-
Accrued interest on notes payable		37,131			37,131
Deferred vendor consideration		275,000			275,000
Engineering contract advance		1,068,150			1,068,150
Derivative liability		181,565			1,268,588
Deferred rent		-			263,955
Other current liabilities		186,913			178,891
Operating lease liabilities		246,473			-
Total Current Liabilities		7,662,381			7,961,458
Accrued warranties		20,000			20,000
Convertible notes payable, net of discount of $954,004 and $1,585,935 at December 31, 2015 and March 31, 2015, respectively		3,747,608			3,215,677
Total Current Liabilities		5,931,251			4,398,809
Total Liabilities		11,409,989			11,177,135
Operating lease liabilities – non-current		3,813,019			-
Commitments and Contingencies
Total Liabilities		9,744,270			4,398,809
Stockholders’ Deficit
Commitments and Contingencies (Note 12)
Preferred stock; $0.001 par value; 1,000,000 shares authorized; none issued and outstanding at December 31, 2015 and March 31, 2015		-			-
Stockholders’ Equity (Deficit)
Common Stock; $0.001 par value; 2,500,000, 000 and 500,000,000 shares authorized; 1,229,633,321 and 174,857,028 issued and outstanding at December 31, 2015 and March 31, 2015, respectively		1,229,632			174,856
Preferred stock; $0.001 par value; 1,000,000 shares authorized; 667 Series B shares issued and outstanding as of June 30, 2019 and March 31, 2019		1			1
Additional paid in capital		18,557,491			18,530,191
Common stock; $0.001 par value; 100,000,000 shares authorized; 24,536,963 issued and outstanding as of June 30, 2019 and March 31, 2019		24,537			24,537
Accumulated deficit		(30,451,357	)		(28,374,272	)
Additional paid-in capital		36,406,842			36,406,842
Total Stockholders’ Deficit		(10,664,234	)		(9,669,225	)
Accumulated deficit		(35,436,738	)		(36,489,917	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	745,755		$	1,507,910
Total Stockholders’ Equity (Deficit)		994,642			(58,537	)
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)	$	10,738,912		$	4,340,272

~~See~~SEE ~~accompanying~~ACCOMPANYING ~~notes~~NOTES ~~which~~TO ~~are~~THESE anCONDENSED ~~integral~~CONSOLIDATED ~~part~~FINANCIAL ~~of these condensed consolidated financial statements.~~STATEMENTS

F-1

Saleen Automotive, Inc. ~~and Subsidiaries~~

Condensed Consolidated Statements of Operations (Unaudited)

	Three month periods ended December 31,						Nine month periods ended December 31,
	For The Three-Month Periods Ended June 30,
	2015			2014			2015			2014
	2019			2018
Revenue, net	$	552,342		$	536,895		$	2,771,518		$	3,072,596
Revenues
Costs of goods sold		493,681			552,788			2,332,861			2,725,378
Services (including $618,668 for the three-month period ended June 30, 2019 and $91,099 for the three-month period ended June 30, 2018 from related party)	$	11,232,363		$	1,016,875
Gross margin		58,661			(15,893	)		438,657			347,218
Products, net		696,220			543,329
Operating expenses
Royalties		6,967			4,043
Research and development		40,939			144,316			190,625			543,070
Total revenues, net		11,935,550			1,564,247
Sales and marketing		204,346			232,666			607,005			1,209,248
Costs of revenues
General and administrative		468,654			801,757			1,543,907			2,736,796
Services		9,156,751			495,286
Depreciation and amortization		22,034			40,608			79,664			150,323
Products		398,146			406,304
Total operating expenses		735,973			1,219,347			2,421,201			4,639,437
Total costs of revenues		9,554,897			901,590
Loss from operations		(677,312	)		(1,235,240	)		(1,982,544	)		(4,292,219	)
Gross profit		2,380,653			662,657
Other income (expenses)
Operating expenses
Interest expense		(330,903	)		(754,488	)		(1,153,804	)		(1,769,289	)
Advertising, sales and marketing		431,430			127,146
Recognition of derivative liability		-			-			(174,437	)		-
General and administrative		775,255			950,485
Private placement costs and loss on debt extinguishment		-			(582,347	)		(27,760	)		(668,230	)
Research and development		-			7,357
Gain on extinguishment of derivative liability		62,607			-			720,658			2,586,732
Depreciation and amortization		60,556			27,687
Change in fair value of derivative liabilities		74,657			129,182			540,802			2,602,392
Total operating expenses		1,267,241			1,112,675
Net loss	$	(870,951	)	$	(2,442,893	)	$	(2,077,085	)	$	(1,540,614	)
Income (loss) from operations		1,113,412			(450,018	)
Net loss per share:
Other expense
Basic and diluted	$	(0.00	)	$	(0.02	)	$	(0.00	)	$	(0.01	)
Interest and financing costs		1,098			10,071
Shares used in computing net loss per share:
Total other expense		1,098			10,071
Basic and diluted		998,464,607			156,891,289			896,120,531			146,930,440
Net income (loss) before income tax expense		1,112,314			(460,089	)
Income tax expense		323,090			-
Net income (loss)	$	789,224		$	(460,089	)
Net income (loss) per share attributable to common stockholders:
Basic	$	0.03		$	(0.08	)
Diluted	$	0.03		$	(0.08	)
Shares used in computing net income (loss) per share attributable to common stockholders:
Basic		24,536,963			5,490,927
Fully diluted		26,376,950			5,490,927

F-2

Saleen Automotive, Inc. ~~and Subsidiaries~~

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

For the Nine month period ended December 31, 2015

	Common Stock $0.001 Par				Preferred Stock $0.001 Par				Additional Paid-In		Accumulated			Stockholders’ Equity
	Number		Amount		Number		Amount		Capital		Deficit			(Deficit)
Balance, March 31, 2018		24,536,963	$	24,537		-	$	-	$	36,006,843	$	(39,001,178	)	$	(2,969,798	)
Net income		-		-		-		-		-		(460,089	)		(460,089	)
Balance, June 30, 2018		24,536,963		24,537		-		-		36,006,843		(39,461,267	)		(3,429,887	)

Balance, March 31, 2019		24,536,963		24,537		667		1		36,406,842		(36,489,917	)		(58,537	)
Cumulative-effect of change in accounting policy		-		-		-		-		-		263,955			263,955
Net income		-		-		-		-		-		789,224			789,224
Balance, June 30, 2019		24,536,963	$	24,537		667	$	1	$	36,406,842	$	(35,436,738	)	$	994,642

													Additional
	Common Stock $0.001 Par						Preferred Stock $0.001 Par						Paid In			Accumulated			Stockholders’
	Number			Amount			Number			Amount			Capital			Deficit			Deficit
Balance, March 31, 2015		174,857,028		$	174,856			-		$	-		$	18,530,191		$	(28,374,272	)	$	(9,669,225	)
Cancellation of Common Stock held by Steve Saleen, CEO in exchange for Super Voting Preferred Stock		(82,133,875	)		(82,134	)		82,134			82			82,052						-
Shares issued for services								63,000			63			113,337						113,400
Fair value of shares issued upon conversion of convertible notes and accrued interest		750,387,791			750,388									(243,617	)					506,771
Fair value of shares issued as payments on accounts payable		2,380,377			2,380									45,227						47,607
Fair value of shares issued upon settlement of accounts payable, related party								239,008			239			253,975						254,214
Exchange of Super Voting Preferred Stock for Common Stock		384,142,000			384,142			(384,142	)		(384	)		(383,758	)					-
Fair value of stock-based compensation														160,084						160,084
Net loss																	(2,077,085	)		(2,077,085	)
Balance, December 31, 2015		1,229,633,321		$	1,229,632			-		$	-		$	18,557,491		$	(30,451,357	)	$	(10,664,234	)

SEE ACCOMPANYING NOTES TO THESE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

See accompanying notes which are an integral part of these condensed consolidated financial statements.

F-3

Saleen Automotive Inc. ~~and Subsidiaries~~

Condensed Consolidated Statements of Cash Flows (Unaudited)

	For the Nine month periods ended December 31,
	For The Three-Month Periods Ended
	2015			2014
	June 30, 2019			June 30, 2018
Cash flows from operating activities
Net loss	$	(2,077,085	)	$	(1,540,614	)
Net income (loss)	$	789,224		$	(460,089	)
Adjustments to reconcile net loss to net cash used in operating activities
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Depreciation and amortization		7960,~~664~~556			~~150~~19,~~323~~431
Gain on change in fair value of derivative liabilities		(540,802	)		(2,602,392	)
Change in operating right-of-use assets and liabilities		263,955			-
Gain on extinguishment of derivative liability		(720,658	)		(2,586,732	)
Changes in operating assets and liabilities:
Gain on settlement of notes payable and accounts payable, related party		-			(89,938	)
Accounts receivable		(617,254	)		(512,266	)
Amortization of discount on convertible notes		882,824			1,496,290
Inventories		(18,550	)		43,820
Loss on shares issued as payment on settlement of accounts payable					58,886
Other current assets		(400,000	)		18,600
Fair value of share based compensation		160,084			580,933
Security deposits		20			662
Loss on debt extinguishment		27,760			-
Accounts payable		(149,878	)		(358,850	)
Private placement costs		-			668,230
Accrued compensation, payroll taxes, and other taxes payable		(319,627	)		(89,578	)
Recognition of derivative liability		174,437			-
Income taxes payable		328,083			-
Fair value of shares issued for services		113,400			170,000
Accrued interest on notes payable		-			6,207
Changes in working capital:
Due to related parties		(457,692	)		(361,589	)
(Increase) Decrease in:
Engineering contract advance		-			1,900,000
Accounts receivable		(17,273	)		27,730
Customer deposits		(99,055	)		145,000
Inventory		597,599			31,456
Other current liabilities		2,208,297			24,971
Prepaid expenses and other assets		32,742			98,932
Net cash provided by operating activities		1,588,079			376,319
Increase (Decrease) in:
Accounts payable		(13,654	)		(185,459	)
Due to related parties		119,306			196,787
Payroll and taxes payable		17,136			(34,325	)
Accrued interest		267,405			220,566
Customer deposits		(405,328	)		928,255
Deferred royalty revenue		400,000			-
Deferred vendor consideration		-			275,000
Other liabilities		8,020			8,829
Net cash used in operating activities		(894,423	)		(2,127,243	)
Cash flows from investing activities
Purchases of property and equipment		(12,810	)		(218,685	)
Cash paid for S7 assets		(800,000	)		-
Net cash used in investing activities		(12,810	)		(218,685	)
Purchases of property and equipment		(215,466	)		-
Net cash used in investing activities		(1,015,466	)		-
Cash flows from financing activities
Proceeds from unsecured convertible notes		-			638,225
Repayment of notes payable		(224,159	)		(124,500	)
Proceeds from unsecured convertible notes - related parties		-			250,000
Net cash used in financing activities		(224,159	)		(124,500	)
Proceeds from secured convertible notes		750,000
Net increase in cash		348,454			251,819
Proceeds from notes payable - related parties		120,000			195,000
Cash at beginning of period		3,374,234			523,120
Principal payments on notes payable - related parties		(45,000	)		-
Cash at end of period	$	3,722,688		$	774,939
Principal payments on notes payable		-			(326,751	)
Supplemental disclosures of cash flow information:
Proceeds from issuance of Common Stock		-			185,000
Cash paid during the period for:
Net cash provided by financing activities		825,000			941,474
Interest	$	1,098		$	10,071
Net decrease in cash		(82,233	)		(1,404,454	)
Income taxes	$	-		$	-
Cash at beginning of period		143,083			1,499,889
Non-cash investing activities during the period for:
Cash at end of period	$	60,850		$	95,435
Elimination of accounts receivable for S7 assets (Note 8)	$	628,304		$	-

~~(continued)~~SEE ACCOMPANYING NOTES TO THESE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

F-4

Saleen Automotive Inc. ~~and Subsidiaries~~

Condensed Consolidated Statements of Cash Flows (Unaudited)

(continued)

	Nine month periods ended December 31,
	2015		2014
Supplemental disclosures of cash flow information:
Cash paid during the year for
Interest	$	3,484	$	21,408
Income taxes	$	-	$	-
Supplemental schedule of non-cash financing activities:
Derivative liability related to conversion feature	$	-	$	1,306,455
Issuance of Common Stock on conversion of secured convertible Notes Payable and accrued interest		-		596,953
Issuance of Common Stock on conversion of unsecured convertible Notes payable and accrued interest		506,771		315,142
Issuance of Common Stock on payment of interest on Notes payable				537,235
Issuance of Common Stock as settlement of accounts payable		47,607		141,955
Issuance of Super Voting Preferred Stock as settlement of accounts payable, related parties		254,214		-
Fair value of beneficial conversion feature		-		250,000
Fair value of shares issued in exchange for amendment of convertible debts recorded as debt discount		-		112,059
Cancellation of Common Stock in exchange for Super Voting Preferred Stock		82,134		-
Accounts payable to be settled by equities securities		-		75,000
Reclass of note payable to offset deferred royalty revenue		100,000		-
Reclass of amounts to be settled through the issuance of equity securities		-		470,534

See accompanying notes which are an integral part of these condensed consolidated financial statements.

F-5

Saleen Automotive Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

~~Three~~NOTE ~~and~~1 ~~Nine~~– ~~month~~NATURE ~~Periods~~OF ~~Ended~~BUSINESS ~~December~~AND ~~31,~~BASIS ~~2015~~OF ~~and 2014~~PRESENTATION

~~The~~Basis ~~accompanying condensed consolidated financial statements~~ of Saleen Automotive, Inc. and subsidiaries (“Saleen,” “we,” “us, “our” and “our Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the rules and regulations of the Securities and Exchange Commission. Accordingly, the unaudited condensed consolidated financial statements do not include all information and footnotes required by accounting principles generally accepted in the United States of America for complete annual financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting of only normal recurring adjustments, considered necessary for a fair presentation. Interim operating results are not necessarily indicative of results that may be expected for the fiscal year ending March 31, 2016, or for any other interim period. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements as of and for the year ended March 31, 2015, which are included in the Company’s Annual Report on Form 10-K for such year filed on July 14, 2015. The consolidated balance sheet as of March 31, 2015, has been derived from the audited financial statements included in the Form 10-K filed on July 14, 2015.Presentation

~~NOTE~~The 1accompanying 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 June 30, 2019 and for the three-month periods ~~NATURE~~ended OFJune ~~THE~~30, ~~BUSINESS~~2019 ~~AND~~and ~~SIGNIFICANT~~2018, ~~ACCOUNTING~~have ~~POLICIES~~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-month period ended June 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 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. (~~formerly W270, Inc.) (~~the “Company”) ~~was~~is ~~incorporated~~an ~~under~~original ~~the~~equipment ~~laws~~manufacturer (“OEM”) of ~~the~~high-performance ~~State~~vehicles (“Saleen ofOriginal”) ~~Nevada~~that onare ~~June 24,~~built ~~2011~~from the ground up. The Company also designs, develops, manufactures and sells high -performance vehicles built from base chassis of ~~Ford~~major ~~Mustangs, Chevrolet~~American ~~Camaros,~~automobile ~~Dodge~~manufacturers ~~Challengers~~(“Saleen ~~and~~Signature ~~Tesla Model S vehicles~~Cars”). The Company isalso aprovides ~~low~~engineering, ~~volume vehicle design~~development, ~~engineering~~ and ~~manufacturing company~~design ~~focusing~~consulting services on ~~the~~a ~~mass~~project ~~customization~~basis ~~(the~~for ~~process~~automotive ~~of customizing automobiles that are mass produced by the~~ manufacturers ~~(Ford,~~worldwide. ~~Chevrolet,~~The ~~Dodge~~Company ~~and~~currently ~~Tesla)~~has ofcustomers ~~OEM~~worldwide, ~~American~~including ~~sports~~muscle and ~~electric vehicles. A~~ high -performance car isenthusiasts, ancollectors, ~~automobile that~~automotive isdealers, ~~designed~~exotic ~~and~~car ~~constructed~~retail ~~specifically~~dealers, ~~for~~television ~~speed~~ and ~~performance.~~motion ~~The~~picture ~~design~~productions, and ~~construction~~consumers ofin ~~a high performance car involves not only providing a capable power train but also providing~~ the ~~handling,~~luxury ~~aerodynamics~~supercar and ~~braking systems to support it. The~~motorsports ~~Company’s Saleen-branded products include a complete line of upgraded high performance vehicles, automotive aftermarket specialty parts and lifestyle accessories~~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 ~~May~~December 2319, ~~2013~~2017, the Company ~~entered~~effected ~~into~~a ~~an Agreement and Plan of Merger (“Merger Agreement”) with Saleen California Merger Corporation, its wholly~~1-~~owned subsidiary~~for-2,000 ~~Saleen~~reverse ~~Florida~~stock ~~Merger~~split ~~Corporation,~~of its ~~wholly-owned~~common ~~subsidiary,~~stock ~~Saleen Automotive, Inc.~~ (“~~Saleen~~reverse ~~Automotive”),~~stock ~~SMS Signature Cars (“SMS~~split” ~~and together with Saleen Automotive, the “Saleen Entities”~~) ~~and Steve Saleen (“Saleen” and together with the Saleen Entities, the “Saleen Parties”).~~ ~~The~~following ~~closing~~approval ~~(the “Closing”) of the transactions contemplated~~ by the ~~Merger Agreement (the “Merger”) occurred on June 26, 2013. At the Closing (a) Saleen California Merger Corporation was merged with and into SMS with SMS surviving as one of the~~ Company’s ~~wholly-owned~~Board ~~subsidiaries; (b) Saleen Florida Merger Corporation was merged with and into Saleen Automotive with Saleen Automotive surviving as one~~ of ~~the~~Directors Company’s wholly-owned subsidiaries; (c) holders of the outstanding capital stock of Saleen Automotive received an aggregate of 554,057 shares of the Company’s Super Voting Preferred Stock, which was subsequently converted into 69,257,125 shares of the Company’s Common Stock and ~~holders~~stockholders. ofAll ~~the~~common ~~outstanding capital~~ stock of ~~SMS~~share ~~received no consideration for their shares;~~ and ~~(d) approximately 93% of the beneficial ownership of the Company’s Common Stock (on a fully~~per-~~diluted~~share ~~basis)~~amounts ~~was owned, collectively, by Saleen (including 341,943 shares of the Company’s Super~~for ~~Voting~~all ~~Preferred~~periods ~~Stock,~~presented which was subsequently converted into 42,742,875 shares of the Company’s Common Stock, issued to Saleen pursuant to the Assignment and License Agreement) and the former holders of the outstanding capital stock of Saleen Automotive. As a result of the Merger the Company is solely engaged in ~~the~~these ~~Saleen~~condensed ~~Entities’~~consolidated ~~business,~~financial ~~Saleen~~statements ~~Automotive’s~~have ~~then officers~~been ~~became~~adjusted ~~the~~retroactively Company’s officers and Saleen Automotive’s then three directors became members of the Company’s five-member board of directors. On June 17, 2013, the Company consummated a merger with WSTY Subsidiary Corporation, its wholly-owned subsidiary, pursuant to ~~which~~reflect the ~~Company amended its articles of incorporation to change its name to Saleen Automotive, Inc.~~reverse Instock ~~October 2013, SMS effected an amendment to its articles of incorporation to change its name to Saleen Signature Cars~~split. In January 2014, the Company effected an increase in the number of its common shares authorized to 500,000,000 and all the remaining shares of Super Voting Preferred Stock were converted into Common Stock of the Company and the Super Voting Preferred Stock ceased to be a designated series of the Company’s preferred stock.

~~F-6~~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. During the period ended June 30, 2019, the S7 was produced under an agreement with S7 Supercars, LLC (“S7 Supercars”), a related party, 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, 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 $1,165,000 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. Since S7 is a related party (common ownership), the entire purchase price of $1,482,304 was allocated to the assets purchased. 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 8 for more details.

F-5

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

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.

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.

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.

Consolidation Policy

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

Going Concern

The Company’s condensed consolidated financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. During the nine months ended December 31, 2015, the Company incurred a net loss of $2,077,085 and utilized $894,423 of cash in operations. The Company also had a stockholders’ deficit and working capital deficit of $10,664,234 and $7,446,888, respectively, as of December 31, 2015, and as of that date, the Company owed $762,639 in past unpaid payroll and other taxes; $846,004 of outstanding notes payable were in default; $1,317,928 of accounts payable was greater than 90 days past due; and $401,689 is owed on past due rent as of the date of filing of this Form 10-Q. In addition, in May 2015, the Company received a complaint from a bank alleging breach of the loan agreement and breach of a commercial guaranty by Steve Saleen and demanding full payment of principal, interest and fees of $369,302. A default under the loan agreement triggers a cross default under the Company’s 3% Senior Secured Convertible Notes and 7% Convertible Notes (see Note 5) enabling the holders thereof to, at their election until the later of 30 days after such default is cured or otherwise resolved or the holder becomes aware of such cure or resolution, accelerate the maturity of the Company’s indebtedness.

These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s independent auditors, in their audit report for the year ended March 31, 2015, expressed substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.

The Company’s ability to continue as a going concern is dependent upon its ability to raise additional capital and to ultimately achieve sustainable revenues and profit from operations. At December 31, 2015, the Company had cash on hand in the amount of $60,850 and is not generating sufficient funds to cover operations. The Company has utilized funding to operate the business during the nine months ended December 31, 2015 with advance royalty payments of $500,000 obtained from an Intellectual Property License Agreement entered into in June 2015 and has received proceeds of $750,000 and $120,000 in secured convertible notes and notes payable from a related party, respectively. However, the Company will need and is currently working on obtaining additional funds, primarily through the issuance of debt or equity securities to operate its business through and beyond the date of this Form 10-Q filing. As further discussed in the Company’s Form 8-K filed on December 8, 2015 and further in Note 5, on December 2, 2015, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”), with SM Funding Group, Inc. (“SM Funding”). Under the Purchase Agreement, the Company issued to SM Funding a 12% Senior Secured Convertible Note (“Senior Note”) under which SM Funding may advance to the Company up to $2,000,000. Amounts outstanding under the Senior Note are convertible into Preferred Stock the Company may issue to accredited investors in a private placement of up to $10,000,000, but not less than $8,000,000. Under the Senior Note, the Company agreed that it will not enter into, create, assume or suffer to exist any additional indebtedness for borrowed money. The Company has received aggregate advances from SM Funding of $750,000 as of December 31, 2015 and $960,000 as of the date of this filing of Form 10-Q. However, SM Funding is currently in default of its obligations to make advances to the Company under a Binding Letter of Intent (the “LOI”) the Company entered into with SM Funding on October 21, 2015. Accordingly, no assurance can be given that the Company will complete the financing transactions with SM Funding, including obtaining additional advances under the Senior Note, and no assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it may contain undue restrictions and covenants on its operations, in the case of debt financing or cause substantial dilution for its stockholders in the case of convertible debt and equity financing.

F-7

Use of Estimates

~~Financial~~The ~~statements~~preparation ~~prepared~~of incondensed ~~accordance~~consolidated ~~with~~financial ~~accounting~~statements ~~principles generally accepted~~ in ~~the~~conformity ~~United~~with ~~States~~GAAP ~~require~~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, ~~the valuation of inventories and long lived assets,~~ warranty reserves, ~~the assumptions used to calculate derivative liabilities,~~ and ~~equity~~the ~~instruments~~valuation ~~issued~~of ~~for~~deferred ~~financing~~tax ~~and compensation~~assets. Actual results could differ from those estimates.

Revenue recognition

Prior to April 1, 2018, the Company recognized its revenue in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 605 Revenue Recognition, upon the delivery of its services or products when: (1) delivery had occurred or services rendered; (2) persuasive evidence of an arrangement existed; (3) there are no continuing obligations to the customer; and (4) the collection of related accounts receivable was reasonably assured.

Effective April 1, 2018, the Company adopted the guidance of Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers. The implementation of ASC 606 did not have a material impact on the Company’s condensed consolidated financial statements. 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.

F-6

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 June 30, 2019 and March 31, 2019, the Company did not have cash equivalents. From time to time, the Company’s cash account balances exceed the balances as covered by the Federal Deposit Insurance System.

Accounts Receivable

The Company evaluates the collectability of its trade 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 June 30, 2019 and March 31, 2019, the Company deemed an allowance for doubtful accounts was not required.

Inventories

Inventories 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. Inventories consist parts for the Company’s Signature Car conversions. Management has determined that no inventory reserve is required because automobile parts are utilized consistently through the manufacturing process and has a high turnover.

	June 30, 2019		March 31, 2019

Automobile parts	$	127,048	$	108,498
Total inventories	$	127,048	$	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-month periods ended June 30, 2019 and June 30, 2018.

F-7

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 June 30, 2019 and March 31, 2019 comprised of funds received in advance of shipment and amounted to $412,025 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. Changes in the product warranty accrual as of June 30, 2019 and March 31, 2019 were as follows:

	Balance at Beginning of Fiscal Quarter		Warranty Expenditures			Provision for Estimated Warranty Cost		Balance at End of Fiscal Quarter
June 30, 2019	$	20,000	$	(11,849	)	$	11,849	$	20,000
March 31, 2019	$	20,000	$	(15,258	)	$	15,258	$	20,000

Advertising, Sales, and Marketing Costs

Advertising, sales, and marketing costs are expensed as incurred and are included in sales and marketing expenses. During the three-month periods ended June 30, 2019 and 2018, advertising expenses were $117,610 and $3,875, respectively. During the three-month periods ended June 30, 2019 and 2018, sales and marketing expenses were $313,820 and $123,271, 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 ~~Financial~~FASB Accounting Standards ~~Board~~Codification (“~~FASB~~ASC”) ~~Accounting Standards Codification (ASC)~~ topic 820, “Fair Value Measurements and Disclosures” (“ASC 820”)~~, formerly SFAS No~~. ~~157 “Fair Value Measurements”.~~ 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, customer deposits, and notes payable. The carrying amounts of such financial instruments in the accompanying balance sheets approximate their fair values due to their relatively short-term nature. It is management’s opinion that the Company is not exposed to any significant currency or credit risks arising from these financial instruments.

As of December 31, 2015 and March 31, 2015, the Company’s condensed consolidated balance sheets included the fair value of derivative liabilities of $181,565 and $1,268,588, respectively, which was based on Level 2 measurements.

Derivative Financial Instruments

The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the condensed consolidated statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

To determine the number of authorized but unissued shares available to satisfy outstanding convertible securities, the Company uses a sequencing method to prioritize its convertible securities as prescribed by ASC 815-40-35. At each reporting date, the Company reviews its convertible securities to determine their classification is appropriate.

F-8

~~Income~~The ~~Taxes~~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.

~~The~~Income ~~Company~~(loss) ~~accounts~~per for income taxes under FASB ASC 740-10-25. Under ASC 740-10-25, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740-10-25, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.Share

~~The~~Basic ~~Company~~income ~~maintains~~(loss) aper ~~valuation~~common ~~allowance~~share ~~with~~is ~~respect~~computed toby ~~deferred~~dividing ~~tax~~income ~~assets.~~(loss) ~~The~~attributable ~~Company~~to ~~established~~common astockholders ~~valuation~~by ~~allowance~~the ~~based~~weighted average ~~upon~~number ~~the~~of ~~potential~~common ~~likelihood~~shares ofoutstanding. ~~realizing~~Diluted ~~the~~net ~~deferred~~income ~~tax~~(loss) ~~asset~~per ~~and~~common ~~taking~~share ~~into~~is ~~consideration~~computed ~~the~~by ~~Company’s~~dividing ~~financial position~~net ~~and~~income ~~results~~(loss) ofattributable to ~~operations~~common ~~for~~stockholders by the ~~current~~weighted ~~period.~~average ~~Future~~number ~~realization~~ of ~~the~~common ~~deferred~~shares ~~tax~~that ~~benefit~~would ~~depends~~have onbeen outstanding during the ~~existence~~period assuming the issuance of ~~sufficient~~common ~~taxable~~stock ~~income~~for ~~within~~all potential dilutive common shares outstanding. Potential common shares consist of shares issuable upon the ~~carry~~exercise ~~forward~~of ~~period~~stock ~~under~~options and warrants and the ~~Federal~~conversion ~~tax~~of ~~laws~~convertible notes payable.

~~Changes~~The infollowing ~~circumstances,~~table ~~such~~sets asforth the ~~Company~~computation ~~generating taxable income, could cause a change in judgment about the realizability~~ of ~~any related~~basic ~~deferred~~and ~~tax~~diluted ~~asset.~~net ~~Any~~income ~~change~~(loss) inper ~~the~~common ~~valuation~~share ~~allowance~~for ~~would be included in income in~~ the ~~year~~three-month ~~of the change in estimate.~~periods ended:

Stock Compensation

	June 30, 2019		June 30, 2018
Numerator:
Net income (loss) attributable to common stockholders	$	789,224	$	(460,089	)

Denominator:
Weighted average number of shares outstanding, basic		24,536,963		5,490,927
Adjustment for dilutive effects of warrants		1,673,320		-
Adjustment for dilutive effects of convertible note payable		166,667		-
Weighted average number of common shares outstanding, fully diluted		26,376,950		5,490,927

Net income (loss) per common share, basic	$	0.03	$	(0.08	)
Net income (loss) per common share, fully diluted	$	0.03	$	(0.08	)

The ~~Company~~following ~~uses~~table ~~the~~sets ~~fair~~forth ~~value recognition provision of ASC 718, “Stock Compensation,” which requires~~ the ~~Company~~number ~~to expense the cost~~ of ~~employee~~potential ~~services~~common ~~received~~shares inexcluded ~~exchange~~from ~~for an award of equity instruments based on~~ the ~~grant~~calculations ~~date fair value~~ of ~~such~~net ~~instruments.~~loss ~~The~~per ~~Company~~diluted ~~uses the Black-Scholes-Merton option pricing model to calculate the fair value of any equity~~share ~~instruments~~because ontheir ~~the~~inclusion ~~grant~~would ~~date~~be ~~that vest over a period of time.~~anti-dilutive:

The Company also uses the provisions of ASC 505-50, “Equity Based Payments to Non-Employees,” to account for stock-based compensation awards issued to non-employees for services. Such awards for services are recorded at either the fair value of the services rendered or the instruments issued in exchange for such services, whichever is more readily determinable, using the measurement date guidelines enumerated in ASC 505-50.

	June 30, 2019		June 30, 2018
Outstanding options to purchase common stock		2,602		2,602
Warrants to purchase common stock		-		1,339,990
Note payable convertible to common stock		-		166,667
Total		2,602		1,509,259

Income (Loss) per Share

The basic EPS is calculated by dividing the Company’s net income or loss available to common stockholders by the weighted average number of common shares during the period. Outstanding shares of Super Voting Preferred Stock are included in the calculation as they are considered as a common stock equivalent. The diluted EPS is calculated by dividing the Company’s net income or loss available to common stockholders by the diluted weighted average number of shares outstanding during the period. The diluted weighted average number of shares outstanding is the basic weighted average number of shares adjusted for any potentially dilutive debt or equity securities unless the effects thereof are anti-dilutive, that is inclusion of such shares would reduce the net loss or increase the net income.

For the three and nine months ended December 31, 2015 and 2014, the basic and diluted shares outstanding were the same, as potentially dilutive shares were considered anti-dilutive. As of December 31, 2015, stock options, warrants, and convertible notes convertible or exercisable into 6,870,333, 13,313,099, and 485,568,933 shares of common stock, respectively, have been excluded from diluted loss per share because they are anti-dilutive.

As of December 31, 2014, stock options, warrants, and convertible notes convertible or exercisable into 7,271,333, 13,313,099, and 139,159,937 shares of common stock, respectively, have been excluded from diluted loss per share because they are anti-dilutive.

Significant Concentrations

~~Two~~Sales ~~customers~~to ~~comprised~~China-based ~~18% and 10% of sales~~customer, ~~respectively,~~Jiangsu ~~for~~Saleen ~~the~~Automotive ~~three~~Technology ~~months~~Co. ~~ended~~(see ~~December~~Note ~~31,~~2) ~~2015~~comprised 87% and ~~one separate customer comprised 14~~59% of ~~sales~~revenues for the ~~nine~~three-month periods ~~months~~ ended ~~December~~June 3130, ~~2015.~~2019 ~~One~~and ~~customer comprised 93% of accounts receivable at December 31~~2018, ~~2015~~respectively.

~~Sales~~Four ~~to three separate~~ customers comprised 2896%, ~~11%~~of ~~and~~accounts ~~10%,~~receivable ~~respectively,~~as ~~and one separate customer comprised 13%~~ of ~~revenues~~June ~~for the~~30, ~~three~~2019. ~~and~~One ~~nine~~customer, ~~months~~a ~~ended~~related ~~December 31~~party, ~~2014, respectively. Two different customers~~ comprised 6398% ~~and 37%~~ of accounts receivable as of ~~December~~March 31, ~~2014~~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.

F-9

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 June 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 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 12 for details regarding the Company’s operating leases.

Recently Issued Accounting Standards

In ~~May~~June ~~2014~~2018, the ~~Financial Accounting Standards Board (~~FASB) issued ~~Accounting Standards Update (~~ASU) No. ~~2014~~2018-0907, ~~Revenue~~Compensation ~~from Contracts~~– ~~with~~Stock ~~Customers.~~Compensation ~~ASU~~(Topic ~~2014-09~~718): isImprovements ato ~~comprehensive revenue recognition standard that will supersede nearly all existing~~nonemployee ~~revenue~~share-based ~~recognition~~payment ~~guidance under current U~~accounting.S. ~~GAAP~~This ~~and~~ASU ~~replace~~simplifies itthe ~~with~~accounting aand ~~principle~~reporting ~~based approach~~ for ~~determining revenue recognition. ASU 2014~~share-09based ~~will~~payments ~~require~~issued ~~that~~to ~~companies~~nonemployees by ~~recognize~~expanding ~~revenue based on~~ the ~~value~~scope of ~~transferred~~ASC ~~goods~~718, orCompensation ~~services~~– asStock ~~they occur in the contract. The ASU also will require additional disclosure about the nature~~Compensation, ~~amount,~~which ~~timing~~currently ~~and~~only ~~uncertainty~~includes ofshare-based ~~revenue and~~compensation ~~cash~~to ~~flows arising from customer contracts~~employees, ~~including~~to ~~significant~~also ~~judgments~~include ~~and~~share-based ~~changes~~payments ~~in judgments and assets recognized from costs incurred~~ to ~~obtain~~nonemployees orfor ~~fulfill~~goods aand ~~contract~~services. ~~ASU~~The ~~2014-09~~standard is effective for ~~interim and annual periods beginning after December~~public ~~15,~~companies ~~2017.~~for ~~Early~~fiscal ~~adoption~~years ~~is permitted only in annual reporting periods~~ beginning after December 15, ~~2016~~2018, including interim periods ~~therein.~~ ~~Entities~~within ~~will~~that befiscal ~~able to transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption~~year. ~~The Company is in the process of evaluating the impact of ASU 2014-09 on the Company’s financial statements and disclosures.~~

InOther ~~August~~recent ~~2014,~~accounting ~~the~~pronouncements ~~FASB~~ issued ~~Accounting~~by ~~Standards~~the ~~Update No. 2014-15 (ASU 2014-15)~~FASB, ~~Disclosure~~including ofits ~~Uncertainties~~Emerging ~~about~~Issues anTask ~~Entity’s Ability~~Force, tothe ~~Continue~~American asInstitute aof ~~Going~~Certified Public ~~Concern~~Accountants, ~~which~~and ~~provides~~the ~~guidance~~Securities ~~on determining when~~ and ~~how~~Exchange toCommission ~~disclose~~did ~~going-concern~~not ~~uncertainties in~~or ~~the~~are ~~financial~~not ~~statements.~~believed ~~The~~by ~~new standard requires~~ management to ~~perform~~have ~~interim~~a ~~and~~material ~~annual~~impact on ~~assessments~~the ~~of an entity~~Company’s ~~ability~~ topresent ~~continue~~or asfuture acondensed ~~going~~consolidated ~~concern within one year of the date the~~ financial statements ~~are issued~~. AnDuring ~~entity~~the ~~must~~three-months ~~provide certain~~ended ~~disclosures~~June if30, ~~conditions~~2019, there orhave ~~events~~been ~~raise~~no ~~substantial~~other ~~doubt~~changes ~~about~~to the ~~entity~~Company’s ~~ability~~significant toaccounting ~~continue~~policies as adescribed ~~going~~in ~~concern. The~~the ~~ASU~~Annual ~~applies~~Report toon ~~all~~Form 10-K ~~entities and is effective~~ for ~~annual~~the ~~periods~~fiscal ~~ending~~year ~~after~~ended ~~December~~March 1531, ~~2016, and interim periods thereafter, with early adoption permitted~~2019.

In November 2014, the FASB issued Accounting Standards Update No. 2014-16 (ASU 2014-16), Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity. The amendments in this ASU do not change the current criteria in U.S. GAAP for determining when separation of certain embedded derivative features in a hybrid financial instrument is required. The amendments clarify that an entity should consider all relevant terms and features, including the embedded derivative feature being evaluated for bifurcation, in evaluating the nature of the host contract. The ASU applies to all entities that are issuers of, or investors in, hybrid financial instruments that are issued in the form of a share and is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted.

In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases. ASU 2016-02 requires a lessee to record a right of use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is in the process of evaluating the impact of ASU 2016-02 on the Company’s financial statements and disclosures.

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future condensed consolidated financial statements.

NOTE 2 - PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

	December 31, 2015			March 31, 2015
Tooling	$	711,053		$	698,243
Equipment		210,980			210,980
Leasehold improvements		203,310			203,310
Total, cost		1,125,343			1,112,533
Accumulated depreciation and amortization		(600,081	)		(520,417	)
Total Property, Plant and Equipment	$	525,262		$	592,116

Depreciation and amortization expense was $79,664 and $109,715 for the nine months ended December 31, 2015, and 2014, respectively.

F-10

NOTE 32 -– ~~NOTES~~REVENUE ~~PAYABLE~~FROM CONTRACTS WITH CUSTOMERS

~~Notes~~The ~~payable,~~Company ~~exclusive~~recognizes ofrevenue ~~accrued~~from ~~interest,~~the ~~are~~following ~~comprised as follows~~sources:

	December 31, 2015		March 31, 2015
Senior secured note payable to a bank, secured by all assets of Saleen Signature Cars, guaranteed by the U.S. Small Business Administration and personally guaranteed by the Company’s CEO, payable in full in March 2015, currently in default (1)	$	358,704	$	358,704
Subordinated secured bonds payable, interest at 6% per annum payable at various maturity dates, currently in default (2)		97,000		97,000
Subordinated secured note payable, interest at 6% per annum, payable March 16, 2010, currently in default (3)		61,046		61,046
Unsecured notes payable, interest at 10% per annum payable on various dates from July 31 to March 31, 2010, currently in default (4)		55,000		55,000
Promissory note, interest at 6%, secured by a vehicle (5)		-		100,000
Total notes payable	$	571,750	$	671,750

Revenue from services

(1)	On February 6, 2014, Saleen Signature Cars received a Complaint from a bank filed in California Superior Court, Riverside County alleging, among other matters, breach of contract due to non-timely payment of November and December 2013 principal amounts owed, which were paid as of March 31, 2014, and the occurrence of a change in control as a result of the Merger. The bank sought full payment of principal and interest owed. In April 2014, the Company entered into a settlement arrangement with the bank whereby the bank dismissed this case in exchange for payment of $124,000 that was applied towards principal and unpaid fees along with advance loan principal and interest through July 2014. From August 2014 to March 31, 2015, in exchange for payments totaling $90,000, the bank agreed to extend this arrangement through various dates with the last date being March 2015. On April 29, 2015, the bank filed a claim against the Company alleging breach of the loan agreement, breach of a commercial guaranty by Steve Saleen, Chairman and CEO, and the bank demanded full payment of principal and interest outstanding (see Note 10).
(2)	Bonds and notes issued on March 1, 2008, 2009 and 2010, payable in full upon one year from issuance. The Bonds accrue interest at 6% per annum and are secured by the personal property of Saleen Signature Cars. As of December 31, 2015 and March 31, 2015, respectively, the Bonds were in default due to non-payment.
(3)	Note payable issued on March 16, 2010 due in full on March 16, 2011. The note accrued interest at 10% per annum and was secured by three vehicles held in inventory by Saleen Signature Cars. On June 7, 2013, the Company entered into a Settlement Agreement and Mutual General Release by canceling this note and issuing a new unsecured 6% note payable due on or before August 19, 2013. The note was in default as of December 31, 2015 and March 31, 2015 due to non-payment.
(4)	In June 2014, the Company entered into a Settlement Agreement and Mutual Release agreement with a note holder for one of the notes that had an outstanding principal and interest of $100,000 and $53,374, respectively, in exchange for (1) issuance of 800,000 shares of its Common Stock and (2) cash payment of $35,000. The Company issued the common shares in June 2014 and determined the value to be $112,000, which was based on the value of the Common Stock of $0.14 as of the date of settlement. The remaining cash payment of $35,000 was unpaid and was included in notes payable as of December 31, 2015 and March 31, 2015. In addition, another separate note for $20,000 remains outstanding as of December 31, 2015 and is in default due to non-payment.
(5)	The Company entered into a note agreement on March 25, 2015 for $100,000 principal and interest bearing at a rate of 6% per annum. The note was secured by a vehicle provided to the note holder by the Company and was due on demand after 60 days following the date the secured vehicle was returned to the Company. In June 2015, the note holder agreed to cancel this note and attribute the then principal outstanding of $100,000 as partial payment against advance royalties received in conjunction with an Intellectual Property License Agreement entered into with the note holder (see Note 7).

The Company recognizes revenue from its engineering and design contracts and consulting services contracts as the services are provided and accepted by the customer. Deferred revenue is 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 other high-performance vehicles to be manufacture in the United States and China. 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. 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 $2,000,000 and $0 for the three-month periods ended June 30, 2019 and 2018, respectively.

During the three-month periods ended June 30, 2019 and 2018, the Company recognized revenue of $574,000 and $718,316, respectively, related to its completed performance under the engineering services contract. In addition, during the three-month periods ended June 30, 2019 and 2018, the Company recognized revenue of $9,839,695 and $0, respectively, related to its completed performance under the Cup Agreement. Furthermore, during the three-month periods ended June 30, 2019 and 2018, the Company recognized revenue of $0 and $162,048, respectively, of consulting fees related to JSAT. Finally, during the three-month periods ended June 30, 2019 and 2018, the Company received payments of $0 and $45,412, respectively, from JSAT for the reimbursement of engineering and manufacturing services.

Revenue from Saleen S7

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. During the three-month periods ended June 30, 2019 and 2018, the Company recognized revenue of $618,668 and $91,099, respectively, for reimbursement of engineering and manufacturing services from the sale of S7 vehicle(s). See Note 8 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-month periods ended June 30, 2019 and 2018, the Company recognized revenue of $692,238 and $518,687, respectively, from signature cars.

F-11

~~NOTE~~Deferred ~~4 - NOTES PAYABLE TO RELATED PARTIES~~ Revenue

~~Notes~~As ~~payable~~of toJune ~~related~~30, ~~parties~~2019 and March 31, ~~exclusive~~2019, the Company’s contract balances included deferred revenue of ~~accrued~~$1,068,150 related ~~interest~~to the Cup Agreement. For service contracts where the performance obligation is not completed, ~~are~~deferred asrevenue ~~follows:~~is recorded for any payments received in advance of the performance obligation being completed.

	December 31, 2015		March 31, 2015
Unsecured note payable to a stockholder at 10% per annum, due on April 1, 2014, currently in default.	$	102,000	$	102,000
Unsecured 10% note payable to a stockholder and convertible note holder at 10% per annum, payable on demand		120,000		-
Unsecured payable to a stockholder at 10% per annum, payable on demand		123,584		165,000
Total notes payable, related parties	$	345,584	$	267,000

NOTE 3 – PROPERTY AND EQUIPMENT

~~NOTE~~Property 5and -equipment ~~CONVERTIBLE~~consisted ~~NOTES~~of ~~PAYABLE~~the following as of June 30, 2019 and March 31, 2019:

Convertible notes payable, exclusive of accrued interest, are as follows:

	June 30, 2019			March 31, 2019
Tooling	$	937,554		$	937,554
Automobiles and trailers		240,257			167,063
Construction in Progress – S7 purchased assets		1,428,304			-
Machinery and equipment		245,672			100,233
Furniture and fixtures		147,960			147,960
Computer equipment and software		90,729			89,246
Leasehold improvements		129,041			79,691
		3,219,517			1,521,747
Accumulated depreciation and amortization		(931,950	)		(871,394	)
Total Property and Equipment	$	2,287,567		$	650,353

	December 31, 2015			March 31, 2015
3% Senior secured convertible notes payable to a private accredited investor group, convertible into 133,666,799 shares of Common Stock (including accrued interest), $2,001,720 due in June 2017 and $499,892 due in January 2019.	$	2,501,612		$	2,501,612
12% Senior secured convertible note payable to a private accredited inventory group, due on October 12, 2016, convertible into shares of preferred stock that may be issued by the Company in a subsequent offering		750,000			-
7% Unsecured convertible notes payable to private accredited investor group, convertible into 82,484,267 shares of Common Stock (including accrued interest) as of December 31, 2015, interest accrued at 7% per annum, notes mature in March 2017		2,200,000			2,200,000
Unsecured convertible notes payable to five separate private accredited investors, convertible into 269,824,686 shares of Common Stock (including accrued interest) as of December 31, 2015, interest accrued at 8% to 12% per annum, notes mature on various dates ending before December 31, 2015, in default		172,254			618,225
		5,623,866			5,319,837
Less: discount on notes payable		(954,004	)		(1,836,828	)
Notes payable, net of discount		4,669,862			3,483,009
Less: notes payable, current		(922,254	)		(267,332	)
Notes payable, long-term	$	3,747,608		$	3,215,677

Depreciation and amortization expense was $60,556 and $19,431 for the three-month periods ended June 30, 2019 and 2018, respectively. The Company purchased $1,428,304 of S7 assets to manufacture S7s for promotional purposes to build its brand and will depreciate such assets once completed.

NOTE 4 – NOTES PAYABLE

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

		June 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		66,753		67,753
(3)	Unsecured note payable, interest at 10% per annum, due July 27, 2017, past due		53,890		83,980
(4)	Note payable to American Express, past due		27,926		32,426
	Total notes payable	$	148,569	$	224,159

(1)	In December 2016, the Company entered into a settlement agreement with Citizens Business Bank for a $400,000 loan that was then in default, 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. For the three month period ended June 30, 2019, the landlord waived interest charges.

(3)	The note bears interest at 10% per annum, and for the three-month period ended June 30, 2019, the lender waived interest charges.

(4)	Per a settlement reached with American Express, the Company makes monthly payments of $1,500 against prior balances due.

NOTE 5 – CONVERTIBLE NOTES PAYABLE, PAST DUE

As of June 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.

F-12

3%NOTE ~~Senior~~6 ~~secured~~– ~~convertible~~ACCRUED ~~notes~~COMPENSATION, PAYROLL TAXES, AND OTHER TAXES PAYABLE

OnAccrued ~~June 26~~compensation, ~~2013,~~payroll ~~pursuant to a Securities Purchase Agreement~~taxes, asand ~~amended,~~other ~~the~~taxes ~~Company~~payables ~~issued~~consisted ~~senior secured convertible notes, having a total principal amount~~ of ~~$3,000,000,~~the tofollowing 12as ~~accredited investors (“2013 Notes”). The 3% Notes pay 3.0% interest per annum with a maturity~~ of ~~4 years from the date of issuance (~~June ~~2017~~30, ~~and January~~ 2019) and ~~are~~March ~~secured by all assets and intellectual property of the Company. No cash interest payments will be required~~31, except that accrued and unconverted interest shall be due on the maturity date and on each conversion date with respect to the principal amount being converted, provided that such interest may be added to and included with the principal amount being converted.2019:

Each 3% Note is convertible at any time into Common Stock at a specified conversion price, which initially was $0.075 per share. In June 2014, the Company entered into a First Amendment to Saleen Automotive, Inc. 3.0% Secured Convertible Note (“3% First Amendment”) and removed all specified adjustments to the conversion price except for standard anti-dilution provisions whereby if the Company consummates a reorganization transaction, pays dividends or enters into a stock split of its common shares the conversion price would adjust proportionally. In addition, if a Fundamental Transaction, as defined in the 2013 Note agreement, were to occur the potential liquidated damage was set to a fixed amount. As an inducement for the amendment, the Company issued an aggregate of 389,923 shares of Common Stock with a fair value of $58,488 determined based on the market value of the Company’s Common Stock of $0.15 as of the date of issuance. Further, the Company accounted for this amendment as a modification for accounting purposes, and as such, the derivative liability recorded of when the note was originally issued was deemed extinguished.

	June 30, 2019		March 31, 2019
Accrued payroll	$	97,898	$	453,492
Accrued vacation		175,987		142,466
Current payroll taxes and withholdings		39,177		36,731
	$	313,062	$	632,689

OnNOTE ~~January~~7 ~~23,~~– ~~2015,~~OTHER ~~the~~CURRENT Company entered into a Second Amendment to 3% Senior Secured Convertible Notes whereby the conversion price of the 2013 Notes were amended to be the lesser of (a) $0.075 and (b) 70% of the average of the three lowest VWAPs occurring during the twenty consecutive trading days immediately preceding the applicable conversion date on which the note holders elect to convert all or part of the note. However, in no event shall the conversion price be less than $0.02. In conjunction with this amendment, the Company entered into two additional 3% Senior Secured Convertible Notes in the principal amount of $499,892 with two accredited investors who participated in the June 26, 2013 offering (“2015 Notes” and collectively “3% Notes”) of which $98,708 was converted from a revolver note payable previously entered into with one investor in November 2013.LIABILITIES

InOther ~~May~~current ~~2015,~~liabilities ~~the~~consisted ~~Company received a complaint from a bank alleging breach~~ of the ~~loan~~following ~~agreement~~as ~~and breach~~ of aJune commercial guaranty by Steve Saleen and demanding full payment of principal, interest and fees of $369,302 (see Note 3). A default under the loan agreement triggers a cross default under the 3% Notes enabling the holders thereof to, at their election until the later of 30 ~~days after such default is cured or otherwise resolved or the holder becomes aware of such cure or resolution~~, ~~accelerate~~2019 ~~the maturity of the indebtedness under the 3% Notes requiring the Company to pay, upon such acceleration, the sum of (1) 120% of the outstanding principal plus (2) 100% of all accrued~~ and ~~unpaid~~March interest plus (3) all other amounts due under the 3% Notes. Upon the occurrence of an event of default under the 3% Notes interest accrues at the rate of 12% per annum. The Company continues to classify the 3% Notes as long term31, as a judgment against the Company has not been granted and the Company disagrees with the compliant and plans to defend its position. As of the date of this filing of Form 10-Q, the Company has not received a notice of default from the holders of the 3% Notes.2019:

In June 2015, the Company determined that there was not sufficient authorized and available Common Stock available for issuance upon conversion of the 3% Notes. As a result, the Company determined that the conversion feature of the 3% Notes were not considered indexed to the Company’s own stock pursuant to FASB guidance on “Determining Whether an Instrument Indexed to an Entity’s Own Stock,” which indicates that any adjustment to the fixed amount (either conversion price or number of shares) of the instrument regardless of the probability or whether or not within the issuers’ control, means the instrument is not indexed to the issuers own stock. Therefore, the Company characterized the fair value of the 3% Note conversion feature of $106,781 in June 2015 as derivative liability. See Note 6 for further discussion.

	June 30, 2019		March 31, 2019
Accrued expenses related to JSAT contracts	$	2,311,601	$	-
Deferred vendor consideration		-	$	150,000
Other current payables		179,637		17,544
	$	2,491,238	$	167,544

~~During~~As ~~the nine months ended December 31, 2015 and 2014, the Company amortized $24,761 and $270,701, respectively,~~ of ~~the~~June ~~valuation discount. The remaining unamortized valuation discount of $49~~30,~~260~~ ~~and $74~~2019,~~021~~ asother ofcurrent ~~December~~payables ~~31,~~mainly ~~2015~~related ~~and~~to ~~March~~expense ~~31,~~accruals ~~2015,~~related ~~respectively, has~~to ~~been~~JSAT ~~offset~~contracts ~~against the face amount of the notes~~ for ~~financial~~which ~~statement purposes. As of December 31, 2015,~~ the ~~principal balance~~Company ~~of the convertible Notes outstanding was $2,501,612 and potentially convertible into 133,666,799 shares of Common Stock~~had ~~including~~not ~~accrued~~been ~~and unpaid interest~~invoiced.

NOTE 8 – RELATED PARTY TRANSACTIONS

Due to related parties

The amounts payable to related parties as of June 30, 2019 and March 31, 2019 are as follows:

	June 30, 2019		March 31, 2019
Related Party:
Steve Saleen and Amy Boylan (a)	$	-	$	457,692
Top Hat Capital and Crystal Research (b)		61,672		61,672
	$	61,672	$	519,364

Steve Saleen and Amy Boylan (a)

Amounts payable to Steve Saleen, founder and Chief Executive Officer of the Company, and Amy Boylan, President and Chief Operating Officer, for accrued bonuses. The bonuses were paid on May 17, 2019.

Jeffrey Kraws, Top Hat Capital and Crystal Research (b)

As of June 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 serves as the OEM for the Saleen S7, a limited production supercar. During the three-month periods ended June 30, 2019 and 2018, 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 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.

F-13

~~12%~~During ~~Senior~~the ~~secured~~three-month ~~convertible~~periods ~~note~~ended June 30, 2019 and 2018, the Company recognized revenue from S7 Supercars of $618,668 and $91,099, respectively, for engineering and manufacturing services. As of June 30, 2019 and March 31, 2019, the Company had accounts receivable due from S7 Supercars of $0 and $133,742, respectively. As of June 30, 2019 and March 31, 2019, deposits of $0 and $100,000 from S7 Supercars were included in customer deposits, respectively.

AsOn ~~noted~~May ~~above under “Going Concern” on December 2~~31, ~~2015~~2019, the Company entered into ~~the~~an ~~Purchase~~asset ~~Agreement~~purchase agreement with SMS7 ~~Funding. Under the Purchase Agreement~~Supercars, ~~the~~LLC ~~Company~~pursuant ~~issued~~ to SMwhich ~~Funding~~S7 aSupercars ~~12%~~sold all ~~Senior~~of ~~Secured~~its ~~Convertible~~assets, ~~Note~~consisting ~~under~~of ~~which~~chassis SMand ~~Funding~~other ~~may advance~~automotive toparts ~~the~~relating ~~Company up~~ to ~~$2,000,000.~~the ~~Pursuant~~manufacture toof the ~~LOI~~S7 ~~(defined~~supercar, ~~below)~~and SMrelated intellectual ~~Funding~~property, ~~was required~~ to ~~advance~~ the Company ~~at least~~for an initial purchase price of $1,~~000~~165,000 ~~within~~comprised ~~seven~~of ~~business~~a ~~days~~cash ~~after~~payment ~~its execution in October 2015. However, as~~ of ~~December 31~~$800, ~~2015~~000, and the ~~Company had~~elimination ~~only~~of ~~received~~an ~~aggregate~~accounts ~~advances~~receivable ~~from~~balance ~~SM Funding~~ of $~~750~~365,000 ~~evidenced~~owed byto ~~the~~us ~~Senior~~by ~~Note~~S7 Supercars. ~~Advances~~Furthermore, ~~under~~ the ~~Senior~~amount ~~Note~~of accounts ~~will~~receivable ~~mature~~balance oneliminated ~~October~~increased ~~12,~~by ~~2016~~$317,304 ~~bear~~to ~~interest~~$682,304 atincreasing athe ~~rate~~final ofpurchase ~~12%~~price ~~per~~to ~~annum~~$1, ~~and will be~~482,304. atSince ~~the~~S7 ~~holder’s option, convertible~~is ~~into~~a ~~shares~~related ofparty ~~preferred stock~~ (~~“Preferred~~common ~~Stock”~~ownership), ~~that may be issued by~~ the ~~Company~~entire inpurchase anprice ~~offering~~of ~~described~~$1,482,304 ~~below. The~~was ~~Company’s~~allocated ~~subsidiaries~~to ~~have guaranteed~~ the ~~obligations~~fixed ~~under~~assets ~~the~~purchased. ~~Senior~~In ~~Note pursuant to a Subsidiary Guaranty~~addition, ~~and~~ the Company’s ~~obligations~~is ~~under~~required ~~the~~to ~~Senior~~pay ~~Note~~S7 ~~and~~Supercars, ~~the~~LLC ~~obligations~~up ~~of its subsidiaries under the Subsidiary Guaranty are secured pursuant~~ to afour ~~Security~~additional ~~Agreement~~payments ~~and~~of an$50,000 ~~Intellectual~~each, ~~Property~~upon ~~Security~~sales ~~Agreement~~by the Company ~~entered into in favor~~ of SMS7 ~~Funding.~~supercars Inwithin ~~addition,~~the ~~pursuant~~two-year toperiod afollowing ~~Binding~~the ~~Letter~~closing, ofsubject ~~Intent~~to (the ~~“LOI”)~~conditions ~~the~~provided ~~Company~~for ~~entered~~in ~~into~~the ~~with~~purchase ~~SM Funding~~agreement. ~~on October 21~~However, ~~2015,~~ the Company ~~entered~~does ~~into~~not aintend ~~Subordination~~to ~~Agreement~~sell ~~with~~S7s SMto ~~Funding~~customers ~~and~~but ~~certain~~instead ~~existing~~will ~~holders~~manufacture ofS7s ~~the~~for ~~Company’s existing~~promotional 3%purposes ~~Senior~~to ~~secured~~build its ~~convertible~~brand. ~~notes~~Pursuant ~~discussed~~to ~~above and 7% Unsecured convertible notes discussed below (~~the ~~“Existing Lenders”)~~purchase toagreement, ~~memorialize~~ the ~~senior~~joint ~~position~~venture ofagreement between the ~~Senior~~Company ~~Note~~and ~~relative~~S7 toSupercars ~~the~~was ~~notes~~terminated, except ~~held~~for byindemnification ~~the~~obligations ~~holders~~ of the 3%Company ~~Notes~~thereunder.

~~Amounts~~NOTE outstanding under the Senior Note are convertible into Preferred Stock the Company may issue to accredited investors in a private placement of up to $10,000,000 (the “Target Amount”) but not less than $8,000,000, including the conversion of the principal and interest under the Senior Note (the “Qualified Offering”). Pursuant to the LOI and the Senior Note, upon completion of the Qualified Offering at the Target Amount, the investors in the Qualified Offering will collectively and beneficially own 60.9% of– ~~the~~INCOME Company, the Existing Lenders will beneficially own 26.1% of the Company (pursuant to the conversion of their notes into shares of preferred stock), Steve Saleen will beneficially own 10% of the Company (excluding a warrant to purchase 5% of the Company’s outstanding shares of Common Stock), and all other stockholders will beneficially own approximately 3% of the Company. There can be no assurance that SM Funding will make additional advances to the Company under the Senior Note or that the Company will be able to consummate a Qualified Offering with SM Funding or otherwise.TAXES

~~Without~~For the ~~prior~~three-month ~~written~~periods ~~consent~~ended ofJune ~~the holder of the Senior Note~~30, ~~the~~2019 ~~Company~~and ~~is prohibited from (i) entering into~~2018, ~~creating,~~a ~~assuming or~~reconciliation ~~suffering to exist any additional indebtedness for borrowed money, (ii) entering into, creating, assuming or suffering to exist any additional liens on or with respect to any~~ of the ~~Company’s~~effective ~~properties~~income ortax ~~assets,~~rate ~~(iii) repurchasing shares of the Company’s Common Stock or common stock equivalents other than repurchases of common stock or common stock equivalents from departing employees up~~ to ~~an aggregate maximum of $150,000, (iv) paying cash dividends, and (v) entering into transactions with its affiliates that would be required to be disclosed in public filings with~~ the ~~Securities~~U.S. ~~and Exchange Commission, unless such transaction is expressly~~statutory ~~approved~~rate bywas aas ~~majority of the disinterested directors on the Company’s board of directors.~~follows:

7% Unsecured convertible notes

	June 30, 2019			June 30, 2018
Tax expense at the U.S. statutory income tax		21	%		-	%
State tax net of federal tax benefit		8			-
Other		-			-
Increase (decrease) in the valuation allowance		-			-
Effective tax rate		29	%		-	%

In March and April 2014, as amended in June 2014, the Company issued 7% Unsecured Convertible Notes (the “7% Notes”), having a total principal amount of $2,250,000 and $250,000, respectively, to 5 accredited investors of which $2,000,000 was received from 3 investors who participated in the June 26, 2013 offering above. The ~~7% Notes pay interest at 7% per annum with a maturity~~ ofprovision 3 years (March and April, 2017). No cash payments are required, except that unconverted outstanding principal and accrued interest shall be due and payable on the maturity date. Each 7% Note is initially convertible at any time into the Company’s Common Stock at a conversion price, which is adjustable to the lower of $0.07 or the three lowest daily volume weighted average prices of the Company’s Common Stock during the twenty consecutive trading days immediately preceding any conversion date. However, in no event shall the conversion price be lower than $0.03 per share. In addition, the conversion price adjusts for ~~standard~~income ~~anti-dilution provisions~~taxes ~~whereby~~consisted ~~if the Company consummates a reorganization transaction, pays dividends or enters into a stock split~~ of ~~its common shares~~ the ~~conversion price would adjust proportionally.~~following:

In June 2014, the Company entered into a First Amendment to Saleen Automotive, Inc. 7% Convertible Note whereby effective as of March 31, 2014 or the applicable issuance date for notes issued thereafter, the conversion price would in no event adjust below $0.03 per share. In addition, if a Fundamental Transaction, as defined in the Agreement, were to occur the potential liquidated damages was set to a fixed amount. As an inducement, the Company issued an aggregate of 357,143 shares of its Common Stock with a fair value of $53,571 based on the market value of the Company’s Common Stock of $0.15 as of the date of issuance.

	June 30, 2019		June 30, 2018
Federal current tax	$	234,634	$	-
State current tax		88,456		-
Income tax expense	$	323,090	$	-

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 June 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 June 30, 2019 and March 31, 2019.

Net deferred tax assets consist of the following:

	June 30, 2019			March 31, 2019
Deferred tax assets
Net operating loss carryforwards	$	850,000		$	850,000
Total deferred tax asset before valuation allowance		850,000			850,000
Valuation allowance		(850,000	)		(850,000	)
Deferred tax assets, net of a valuation allowance	$	-		$	-

As of June 30, 2019, the Company generated regular tax federal net operating losses (“NOLs”) of approximately $18.2 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-month period ended June 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.

F-14

AsThe ~~the initial conversion price of $0.07 reflected a price discount below the fair market value of the~~ Company’s ~~Common~~operations ~~Stock as~~are ofbased ~~the issuance date of the 7% Notes, the Company determined that there was deemed a beneficial conversion feature associated with these 7% Notes. As such, the Company recorded $2,250,000 and $250,000~~ in ~~March~~California ~~2014~~ and ~~April~~it 2014, respectively, representing the intrinsic value of the beneficial conversion feature at the issuance date of the 7% Notes in additional paid-in capital. The value of the beneficial conversion feature is ~~being~~subject ~~amortized~~to asFederal ~~additional interest expense over the term of the 7% Notes, which totaled $544,556~~ and ~~$422,206~~California ~~for~~state ~~the~~income ~~nine months ended December 31, 2015 and 2014, respectively~~tax. AsTax ofyears ~~December 31, 2015 and~~after ~~March~~2014 ~~31,~~are ~~2015,~~open ~~the~~to ~~remaining~~examination ~~unamortized~~by ~~valuation~~Federal ~~discount of $904,744~~ and ~~$1,449,300,~~state ~~respectively,~~tax ~~has been offset against the face amount of the notes for financial statement purposes~~authorities. ~~As of December 31, 2015, the outstanding principal balance of these notes was $2,200,000 and potentially convertible into 82,077,448 shares of Common Stock including accrued and unpaid interest.~~

InNOTE ~~May~~10 ~~2015,~~– the Company received a complaint from a bank alleging breach of the loan agreement and breach of a commercial guaranty by Steve Saleen and demanded full payment of principal, interest and fees of $369,302 (see Note 3). If the bank is successful in their claim of default, such default would trigger a cross default under the 7.0% Notes enabling the holders thereof to, at their election, accelerate the maturity of the outstanding indebtedness under the 7% Notes requiring the Company to pay, upon such acceleration, the greater of (1) 120% of the outstanding principal (plus all accrued and unpaid interest) and (2) the product of (a) the highest closing price for the five trading immediately preceding the holderSTOCKHOLDERS’s ~~acceleration~~EQUITY and (b) a fraction, of which the numerator is the entire outstanding principal, and of which the denominator is the then applicable conversion price. Upon the occurrence of an event of default under the 7% Notes interest accrues at the rate of 24% per annum. The Company continues to classify the 7% Notes as long term, as a judgment against the Company has not been granted and the Company disagrees with the compliant and plans to defend its position. As of the date of this filing of Form 10-Q, the Company has not received a notice of default from the holders of the 7% Notes.DEFICIT

InSeries ~~June~~B ~~2015,~~Preferred ~~the Company determined that there was not sufficient authorized and available Common~~ Stock available for issuance upon conversion of the 7% Notes. As a result, the Company determined that the conversion feature of the 7% Notes was not considered indexed to the Company’s own stock pursuant to FASB guidance on “Determining Whether an Instrument Indexed to an Entity’s Own Stock,” which indicates that any adjustment to the fixed amount (either conversion price or number of shares) of the instrument regardless of the probability or whether or not within the issuers’ control, means the instrument is not indexed to the issuers own stock. Therefore, the Company characterized the fair value of the 7% Note conversion feature of $13,148 in June 2015 as derivative liability. See Note 6 for further discussion.

~~Unsecured~~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 ~~notes~~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.

~~From~~On September ~~2014~~11, ~~to December 2014~~2018, the Company issued ~~Unsecured~~666.66 ~~Convertible~~units ~~Promissory~~of ~~Notes~~Series ~~(“Notes”)~~B toPreferred ~~eight~~Stock ~~separate accredited~~and ~~investors~~warrants ~~with~~for a$600 ~~remaining~~per ~~principal~~unit, ~~balance~~for total cash proceeds of $~~172~~400,~~254~~000 ~~and~~to ~~$618,225~~a asrelated ofparty. ~~December~~Each ~~31,~~unit ~~2015~~consisted ~~and~~of ~~March~~one ~~31,~~share ~~2015,~~of ~~respectively. The~~Series ~~original~~B ~~Notes~~Preferred ~~contained~~Stock ~~interest~~that ~~ranging~~is ~~from~~convertible 8%into 1,000 toshares ~~12%~~of ~~per~~the ~~annum~~Company’s common stock, and ~~matured~~a onthree-year ~~various~~warrant ~~dates~~to ~~from~~purchase ~~April~~500 ~~2015~~shares toof ~~December~~the Company’s common ~~2016.~~stock ~~The~~at ~~notes~~an ~~outstanding~~exercise asprice of ~~December~~$.70 ~~31,~~per ~~2015~~share. ~~contain~~A ~~interest~~total ~~rates~~of ~~ranging~~666.66 ~~from~~shares 8%of toSeries ~~10%~~B ~~and~~Preferred ~~matured~~Stock onconvertible ~~dates~~into ~~prior~~666,666 toshares ~~December~~of ~~31,~~common ~~2015~~stock and aswarrants ~~such,~~exercisable ~~were~~into in333,330 ~~default~~shares as of ~~December~~common ~~31,~~stock ~~2015~~were issued. The ~~Company~~warrants ~~may~~have ~~not~~a ~~prepay~~term ~~the~~of ~~Notes~~three ~~without the Note~~years ~~holder’s~~and ~~consent~~vested immediately. ~~Notes~~The ~~under~~aggregate ~~default~~value ~~contain~~of ~~provisions~~the ~~that,~~warrants asissued ~~defined~~was ~~in the agreements~~$92,000 ~~the~~and ~~amount~~were ~~owed~~valued ~~could~~using ~~increase~~the Black-Scholes-Merton byoption ~~amounts~~valuation ~~ranging~~model ~~from~~with ~~135%~~the tofollowing ~~150%~~assumptions; ~~depending~~risk-free oninterest ~~the~~rate ~~event~~ of ~~default~~2.83%; Individend ~~addition,~~yield inof ~~the~~0%; ~~event~~and volatility of ~~non-payment~~100. ~~when~~The ~~due,~~Company also determined that the ~~interest~~ ~~rates~~Series ~~would~~B ~~increase~~Preferred toStock ~~between~~contained ~~20%~~a ~~and~~beneficial ~~25%~~conversion ~~per~~feature ~~annum~~of ~~from~~$92,000 ~~the~~which was ~~date~~recorded ~~due~~as ~~until~~a ~~paid~~deemed dividend.

~~The~~A ~~Notes~~portion ~~are convertible into shares~~ of ~~Common Stock of~~ the ~~Company~~proceeds atfrom the ~~option~~sale of the ~~holder~~Series ~~commencing~~B onPreferred ~~various~~Stock ~~dates~~was ~~following the~~allocated ~~issuance~~to ~~date of~~ the ~~Notes~~warrants ~~and~~based ~~ending~~ on ~~the~~their ~~later~~relative ~~of the maturity date or date of full payment of principal and interest.~~fair ~~The principal amount of the Notes along with~~value, atwhich ~~the~~amounted ~~holder’s~~to ~~option~~$92, ~~any unpaid interest and penalties~~000, ~~are~~using ~~convertible at price per share discounts ranging from 42% to 38% of~~ the ~~Company’s~~Black ~~Common~~Scholes ~~Stock~~option ~~trading~~pricing ~~market price during a certain time period, as defined in the agreement~~model. ~~Further,~~The ~~the~~assumptions ~~conversion~~used ~~prices are subject to a floor such that the conversion prices will not be less than a certain price, as defined~~ in the ~~agreement,~~Black ~~with~~Scholes ~~such floor prices ranging from $0.001 to $0.00005 per~~model ~~share.~~were ~~In addition, the conversion prices are subject to adjustment in certain events, such~~ as infollows: ~~conjunction~~risk-free ~~with~~interest ~~any~~rate ~~sale, conveyance or disposition~~ of ~~all~~2.83%; ordividend ~~substantially~~yield ~~all~~ of ~~the~~0%; ~~Company’s~~and ~~assets~~volatility orrate ~~consummation~~ of a100%. ~~transaction~~The or$92,000 ~~series~~has ofbeen ~~related~~recorded ~~transactions~~as ina ~~which~~deemed ~~the~~dividend ~~Company~~to ~~is not~~ the ~~surviving~~preferred ~~entity.~~shareholders ~~The~~and ~~note~~as ~~agreements~~a ~~also~~charge ~~require the Company~~ to ~~maintain~~additional apaid-in ~~reserve of~~capital ~~Common Stock,~~ (as ~~determined~~there ~~based~~is on a ~~formula~~deficit ~~stated~~ in the ~~note agreements, which, upon request by the note holder, can be~~ ~~adjusted based on the formula and the then share price of the~~ Company’s ~~Common~~retained ~~Stock as of the date of request~~earnings). ~~The note holder can convert up to the number of the then shares reserved for conversion of their related note.~~

F-15

During the nine months ended December 31, 2015, Note holders converted $473,731 of principal and $33,040 of accrued interest into 750,387,791 shares of the Company’s Common Stock. In addition, in June 2015, the Company agreed to allow one note holder to assign their then note principal balance of $49,240, which was in default due to non-payment after maturity date and insufficient availability of Common Stock available upon conversion, to a separate note holder, who is also a note holder under the 3% Notes and 7% Notes, for the new note holder’s payment of $77,000 to the original note holder. As a result of this assignment, the Company recorded $27,760 as loss on extinguishment during the nine months ended December 31, 2015 as a result of the increase in principal balance from $49,240 to $77,000. As of December 31, 2015, the principal balance of the convertible Notes outstanding was $172,254 and potentially convertible into 269,824,686 shares of Common Stock including accrued and unpaid interest.

The Company considered the current FASB guidance of “Contracts in Entity’s Own Stock” which indicates that any adjustment to the fixed amount (either conversion price or number of shares) of the instrument regardless of the probability of whether or not within the issuers’ control means the instrument is not indexed to the issuer’s own stock. Accordingly, the Company determined that the conversion prices of the Notes were not a fixed amount because they were subject to an adjustment based on the occurrence of future offerings or events. In addition, the Company determined that instruments with floor prices ranging from $0.001 to $0.00005 were de minimis and in substance not indexed to the Company’s own stock. As a result, the Company determined that the conversion features of the Notes were not considered indexed to the Company’s own stock and characterized the fair value of the conversion features as derivative liabilities upon issuance. The Company determined that upon issuance of the Notes, the initial fair value of the embedded conversion feature was $1,306,455. As such, the Company recorded a $1,306,455 derivative liability, of which $638,225 was recorded as debt discount offsetting the fair value of the Notes and the remainder of $668,230 recorded as private placement costs in the Consolidated Statement of Operations for the year ended March 31, 2015. The balance of the unamortized discount was $313,507 at March 31, 2015. During the nine months ended December 31, 2015, the Company amortized $313,507 of the valuation discount to interest expense.

In addition, as a result of the assignment of note discussed above, the Company recognized a derivative liability of $54,508 in June 2015. The derivative liability is re-measured at the end of every reporting period with the change in value reported in the statement of operations (see Note 6).

NOTE 6 - DERIVATIVE LIABILITY

In June 2008, the FASB issued authoritative guidance on determining whether an instrument (or embedded feature) is indexed to an entity’s own stock. Under the authoritative guidance, effective January 1, 2009, instruments, which do not have fixed settlement provisions, are deemed to be derivative instruments. The conversion feature of the Company’s senior secured convertible notes and unsecured convertible notes (described in Note 5 above), did not have fixed settlement provisions because their conversion prices could be lowered if the Company issues securities at lower prices in the future or the ultimate determination of shares to be issued could exceed current available authorized shares. In June 2015, the Company determined that there was not sufficient authorized and available Common Stock available for issuance upon conversion of the 3% senior secured and 7% unsecured convertible notes. In accordance with the FASB authoritative guidance, the conversion feature of the notes was separated from the host contract (i.e., the notes) and recognized as a derivative instrument. The conversion feature of the notes had been characterized as a derivative liability and was re-measured at the end of every reporting period with the change in value reported in the statement of operations.

The derivative liability was valued at the following dates using a Weighted-Average Black-Scholes-Merton model with the following assumptions:

	December 31, 2015			June 30, 2015			March 31, 2015
Conversion feature:
Risk-free interest rate		0.01 - 1.31	%		0.02 - 0.03			0.004 - 1.55	%
Expected volatility		217	%		203	%		179	%
Expected life (in years)		.01 - 1.5 years			1.62 - 1.8 years			.2 - 1.6 years
Expected dividend yield		-			-			-
Fair Value:
Conversion feature	$	181,565		$	174,437		$	1,268,588

F-16

The risk-free interest rate was based on rates established by the Federal Reserve Bank. The Company used its own stock’s volatility as the estimated volatility. The expected life of the conversion feature of the notes was based on the estimated remaining terms of the notes. The expected dividend yield was based on the fact that the Company has not customarily paid dividends to its holders of Common Stock in the past and does not expect to pay dividends to holders of its Common Stock in the future.

During the nine months ended December 31, 2015 and 2014, the Company recognized $540,802 and $2,602,392, respectively, as other income, which represented the difference in the value of the derivative from the respective prior period. In addition, the Company recognized a gain of $720,658 and $2,586,732, which represented the extinguishment of derivative liabilities related to the conversion of the unsecured convertible notes during the nine months ended December 31, 2015 and 2014, respectively.

In June 2015, the Company determined that there was not sufficient authorized and available Common Stock available for issuance upon conversion of certain of its Notes. As a result, the Company was required to record a derivative liability of $174,437 in June 2015.

NOTE 7 - ADVANCE ROYALTY

In June 2015, the Company entered into an Intellectual Property License Agreement (the “License Agreement”) with Saleen Motors International, LLC, a Delaware limited liability company (“SMI”) and a wholly owned subsidiary of GreenTech Automotive, Inc. (“GTA”) and non-affiliated subsidiary of the Company. Pursuant to the License Agreement, the Company granted to SMI an irrevocable, fully paid-up (subject to certain royalty fees), sublicensable license during the term of the License Agreement to use all of the Company’s intellectual property on an exclusive basis worldwide other than in North America, Europe, Middle East and Australia (as applicable, the “Territory”), and to make, promote, sell and otherwise exploit the Company’s intellectual property in the Territory. The License Agreement has an initial term of 10 years, with automatic renewal for periods of five years at SMI’s election provided that the number of Saleen branded vehicles sold by SMI in the prior 12-month period is not less than the average number of Saleen-branded vehicles sold by the Company and subsidiaries in the most recently available three-year period. The License Agreement may be terminated by mutual written agreement, upon a material breach, which remains uncured (with SMI having the right to cure no more than 3 breaches of its obligation to pay royalties) for 15 days after written notice of such breach, or in the event of SMI’s bankruptcy.

In consideration of the license, SMI shall pay royalties, within 15 days after the product shipment date and in all events at least quarterly, based on a fee per Saleen-branded vehicle sold by SMI depending on its sales volume as set forth in the License Agreement, and shall pay royalties based on a percentage of SMI’s gross revenues for parts and merchandise (in each case net of discounts, returns, taxes and similar amounts) received on Saleen-branded non-vehicle products.

As part of the License agreement, SMI agreed to advance to the Company $500,000 in royalties of which $250,000 was applied from loan advances previously made to the Company under the 10% Notes made by GTA pursuant to a Securities Purchase Agreement and 10.0% First Lien Convertible Note entered into in May 2015; $100,000 was applied from the cancelation of a note entered into between GTA and the Company in March 2015; and $150,000 was paid by GTA in cash to the Company. As of December 31, 2015, the Company recognized a deferred advance royalty of $500,000 and will recognize this amount as revenue based on actual future royalties resulting from sales by SMI under the License Agreement.

F-17

Except for the transactions under the agreements described above and the Company’s Joint Branding, Marketing, and Distribution Agreement with WM Industries Corp. (an affiliate of SMI and GTA) dated March 2014, none of the Company or its subsidiaries had any material relationship with SMI, GTA and its affiliates.

NOTE 8 - RELATED PARTY TRANSACTIONS

The amounts of accounts payable to related parties as of December 31 and March 31, 2015 are as follows:

Related Party:	December 31, 2015		March 31, 2015
Steve Saleen (a)	$	122,759	$	223,455
Top Hat Capital (b)		62,500		62,500
Crystal Research		6,343		6,343
Molly Saleen, Inc. (c)		-		34,214
	$	191,602	$	326,512

(a) As of March 31, 2015 the Company owed $223,455 to Mr. Saleen for his unpaid officers’ salary. On June 16, 2015, the Company issued 220,000 shares of Super Voting Preferred Stock to Mr. Saleen in satisfaction of $220,000 of debt owed to Mr. Saleen. The per share price of Super Voting Preferred Stock issued to Mr. Saleen was based on the conversion ratio of Super Voting Preferred Stock into 1,000 shares of Common Stock, multiplied by the per share closing price ($0.001) of Common Stock as of June 11, 2015, the date the issuance was approved by the Company’s Board of Directors. Further, during the nine months ended December 31, 2015, the Company incurred $122,759 in officers’ salary expense to its Director, Chairman and CEO, Mr. Steve Saleen, which was due and owing as of December 31, 2015. As discussed in Note 9, in October 2015, shares of Super Voting Preferred stock were converted into shares of Common Stock. (b) The Company previously incurred $75,000 of expense, of which the Company paid $12,500, for investment advisor and research services provided by Top Hat Capital, whose co-founder and Managing Partner, Jeffrey Kraws, is a Director of the Company. As of December 31 and March 31, 2015, $62,500 was payable to Top Hat Capital for these services. (c) As of March 31, 2015 the Company owed $34,214 for apparel merchandise purchased on behalf of the Company by Molly Saleen, Inc., dba Mollypop (“Mollypop”), who’s owner, Molly Saleen, is the Chief Executive Officer of Mollypop and is the daughter of Steve Saleen. On June 22, 2015, the Company issued to Mollypop, 19,007.777 shares of Super Voting Preferred Stock to reimburse Mollypop for the amount owed of $34,214. The per share price of Super Voting Preferred Stock issued to Mollypop was based on the conversion ratio of Super Voting Preferred Stock into 1,000 shares of Common Stock, multiplied by the per share closing price ($0.0018) of Common Stock as of June 19, 2015, the date the issuance was approved by the Board of Directors. During the nine months ended December 31, 2015, the Company incurred $802 of such costs, which was paid. As discussed in Note 9, in October 2015, shares of Super Voting Preferred stock were converted into shares of Common Stock.

Other Transactions

On June 22, 2015, the Company issued 63,000 shares of Super Voting Preferred Stock to Michaels Law Group, APLC (“MLG”) as a retainer for legal services to be provided by MLG in connection with various outstanding claims and suits in which the Company is plaintiff, and for other legal matters. Jonathan Michaels, the founding member of MLG, previously served as a member of the Company’s Board of Directors and as our general counsel. The per share price of Super Voting Preferred Stock issued to MLG was based on the conversion ratio of Super Voting Preferred Stock into 1,000 shares of Common Stock, multiplied by the per share closing price ($0.0018) of Common Stock as of June 19, 2015, the date the issuance was approved by the Board of Directors. As discussed in Note 9, in October 2015, all shares of Super Voting Preferred stock were converted into shares of Common Stock.

F-18

NOTE 9 - STOCKHOLDERS’ EQUITY

Authorized Shares

In June 2015, the board of directors approved an increase in the Company’s authorized shares from 500,000,000 to 2,500,000,000. The increase became effective in October 2015.

Issuance of Common Stock

During the ~~nine~~three-month ~~months~~periods ended ~~December~~June 3130, ~~2015,~~2019 ~~the~~and ~~Company~~2018, ~~issued~~there anwere ~~aggregate~~no ~~of 750,387,791~~ shares of common stock ~~upon conversion of the Company’s convertible notes payable and accrued interest amounting to $506,771 (see Note 5)~~issued.

During the nine months ended December 31, 2015, the Company entered into Settlement Agreement and Mutual Release agreement with a vendor whereby the Company issued an aggregate of 2,380,377 shares of Common Stock with a fair value of $47,607 in exchange for extinguishment of amount owed of $47,607. The value of the Common Stock was based on the market price of the Company’s Common Stock as of the date of the Settlement Agreement.Options

Designation of Super Voting Preferred

On June 12, 2015, the Company filed a Certificate of Designation designating the rights and restrictions of 1,000,000 shares of Super Voting Preferred Stock, par value $0.001 per share, pursuant to resolutions approved by the Company’s Board of Directors on June 11, 2015. In October 2015, upon the increase in our authorized shares of common stock to 2,500,000,000, all 384,142 outstanding shares of Super Voting Preferred Stock were automatically cancelled and converted into 384,142,000 shares of Common Stock , and the Super Voting Preferred Stock ceased to be a designated class of Preferred Stock.

Issuance of Super Voting Preferred

During the nine months ended December 31, 2015, the Company issued 63,000 shares of Super Voting Preferred Stock to Michaels Law Group, APLC (“MLG”) as a retainer for legal services to be provided by MLG in connection with various outstanding claims and suits in which the Company is plaintiff, and for other legal matters. Jonathan Michaels, the founding member of MLG, previously served as a member of the Company’s Board of Directors and as our general counsel. The per share price of Super Voting Preferred Stock issued was based on the conversion ratio of Super Voting Preferred Stock into 1,000 shares of Common Stock, multiplied by the per share closing price ($0.0018) of Common Stock as of June 19, 2015, the date the issuance was approved by the Board of Directors. The Company recorded these fees as general and administrative expense during the nine months ended December 31, 2015.

During the nine months ended December 31, 2015, the Company issued 220,000 shares of Super Voting Preferred Stock to Mr. Saleen in satisfaction of $220,000 of debt owed to Mr. Saleen. The per share price of Super Voting Preferred Stock issued to Mr. Saleen was based on the conversion ratio of Super Voting Preferred Stock into 1,000 shares of Common Stock, multiplied by the per share closing price ($0.001) of Common Stock as of June 11, 2015, the date the issuance was approved by the Company’s Board of Directors.

During the nine months ended December 31, 2015, the Company issued to Mollypop, 19,007.777 shares of Super Voting Preferred Stock to reimburse Mollypop for $34,214 of merchandise previously purchased by Mollypop on the Company’s behalf and owed to Mollypop as of March 31, 2015. The per share price of Super Voting Preferred Stock issued was based on the conversion ratio of Super Voting Preferred Stock into 1,000 shares of Common Stock, multiplied by the per share closing price ($0.0018) of Common Stock as of June 19, 2015, the date the issuance was approved by the Board of Directors.

In order to make available additional shares of Common Stock to facilitate the conversion of outstanding debt, during the nine months ended December 31, 2015 the Company issued to Steve Saleen, the Company’s Chief Executive Officer and President, 82,133.875 shares of Super Voting Preferred Stock in exchange for 82,133,875 shares of Common Stock held by Mr. Saleen.

As discussed above, all shares of Super Voting Preferred Stock were automatically cancelled and converted into shares of Common Stock in October 2015.

F-19

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.

F-15

Stock option activity is set forth below:

	Number of Shares			Weighted Average Exercise Price per Share		~~Aggregate~~Average Intrinsic Value		Weighted- Average Remaining Contractual Term (in years)
Balance at March 31, 2015		13,459,000		$	-	$	-		-
Outstanding at April 1, 2018		2,602		$	108	$	-		6.50
Options granted during the period		-			-		-		-
Granted during the three-month period		—			—		-		-
Options cancelled during the period		(792,334	)		0.10		-		-
Cancelled during the three-month period		—			—		-		-
Options exercised during the period		-			-		-		-
Exercised during the three-month period		—			—		-		-
Balance at December 31, 2015		12,666,666		$	0.10	$	0		8.69
Outstanding at June 30, 2018		2,602			108		-		6.25
Exercisable at December 31, 2015		6,870,333		$	0.10	$	0		8.71
Outstanding at April 1, 2019		2,602			108		-		5.50
Expected to vest after December 31, 2015		5,796,333		$	0.10	$	0		8.69
Granted during the three-month period		—			—		-		-
Cancelled during the three-month period		—			—		-		-
Exercised during the three-month period		—			—		-		-
Outstanding at June 30, 2019		2,602		$	108	$	-		5.25

The aggregate intrinsic value shown in the table above represents the difference between the fair market value of the Company’s ~~common~~Common ~~stock~~Stock ofper ~~$0.0007~~share on ~~December~~June 3130, ~~2015~~2019 and the exercise price of each option.

During the ~~nine~~three-month ~~months~~periods ended ~~December~~June 3130, ~~2015~~2019 and 2018, the Company recorded no stock-based compensation expense of $160,084 of which $5,782, $120,069, and $34,233 was included in research and development, sales and marketing, and general and administrative expenses, respectively. Unearned compensation of $143,997 at December 31, 2015, related to ~~non-vested~~ stock ~~options, will be recognized into expense over~~ ~~a weighted average period of~~ options.~~4 years.~~

During the nine months ended December 31, 2014, the Company recorded stock compensation expense of $580,933 of which $56,805, $229,305, and $294,822 was included in research and development, sales and marketing, and general and administrative expenses, respectively.

Warrants

~~The~~Warrant ~~following summarizes warrant~~ activity ~~for~~is ~~the~~set ~~Company~~forth ~~during the nine months ended December 31, 2015~~below:

	Warrants		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term
	Number of Shares		Weighted Average Exercise Price per Share		Average Intrinsic Value		Weighted Average Remaining Contractual Term (in years)
Outstanding March 31, 2015		13,313,099	$	0.15		3.4
Outstanding at April 1, 2018		1,673,320	$	1.81		-		3.75
Issued during the period		-		-		-
Granted during the three-month period		-
Exercised during the period		-		-		-
Cancelled during the three-month period		-		-		-		-
Outstanding December 31, 2015		13,313,099	$	0.15		3.4
Exercised during the three-month period		-		-		-		-
Outstanding at June 30, 2018		1,673,320		1.81		-		3.50
Outstanding at April 1, 2019		1,673,320		1.81		-		2.75
Granted during the three-month period		-
Cancelled during the three-month period		-
Exercised during the three-month period		-
Outstanding at June 30, 2019		1,673,320	$	1.81		-		2.50

AsIn ofJanuary ~~December 31~~2018, ~~2015~~warrants exercisable into 1,333,333 13shares of common stock were issued by the Company in conjunction with the issuance of 1,~~313~~333,~~099~~333 shares of common stock. The warrants ~~were~~have ~~exercisable~~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 June 30, 2019, March 31, 2019, and March 31, 2018.

F-2016

NOTE 1011 -–ROYALTY ~~COMMITMENTS~~REVENUE ~~AND~~FROM ~~CONTINGENCIES~~INTELLECTUAL PROPERTY LICENSE

~~Purchase~~In ~~Commitments~~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.

InNOTE ~~April~~12 ~~2014,~~– ~~the~~COMMITMENTS ~~Company~~AND entered into an agreement with BASF to exclusively use BASF’s products for paint work. The agreement continues from May 2014 until the Company purchases in the aggregate $4,131,000 of BASF products. If the aggregate purchases of BASF products are less than $1,697,000 over a period of 36 consecutive months, the Company is required to repay BASF 6.1% of the shortfall between $1,697,000 and the amount it actually purchased over this period. In consideration for the Company’s exclusive use of BASF’s products and fulfilling this purchase commitment, BASF paid the Company $250,000, which was recorded as deferred vendor consideration. This amount will be recorded as reduction to costs of goods sold in future periods based upon a prorated percentage of the purchased amount over the purchase commitment if the Company determines there is a reasonable certainty in achieving the purchase commitment.CONTINGENCIES

InFacilities May 2014, the Company entered into an agreement with FinishMaster, Inc. (“FinishMaster”) to exclusively use FinishMaster’s paint material supplies. The agreement continues from May 2014 until the Company purchases in the aggregate $1,555,000 of FinishMaster products. In consideration for the Company’s exclusive use of FinishMaster’s products and fulfilling this purchase commitment, FinishMaster paid the Company $25,000, which was recorded as deferred vendor consideration, and FinishMaster will pay an additional $25,000 upon the achievement of purchase level milestones, as outlined in the agreement. Should the Company not complete a set purchase level milestone, the Company would be required to re-pay the $25,000 along with $11,475 compensation to FinishMaster. This amount will be recorded as reduction to costs of goods sold in future periods based upon a prorated percentage of the purchased amount over the purchase commitment if the Company determines there is a reasonable certainty in achieving the purchase commitment.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. 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.

For the three-month periods ended June 30, 2019 and June 30, 2018, operating lease expenses (as well as cash paid for operating cash flows from operating leases) were $173,932 and $106,291, respectively. 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 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
Equity
Accumulated deficit	$	(36,489,917	)		263,955		$	(36,225,962	)

	June 30, 2019		March 31, 2019
Right-of-use asset	$	4,059,492	$	-

Deferred rent liability – current	$	-	$	263,955
Operating lease liabilities		246,473	$	-
Operating lease liabilities – non-current		3,813,019		-
Lease liabilities – total	$	4,059,492	$	263,955

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

Fiscal Year	Lease Commitment
2020	$	486,196
2021		655,910
2022		675,587
2023		695,855
2024		716,731
Thereafter		2,943,233
Total lease payments		6,173,512
Less: Future interest expense		2,114,020
Total	$	4,059,492

F-17

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 ~~financial~~condensed consolidated financial statements as ~~accrued~~other current liabilities, ~~accounts~~ or ~~notes~~accounts payable. ~~Except~~The ~~for income tax contingencies (commencing April 1, 2009), the~~ Company records accruals for contingencies to the extent that management concludes that the occurrence is probable and that the related ~~amounts~~amount of loss can be reasonably estimated. Legal expenses associated with the contingency are expensed as incurred. ~~Material~~ The Company is not currently involved in any legal proceedings that ~~are~~could ~~currently~~potentially ~~pending~~have ~~are~~a asmaterial ~~follows:~~impact on its statement of operations.

~~The~~NOTE ~~Company is a defendant in a case filed by MSY Trading, Inc. on April~~ 13, ~~2012~~– inSEGMENT the California Superior Court, Riverside County, that claimed breach of contract related to an engine installed by a third party vendor. The suit claimed $200,000 in damages plus interest, legal fees and costs of litigation. SSC filed a cross complaint against MSY Trading, Inc. for breach of warranty, negligence, and indemnification. On January 10, 2014, the Company settled this claim by agreeing to pay $112,500 over a period of 18 months, of which we paid $45,500 through August 2014. Subsequent to this date the Company defaulted on these payment obligations. On October 30, 2014, a judgment was entered against SSC in the amount of $68,950, which the Company accrued for in accounts payable.REPORTING

InOur ~~December~~Chief ~~2014,~~Executive ~~Saleen Automotive~~Officer, ~~Inc.~~as ~~(formerly Saleen Electric Automotive, Inc.),~~ the ~~Company’s~~chief ~~wholly-owned~~operating ~~subsidiary, received~~decision amaker ~~Complaint from Green Global Automotive B.V.~~ (“~~GAA~~CODM”), ~~alleging~~organizes ~~causes~~the ofCompany, ~~action~~manages ~~for~~resource ~~breach of contract and~~allocations ~~breach~~and ofmeasures ~~the~~performance ~~covenant~~among oftwo ~~good~~operating ~~faith~~ and ~~fair~~reportable ~~dealing,~~segments: ~~related~~(i) toproducts aand ~~European~~(ii) ~~Distribution~~services. ~~Agreement~~The ~~entered~~products ~~into~~segment ~~in December 2011~~includes ~~between~~our ~~GAA~~signature cars and ~~Saleen Automotive~~merchandises. The ~~suit~~services ~~seeks~~segment ~~contract~~includes ~~and~~engineering, ~~economic~~development, ~~damages of $50~~design,~~000~~ ~~along~~and ~~with~~consulting ~~compensatory~~services ~~damages~~for JSAT, ~~restoration~~S7, ~~lost~~ ~~profits~~ and ~~attorneys’~~other ~~fees~~customers. The ~~Company~~following ~~believes~~table ~~this~~provides ~~case~~information isabout ~~without~~disaggregated ~~merit~~revenue ~~and~~based ~~that~~on ~~the~~revenue ~~Company~~by isservice lines ~~not~~and ~~liable~~revenue ~~under the~~by ~~alleged contract.~~area:

In December 2014, the Company received a Complaint from Ford of Escondido seeking damages based on 1) claim and delivery of personal property, 2) money due on a contract, and 3) common count. This matter was settled with the Company agreeing to a judgment in the amount of $300,000 and the transfer to the Company of title to four vehicles held by Ford of Escondido. The judgment has been entered, but no collection efforts have started.

	For The Three-Month Periods Ended June 30,
	2019		2018
Revenue by service lines:
Services provided to JSAT	$	10,413,695	$	925,776
S7 agreement (related party)		618,668		91,099
Other		200,000		-
Services – total		11,232,363		1,016,875

Products
Signature cars		692,238		518,687
Other		3,982		24,642
Products – total		696,220		543,329

Royalties		6,967		4,043
Total revenue	$	11,935,550	$	1,564,247

F-21

	For The Three-Month Periods Ended June 30,
	2019		2018
Gross profit
Services	$	2,075,612	$	521,589
Products		298,074		137,025
Total	$	2,373,686	$	658,614

InNOTE ~~February~~14 ~~2014,~~– ~~SSC~~SUBSEQUENT received a Complaint from Citizens Business Bank (the “Bank”) alleging, among other matters, breach of contract due to non-timely payment of November and December 2013 principal amounts owed and the occurrence of a change in control as a result of the Merger. In April 2014, the Bank agreed to dismiss the suit in exchange for payment of $124,000 that was applied towards principal and unpaid fees along with advance loan principal and interest for May, June and July 2014, and the agreement to pay the remaining recorded balance due of $443,000 to the Bank in August 2014. From August 2014 to March 31, 2015, in exchange for payments totaling $90,000, the Bank agreed to extend this arrangement through various dates with the last date being March 2015. The Company did not pay the then outstanding principal and interest in March 2015 and the Bank did not agree to an additional extension. In May 2015, the Company was notified of a lawsuit filed by the Bank in the Superior Court of the State of California, County of Riverside, alleging breach of the Loan Agreement with the Bank, breach of a commercial guaranty by Steve Saleen and indebtedness for principal and interest of at least $369,302, and seeking appointment, which has not been granted by the court as of the date of this filing, of a limited purpose receiver and a temporary restraining order enjoining the Company from transferring the collateral securing the loan, which related to SSC. The main complaint by the Bank stems from the Company’s reverse merger that occurred in June 2013 whereby the Bank deemed this event to constitute a change in control, as defined in the loan agreement. The Company disagrees with the Bank’s interpretation and believes the claims by the bank are without merit. Although the Company currently believes that resolving claims against the Company, individually or in aggregate, will not have a material adverse impact on the Company’s financial statements, these matters are subject to inherent uncertainties and management’s views of these matters may change in the future.EVENTS

~~NOTE~~In 11March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) ~~SUBSEQUENT~~as ~~EVENTS~~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:

~~Subsequent~~ ● Interruptions of production due to ~~December~~supply ~~31,~~chain ~~2015~~disruptions ~~through~~(most notably, the ~~date~~recently announced closure of ~~this~~Ford ~~Filing~~Motor ofCompany ~~this~~factories ~~Form~~at ~~10-Q~~least through April 5, SM2020); ~~Funding~~● ~~advanced~~Reduced ~~the~~customer ~~Company~~demand ~~$210,000~~due ~~under~~to the ~~terms~~ overall state of the ~~12%~~economy; ~~Senior~~and ~~Secured~~● ~~Note~~Delayed cash collections (most notably, asfrom ~~discussed~~JSAT inand ~~Note~~automobile 5dealerships).

InAll ~~January,~~of ~~February~~the ~~2016~~above ~~and~~will ashave ofa material adverse impact on the ~~date~~Company. ofWhile the ~~Filing~~disruption ofis ~~this~~currently ~~Form~~expected ~~10-Q~~to be temporary, ~~note~~there is ~~holders~~uncertainty ~~related~~around the duration. Therefore, while we expect this matter to ~~the~~negatively ~~unsecured~~impact ~~convertible~~our ~~notes~~business, as ~~discussed~~results inof ~~Note~~operations, and 5financial position, ~~converted~~the ~~approximately~~extent ~~$200~~of this impact cannot be reasonably estimated at this time. In the interim,~~000~~ the Company has furloughed some employees in expectation of ~~principal~~reduced business and ~~interest~~may ~~into~~consider ~~842,506,341~~other ~~shares~~mitigating ofactions ~~common~~in ~~stock~~the short-term.

F-2218

ITEM 2. ~~MANAGEMENT~~Management’Ss ~~DISCUSSION~~Discussion ~~AND~~and ~~ANALYSIS~~Analysis OFof ~~FINANCIAL~~Financial ~~CONDITION~~Condition ~~AND~~and ~~RESULTS~~Results OFof ~~OPERATIONS~~Operations

The following discussion summarizes the significant factors affecting the operating results, financial condition and liquidity and cash flows of ~~Saleen~~the ~~Automotive,~~Company ~~Inc. and subsidiaries~~ for the three-month ~~and~~periods ~~nine months~~ ended ~~December~~June 3130, ~~2015~~2019 and ~~2014~~2018. ~~The~~You ~~discussion and analysis that follows~~ should be read this discussion together with the ~~financial~~condensed ~~statements~~consolidated offinancial ~~Saleen Automotive~~statements, ~~Inc.~~related ~~and~~notes ~~subsidiaries~~ and ~~the~~ ~~notes~~other ~~to the condensed consolidated~~ financial ~~statements~~information included ~~elsewhere~~ in this ~~Quarterly Report on~~ 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, our ability to successfully achieve profitability and positive cash flows from operations, our ability to raise additional funds required to continue our operations and meet our planned business objectives, the dilutive impact of the sale of equity securities to obtain needed additional financing, the potential issuance of shares or securities convertible into or exchangeable for shares that would result in a change of control of our company in connection with a financing transaction, the impact of changes in demand for our products, our success with new product development, our success with current dealers and our ability to expand our dealer base, our ability to maintain or grow our market share, our ability to obtain Ford Mustang, Chevrolet Camaro, Dodge Challenger and Tesla Model S platform vehicles, our effectiveness in managing development and manufacturing processes, and the other 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, ~~2015~~2019 as filed on ~~July~~October 144, ~~2015~~2019. These ~~forward-looking~~risks ~~statements~~could ~~represent~~cause our judgment as of the date hereof. We disclaim any intent or obligation to update these forward-looking statements. New factors emerge from time to time, and their emergence is impossible for us to predict. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from ~~those~~ ~~contained~~any infuture ~~any~~performance ~~forward-looking~~suggested ~~statements~~below.

~~General~~ Overview

WeThe ~~design,~~Company ~~develop,~~is ~~manufacture~~an ~~and~~OEM ~~sell~~of high -performance ~~cars built from base chassis of Ford Mustangs, Chevrolet Camaros, Dodge Challengers and Tesla Model S~~ vehicles. Wethat are abuilt ~~low~~from ~~volume specialist vehicle design, engineering and manufacturing company focusing on~~ the ~~mass~~ground ~~customization~~up. ~~(the~~The ~~process~~Company ofalso ~~customizing automobiles that are mass produced by manufacturers (Ford~~designs, ~~Chevrolet~~develops, ~~Dodge~~manufactures and ~~Tesla))~~sells ~~of OEM American sports and electric vehicles and the production of~~ high -performance ~~USA-engineered~~vehicles ~~sports~~built ~~cars.~~from ~~Saleen-branded products~~base ~~include~~chassis ~~a line~~ of ~~high~~major ~~performance~~American ~~and~~automobile ~~upgraded~~manufacturers. ~~muscle~~The ~~and~~Company ~~electric~~also ~~cars~~provides engineering, ~~automotive~~development, ~~aftermarket specialty parts~~ and ~~lifestyle~~ ~~accessories.~~design Aconsulting ~~high~~services ~~performance~~on ~~car~~a isproject anbasis ~~automobile~~for ~~that~~automotive ismanufacturers ~~designed and constructed specifically for speed~~worldwide. The ~~design~~Company ~~and~~currently ~~construction~~has ofcustomers aworldwide, ~~high~~including ~~performance~~muscle ~~car involves not only providing a capable power train but also providing the handling~~ and ~~braking~~ ~~systems to support it. Muscle cars are any of a group of American-made 2-door sports coupes with powerful engines designed for~~ high -performance ~~driving.~~car Weenthusiasts, ~~are~~collectors, ~~also~~automotive ~~planning~~dealers, ~~to develop an American supercar. The term supercar describes an expensive (approximately~~exotic ~~$250,000~~car orretail ~~more)~~dealers, ~~limited~~television ~~production,~~and ~~fast~~motion orpicture ~~powerful~~productions, ~~(capable~~and ofconsumers ~~reaching speeds~~ in ~~excess~~the ofluxury ~~180~~supercar ~~miles~~and ~~per~~motorsports ~~hour) sports car with a centrally located engine~~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.

Our ~~customers worldwide include muscle and high performance car enthusiasts~~revenue, ~~collectors,~~operating ~~automotive dealers~~expenses, ~~exotic car retail dealers, television~~ and ~~motion~~net ~~picture~~income ~~production,~~(loss) ~~and~~from ~~consumers~~operations infor the ~~luxury~~three-month ~~supercar~~period ~~and~~ended ~~motorsports~~June ~~market.~~30, We2019, ~~plan~~as compared to ~~develop~~the ~~a network of company~~three-~~owned~~month ~~branded~~period ~~stores~~ended toJune ~~complement~~30, ~~our~~2018, ~~existing~~were ~~retail~~as ~~dealer locations.~~follows:

We utilize automobile manufacturers Ford, Chevrolet, Dodge and Tesla platform vehicles for our high performance and electric vehicle production. All aftermarket parts and accessory products are engineered and manufactured exclusively by us. Our main retail outlets for our products are authorized Ford, Chevrolet, Dodge and exotic car dealers.

	For The Three-Month Periods Ended								Percentage
	June 30,								Change
	2019		2018			Change			Inc. (Dec.)

Revenues
Services (including $618,668 as of June 30, 2019 and $91,099 as of March 31, 2019 from related party)	$	11,232,363	$	1,016,875		$	10,215,488			1,005	%
Products, net		696,220		543,329			152,891			28
Royalties		6,967		4,043			2,924			72
Total revenues, net		11,935,550		1,564,247			10,371,303			663

Cost of revenues
Services		9,156,751		495,286			8,661,465			1,749
Products		398,146		406,304			(8,158	)		(2	)
Total cost of revenues		9,554,897		901,590			8,653,307			960
Gross profit		2,380,653		662,657			1,717,996			259

Operating expenses
Research and development		-		7,357			(7,357	)		(100	)
Advertising, sales and marketing		431,430		127,146			304,284			239
General and administrative expenses		775,255		958,741			(183,486	)		(19	)
Depreciation and amortization		60,556		19,431			41,125			211
Total operating expenses		1,267,241		1,112,675			154,566			14
Income (loss) from operations		1,113,412		(450,018	)		1,563,430			347
Other expense
Interest and financing costs		1,098		10,071			(8,973	)		(89	)
Total other expense		1,098		10,071			(8,973	)		(89	)
Net income (loss) before income tax expense		1,112,314		(460,089	)		1,572,403			342
Income tax expense		323,090		-			323,090			100
Net income (loss)		789,224		(460,089	)		1,249,313			272

Net income (loss) attributable to common shareholders	$	789,224	$	(460,089	)	$	1,249,313			272	%

We plan to operate as a global high performance automotive brand and expand our production, sales and marketing operations extensively within the markets of the USA and into multiple international markets. In March 2014, we entered into an agreement to distribute the full collection of Saleen automobiles in China. We also plan to open our own retail outlets, market our expertise in specialist engineering and design services to third party clients, and introduce our next generation American supercar.Revenue

~~Merger~~Revenue, net increased by $10,371,303 (663%) to $11,935,550 for the three-month period ended June 30, 2019, compared to $1,564,247 for the three-month period ended June 30, 2018. The majority of the increase in revenue was attributable to increased revenue from JSAT. Revenue from JSAT increased by $9,487,918 (1,025%) to $10,413,695 for the three-month period ended June 30, 2019, compared to $925,776 for the three-month period ended June 30, 2018. The increase relates to the Cup Agreement. Revenue from the Cup Agreement was $9,839,695 and $0 for the three-month periods ended June 30, 2019 and June 30, 2018, respectively.

OnRevenue ~~May~~for ~~23,~~products ~~2013,~~increased wemainly ~~entered~~due ~~into~~to anincreased ~~Agreement~~revenue ~~and~~from ~~Plan of Merger (“Merger Agreement”) with Saleen California Merger Corporation,~~ our ~~wholly-owned~~Signature ~~subsidiary,~~Cars ~~Saleen~~and ~~Florida Merger Corporation, our wholly-owned subsidiary, Saleen Automotive, Inc~~S7. ~~(“Saleen Automotive”),~~Revenue ~~SMS~~from Signature Cars ~~(“SMS”~~increased ~~and together with Saleen Automotive, the “Saleen Entities”)~~by ~~and Steve Saleen (“Saleen” and together with the Saleen Entities~~173,551 ~~the “Saleen Parties”). The closing~~ (~~the “Closing”~~33%) ofto ~~the transactions (the “Merger”) occurred on June 26~~$692,238 ~~2013.~~for At the ~~Closing (a) Saleen California Merger Corporation was merged with and into SMS with SMS surviving as one of our wholly~~three-~~owned~~month ~~subsidiaries;~~period ~~(b)~~ended ~~Saleen~~June Florida Merger Corporation was merged with and into Saleen Automotive with Saleen Automotive surviving as one of our wholly-owned subsidiaries; (c) holders of the then outstanding capital stock of Saleen Automotive received an aggregate of 55430,~~057~~ ~~shares of our Super Voting Preferred Stock~~2019, ~~which~~compared ~~was~~to ~~subsequently converted into 69~~$518,~~257,125~~687 ~~shares of our Common Stock and holders of the outstanding capital stock of SMS received no consideration~~ for ~~their shares; and (d) approximately 93% of~~ the ~~beneficial~~three-month ~~ownership~~period ~~of our Common Stock~~ended ~~(on~~June a30, ~~fully-diluted~~2018. ~~basis)~~Revenue ~~was~~from ~~owned,~~S7 ~~collectively,~~increased by ~~Saleen~~$527,569 (~~including~~579%) ~~341,943~~to ~~shares of our Super Voting Preferred Stock~~$618,668 ~~which was~~for ~~subsequently converted into 42,742,875 shares of our Common Stock, issued to Saleen pursuant to an Assignment and License Agreement) and~~ the former holders of the outstanding capital stock of Saleen Automotive. As a result of the Merger we are solely engaged in the Saleen Entities’ business, Saleen Automotive’s officers became our officers and Saleen Automotive’s three ~~directors became members of our five~~-~~member~~month ~~board~~period ofended ~~directors. On~~ June 1730, ~~2013~~2019, ~~we consummated a merger with WSTY Subsidiary~~compared ~~Corporation, our wholly-owned subsidiary, pursuant~~ to ~~which we amended our articles of incorporation to change our name to Saleen Automotive~~$91,099 ~~Inc.~~for ~~In October 2013, SMS effected an amendment to its articles of incorporation to change its name to Saleen Signature Cars. In January 2014, we effected an increase in~~ the ~~number~~three-month ofperiod ~~our~~ended ~~common~~June ~~shares authorized to 500~~30,~~000,000~~ ~~and all the remaining shares of Super Voting Preferred Stock were converted into our Common Stock and the Super Voting Preferred Stock ceased to be a designated series of our preferred stock~~2018.

InCost ~~June 2015, our board~~ of ~~directors~~Goods ~~approved an increase in our authorized shares of common stock from 500,000,000 to 2,500,000,000. The increase became effective in October 2015.~~Sold

~~Critical~~Cost ~~Accounting~~of ~~Policies~~goods sold 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 goods sold 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 goods sold increased by approximately $8,653,307 (960%) to $9,554,897 for the three-month period ended June 30, 2019, compared to $901,590 for the three-month period ended June 30, 2018. The increase in the cost of sales was primarily attributable to increased costs related to JSAT.

~~Information~~Gross with respect to our critical accounting policies which we believe have the most significant effect on our reported results and require subjective or complex judgments of management are contained starting on page 31 in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended March 31, 2015 as filed on July 14, 2015.Profit

Gross profit as a percentage of net revenue decreased by 22% to 20% for the three-month period ended June 30, 2019, compared to 42% for the three-month period ended June 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.

Operating Expenses

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

We had no research and development costs during the three-month period ended June 30, 2019, compared to $7,357 during the three-month period ended June 30, 2018.

~~Three~~Advertising ~~Months~~expense ~~Ended~~increased ~~December~~$103,735 31(2,677%) ~~2015~~to ~~Compared~~$117,610 during the three-month period ended June 30, 2019, compared to ~~Three~~$3,875 ~~Months~~during ~~Ended~~the three-month ~~December~~period 31ended June 30, ~~2014~~2018. The increase relates to new advertising efforts that were not in place in 2018. Sales and marketing expense increased $190,549 (155%) to $313,820 during the three-month period ended June 30, 2019, compared to $123,271 during the three-month period ended June 30, 2018. The increase in sales and marketing costs was due primarily to increased sales salaries and marketing costs related to promotional events and car shows.

~~Our~~General ~~revenue,~~and ~~operating~~administrative expenses increased $154,567 ~~and~~(14%) ~~net~~to ~~loss~~$1,267,241 ~~for~~during the three-month ~~months~~period ended ~~December~~June 3130, ~~2015~~2019, as compared to $1,112,675 during the three-month ~~months~~period ended ~~December~~June 30, 2018. The increase in general and administrative expenses was due primarily 31to increased sales, ~~2014~~marketing, ~~were~~and asadvertising ~~follows:~~expenses to support our revenue growth during the three-month period ended June 30, 2019.

	For the Three months ended									Percentage
	December 31,									Change
	2015			2014			Change			Inc. (Dec.)
Revenue, net	$	552,342		$	536,895		$	15,447			3	%
Costs of goods sold		493,681			552,788			(59,107	)		(11	%)
Gross profit (loss)		58,661			(15,893	)		74,554			(469	%)
Operating expenses
Research and development		40,939			144,316			(103,377	)		(72	%)
Sales and marketing		204,346			232,666			(28,320	)		(12	%)
General and administrative		468,654			801,757			(333,103	)		(42	%)
Depreciation and amortization		20,034			40,608			(18,574	)		(46	%)
Total operating expenses		735,973			1,219,347			(483,374	)		(40	%)
Loss from operations		(677,312	)		(1,235,240	)		557,928			(45	%)
Other income (expenses)
Interest expense		(330,903	)		(754,488	)		423,585			(56	%)
Private placement costs and loss on debt extinguishment		-			(582,347	)		582,347			-
Gain on extinguishment of derivative liability		62,607			-			62,607			-
Change in fair value of derivative liabilities		74,657			129,182			(54,525	)		(42	%)
Net Loss	$	(870,951	)	$	(2,442,893	)	$	1,571,942			(64	%)

Depreciation and Amortization

~~Revenues:~~Depreciation ~~Revenue primarily consists of sales of high performance vehicles~~ and ~~aftermarket~~amortization ~~retail~~expense ~~parts.~~increased ~~Our~~by ~~revenue from high performance muscle car vehicles generally includes our sales of base chassis (Mustang~~$41,125 ~~Camaro or Challenger~~(169%), onto ~~which we normally generate minimal or no margin~~$60,556 ~~and~~for ~~revenues from~~ the ~~production~~three-month ~~and~~period ~~conversion~~ended ofJune ~~the base Mustang~~30, ~~Camaro~~2019, ~~Challenger and Tesla Model~~ Scompared ~~chassis~~to ~~into~~$19,431 afor ~~Saleen high performance vehicle. We also generate revenues from~~ the ~~retail sale of specialty automotive aftermarket parts, Saleen lifestyle accessories and other Saleen~~three-~~branded~~month ~~products~~period ~~sold~~ended toJune ~~our base of Saleen automotive vehicle enthusiasts in the U.S. and overseas. Additionally~~30, ~~many of these parts and accessories are marketed and sold to the owners of Ford Mustangs, Chevrolet Camaros and Dodge Challengers~~2018.

~~Total~~Income ~~revenues~~(Loss) ~~for the three months ended December 31, 2015 were $552,342, an increase of $15,447 or 3%~~ from $536,895 for the three months ended December 31, 2014. The slight increase was driven by higher conversion revenue offset somewhat by lower chassis revenue, as dealers opted to obtain and send to us the chassis rather than us procuring the chassis on their behalf.Operations

~~Cost~~During ofthe ~~Goods~~three-month ~~Sold:~~period ~~Cost~~ended ofJune ~~goods~~30, ~~sold~~2019, ~~consists~~we ofgenerated ~~five~~income ~~major~~from ~~categories:~~operations ~~base~~of ~~chassis~~$1, ~~material~~113, ~~overhead~~412, ~~labor~~compared ~~and purchased process services. Chassis costs relate~~ to ~~the~~a ~~purchased~~loss ~~Ford~~from ~~Mustang, Chevrolet Camaro or Dodge Challenger vehicles in which we~~operations ~~are the primary obligor. Material cost relates to the purchase~~ of ~~conversion~~$450,018 ~~parts~~incurred ~~used~~during in the ~~production~~three-month ofperiod ~~our~~ended ~~high~~June ~~performance vehicles~~30, ~~and~~2018. ~~procurement~~Income offrom ~~aftermarket~~operations ~~parts,~~for ~~which~~the ~~are~~three-month ~~manufactured~~period ~~by third party suppliers using our proprietary tools and~~ended ~~molds~~June ~~developed by us. Overhead costs include costs associated with manufacturing support~~30, ~~shop and warehouse supplies and expenses~~2019, ~~small~~ ~~tools~~was ~~and~~due ~~equipment~~primarily ~~and other related warehouse and production costs. Our labor costs include the cost of personnel related~~ to ~~the~~increased ~~production~~revenue ~~of our high performance vehicles~~ and ~~logistics~~gross ofprofit, ~~warehousing~~offset ~~and~~in ~~shipping~~part ~~our~~by ~~aftermarket~~increased ~~parts.~~operating ~~Purchased process services related to the subcontracting of specific manufacturing processes to outside contractors, such as paint~~expenses.

5Other Expense (Income)

~~Total~~Other ~~costs~~expenses ofinclude ~~goods~~interest ~~sold~~and ~~for~~financing ~~the~~costs. ~~three~~Interest ~~months~~and ~~ended~~financing ~~December~~costs 31decreased 8,973 ~~2015~~(89%) ~~were~~to $~~493~~1,~~681,~~098 aduring ~~decrease~~the ofthree-month period ~~$59~~ended June 30,~~107~~ or2019, ~~11%~~compared ~~from~~to $~~552~~10,~~788~~071 ~~of costs~~during ~~of goods sold for~~ the three-month ~~months~~period ended ~~December~~June 3130, ~~2014~~2018. The decrease ~~was~~in ~~primarily~~interest ~~attributable to the lower chassis~~and financing costs, asduring ~~dealers opted to obtain and send to us~~ the ~~chassis~~three-month atperiod ~~their~~ended ~~own~~June ~~cost~~30, ~~rather~~2019, ~~than~~was usdue ~~procuring~~primarily ~~the~~to ~~chassis~~an onoverall ~~their behalf,~~reduction ~~and~~in ~~improved pricing obtained from certain vendors~~debt.

~~Gross~~Income ~~Margin:~~Tax Gross Margin from the sale of vehicles and parts increased $74,554 to a margin of $58,661 for the three months ended December 31, 2015 from a gross loss of $15,893 for the three months ended December 31, 2014. The increase in gross margin mainly reflects higher conversion sales and less chassis sales in the current period versus the same period in the prior year, as we obtain minimal to no margin from chassis sales.Expense

~~Research~~During ~~and~~the ~~Development~~three-month ~~Expenses:~~period ~~Research~~ended ~~and~~June ~~development~~30, ~~expenses~~2019, ~~are~~we ~~expensed~~reported asincome ~~incurred~~tax ~~and~~expense ~~represent~~of ~~engineering~~$323,090. ~~and~~We ~~design salaries~~had ~~and~~no ~~benefits~~income ~~and~~tax ~~costs~~expense ~~incurred~~during in the three-month ~~development~~period ofended ~~new~~June ~~products and processes~~30, ~~including significant improvements and refinements to existing products and processes~~2018.

Research and development expenses decreased by $103,377, or 72%, to $40,939 during the three months ended December 31, 2015 from $144,316 for the three months ended December 31, 2014. The decrease was primarily due to lower salaries and less expenses related to outside services along with lower non-cash stock based compensation expense.Dividends

~~Sales~~There ~~and~~were ~~Marketing~~no ~~Expense:~~dividends ~~Sales~~granted ~~and~~during ~~marketing~~the ~~expenses~~three-month ~~relate~~periods toended ~~sales~~June ~~and marketing salaries and benefits~~30, ~~including~~2019 ~~our regional sales representatives,~~ and ~~costs~~June ~~incurred to promote our existing and new products~~30, ~~such as attending car shows and promotion through other media outlets, along with new car sales expenses such as commissions and incentives, and costs related to investor relations~~2018.

Sales and marketing expenses decreased by $28,320, or 12%, to $204,346 for the three months ended December 31, 2015 from $232,666 for the three months ended December 31, 2014. The decrease was primarily related to lower headcount offset somewhat by higher website expenses related to our performance parts website.

General and Administrative Expense: General and administrative expenses include expenses for administrative salaries, including executive, finance/accounting, information personnel and administrative support staff and benefits. Other general and administrative costs also include occupancy costs of our facilities, travel and entertainment, auto, insurance, stock compensation, other office support costs and professional fees, including outside accounting/audit, legal, and investor fund raising advisory services.

General and administrative expenses decreased by $333,103, or 42%, to $468,654 for the three months ended December 31, 2015 from $801,757 for the three months ended December 31, 2014. The decrease was primarily comprised of lower non-cash stock based compensation expense; lower professional fees; lower general and administrative salaries as a result of headcount reduction; and a decrease in other expenses primarily resulting from our efforts to reduce costs.

Depreciation and Amortization Expense: Depreciation and amortization expense relates to our depreciating and amortizing costs incurred for leasehold improvements, equipment and tooling. Depreciation and amortization expense decreased by $18,574, or 46%, to $22,034 for the three months ended December 31, 2015 from $40,608 for the three months ended December 31, 2014.

Interest Expense: Interest expense decreased by $423,585 or 56% to $330,903 for the three months ended December 31, 2015 from $754,488 for the three months ended December 31, 2014. The decrease was primarily attributable to lower non-cash interest expense incurred during the three months ended December 31, 2015 as compared to same period in the prior year.

Private Placement Costs: In conjunction with the issuance of convertible notes from October to December 2014, the conversion features of such notes were bifurcated from the notes and recorded as derivative liability. The Company recorded a $1,064,572 derivative liability with an offsetting charge to valuation discount of $482,225 with the remainder of $582,347 recorded as an expense included in other income (expense) during the three months ended December 31, 2014. We incurred no similar expense during the three months ended December 31, 2015.

Gain on Extinguishment of Derivative Liability: Gain on the extinguishment of derivative liability related to gains of $62,607 during the three months ended December 31, 2015 as a result of the extinguishment of derivative liabilities resulting from the optional conversion of convertible debt to stock by the holders of such convertible notes in accordance with their terms. We incurred no similar expense during the three months ended December 31, 2014.

Change in Fair Value of Derivative Liability: In accordance with the FASB authoritative guidance, the conversion feature of certain convertible notes issued by us was separated from the host contract (i.e., the notes) and recognized as a derivative instrument. The conversion feature of these notes are characterized as a derivative liability, which is re-measured at the end of every reporting period with the change in value recognized as a gain or loss in our statement of operations. During the three months ended December 31, 2015 and 2014, we recorded a gain of $74,657 and $129,182, respectively, due to the change in the fair value of our derivative liability.

Net Loss: Net loss decreased by $1,571,942, or 64%, to a net loss of $870,951 for the three months ended December 31, 2015 from a net loss of $2,442,893 for the three months ended December 31, 2014. The decrease in net loss was primarily attributable to lower interest expense of $423,585 and costs of private placement of $582,347 in the three months ended December 31, 2014, which did not recur in the current period. In addition, the decrease in net loss was also positively impacted by $557,928 decrease in loss from operations related to $483,374 decrease in operating expenses and $74,554 increase in gross margin.

Nine months Ended December 31, 2015 Compared to Nine months Ended December 31, 2014

Our revenue, operating expenses, and net loss for the nine months ended December 31, 2015 as compared to the nine months ended December 31, 2014 were as follows:

	For the Nine months ended									Percentage
	December 31,									Change
	2015			2014			Change			Inc. (Dec.)
Revenue, net	$	2,771,518		$	3,072,596		$	(301,078	)		(10	%)
Costs of goods sold		2,332,861			2,725,378			(392,517	)		(14	%)
Gross profit		438,657			347,218			91,439			26	%
Operating expenses
Research and development		190,625			543,070			(352,445	)		(65	%)
Sales and marketing		607,005			1,209,248			(602,243	)		(50	%)
General and administrative		1,543,907			2,736,796			(1,192,889	)		(44	%)
Depreciation and amortization		79,664			150,323			(70,659	)		(47	%)
Total operating expenses		2,421,201			4,639,437			(2,218,236	)		(48	%)
Loss from operations		(1,982,544	)		(4,292,219	)		2,309,675			(54	%)
Other income (expenses)
Interest expense		(1,153,804	)		(1,769,289	)		615,485			(35	%)
Private placement costs and loss on debt extinguishment		(27,760	)		(668,230	)		640,470			(96	%)
Recognition of derivative liability		(174,437	)		-			(174,437	)		-
Gain on extinguishment of derivative liability		720,658			2,586,732			(1,866,074	)		(72	%)
Change in fair value of derivative liabilities		540,802			2,602,392			(2,061,590	)		(79	%)
Net Loss	$	(2,077,085	)	$	(1,540,614	)	$	(536,471	)		35	%

Revenues: Total revenues for the nine months ended December 31, 2015 were $2,771,518, a decrease of $301,078 or 10% from $3,072,596 for the nine months ended December 31, 2014. The decrease in revenues was primarily related to lower chassis revenue, as dealers opted to obtain and send to us the chassis rather than us procuring the chassis on their behalf, and lower conversion revenue due to product mix of vehicles sold as volume remained consistent on a year over year basis. This decrease was offset somewhat by an increase in revenue from sales of our aftermarket retail parts.

Cost of Goods Sold: Total costs of goods sold for the nine months ended December 31, 2015 were $2,332,861, a decrease of $392,517 or 14% from $2,725,378 of costs of goods sold for the nine months ended December 31, 2014. The decrease was primarily attributable to the decrease in chassis purchased, as dealers opted to obtain and send to us the chassis at their own cost rather than us procuring the chassis on their behalf, offset somewhat from higher parts costs and our performance parts sales increased during the nine months ended December 31, 2015 as compared to the same period in the prior year.

Gross Margin: Despite the decline in revenue of $301,078 from the nine months ended December 31, 2014, gross Margin from the sale of vehicles and parts increased $91,439 to a margin of $438,657 for the nine months ended December 31, 2015 from a gross margin of $347,218 for the nine months ended December 31, 2014. The increase in gross margin reflects the sales mix as compared to the same period in the prior year along with sales of less chassis and increase in performance parts sales.

Research and Development Expenses: Research and development expenses decreased by $352,445, or 65%, to $190,625 during the nine months ended December 31, 2015 from $543,070 for the nine months ended December 31, 2014. The decrease is primarily due to lower salaries and less expenses related to outside services and research and development parts along with lower non-cash stock based compensation expense.

Sales and Marketing Expense: Sales and marketing expenses decreased by $602,243, or 50%, to $607,005 for the nine months ended December 31, 2015 from $1,209,248 for the nine months ended December 31, 2014. The decrease was primarily related to lower salaries and benefit expenses due to lower headcount; lower car show expenses, as we incurred higher car show expenses in the prior year related to the 50th anniversary celebration of the Ford Mustang; lower public relations and promotional expenses; and lower non-cash stock based compensation.

General and Administrative Expense: General and administrative expenses decreased by $1,192,889, or 44%, to $1,543,907 for the nine months ended December 31, 2015 from $2,736,796 for the nine months ended December 31, 2014. The decrease is primarily comprised of lower professional fees; lower general and administrative salaries and benefits as a result of headcount reduction; lower auto, travel and entertainment costs due to less car show expenses; lower non-cash stock based compensation; and decrease in other expenses primarily resulting from our efforts to reduce costs.

Depreciation and Amortization Expense: Depreciation and amortization expense relates to our depreciating and amortizing costs incurred for leasehold improvements, equipment and tooling. Depreciation and amortization expense decreased by $70,659, or 47%, to $79,664 for the nine months ended December 31, 2015 from $150,323 for the nine months ended December 31, 2014.

Interest Expense: Interest expense decreased by $615,485 or 35% to $1,153,804 for the nine months ended December 31, 2015 from $1,769,289 for the nine months ended December 31, 2014. The decrease is primarily attributable to lower non-cash interest expense incurred during the nine months ended December 31, 2015 as compared to same period in the prior year.

Recognition of Derivative Liability: In June 2015, we determined that there was not sufficient authorized and available Common Stock available for issuance upon conversion of certain of its Notes. As a result, we recognized a derivative liability of $119,929 in June 2015. In addition, as a result of the assignment of a convertible note to a separate note holder, we recognized a derivative liability of $54,508 in June 2015. We did not incur a comparable expense during the nine months ended December 31, 2014.

Private Placement Costs and Loss on Debt Extinguishment: In conjunction with a note holder agreeing to assign its then outstanding note and principal balance of $49,240 to a separate note holder in exchange for the new note holder’s payment of $77,000 to the original note holder, we recorded $27,760 as loss on extinguishment during the nine months ended December 31, 2015 representing the increase in principal balance from $49,240 to $77,000. In conjunction with the issuance of convertible notes from September to December 2014, the conversion features of such notes was bifurcated from the notes and recorded as derivative liability. The Company recorded a $1,306,455 derivative liability with an offsetting charge to valuation discount of $638,225 with the remainder of $668,230 recorded as an expense included in other income (expense) during the nine months ended December 31, 2014.

Gain on Extinguishment of Derivative Liability: Gain on the extinguishment of derivative liability related to gains of $720,658 during the nine months ended December 31, 2015 as a result of the extinguishment of derivative liabilities resulting from the optional conversion of convertible debt to stock by the holders of such convertible notes in accordance with their terms. During the nine months ended December 31, 2014, we recognized a gain of $2,586,732 related to the extinguishment of a derivative liability related to our 3% Senior Secured Convertible Notes.

Change in Fair Value of Derivative Liability: In accordance with the FASB authoritative guidance, the conversion feature of certain convertible notes issued by us was separated from the host contract (i.e., the notes) and recognized as a derivative instrument. The conversion feature of these notes are characterized as a derivative liability, which is re-measured at the end of every reporting period with the change in value recognized as a gain or loss in our statement of operations. During the nine months ended December 31, 2015, we recorded a gain of $540,802 due to the change in the fair value of our derivative liability. During the nine months ended December 31, 2014, we recorded a $2,602,392 gain due to the change in the derivative liability from issuance date of which $2,446,054 related to the June 17, 2014 amendment.

Net Loss: Net loss increased by $536,471, or 35%, to a net loss of $2,077,085 for the nine months ended December 31, 2015 from a net loss of $1,540,614 for the nine months ended December 31, 2014. The increase in net loss was primarily attributable to a decrease of $2,061,590 in gain on extinguishment of derivative liability; a $1,866,074 decrease in change in fair value of derivative liability; and a $174,437 recognition of a derivative liability offset somewhat by a $615,485 decrease in interest expense and a $640,470 decrease in costs of private placement. This increase in net loss was offset by a $2,309,675 decrease in loss from operations related to a $2,218,236 decrease in operating expenses along with a $91,439 improvement in gross profit.

Liquidity and Capital Resources

Our working capital ~~deficit~~deficiency as of ~~December~~June 3130, ~~2015~~2019, and March 31, ~~2015~~2018, ~~are~~was as follows:

	As of			As of
	December 31, 2015			March 31, 2015
	June 30, 2019			March 31, 2019
Current Assets	$	215,493		$	910,794
Current assets	$	4,321,073		$	3,619,119
Current Liabilities		(7,662,381	)		(7,961,458	)
Current liabilities		5,931,251			4,398,809
Net Working Capital Deficit	$	(7,446,888	)	$	(7,050,664	)
Net working capital deficiency	$	(1,610,178	)	$	(779,690	)

~~Summary~~The offollowing summarizes our cash flow activity for the ~~nine~~three-month ~~months~~periods ended ~~December~~June 3130, ~~2015~~2019, and ~~December 31, 2014 are as follows~~2018:

Cash Flows

	Nine months			Nine months
	Three-Month Period			Three-Month Period
	Ended			Ended
	December 31, 2015			December 31, 2014
	June 30, 2019			June 30, 2018
Net cash used in Operating Activities	$	(894,423	)	$	(2,127,243	)
Net cash provided by Operating Activities	$	1,588,079		$	376,319
Net cash used in Investing Activities		(121,~~810~~015,466	)		~~(218,685~~-	)
Net cash provided by Financing Activities		825,000			941,474
Net cash used in by Financing Activities		(224,159	)		(124,500	)
Decrease in Cash during the nine month period		(82,233	)		(1,404,454	)
Increase in Cash during the period		348,454			251,819
Cash, Beginning of Period		~~143~~3,~~083~~374,234			1523,~~499,889~~120
Cash, End of Period	$	603,~~850~~722,688		$	95774,~~435~~939

~~Our~~The ~~principal~~Company ~~sources~~has ofincurred ~~liquidity~~significant ~~have~~net ~~been~~losses ~~cash~~since ~~provided~~inception. ~~by financing~~However, ~~including~~during ~~through~~ the ~~private~~three-month ~~issuance~~period ofended ~~notes~~June ~~and~~30, ~~sale of~~2019, ~~equity securities; and gross margins from~~ the ~~sales~~Company’s financial ~~of high~~ performance ~~vehicles~~significantly improved, and ~~aftermarket~~we ~~parts~~recorded ~~along~~net ~~with~~income ~~customer deposits received in advance~~ of ~~shipment.~~$789,224 ~~Our~~and ~~principal~~generated ~~uses of~~ cash ~~have~~flows ~~been~~from ~~primarily for production and purchase of parts for our high performance vehicles; expansion of~~ operations~~; development of new products and improvement of existing products;~~ ~~expansion~~ of ~~marketing~~$1,588,079, ~~efforts~~primarily due to ~~promote~~revenues ~~our~~from ~~products and company; and capital expenditures primarily for tooling~~JSAT. WeOur ~~anticipate that~~ability ~~significant~~to ~~additional~~continue ~~expenditures will be necessary~~ to ~~develop~~generate ~~and~~net ~~expand~~income ~~our automotive assets before sufficient~~ and ~~consistent~~ positive ~~operating~~ cash flows ~~will be achieved, including sufficient cash flows to service existing debt and related interest.~~from ~~Additional~~operations ~~funds~~is ~~will~~primarily bedependent ~~needed~~on inour ~~order~~ability to continue ~~production and operations, obtain profitability and~~ to ~~achieve~~generate ~~our~~revenue ~~objectives. As~~from ~~such,~~ our ~~cash~~contracts ~~resources~~with ~~are~~JSAT ~~insufficient~~and to ~~meet our current operating expense and production requirements and planned business~~generate ~~objectives~~revenue ~~beyond~~from the ~~date~~sale of ~~this~~our ~~Form~~Signature ~~10-Q filing without additional financing~~Cars.

AsThe ~~further~~Company ~~presented~~cannot ingive ~~our~~assurance ~~condensed~~that ~~consolidated~~it ~~financial~~can ~~statements~~maintain ~~and~~its ~~related~~cash ~~notes,~~balances ~~during~~or ~~the~~limit ~~nine~~its ~~months~~cash ~~ended~~consumption ~~December 31,~~and ~~2015,~~maintain wesufficient ~~incurred~~cash balances afor ~~net~~its ~~loss~~planned ofoperations. $2Also,~~077,085~~ ~~and~~future ~~utilized~~business ~~$894,423~~demands ofmay ~~cash~~lead into ~~operations.~~cash Weutilization ~~also~~at ~~had~~levels agreater ~~stockholders’~~than recently ~~deficit~~experienced ~~and~~or ~~working~~anticipated. ~~capital~~While ~~deficit~~we ofbelieve ~~$10,664,234~~that ~~and~~our ~~$7,446,888,~~existing ~~respectively~~cash asbalances ofwill ~~December~~be ~~31,~~sufficient ~~2015,~~to ~~and~~fund asour ofcurrently ~~that date,~~planned welevel ~~owed~~of ~~$762,639~~operations ~~in past unpaid payroll~~ and ~~other~~investment ~~taxes; $846~~activity,~~004~~ ofwe ~~outstanding~~may ~~notes~~require ~~payable~~additional ~~were~~financing into ~~default;~~fund ~~$1,317,928~~our ~~of accounts~~planned ~~payable~~future ~~was~~operations ~~greater~~if ~~than~~we 90encounter unanticipated ~~days past due; and $401~~difficulties,~~689~~ isor ~~owed~~if onour ~~past~~estimates ~~due rent as~~ of the ~~date~~amount of ~~this~~cash ~~filing~~necessary ofto ~~Form 10-Q.~~operate Inour ~~addition,~~business inprove ~~May~~to ~~2015~~be wrong, and we ~~received~~use ~~a complaint from Citizens Business Bank alleging breach of~~ our ~~loan~~available ~~agreement~~financial ~~with the~~resources ~~bank~~faster ~~and~~than ~~breach~~we ofcurrently aexpect. ~~commercial~~No ~~guaranty~~assurance bycan ~~Steve~~be ~~Saleen~~given ~~and~~that ~~demanding~~any ~~full~~future ~~payment~~financing, if ~~of principal~~needed, ~~interest~~will ~~and~~be ~~fees~~available ~~of $369~~or,~~302. A~~ ~~default~~if ~~under~~available, ~~the~~that ~~loan~~it ~~agreement~~will ~~triggers~~be aon ~~cross~~terms ~~default~~that ~~under~~are ~~our~~satisfactory ~~3% Senior Secured Convertible Notes and 7% Convertible Notes (see Note 5~~ to ~~our condensed consolidated financial statements) enabling~~ the ~~holders~~Company. ~~thereof~~Subject to, ~~at their election until~~ the ~~later~~foregoing, ofwe 30believe ~~days~~the ~~after~~Company ~~such~~has ~~default~~sufficient iscapital ~~cured~~and orliquidity ~~otherwise~~to ~~resolved~~fund orits ~~the~~operations ~~holder~~for ~~becomes~~at ~~aware~~least ofone ~~such~~year ~~cure~~from ~~or resolution, accelerate~~ the ~~maturity~~date of ~~our~~filing of ~~indebtedness.~~this ~~These~~Quarterly ~~factors~~Report ~~raise~~on ~~substantial~~Form ~~doubt about our ability to continue as a going concern~~10-Q.

~~Our~~New ~~ability~~Accounting to continue as a going concern is dependent upon our ability to raise additional capital and to ultimately generate revenues at a level that will result in profitably and positive cash flows from operations. At December 31, 2015, we had cash on hand in the amount of $60,850 and we are not generating funds from operations to cover current production and operating expenses, and we will have to obtain additional financing. As such, we will need and are currently seeking additional funds, primarily through the issuance of debt or equity securities for production and to operate our business through and beyond the date of this Form 10-Q filing. To this end, and as further discussed in our Form 8-K filed on December 8, 2015 and further in Note 5 to our condensed consolidated financial statements, on December 2, 2015, we entered into a Securities Purchase Agreement (the “Purchase Agreement”), with SM Funding Group, Inc. (“SM Funding”). Under the Purchase Agreement, we issued to SM Funding a 12% Senior Secured Convertible Note (“Senior Note”) under which SM Funding may advance to us up to $2,000,000. Amounts outstanding under the Senior Note are convertible into Preferred Stock we may issue to accredited investors in a private placement of up to $10,000,000, but not less than $8,000,000. Under the Senior Note, we agreed that we will not enter into, create, assume or suffer to exist any additional indebtedness for borrowed money. Pursuant to a Binding Letter of Intent (“LOI”) we previously entered into with SM Funding, SM Funding was required to advance us at least $1,000,000 within seven business days after the execution of the LOI in October 2015. However, as of December 31, 2015, we had only received aggregate advances from SM Funding of $750,000, and subsequent to December 31, 2015 to the date of this filing of Form 10-Q, SM Funding advanced us an additional $210,000 under the Senior Note. Accordingly, there can be no assurance that we will complete the financing transactions with SM Funding and no assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to us. Even if we are able to obtain additional financing, it may contain undue restrictions and covenants on our operations, in the case of debt financing, or cause substantial dilution for our stockholders (including the issuance of securities sufficient to result in a change in control of our company), in the case of convertible debt and equity financing.Standards

AtSee ~~December~~Note ~~31,~~1 ~~2015, we had a working capital deficit~~ of ~~$7,446,888~~the ~~compared~~condensed toconsolidated afinancial ~~working~~statements ~~capital~~for ~~deficit of $7,050,664 at March 31, 2015. The decrease in working capital deficit was primarily related to~~ a ~~decrease~~discussion ~~in current assets~~ of ~~$695,301~~recent ~~primarily due~~accounting ~~to a $597,599 decrease in inventory and a $82,233 decrease in cash~~pronouncements. This was offset somewhat by a $299,077 decrease in current liabilities primarily due to a $1,087,023 decrease in derivative liability; a $405,328 decrease in customer deposits; a $61,261 decrease in accounts payables with related parties; and a $134,910 decrease in notes payable, which was offset by $633,506 in higher notes payable, primarily due to $750,000 obtained from SM Funding, and a $230,781 increase in accrued interest.

Net cash used in operating activities for the fiscal year ended March 31, 2015 totaled $894,423 after the net loss of $2,077,085 was decreased by $188,890 of non-cash charges and by $993,772 in net changes to the working capital accounts. This compares to net cash used in operating activities for the nine months ended December 31, 2014 of $2,127,243 after the net loss of $1,540,614 was increased by $2,133,448 in non-cash charges and decreased by $1,546,819 in net changes to the working capital accounts.

Net cash used in investing activities was $12,810 for nine months ended December 31, 2015 as compared to $218,685 of cash used in investing activities for the nine months ended December 31, 2014.

Net cash provided by financing activities for the nine months ended December 31, 2015 was $825,000, which was comprised of $45,000 of principal payments on notes payable to related parties offset by a $120,000 note payable received from a related party and $750,000 in proceeds from senior secured convertible notes. This compares to net cash provided by financing activities for the nine months ended December 31, 2014 of $941,474 of which $888,225 came through the issuance of our unsecured convertible notes, $185,00 came from the issuance of 1,183,344 shares of our common stock and $195,000 came from issuances of notes to related parties. Cash of $326,751 was used to pay principal on long-term notes.

Defaults on Notes and Accounts Payable

As of December 31, 2015, we were in default on $846,004 of unsecured notes payable; $1,232,250 of accounts payable was past 90 days outstanding; and $384,704 was past due on rent for our facilities, including late fees. While we are in discussions with the note holders and vendors to arrange extended payment terms, the initiation of collection actions by these note holders and vendors may severely affect our ability to execute on our business plan and operations. In addition, in May 2015, we received a complaint from Citizens Business Bank alleging breach of our loan agreement with the bank and breach of a commercial guaranty by Steve Saleen and demanding full payment of principal, interest and fees of $369,302. A default under the loan agreement triggers a cross default under our 3% Senior Secured Convertible Notes and 7% Convertible Notes (see Note 5 to our consolidated financial statements) enabling the holders thereof to, at their election until the later of 30 days after such default is cured or otherwise resolved or the holder becomes aware of such cure or resolution, accelerate the maturity of our indebtedness.

Off-Balance Sheet Arrangements

We ~~have~~do not ~~entered~~have ~~into~~ 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

AsA ~~a “~~smaller reporting company” asis ~~defined by Rule 229.10(f)(1), we are~~ not required to provide ~~the~~any information ~~required by~~in ~~this~~response to Item 3305 of Regulation S-K.

ITEM 4. CONTROLS AND PROCEDURES

~~Evaluation of~~ Disclosure Controls and Procedures

As of ~~December~~June 3130, ~~2015~~2019, we carried out an evaluation, under the supervision and with the participation of our ~~principal~~Chief ~~executive~~Executive Officer and ~~financial~~Chief ~~officer~~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 ~~principal executive~~Chief Executive Officer and ~~financial~~Chief ~~officer~~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 ~~principal~~Chief ~~executive~~Executive Officer and ~~financial officer~~Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

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

During the ~~nine~~three-month ~~months~~period ended ~~December~~June 3130, ~~2015~~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.

126

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

~~The information under “Litigation” in Note 10 of the Unaudited Condensed Consolidated Financial Statements in Item 1 of Part I is hereby incorporated by reference~~None.

ITEM 51A. ~~OTHER~~RISK ~~INFORMATION~~FACTORS.

OnNot ~~March 18, 2016, we accepted the resignation of our Chief Financial Officer, David Fiene~~applicable.

ITEM 62. ~~EXHIBITS~~UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

~~EXHIBIT INDEX~~None.

Exhibit Number		Description of Exhibit
31.1		Certification by Principal Executive and Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended.
32.1		Certification of Principal Executive and Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS**		XBRL Instance.
101.SCH**		XBRL Taxonomy Extension Schema.
101.CAL**		XBRL Taxonomy Extension Calculation.
101.DEF**		XBRL Taxonomy Extension Definition.
101.LAB**		XBRL Taxonomy Extension Labels.
101.PRE**		XBRL Taxonomy Extension Presentation.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

** XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sectionsNone.

13ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

On March 6, 2020, Lawrence Balingit resigned as the Company’s Chief Financial Officer.

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

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.

	Saleen Automotive, Inc.
	a Nevada Corporation
Date: March 24, 2016	/S/ Steve Saleen
	Steve Saleen
	Chief Executive Officer (principal executive, financial and accounting officer)

Date: April 6, 2020

14SALEEN AUTOMOTIVE, INC. By: /s/ Steve Saleen Name: Steve Saleen Title: Chief Executive and Chief Financial Officer

Filing Compare · Saleen Automotive, Inc.