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Has anyone reviewed S2A modular? Just doing my diligence
There is a new green modular company out of hemet, ca. S2A Modular Went thru their presentation yesterday. Just wanted to see if anyone else has looked into them. Supposedly they can build a custom or one of their predesigned floor plans with tesla powerwall, graphene solar panels for a "net-zero" or "net-positive" house for $165 a sq ft. First units out by 2021.
Correct Robert about the lumber commodity, but finished sidings, windows, electrical panels, etc. are very problematic- I deal with it every day so there will be materials supply chain issues. In addition to major labor supply problems.
What is a bigger red flag is that they don't have the factory built up and running. Signs are pointing toward a pyramid scheme about to fall apart.
Quote from @Robert Cunningham:
I also have been in conversation with Catherine O'Connor who works with potential investors who sent an email showing a tour of their Patterson facility. The facility has not produced much yet and they don't have any other operating facilities and wrote:
I believe contracted public orders will begin in October. In regards to a recession we have considered this in our model as well and how this would affect our business. Two things that we think of we have noticed that we currently have a massive influx of builds to do right now with not enough factories open so what if we cut that by 70% what happens? Well the deals that are coming in are just different. Instead of SFH by individuals, it is developers with ‘Build to rent' and Multi-Family communities that are coming in a flurry that takes up that demand. Even with interest rates going up but now we can shift to rental communities. Our model stays the same but our orders can change. Margins don't **** dramatically when we shift a line as we can shift a line in 2 hours (which is very beneficial to us) if all of a sudden housing shuts down and no one builds rental communities then we can do government contracts (that won't go away – DOD, FEMA, military housing isn't going away). We are creating a log jam of people waiting in line to build no matter what happens to the economy.
We are also structured all cash. I think this helps with the risk factor in case anything catastrophic were to happen. We do not have mortgage or rent payments to make. We can simply just sit it out and wait. It is hard to go bankrupt when we are not leveraged so we find this to be an extreme benefit with possible recessions or economic downturn coming into play.
I'm still skeptical about putting $220,000.00 into a company that has zero production. It's a risk.
This response is the there isn't any way we could fail response I would not want to see. The reality is modular has been around for a long time and while there are cost efficiencies there are countering cost inefficiencies like delivery and setting which are both proportionately higher. Those are a major reason modular hasn't yet revolutionized the production builder into only using modular and not site building any units. So if there is a slump in their pipeline there will likely be reduced sales volume of some level and they should acknowledge that and provide a description of how they can survive that, not say sales will just stay up from somewhere else. They may be correct, but they should still consider the other worst case scenario. That's what good start up innovators will do and say. Here is why I don't think that bad scenario would happen, but we're prepared for that in this way. Confidence in their plan, while also planning for other outcomes.
Quote from @SL Jackson:
I personally went to a live seminar in the South Bay area, I believe it was in 2018. I almost invested then, but remembered what happened 20 years before at a sales pitch seminar. It was for a new vending machine that dispensed beverages and snacks. I made sure to sit in the back row so I could "watch" everyone else besides the "pitchmen" as I had over 20 years in sales and know "the drill". A lot can be gleaned by watching those watching the "show". But I was blown away when I opened their folder with their advertising literature and paperwork. Right inside was a warning they had to include from the SEC saying they were under investigation they had to include. I almost got up and walked out, but thought, why not watch since I came all the way. Sure enough, more than half the attendees got up and most were seen opening their checkbooks to write from $5+k to $25k checks right there on the spot. They were so hoodwinked, I guess they never even read what I did or overlooked it. I remember thinking as I left, I don't know enough about this business and I will not spend a dollar until I do my DD first. Sure enough I later found their machines sold for less than 25% unused and after talking to those that had them, they wished they didn't. I found regular full sized machines for much less too.
As I went to this company's seminar, that all was in the back of my mind. But their presentation was much more professional, less hype, more details. But I couldn't believe their projections of how much would be made on I think then was a $100k investment. But the "alarm bell" went off when I heard the same thing these "seminars" always seem to have...."The deal is for today (or week) only" or something like that. Given time to think over a sales pitch, the odds of closing go down considerably. This is also what I have heard countless times many years ago in one MLM (Multi-Level Marketing aka Amway, etc.) pitch after another. I too needed to see delivered product before I would buy, but more importantly, to learn if the numbers stated were real world or competitive. I stayed away from the slick pictures and focused on the "meat". I also researched the address in Palo Alto and that said plenty to me. Finally the old "If it's too good to be true..." line clinched it.
So, this was plenty of time pre-Covid and I had zero to do with this company since that time until tonight when I came across this thread. It was kind of comical to read the posts here, being that they started almost 2 years after I learned of this company and not much seems to have been done since. I often wondered back then why if this company's business plan was so good, they needed to go to personal investors. Well, it's pretty simple....regular "Joe's" and "Julie's" are not savvy in this business, I wasn't then either. They are much easier to sell to as well. VC's are savvy, knows how too DD much better, but probably can see right through this stuff much faster than us and if they didn't put some "skin in the game" here, that said a lot to me. Just like the vending business seminar, unsophisticated, unknowledgeable people can easily be "PT Barnum-ed" into plunking down large sums of money quite easily without ANY DD done prior. It's human nature to want to "score big" and often brag to your friends and family how smart you were if so. The Lottery or many ways of gambling come to mind here. I wish this company can do what they say they would, but when you cannot even provide an address that looks like it's in a simple office park instead of a rented small house and you show a Tesla Semi like you almost have one knowing they were years out still, ya gotta wonder where investor money is truly going. America just doesn't punish White collar scammers enough to make it stop the next one. Think what would happen say in China or Russia with this plan were it found to be fraudulent. For those that invested, I'm sorry I am giving it "between the eyes" these are my thoughts and opinions, good luck to you, hope I'm wrong for your sake.
Agreed...on all counts. Sadly de facto white-collar crime is pretty much perfectly legal if perpetrated in a cleverly slick, superficially compliant manner. Ironically all of the ideas/ideals contained in the "offering" are beautifully articulated and sound like just the kind of thing that SHOULD be done/exist. Meanwhile, where is all the money that has been collected for years? What is there to show for it? How much has been taken in compensation by the principles? Is it sitting in an account earning interest? Is it invested in....?
I would love for someone who could actually set up and fund such an enterprise actually do it, as the pitch sounds quite sensible Maybe Musk might spend a couple of billion bucks to do this for real and set up a functioning demonstrable template that truly would transform the housing/commercial building markets in America! (Sadly, Elon was more interested in the Twittersphere.)
The way laws are written/enforced; it's almost impossible to prosecute and convict competent white-collar criminality, as the smart crooks have found all manner of ways of creating quasi-legitimate facades/presentations that play on people's gullibility and "greed"....this ethos permeates all sectors. Meanwhile, it's the smaller "investors" that usually get the shaft.
Actually I've heard Musk did invest in Boxabl, take that for what it's worth....I read it on the internet
This is the response that I got asking about a timeline:
"Our Patterson CA factory is in its final stages, we are currently building homes, but they will be our model homes for our factory location that people can tour.
The Patterson factory will be fully operational by end of 2022. Any home orders will be put onto a work schedule soon afterwards for deliveries to begin in 2023."
I would love to connect with any other folks who have actually invested in this company?
I am an initial round investors with S2A Modular and I'm not super impressed with their results or there current round of antics to try to convert the initial LLCs (and their Members) to a dilatable class of shareholders. Meanwhile the two founders are claiming that they will remain 50% shareholders regardless of how much they dilute the investor base to raise more capital to fund the development of additional factories.
Their business model should be sound but their capital raising and approach to fund their growth and their treatment or lack of understanding of shareholders rights is snag for me. They could provide the Bigger Pockets hands on wealth building community massive value with apartment building solutions all of the way down to backyard ADU solutions.
The challenge remains the same; can you design something that you can get approved in your town for an all in price for site work and vertical building that is economical and that you are willing to pay? In CA the contractors have gone nuts and are practically charging the going rates for the real estate sales price / square foot. In Berkeley a contractor said that his last project was delivered at about $900 / sq ft so yes labor and bureaucracy are high but at $900 / ft what value is the guy really delivering, if any at all.
If you are or know of any other investors I'd love to connect, please DM me.
I was considering investing in S2A back in January for all the reasons mentioned here. I ultimately decided against it after doing some research. Specifically, I thought that the graphene solar panels would offer a unique competitive advantage because of the claims made for greater efficiency and durability compared to conventional panels.
I started by contacting a friend who's been in the solar business for about 20 years, and he had never heard of anyone with a working graphene panel. There are no commercially available graphene solar panels with one exception: Freevolt, the company that S2A has partnered with. All of the academic studies talk about graphene's potential but there are no other mentions of real-world applications.
Freevolt is the U.S. subsidiary of a Polish company, formerly PV Graf and now Euro Com Project, that claims to make the panels. There is no record of a patent application or even a trademark application in the United States under either of these names, but they show an application for a Polish patent number: P.421831. They have a photo gallery on their web site, but there are no pictures of actual installations of graphene panels.
The U.S. subsidiary is a small solar installer located in a strip mall in Palm Desert, Calif. Their CEO is a 31-year old CEO with a degree in kinesiology from San Jose State and five years of solar industry experience. Hmmm.
I was reminded of S2A recently when I watched "The Dropout," a film about Theranos. That was another company with a great story and slick executives who overpromised and underdelivered for almost a decade, ultimately costing investors -- some of them highly sophisticated -- hundreds of millions of dollars.
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Yes, they need to adapt quickly. If they were adept and quick thinking they could switch to modular components similar to what Guerdon did to build larger commercial projects. IMO they have a chance if they still have big cash reserves from investors, if not, kiss your money bye, bye. But what do I know....40+ years of building experience, probably some of the most expensive manufactured/ modular home projects ever in addition to hundreds of mid-priced to higher end projects in California. I wish them the best, people NEED housing, but that's my passion not a scheme to make money. The money comes when we provide value, I make more money for my customers than I make in the long run. That's my philosophy and has served me and my customers well.
BTW, I meant make more money INDIVIDUALLY for my clients than what I make per project.
Thank you Richard for the information about the graphene solar panels and their relationship with S2A. I was also considering investing $200k of 401k retirement savings into this company but have decided against it partly from this discussion and also after going out to Patterson and seeing the beginnings of their 'factory' but with only one building and no pavement and no real sign of activity it doesn't look like a strong going concern. I would love to hear from some of the people in the video who are investors in the company to see how they are feeling about the lack of progress over the last 18 months or so.
Here is the video with investors.
https://vimeo.com/s2amodular/review/708768398/ae9d69f695
Here is the longer virtual walkthrough : https://vimeo.com/718808585/f85d52d29f
If Patterson, CA is their first 'operational' factory, then they have not made much progress. They say they will begin building for the public by October 2022. Their affiliate companies LuxMods and Bahia Villages are scheduled to be produced before that but again not sure that anything has actually happened.
Yes, they keep pushing their deadline to start operations and there is little sign of actual investment in production capacity. When I was talking to them their productions start was scheduled to begin in April of this year, and in older press releases they have had deadlines going as far back as 2020.
in the meantime, they keep adding to their staff and paying salaries to themselves from investors' pockets. The two founders are each paying themselves at least $400,000 a year, and both have children working for the company in management roles.
The fact that no venture funds or institutions have bought into their story should be a huge red flag for anyone thinking of putting real money into S2A.
Quote from @Dave Arneson:
I would love to connect with any other folks who have actually invested in this company?
If you are or know of any other investors I'd love to connect, please DM me.
I did invest at the $150k range back in late 2020. I was/am still skeptical, but I've personally toured the Patterson facility and believe they are legit in that they plan to deliver module homes to people. I will be honest and say that while I was walking the factory in April of 2022, visions of Elizabeth Holmes and Theranos were flashing through my mind of "it works but don't make me prove it." But, they did warn us that they were still under construction and it certainly wasn't a working factory at that point...but made the hour-drive anyway just out of curiosity.
I've been on their quarterly investor calls and they are always exciting. Probably overly optimistic, but when talking to people who have invested that much of their hard-earned money, they can't be pessimistic, can they? lol. I'm on the fence about the whole restructuring thing.
If I had gone into this project with a "buy x number of shares at x dollars each" mentality, I wouldn't have put in so much money. I would have put in 10-20k and called it good. That's what I've done with boxabl. But I was excited by the prospect of owning .5% of a 'brick and mortar' factory. Almost regardless of the product, that was most interesting to me. So, now that I'll just be a regular shareholder of all the factories and all the other related ventures (55+ communities, solar stuff, etc.), it's a little less exciting. But, if I get my investment back at some point, I'll consider that a win. Any returns I make above that will be gravy. And if I lose it all... Well, I'll feel stupid and gullible but I'll have learned a lesson.
If American Greed ever does an episode on them, I'll be one of the people saying "I should have listened to everyone who told me it was crazy." And if they make good on their promises, I'll post a copy of my fat check here. Either way, it's been a good story to tell.
Here are the pix I took back on April 20, 22. I'm sure it's further along by now...but I don't believe they are delivering units yet. I tried to order one for our lake house and it would have cost about a million dollars after construction (700k for the modules and 300k for installation on our remote property that has windy, narrow roads). Every contractor I talked to said stick built was cheaper, even with the crazy high lumber prices, so we're going that route. Though, with the ridiculous delays we're facing in building permits, we might switch to an S2A if they're actually delivering in Spring 23 when we're actually ready to break ground.
Anyway, I'm hesitant to post anything here because so many people have been vocal about how only an idiot would fall for their smoke and mirrors...and that might be true. But like buying a lotto ticket, if the possibility of "winning" makes me happy and excited, then what's the harm done? I'm not encouraging anyone else to invest money they can't afford to lose in its entirety. But for me, it's exciting to be part of something that MIGHT be a game changer.
Quote from @Robert Cunningham:
I would love to hear from some of the people in the video who are investors in the company to see how they are feeling about the lack of progress over the last 18 months or so.
Here is the video with investors.
https://vimeo.com/s2amodular/review/708768398/ae9d69f695
Here is the longer virtual walkthrough : https://vimeo.com/718808585/f85d52d29f
I am in that video. Lol. I gave a testimonial as well but maybe it's in a different one. Anyway, see my previous post about my personal thoughts. I'm optimisitally skeptical that I'll get my investment back... As for anything else... if it goes public, I'll be rich. If it doesn't, I'll probably lose it all. Only time will tell which.
Hi Dave, Thanks so much for your thoughtful insight into S2A and your investment strategy, along with the inherent risk. I think many share the excitement of being part of something so innovative and forward-thinking. I hope your investment helps them to take the next step. i'd love to see a parking lot / solar panels installed at their Patterson location (the facility that you toured) as tangible progress, but last time I was there (July 2022 or so) there was little signs of construction.
RIchard's notes about graphene solar panels was a bit of a red flag, but still hoping that this company succeeds.
Also I didn't know that you could invest smaller amounts, as when I went through the presentation they stated $200k minimum.
Quote from @Frank Edwards:
@Mark Caudill - Were you looking to invest in S2A Modular or just have them build something for you? I just started doing my own due diligence on them because I am interested in investing in the company.
Hi, I'm interested in building my own home this way as well as investing in a factory. Please let me know if you have any information that you find interesting that points positive or negative. Thank you.
I too was interested to invest in S2A until I read all the posts here and physically went out to look at the "factory" and site last month. According to Kelvin, I wouldn't be able to take a tour of the "fully functioning factory" because of Osho rules. I told him that was fine, but needed to due my own due diligence and just take a look from the outside.
When I arrived at the Patterson "factory" on Nov. 9th at 2pm, at first it took a minute to find because the "factory" looks more like a temporary structure sitting on an unpaved lot. There is no "showroom" which they claim on the webinar is "almost finished" - In fact there were only three trucks there. One was parked by the entrance with two guys just hanging out and talking. And two were parked by the "factory". I walked up and told the guys at front that i was a potential investor and just wanted to take a look. They told me to walk over to the factory and talk with the guy in charge who was standing by the door. When I approached, I told that guy, who said he was the VP of construction, that I was a potential investor. He said I could look inside but not take any photos. I looked inside and there were sounds of machines, but only 2 guys working there. I saw what looked like wood frames on the far wall, but i didn't see anything actually being made or put together.
This VP of construction, who was basically just standing by the door talking on his phone, didn't seem to have a job to do except watch the 2 guys at the factory and maybe be the person to talk to potential investors like me. He said that a few people like me come by every week. When I asked about the "showroom" he went on and on how they couldn't get trucks in to do the work because of the mud and rain. (On Nov. 9th, we had only had 5 days of rain and what about all the time before that?) He said that I wouldn't be able to see anything regarding a showroom, but they dug the footing and I had no permission to walk over an look. Ok. So many red flags.
I wondered what had happened to all the investors money? The 30 million or so? Land is cheap out there in Patterson. And why didn't they pave the property and prepare it properly for a factory? Why did they not tell the truth on the webinar about the status of the Patterson factory? Why did Kelvin make it out to me that it was a fully functioning factory...? I am a real estate investor and have flipped @ 15 properties. It's not that hard to learn step by step how to construct a home or an apt building or a factory or anything. You need a plan. You need to go step by step and you need to actually follow through on your word that you are using your investors money to build the factories.... Believe me if you are considering investing, you should drive out to Patterson and see with your own eyes.
If you read through these posts, you will see that these execs are making upwards of $400k salaries and have family working there. I don't know if that is true, but after driving out to Patterson, it wouldn't surprise me. The question is where is all the investors money?
Fully Functioning Factory on a Wed at 2pm
Backside of factory where Showroom is supposed to be built
It amazes me that these people are still able to raise money. I first heard their story on Facebook over 30-months ago and was hooked. Fortunately my due dilligence uncovered numerous red flags which are all discussed on this thread. In the 2.5 years that have passed, their pitch is nearly identical today and there is little indication that they'll ever produce a product. However, they appear very successful in telling a story and getting investors to give them money. I can't imagine this ending well.
Quote from @Raisa Rodriguez:
@Frank Edwards I sent them a message through FB asking them if they've ever actually built a house. Still waiting for a reply... I sat through webinar, and then they reached out to me to invest. I said I'd only be interested in investing after I personally have built a home for the customer experience. They have no home built at this point.
Quote from @Scott Sprague:
It amazes me that these people are still able to raise money. I first heard their story on Facebook over 30-months ago and was hooked. Fortunately my due dilligence uncovered numerous red flags which are all discussed on this thread. In the 2.5 years that have passed, their pitch is nearly identical today and there is little indication that they'll ever produce a product. However, they appear very successful in telling a story and getting investors to give them money. I can't imagine this ending well.
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Real Estate Agent
I made a similar tour last June 2022 and nothing has been built in the meantime. At $200k / investor (what they told me was the minimum) they are stacking cash and not getting anything done. Some investors have been 3+ years and nothing to show.
Still curious to see if they can make progress, but this thread is several years old and basically the 'progress' is immeasurable.