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.
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Please do your DD carefully. There are many companies out there offering similar solutions and ideas. I almost invested in a near identical scenario in Orlando a few years back. I listened to this particular webinar and it was a deja-vu experience, it was surreal. The company I evaluated in orlando claimed to be able to build "ecco homes" using pre-fabricated pieces with solar panels. They actually had a production line set up and I visited it. The concept was brilliant and exciting. The numbers looked too good to be true. However, I'm a seasoned investor and business man and have learnt over the years to be very skeptical of people with grand visions but not much of a track record, but great presentations. The company that I was seriously considering folded within a few months and there were accusations of nepotism, embezzlement, usurping of projects... the list goes on. Needless to say the house of cards collapsed and not a single house was built. I believe they are mired in lawsuits now. But oh my, what a great sales pitch they had!
Now... take a look at the webinar and look between the PR fluff. The tech guy knows his stuff but does the webinar from a bedroom with the bed right behind him. What professional person does that ? I get it that we are in a Covid induced environment and we are all working from home.... but how can you possibly think that is a positive image that gives the audience comfort? What does it say about his judgement?
A quick google search shows for S2A shows the following:
S2A Investments 2, LLC raised $300,000 from 2 investors on 2020-06-08.
S2A Investments 2, LLC Filings
| Date | Filing Type | Offered | Sold | Remaining | Min. investment | Invest. count | Exemption / Exlusions | ||
|---|---|---|---|---|---|---|---|---|---|
| 2020-06-08 | New Form D | $15,000,000 | $300,000 | $14,700,000 | $150,000 | 2 | 06c | [SEC Filing] |
S2A Investments 2, LLC raised $300,000 in total.
So they managed to get 300k by mid June.
Look up the registered address for the LLC
This is where their registered office is.
Do you really want to send your 150k investment here?
Do you really believe it will be worth 2m in 5 years?
Now... they many be legit and I may be watering the wrong tree..BUT... I could write a book on all the shenanigans and screws up I have seen in my 30 years of adult life in a business setting. In reading some of the innocent comments from fellow investors I felt very strongly in posting this comment. I've seen this play out - in a bad way - too many times.
Proceed with great caution.
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.
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.
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.
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.
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.
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.
- Larry Weiss
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.