Has anyone reviewed S2A modular? Just doing my diligence

Investor · Elizabeth, CO · Member since 2016 · 32 posts · 29 votes

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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Artur Madej

Investor · Orlando, FL · Member since 2016 · 6 posts · 36 votes

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.

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Maria L Varrichione
Member since 2022 · 1 post · 1 vote
4y
Quote from @Dan Heimer:

S2A modular may have a decent product but their big downfall will be the fact that they are getting money from investors with major inflated BS promises of returns.
They have been doing this for a couple of years now and soon they will be investigated for unethical and overhyped promises of crazy returns especially when investors cannot cash out like a couple of people I know who are now stuck and cannot get over $500,000 invested there and have had zero returns.
Their next call is to the SEC. Will give an update soon

Any more information from the SEC on this?
1 Reply
Corry Slade
Member since 2022 · 1 post · 1 vote
4y
@Mark Caudill any updates from S2A?
1 Reply
Wai Fung
San Francisco, CA · Member since 2008 · 65 posts · 9 votes
4y
Quote from @Corry Slade:

@Mark Caudill any updates from S2A?
I'm interested as well. Anyone else actually has bought their product?
0 Reply
SL Jackson
Member since 2022 · 1 post · 2 votes
4y
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.
2 Reply
Bob Cernohous
Member since 2022 · 1 post · 0 votes
4y
The Patterson factory has started building models. We'll see where it goes over the next few months before they open the doors to the public.
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Raymond Schmitt
Member since 2021 · 16 posts · 16 votes
4y
Anybody actually been to the Patterson site recently? Maybe I'll take a drive, it's an hour and a half away so if someone else has already gone let me know. Otherwise it might be an interesting field trip and photo shoot.
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Karen McGarrigle
Member since 2019 · 2 posts · 0 votes
4y
Thank you for all your responses on this feed. I am listening to the webinar today and was watching videos last night and before finding this post thinking they are trying to be EVERYTHING TO EVERYBODY. 101 mistake in business. I suppose their casting a wide net and seeing where their sweet spot will be. I am suspecting it will be the high end individuals building a home, especially in Cali where the building is pricey. My concerns were their not have big financial backing or VC backing and only doing crowd-type funding. I do hope they make it, this is a great concept and it appears by the post there is a need and interest. I wouldn't hold it against them for the delays in building or supply chain the last 2 years, it's been a pandemic and you all know EVERYONE's been affected by this.
Kay
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Karen McGarrigle
Member since 2019 · 2 posts · 0 votes
4y
Now this is more like it! Direct, honest of where they are and to the point! I am sure they've seen this feed and know they need to be realistic with folks!
Hello Karen,
Thank you for your interest in S2A Modular. As an update, we anticipate beginning production in the second half of 2022, once our first factory in Patterson CA is up and running as mentioned in the follow up email to you. While our team prepares for production to begin, we are finalizing finance options, and updating our itemized pricing as well as our catalogs and options to show case standard build finishes and fixtures as well as optional upgrades.
I'd be happy to make a note and add you to our waitlist for follow up once we have updated pricing in place and more information to share on what's included in the builds at those various price ranges and what services will be available.Feel free to reply to my email* directly if you have any additional questions.
*Please note, due to the high volume of requests all communications are done via email initially and responses may be delayed. We appreciate your patience and understanding.
Warmest Regards,

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Larry WeissBusiness Member
Realtor · North New Jersey · Member since 2018 · 4 posts · 4 votes
4y
I read everybody's post on S2A . My question has anybody invested with S2A factories and have they made any distributions to their investors for the Patterson factory? Why is there no online local news article or the Patterson township website for the ribbon cutting opening of the of Patterson factory?

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Scott Mcneely
Member since 2022 · 4 posts · 1 vote
4y
Quote from @Frank Edwards:

@Raisa Rodriguez - I can answer that (more or less). Their Mega-factories in California are in the process of being built (just broke ground on two locations in California), so they haven't built anything yet. They are estimating the factories will be built by the end of the year and start running in 2021.

Now estimating the end of this year, per their recent FB response to me.
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Scott Mcneely
Member since 2022 · 4 posts · 1 vote
4y
Quote from @Karen McGarrigle:

Thank you for all your responses on this feed. I am listening to the webinar today and was watching videos last night and before finding this post thinking they are trying to be EVERYTHING TO EVERYBODY. 101 mistake in business. I suppose their casting a wide net and seeing where their sweet spot will be. I am suspecting it will be the high end individuals building a home, especially in Cali where the building is pricey. My concerns were their not have big financial backing or VC backing and only doing crowd-type funding. I do hope they make it, this is a great concept and it appears by the post there is a need and interest. I wouldn't hold it against them for the delays in building or supply chain the last 2 years, it's been a pandemic and you all know EVERYONE's been affected by this.
Kay

Personally, I'm dubious. This scope of the business model seems way too big to me. I would think they would start with one factory, build a track record, then continue on a growth path.
1 Reply
Jake L.
Developer · 59937 · Member since 2018 · 6 posts · 7 votes
4y
My company builds exclusively using offsite construction methods (specifically modular), and we interact with numerous factories throughout the country. Building a factory, staffing it, and then getting modules off the line and out the door for a single location is a massive undertaking, and I don't think even the most sophisticated and successful operators in this space would ever claim they could bring 35 factories online... as in, it just isn't possible. Too good to be true, and it really doesn't even sound good. I wouldn't touch this "opportunity" with a 100 ft pole.
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Nick Lento
Member since 2022 · 5 posts · 9 votes
4y
Yes, it seems that the sheer logistics of trying to find and hire truly skilled qualified workers to staff such growth (especially when their presentation speaks of 3 shifts ) seems a daunting task.....even if the money was there. Also all of the machinery, tools etc etc etc. Having said that, the webinar is extremely impressive on a conceptual level as it promises, literally, everything I would LOVE to see as THE best way to do construction, in general, going forward. All of the best green tech is promised to the hilt. One has to wonder if the real business of the business is separating "investors" from their money or if the commitment to the vision is genuine. The promises re graphene solar and alternatives to tree-based "lumber," etc are all wonderful as these buildings would be ecologically ideal. Yes, the cliche' "too good to be true" comes to mind. On the other hand, it would be wonderful if someone like a Musk would have invested a couple of billion dollars into doing this for real instead of Twittering away his assets on stupid online advertising platforms.

Would love to have folks with far more experience and expertise than me take a look at the webinar in the light of this whole thread going back two years. If this is real, it would be super spectacular...if it's a scam these folks are brilliantly slick. Maybe something in between???

https://www.s2amodular.com/408...
1 Reply
Scott Sprague
Member since 2020 · 17 posts · 19 votes
4y
Best line ever on this thread: "the real business of the business is separating "investors" from their money"
It's remarkable that this company appears to be successfully raising funds after more than two years of near zero progress. They produced a great webinar "show" and certainly know how to get people excited (I was one of them), but it is obvious to me that these folks are more interested is selling a story and raising money versus actually accomplishing the goal of creating the product. I am fortunate that I did not "invest."
1 Reply
Robert Cunningham
Member since 2022 · 8 posts · 4 votes
4y
Most of these entries are from a few years ago. Anyone have updates? According to S2A they are working on a plant at 300 Park Center Drive in Patterson, but when I looked it up on Google earth it came up as an Amazon Warehouse. What am I missing?

Am going to drive by (about an hour from me) this weekend to see with my own eyes.

$200k minimum is no joke.
0 Reply
Raymond Schmitt
Member since 2021 · 16 posts · 16 votes
4y
Let us know, I do believe that the Patterson plant is in operation. Once the structure is built it wouldn't take long to gear up and start producing homes, within 60 days would be believable to start production but not at a sustainable rate, probably more like 8-10 months to get up to profitable production rate. The supply chain problems and factory labor are really, really the issues that are going to be problematic so it will take awhile to get things going.
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Scott Sprague
Member since 2020 · 17 posts · 19 votes
4y
Wow. This thread is still ongoing. These people have fulfilled ZERO promises. Two years ago I was provided the PPM. It was stupid... and I can't think of a more politically correct term to use. It saddens me that people are still considering funding this group.
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George Davison
Member since 2022 · 6 posts · 3 votes
4y
For what it’s worth, I was talking to a lender about modular homes and S2A is on their approved builder list. I’m going to be talking to them next week. I’ll post any information I find.
1 Reply
Gary Sewart
Raleigh, NC · Member since 2019 · 4 posts · 3 votes
4y
We've been following S2A for about a year, intrigued by the investment possibilities but skeptical of the claims and projections. We cannot see evidence yet of them delivering any homes. Does anyone know if they have? And roughly how many?
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Robert Cunningham
Member since 2022 · 8 posts · 4 votes
4y
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.
1 Reply
George Davison
Member since 2022 · 6 posts · 3 votes
4y
I've sent inquiries and only received robo-responses. They say the factory is going to open soon and that I should have a flexible timeline, which says to me they are not producing as Robert above found through the investor route.
I emailed 3 different people--the people attached to the canned emails--asking if they are producing houses and if not do they have a timeline as to when they are going to start.
And so it continues...
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Raymond Schmitt
Member since 2021 · 16 posts · 16 votes
4y
Mr. Cunningham, weren't you going to do a drive by of the Patterson plant, how did that go?
They are going to have major supply chain issues getting materials, it's a mess out there right now in the construction business. They're a new player with no track record, vendors are going to be very wary when they have established accounts that they can't service right now. Even Home Depot and Lowe's are having issues and imagine the volume of material they go through. I don't think it's impossible but they better have some established players on their team with good contacts.
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Robert Cunningham
Member since 2022 · 8 posts · 4 votes
4y
Hi Raymond,
I did drive by the plant, which is across from the Amazon fulfillment center. They have one of the round-roofed buildings up and as we flew a drone over the top, saw that they have a few of the solar panels set up in the future parking area, but no pavement, and no obvious signs of activity.

I don't think that getting materials will be a problem, as lumber prices are going down and new home starts have decreased as well. The question is how severe the recession will be as that could affect their plans.

The financial coordinator (sales person) there says that this is the final round of private funding (known as the now or never close / scarcity close) and they promise a 5x ~10x return in 2-5 years. I wonder though about the initial investors and how they feel about waiting for the last year or two with zero activity with their funds. Would love to hear from them.
0 Reply
Jake L.
Developer · 59937 · Member since 2018 · 6 posts · 7 votes
4y
At this point, I don’t see what a prospective investor wouldn’t seek out an investment opportunity with a factory that has 1) actually delivered modules and 2) has a pipeline full of repeat customers. Most factories have had customers drop out of their pipeline and will have adjusted their projections. Why not put your money with a proven entity instead of one that has promised a ton and produced nothing? Boxabl, Impresa, VBC, Autovol, Fading West, Foothold… just a few operators that come to mind that have actually delivered modules to customers’ jobsites and are way beyond the “renderings! solar panels everywhere!! sustainable!!!” stage; whether any are accepting new investors is another question.
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Raymond Schmitt
Member since 2021 · 16 posts · 16 votes
4y
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.
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