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MJ DeMarco

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So StartEngine is raising money through equity... you can have a chance at owning part of the company! Hooray!


Red flag #1: Kevin 0leary who seems to sell his soul and his endorsement to the higher bidder.
Red flag #2: My experience with WeFunder, read here:


Sum of that thread? The platform is being used by early startup entrepreneurs as a source for 0%, free loans for an indefinite period of time.

Red flag #3: OMG, read the offering prospectus...

Of course, few people will read the fine print of the offering details....


In short, it looks like the same type of scam Wefunder allows with their companies.

They too are looking to get interest-free loans from "so called" investors which has just been renamed to "Common Stock"...

When you invest, you also relinquish your voting rights to the the majority shareholders. That's right, you get no voting rights. It also says the proceeds are going to marketing and administrative salaries. Of course, they can use the proceeds to pay the CEO and inner C-Suiters millions per year.

This also gives them the power to say, "You get your money back!" while you get no ROI regardless of company performance. And it doesn't matter if they go IPO, sold for billions, or anything...

Also, existing shareholders are able to acquire shares (likely Preferred Shares) at an undisclosed discount.

More details..
Holders of our Preferred Stock are entitled to potentially significant liquidation preferences over holders of our Common Stock if we are liquidated, including upon a sale of our company.

Holders of our outstanding Preferred Stock have liquidation preferences over holders of Common Stock being offered in this offering. This liquidation preference is paid if the amount a holder of Preferred Stock would receive under the liquidation preference is greater than the amount such holder would have received if such holder’s shares of Preferred Stock had been converted to Common Stock immediately prior to the liquidation event. Holders of Series A Preferred Stock and Series T Preferred Stock are entitled to liquidation preferences superior to Series Seed Preferred Stock. See “Securities Being Offered – Preferred Stock – Right to Receive Liquidation Distributions”. If a liquidation event, including a sale of our company, were to occur that resulted in a distribution of less than approximately $9 million, the holders of our Preferred Stock could be entitled to all proceeds of cash distributions.

More details...

Screen Shot 2021-11-13 at 9.03.55 AM.png

It appears much of the proceeds are going to "Selling Shareholders" -- in other words, they are getting an exit event without really doing anything, growing a company, and having it go public. In short, they are turning this into not only a risk-free venture, but a venture that has already paid them millions. On top of that, more fine print: a 10% - 20% bonus! Wow, what a nice return!

Once again, this appears to be just a bunch of filthy rich people taking advantage of uneducated investors to get free, indefinite 0% interest loans, while also enjoying an exit event without doing much of nothing... just like most equity financing schemes done on these platforms.

IMO, I'd avoid it.

I'm willing to bet with 90% confidence that any investors in this are subjecting themselves to a "best case scenario" of a return of capital (ROC) ... yes, the Interest Free Loan for years while the preferred shareholders make out like bandits.

Folks, in my opinion you'd better off taking that $500 and putting it into Bitcoin, or your own business and/or side hustle.
 
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Mathuin

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It's sad seeing the direction Kevin O'Leary has been going in the past few years.

Always liked him on Shark Tank & Dragon's Den.

Now, I avoid anything he's involved in like the plague.
 

doster.zach

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Sum of that thread? The platform is being used by early startup entrepreneurs as a source for 0%, free loans for an indefinite period of time.
Thanks for the write-up. They got the branding and resources to pull the wool over a lot of people's eyes.

Never would have guessed thats what StartEngine would be.
 

ericaung

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I totally knew it when you started mention abt "Mr wonderful". He seems too much advocate of this one and he expands his fans from Tiktok - making videos every day.

There're countless of fake gurus who selling courses like Grant Cardone, Dan Lok etc and talking the same thing. Grant might be a good buddy of Kevin LOL.

Yea, I completely agree with MJ. I would better off throw your money in IPO ETF instead of this dodgy platform hahaha Renaissance IPO ETF might be better alternative (Not financial advice) lol
 
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Phil Yu

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I just want to share this little discovery and this is also part of how i review these investment deals sometimes


On their about us section, it claims that the CEO Howard Marks later sold Acclaim Games to Disney. If you google Acclaim Games, What showed up paints a different story.
 
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Private Witt

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I just want to share this little discovery and this is also part of how i review these investment deals sometimes


On their about us section, it claims that the CEO Howard Marks later sold Acclaim Games to Disney. If you google Acclaim Games, What showed up paints a different story.

The story I found is he sold it to Playdom which was a subsidiary of Disney Interactive a division of Disney.
 

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Thank you for taking me down the rabbit hole of this stock offering - once I pick them up I just can't put them down.

This is why I don't understand the current state of raising capital. I'm not good at seeing the "vision" - I like to see the numbers.
Revenue for 2020 and 2019: $12.5 million and $4.3 million, respectively.
Loss for 2020 and 2019: $2.5 million and $4 million, respectively.
Stock offerings 2020 and 2019: ~$3.5 and ~$2.5 per share, respectively.

So with a 2020 net loss of $2.5 million, they are selling up to 4,888,888 shares of common stock at $13.50 per share.

There are currently authorized 25,950,000 shares of Preferred stock, and 75,000,000 shares of Common stock (for 100,950,000 total).
I'm not a financial advisor, but it looks like they think their company is worth 100,950,000 * $13.50 per share = $1,362,825,000.

$1.36 billion.

Did I do this math right? I'm an accountant, not a securities expert.
Also, don't take anything I say in this post as advice, I'm just pointing out things that look interesting to me.
Even if I did the math wrong and the fact that the Preferred shares convert to Common means that the valuation should just be based on the 75 million common shares, that's still a valuation of $1 billion.

Interesting side note: "At December 31, 2020, the total compensation cost related to nonvested awards not yet recognized was approximately $6,300,000"
 
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MJ DeMarco

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Thank you for taking me down the rabbit hole of this stock offering - once I pick them up I just can't put them down.

This is why I don't understand the current state of raising capital. I'm not good at seeing the "vision" - I like to see the numbers.
Revenue for 2020 and 2019: $12.5 million and $4.3 million, respectively.
Loss for 2020 and 2019: $2.5 million and $4 million, respectively.
Stock offerings 2020 and 2019: ~$3.5 and ~$2.5 per share, respectively.

So with a 2020 net loss of $2.5 million, they are selling up to 4,888,888 shares of common stock at $13.50 per share.

There are currently authorized 25,950,000 shares of Preferred stock, and 75,000,000 shares of Common stock (for 100,950,000 total).
I'm not a financial advisor, but it looks like they think their company is worth 100,950,000 * $13.50 per share = $1,362,825,000.

$1.36 billion.

Did I do this math right? I'm an accountant, not a securities expert.
Also, don't take anything I say in this post as advice, I'm just pointing out things that look interesting to me.
Even if I did the math wrong and the fact that the Preferred shares convert to Common means that the valuation should just be based on the 75 million common shares, that's still a valuation of $1 billion.

Interesting side note: "At December 31, 2020, the total compensation cost related to nonvested awards not yet recognized was approximately $6,300,000"

$12.5M revenue, and a 1.36 billion valuation at 13.50. LOL.

I'm not a securities analyst either, an investment advisor, or anything in that realm other than a private investor -- and this is solely my opinion, but that's what the math says.

Its a legal rip-off, targeting uneducated investors whose "best case scenario" is to get their money back after all the INSIDERS run off with millions on a company that barely has cracked $10M in revenue. What a freaking joke.

"Mr Wonderful"
 

jdm667

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12.5M revenue, and a 1.36 billion valuation at 13.50. LOL.
They must be basing the valuation on EBITDAC (C = the you know what virus).

"Yeah man, we would totally be worth $1B by now, but you know ... C virus."

Yeah, bro. Totally.
 
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MJ DeMarco

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The last time I saw an inflated arbitrary valuation like this it was called FYRE Media and run by Billy McFarland. I think he is still in prison if not for the COVID get-out-of-jail-free card.
 

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