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Smart Cups Technology is a patented delivery system platform that creates sustainable consumer packaged products by eliminating liquid through the use of novel microencapsulation printing. The company was granted a patent for its technology and previously raised $10 million.
Smart Cups, Inc. (the “Company”) conducted a Regulation Crowdfunding offering from July 7, 2023 to October 6, 2023, pursuant to which the Company issued an aggregate of 1,989,2221 shares (the “Offering”) of Class A Stock (the “Common Stock”), for $0.65 per share, for aggregate gross proceeds of $1,211,030.83 (the “Purchase Price”). Shares issued included shares to StartEngine as part of their compensation.
Since the closing of the Offering, as part of the preparation of the Company’s audited financial statements for the fiscal year ended December 31, 2022, management realized that the previously disclosed financial statement review report, which was initially issued on June 13, 2023, reflected the impact of the Company’s restructuring event on October 3, 2022 (the “Restructuring Event”), as other income during the year in the Statement of Operations. Management has subsequently concluded that this accounting treatment was incorrect and, as a result, the Company has restated its financial statements for the fiscal year ended December 31, 2022 (the “Restatement”). It also was determined that certain accounts payable pertaining to the year ending December 31, 2022 were previously excluded from the reviewed financial statements. These payables had the impact of increasing operating expenses in the amount of $100,189 and increasing capitalized property and equipment in the amount of $596,875.
The overall impact of these Restatement changes was to reduce 2022 Other Non-operating Income by the amount of $9,782,350, and reduce Members’ Equity by the amount of $100,189, and increase capitalized equipment by the amount of $596,875 as of December 31, 2022. The further impact was to increase net cash used by investing activities by $10,186,244 since the previous Statement of Cash Flows accounted for the Restructuring Event as a cash inflow, while in fact it was a nonmonetary exchange.
In light of the Restatement, the Company is offering to cancel investors’ purchase of Common Stock and refund their portion of the Purchase Price, not including any bonus shares, plus interest at the current statutory rate. Certain Investors were eligible to receive Bonus Shares depending on when they invested, how much they invested, whether or not they reserved shares in the Company’s testing the waters campaign and whether or not they were enrolled in the StartEngine OWNer’s Bonus Program. Investors received the highest percentage they were eligible for among the time and amount bonuses. The Loyalty Bonus and the StartEngine Owner’s bonus stacked on top of the Time/Amount bonuses. This means that investors were eligible for a maximum bonus share percentage of 35% (i.e. 15% from Time/Amount, 10% from Loyalty and 10% from Owner’s Bonus). Because these Bonus Shares were received in addition to the Common Stock purchased, if you accept this offer you will be refunded the amount you invested and will forfeit the Bonus Shares. In summary, the investors who accept this offer will be repaid the amount they initially paid for the Common Stock and not necessarily $0.65 x the total shares received by the investor. We refer to this offer as the “Rescission Offer.”
Under the Rescission Offer, the Company is offering to cancel investors’ purchase of Common Stock by repurchasing those shares at a total price equal to their respective portion of the Purchase Price (as explained above), plus interest at the applicable state mandated statutory rate (calculated from the date you purchased the Common Stock through the expiration date of this Rescission Offer), and refund that amount to the investor (the “Refunded Money”) to the account the investor designates on the Rescission Election Form. The Company, in its sole discretion, will remit the Refunded Money via wire or ACH.
We encourage you to review the risk factors included in the Company’s filing found here.
The Rescission Offer will expire at 5:00 P.M., Eastern Standard Time on February 28, 2024.
HOW TO ACCEPT OR REJECT THIS OFFER
Acceptance of the Rescission Offer is optional for each participant who purchased Common Stock in the Offering. After reviewing this offering, you may decide that it is in your best interest to either accept or reject this offer. To accept this Rescission Offer, you must complete and submit the Rescission Election Form found here [URL]. A link to this form has also been included in the rescission notification email received by investors in the Offering.
If you decide to reject this offer, and keep your shares of Common Stock, you do not need to take any action.
If you decide to accept this offer, please note that once you have submitted your Form to the Company, your decision to accept the Rescission Offer is final and may not be changed.
If you do not complete the Form and return it as instructed above, you will be deemed to have rejected the offer and will remain a shareholder of the Company.
(1) Does not include 3% of shares sold in the Offering to be received by StartEngine Capital LLC as compensation. The 3% compensation will not include shares repurchased by investors in this rescission offering.”
Overview
About
Terms of Original Offering
REASONS TO INVEST
- Our revolutionary packaging enables liquidless transportation of consumer packaged products, reducing carbon emissions. Our UCLA, collaboration showcases our transformative tech, featuring 90% less packaging & is 57% lower global warming potential.
- Smart Cups has gained popularity since its launch and has been featured in major outlets such as Time Magazine, Gordon Ramsay’s Food Stars on Fox, ABC 7, and Forbes.
- Smart Cups is led by CEO Chris Kanik (25+ yrs scientific research), COO Owen Dolan (10+ yrs medical device industry), and Director of Engineering Bill Davidson (8 patents in aerospace & nano-technologies).
Smart Cups, Inc. is in discussions with lenders to potentially take out one or more new loans which may occur while this Regulation Crowdfunding offering is live. For further information on the details of the contemplated loan or loans, please see the Risk Factors and Indebtedness sections of the Offering Memorandum which is linked below.
THE PITCH
Introducing a Truly Sustainable Printed Beverage
At Smart Cups Technology, we offer a revolutionary solution to the problem of excessive packaging and shipping waste associated with traditional liquid-based products. Commercially known as the “World’s First Printed Beverage,” our patented delivery system platform creates sustainable consumer packaged products by eliminating liquid through the use of novel microencapsulation printing. With patented technology, over $18 million already raised, and features in major publications such as Time Magazine, Gordon Ramsay’s Food Stars on Fox, ABC 7, and Forbes, we are ready to reduce economical and environmental costs with our innovative line of products.
THE PROBLEM & OUR SOLUTION
Increased Shipping Efficiency with 3-D Printing
THE MARKET & OUR TRACTION
Reshaping a Major, Fast-Growing Industry with Our Patented Technology
The global functional beverages market size was valued at $140.87 billion in 2022 and is predicted to grow to $279.4 billion by 2030 at a CAGR of 8.94% (source). We plan to disrupt the functional beverage market by enabling companies to introduce new and improved functional beverages with enhanced flavors, dosing accuracy, and convenience at reduced shipping costs, all the while lowering environmental impacts.
Since our launch, we have achieved the following milestones:
- Built a portfolio of patents for our innovative technology
- Raised $18 million in previous funds
- Won multiple awards, including Time Magazine’s Best 100 Innovations of 2021 and California Small Business of the Year in 2020
- Featured in Forbes, ABC 7, Joe Rogan, and our CEO Chris Kanik represented Smart Cups on Gordon Ramsay’s Food Stars
WHY INVEST
A Disruptive Innovation with a Positive Global Impact
ABOUT
Team
Chris Kanik
Founder, CEO, Secretary,
Treasurer, Director
Dynamic leader with unconventional 25+ years of wide experience in science research, consulting for CPG and Pharma companies, product development, formulation, product branding, launch strategies, and contract negotiation.
Chris has extensive technical, chemical, and engineering experience since joining the Stevens Institute of Technology at age 12 and the Nutritional Sciences Department at Rutgers University at the age of 14.
Chris currently devotes nearly all of his working hours towards Smart Cups and spends less than 2 hours per week working as Head of Science and Formulation for TR Processing.
Owen Dolan
Chief Operating Officer
Bill Davidson
Director of Engineering
Matthew Bottomly
Intellectual Property Attorney
Terms of Original Offering
Overview
Breakdown
| Most Recent Fiscal Year-End | Prior Fiscal Year-End | |
|---|---|---|
| Total Assets | $7,100,877 | $15,815,254 |
| Cash & Cash Equivalents | $90,920 | $60,750 |
| Accounts Receivable | $0 | $0 |
| Short-Term Debt | $330,747 | $90,007 |
| Long-Term Debt | $1,291,300 | $0 |
| Revenue & Sales | $216,510 | $391,250 |
| Costs of Goods Sold | $361,802 | $360,506 |
| Taxes Paid | $0 | $0 |
| Net Income | $7,287,553 | -$2,259,404 |
A crowdfunding investment involves risk. You should not invest any funds in this offering unless you can afford to lose your entire investment. In making an investment decision, investors must rely on their own examination of the issuer and the terms of the offering, including the merits and risks involved. These securities have not been recommended or approved by any federal or state securities commission or regulatory authority. Furthermore, these authorities have not passed upon the accuracy or adequacy of this document. The U.S. Securities and Exchange Commission does not pass upon the merits of any securities offered or the terms of the offering, nor does it pass upon the accuracy or completeness of any offering document or literature. These securities are offered under an exemption from registration; however, the U.S. Securities and Exchange Commission has not made an independent determination that these securities are exempt from registration.
What is a Equity Offering?
*Maximum Number of Shares Offered subject to adjustment for bonus shares. See Bonus info below.
Voting Rights of Securities Sold in this Offering
Voting Proxy. Each Subscriber shall appoint the Chief Executive Officer of the Company (the “CEO”), or his or her successor, as the Subscriber’s true and lawful proxy and attorney, with the power to act alone and with full power of substitution, to, consistent with this instrument and on behalf of the Subscriber, (i) vote all Securities, (ii) give and receive notices and communications, (iii) execute any instrument or document that the CEO determines is necessary or appropriate in the exercise of its authority under this instrument, and (iv) take all actions necessary or appropriate in the judgment of the CEO for the accomplishment of the foregoing. The proxy and power granted by the Subscriber pursuant to this Section are coupled with an interest. Such proxy and power will be irrevocable. The proxy and power, so long as the Subscriber is an individual, will survive the death, incompetency and disability of the Subscriber and, so long as the Subscriber is an entity, will survive the merger or reorganization of the Subscriber or any other entity holding the Securities. However, the Proxy will terminate upon the closing of a firm-commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933 covering the offer and sale of Common Stock or the effectiveness of a registration statement under the Securities Exchange Act of 1934 covering the Common Stock.
Investment Incentives & Perks*
Perks:
Time-Based Perks
Friends and Family – Invest within the first 72 hours and receive 15% bonus shares
Super Early Bird – Invest within the first week and receive 10% bonus shares
Early Bird Bonus – Invest within the first two weeks and receive 5% bonus shares
Volume-Based Perks
Tier 1 Perk
Invest $500+ and receive 10-pack of Smart Cups Energy
Tier 2 Perk
Invest $1,000+ and receive Smart Cups Energy Bundle
Tier 3 Perk
Invest $5,000+ and receive Smart Cups Energy Bundle, Hat, T-Shirt and Smart Keeper
Tier 4 Perk
Invest $10,000+ and receive Smart Cups Energy Bundle, Hat, T-Shirt and Smart Keeper Plus Zoom Call with Founder Chris Kanik + 5% bonus shares
Tier 5 Perk
Invest $25,000+ and receive Everything above plus first ones to receive new products before they are launched + 10% bonus shares
Tier 6 Perk
Invest $50,000+ and receive Everything above Smart Facility Tour with Chris Kanik. Opportunity to experience all Smart Cups Technology R&D pipeline applications first hand + 15% bonus shares
Loyalty Bonus | 10% Bonus Shares
All who reserve their shares in this Reservations Page will receive 10% bonus shares at the time of Smart Cups’ launch.
*In order to receive perks from an investment, one must submit a single investment in the same offering that meets the minimum perk requirement. Bonus shares from perks will not be granted if an investor submits multiple investments that, when combined, meet the perk requirement. All perks occur when the offering is completed.
*Crowdfunding investments made through a self-directed IRA cannot receive perks due to tax laws. The Internal Revenue Service (IRS) prohibits self-dealing transactions in which the investor receives an immediate, personal financial gain on investments owned by their retirement account. As a result, an investor must refuse those perks because they would be receiving a benefit from their IRA account.
The 10% StartEngine Owners’ Bonus
Smart Cups, Inc. will offer 10% additional bonus shares for all investments that are committed by investors that are eligible for the StartEngine Crowdfunding Inc. OWNer’s bonus.
This means eligible StartEngine shareholders will receive a 10% bonus for any shares they purchase in this offering. For example, if you buy 1,000 shares of Class A Common Stock at $0.65 / share, you will receive 1,100 shares Class A Common Stock, meaning you’ll own 1,100 shares for $650. Fractional shares will not be distributed and share bonuses will be determined by rounding down to the nearest whole share.
This 10% Bonus is only valid during the investors eligibility period. Investors eligible for this bonus will also have priority if they are on a waitlist to invest and the company surpasses its maximum funding goal. They will have the first opportunity to invest should room in the offering become available if prior investments are canceled or fail.
Investors will receive the highest single bonus they are eligible for among the bonuses based on the amount invested and time of offering elapsed (if any). Eligible investors will also receive the Owner’s Bonus and the Loyalty Bonus in addition to the aforementioned bonus.
Irregular Use of Proceeds
The Company might incur Irregular Use of Proceeds that may include but are not limited to the following over $10,000: Vendor payments. Salary payments made to one’s self, a friend or relative.
NEW UPDATES
Dear Investors,
I hope this message finds you well and thriving. Once again, I extend my deepest gratitude for your support and belief in our vision here at Smart Cups.
Since the finale of Food Stars, our journey has been nothing short of exhilarating. The response has been overwhelming, and I am thrilled to share with you this video link that captures just how exciting things have been for us: https://www.youtube.com/watch?v=9rnW-_X4f3o&t=6s
As we gear up for what promises to be an eventful year ahead, I’m excited to announce two major launches on the horizon. Firstly, we’re preparing for the global launch of our printed pet bowls, marking a significant milestone in our journey. Additionally, we’re gearing up for the next round on StartEngine, which holds immense promise for the future of Smart Cups.
I understand that many of you are eagerly awaiting the perks from your investments, and I want to assure you that we’re diligently working on getting them out to you. The outreach since Food Stars coupled with the handful of viral videos of us distributing printed foods to homeless communities has generated overwhelming responses, which is great especially for investors like you. Your patience and understanding during this process are truly appreciated. If you haven’t received your perks yet, please know that we’re working tirelessly to ensure they reach you as soon as possible.
I want to express my sincere appreciation for your continued support and belief in Smart Cups. Together, we’re paving the way for innovation and excellence, and I couldn’t be more excited about what the future holds.
Warmest regards,
Chris Kanik
CEO, Smart Cups