UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, ~~2023~~2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission file number: 000-56415

StartEngine Crowdfunding, Inc.

(Exact Name of Registrant as Specified in Its Charter)


Delaware		46-5371570
State or Other Jurisdiction of Incorporation or Organization		I.R.S. Employer Identification No.

4100 West Alameda Avenue, 3^rd Floor, Burbank, CA		91505
Address of Principal Executive Offices		Zip Code

Registrant’s telephone number, including area code (800) 317-2200

Securities registered pursuant to Section 12(b) of the Act:

None.

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $0.00001 par value

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒

Note - Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Exchange Act from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☐		Accelerated filer ☐
Non-accelerated filer ☒		Smaller reporting company ☒
		Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter.

Note.-If a determination as to whether a particular person or entity is an affiliate cannot be made without involving unreasonable effort and expense, the aggregate market value of the common stock held by non-affiliates may be calculated on the basis of assumptions reasonable under the circumstances, provided that the assumptions are set forth in this Form.

The aggregate market value of the voting and non-voting stock held by non-affiliates of the registrant as of ~~December~~June 3130, ~~2023~~2024, the last business day of the registrant’s most recently completed ~~fourth~~second fiscal quarter was $~~672~~673,~~898~~709,~~700~~150 based upon the per share price in our current offering under Regulation A.

As of ~~April~~March 1531, ~~2024~~2025, the registrant had 34704,~~863~~783,~~194~~714 shares of Common Stock, ~~482~~9,~~104~~642,080 shares of Series T Preferred Stock, 10204,~~240~~810,~~536~~720 shares of Series Seed Preferred Stock and 9185,~~272~~440,~~044~~880 shares of Series A Preferred Stock

DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933. The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1980).

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StartEngine Crowdfunding, Inc.

Form 10-K

TABLE OF CONTENTS

Note About Forward-Looking Statements


PART I		4
Item 1.	Business	4
Item 1A.	Risk Factors	14
Item 1B.	Unresolved Staff Comments	21
Item 1C	Cybersecurity	21
Item 2.	Properties	21
Item 3.	Legal Proceedings	2221
Item 4.	Mine Safety Disclosures	22
PART II		22
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	22
Item 6.	[Reserved]	2423
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2423
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	3332
Item 8.	Financial Statements and Supplementary Data	F-1
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosures	33
Item 9A.	Controls and Procedures	33
Item 9B.	Insider Trading Arrangement	35
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	35
PART III		36
Item 10.	Directors, Executive Officers and Corporate Governance	36
Item 11.	Executive Compensation	38
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	4142
Item 13.	Certain Relationships and Related Transactions, and Director Independence	4243
Item 14.	Principal Accountant Fees and Services	43
PART IV		4344
Item 15.	Exhibit and Financial Statement Schedules	4344
Item 16.	Form 10-K Summary
	Signatures	46

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NOTE ABOUT FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains forward-looking statements. All statements contained in this Annual Report on Form 10-K other than statements of historical fact, including statements regarding our future results of operations and financial position, our business strategy and plans, and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in Part I, Item 1A, “Risk Factors” in this Annual Report on Form 10-K. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this Annual Report on Form 10-K may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

Unless expressly indicated or the context requires otherwise, the terms “StartEngine,” “Company,” “we,” “us,” and “our” in this document refer to StartEngine Crowdfunding, Inc., a Delaware corporation, and, where appropriate, its subsidiaries.

On May 6, 2024, StartEngine Crowdfunding Inc. split its designated “Common Stock” and “Preferred Stock” on a 20 for 1 basis. The total number of shares of Common Stock that the Company is authorized to issue was increased to 1,500,000,000 shares after the split. The total number of shares of Preferred Stock that the Company is authorized to issue was increased to 519,000,000 after the split. Accordingly, all share and per share amounts for all periods presented this Annual Report on Form 10-K have been adjusted retroactively, where applicable, to reflect this stock split.

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PART 1

Item 1.Business

StartEngine Crowdsourcing Inc. was incorporated in the State of Delaware on March 19, 2014. On May 8, 2014, the company changed its name to StartEngine Crowdfunding, Inc.

StartEngine aims to revolutionize the startup financing model by helping both accredited and non-accredited investors invest in private companies on a public platform. In 2015, StartEngine Crowdfunding began operating under Title IV of the JOBS Act, allowing private companies to advertise the sale of their stock to both accredited and non-accredited investors under Regulation A, and under Title II of the JOBS Act, which permits offerings to accredited investors to be advertised under Rule 506(c) of Regulation D. StartEngine continues to expand the breadth of its offerings in order to better serve its mission. Operations expanded in 2016, as Regulation Crowdfunding, adopted in response to Title III of the JOBS Act, went into effect and we offered services to companies raising money under Regulation Crowdfunding. Beginning in December 2017, StartEngine began offering transfer agent services through one of its subsidiaries. In June 2019, StartEngine Primary LLC was approved for membership as a broker-dealer with FINRA and offers broker-dealer services to companies selling securities in Regulation A and Regulation D offerings and operates our alternative trading system.

StartEngine’s most recent addition to its family of services is StartEngine Private. StartEngine Private provides accredited investors the opportunity to purchase membership interests in funds (“SE Funds”) which own shares of venture capital backed, late-stage private companies.

StartEngine offers its services both through its website as well through its iOS application which launched in 2021.

StartEngine Crowdfunding performs much of its work through its subsidiaries, including the following six wholly owned direct operating subsidiaries:

● StartEngine Capital LLC (“StartEngine Capital”), a funding portal registered with the SEC and a member of the Financial Industry Regulatory Authority (“FINRA”), operates under Title III of the JOBS Act, which introduced Regulation Crowdfunding.

● StartEngine Secure LLC (“StartEngine Secure”), a transfer agent registered with the SEC that was formed on December 12, 2017.

●

StartEngine Primary LLC (“StartEngine Primary”), a company formed on October 12, 2017, a registered broker-dealer, which was approved to act as alternative trading system on April 16, 2020.

● StartEngine Assets LLC (“StartEngine Assets”), a company formed on May 18, 2020, for the purpose of securitizing assets.

●

StartEngine Private Manager LLC (“StartEngine Private Manager”), a company formed on August 3, 2023 for the purpose of managing all StartEngine Private offerings.

●

StartEngine Secure LLC (“StartEngine Secure”), a transfer agent registered with the SEC that was formed on December 12, 2017.

●

StartEngine Assets LLC (“StartEngine Assets”), a company formed on May 18, 2020, for the purpose of securitizing assets.

●

StartEngine Adviser LLC (“StartEngine Adviser”), a company formed on August 3, 2023 for the purpose of being the organizer and Exempt Reporting Adviser to all StartEngine Private offerings.

On● ~~May 5, 2023,~~ StartEngine ~~Crowdfunding,~~Capital ~~Inc.~~LLC (“StartEngine”) completed an agreement to acquire substantially all of the assets of the SeedInvest business as conducted by Circle Internet Financial Limited through its subsidiary Pluto Holdings, LLC, a Delaware limited liability company (“Pluto HoldingsCapital”) ~~and through SI Securities~~, ~~LLC,~~ a ~~New~~funding ~~York~~portal ~~limited~~registered ~~liability~~with ~~company~~the ~~(“SI~~SEC ~~Securities”),~~ and ~~SeedInvest Technology, LLC,~~ a ~~New~~member ~~York limited liability company, each a wholly-owned subsidiary~~ of ~~Pluto Holdings (“SeedInvest Technology,” collectively, with~~ the ~~assets~~Financial ~~acquired~~Industry ~~from~~Regulatory ~~Pluto~~Authority ~~Holdings and SI Securities,~~ (“~~SeedInvest~~FINRA”)., ~~The~~operates ~~total~~under ~~consideration~~Title ~~for~~III ~~the purchase is 960,000 shares~~ of ~~StartEngine’s~~the ~~common~~JOBS ~~stock~~Act, which ~~based~~introduced ~~on StartEngine’s current~~ Regulation ~~A offering price of $25 per share would be valued at $24 million~~Crowdfunding.

On May 5, 2023, StartEngine Crowdfunding, Inc. (“StartEngine”) completed an agreement to acquire substantially all of the assets of the SeedInvest business as conducted by Circle Internet Financial Limited through its subsidiary Pluto Holdings, LLC, a Delaware limited liability company (“Pluto Holdings”) and through SI Securities, LLC, a New York limited liability company (“SI Securities”), and SeedInvest Technology, LLC, a New York limited liability company, each a wholly-owned subsidiary of Pluto Holdings (“SeedInvest Technology,” collectively, with the assets acquired from Pluto Holdings and SI Securities, “SeedInvest”). The total consideration for the purchase is 19,200,000 shares of StartEngine’s common stock, which based on StartEngine’s most recent Regulation A offering price of $1.25 per share would be valued at $24 million.

The assets of the SeedInvest business include SeedInvest Technology, LLC and substantially all the assets related to owning and operating the crowdfunding platform at www.seedinvest.com.

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The sellers will retain among other items: their broker-dealer regulatory approvals and licenses; equity interests, convertible notes, SAFEs and all other investment contracts received, and in certain cases to be received, in SeedInvest portfolio companies; and receivables related to current and certain contemplated offerings. For details, see Exhibit 10.3 in the Exhibit Index.

Principal Products and Services

Offerings: Depending on the type of offering being made, we currently operate as a technology platform connecting issuers and investors, as a broker-dealer and as a Regulation Crowdfunding funding portal. We facilitate the following types of offerings that are exempt from registration under the Securities Act:

● Regulation A Offerings: Through StartEngine Primary, our broker-dealer, we host Regulation A offerings on our platform. These companies are seeking to raise anywhere from $100,000 to $75 million and we provide an array of services, including acting as a broker-dealer, assisting with due diligence, custodial accounts and coordinating vendors.

● Regulation Crowdfunding Offerings: Through StartEngine Primary, our broker-dealer, , we host Regulation Crowdfunding offerings. In 2024, the Company decided to host future issuances of Regulation Crowdfunding raises within the broker-dealer entity for regulatory and compliance reasons. We believe this will positively affect the future issuances of Regulation Crowdfunding raises with no additional cost incurred. Any raises initiated prior to this decision, our currently hosted by StartEngine Capital, our funding portal registered with the SEC and FINRA,. weCompanies ~~host~~utilizing Regulation Crowdfunding ~~offerings. These companies~~ are seeking to raise anywhere from $10,000 to $5 million, and we also provide an array of services permitted by Regulation Crowdfunding, including campaign page design services, marketing consulting services, assisting with due diligence, custodial accounts, and coordinating vendors.

●

Rule 506(c) Offerings: Through StartEngine Crowdfunding and StartEngine Primary, we host offerings under Rule 506(c) of Regulation D. Accredited investors are allowed to invest in these offerings and we host these offerings either on a stand-alone basis or concurrently with a Regulation Crowdfunding offering. Under Rule 506(c), companies can use general solicitation to attract investors and there is no limit to the amount of money that can be raised. Therefore, companies engaged in a concurrent Regulation Crowdfunding offering can also raise additional funds from accredited investors providing they comply with the requirements of each exemption.

StartEngine ~~OWNers Bonus~~Private: The ~~general~~Company ~~public~~provides ~~can~~accredited ~~become~~investors ~~members~~the opportunity to purchase membership interests in funds (“SE Funds”) which own shares of venture capital backed, late-stage private companies (the “underlying securities”) via its StartEngine ~~OWNers~~Private ~~bonus~~product ~~program~~offering. onThe SE Funds are managed by StartEngine’s ~~website~~Private ~~for~~Manager ~~$275~~LLC ~~per~~and ~~year~~advised by StartEngine Adviser LLC. ~~The~~StartEngine ~~OWNers~~Adviser ~~Bonus~~LLC ~~entitles~~is ~~members~~an toexempt ~~10%~~reporting ~~bonus~~adviser ~~shares~~under onRule ~~all~~203(m)-1 ~~investments~~under ~~they~~the ~~make~~Investment Advisers Act of 1940. The SE Funds sell their membership interests in offerings onthat ~~StartEngine~~are ~~where~~exempt from registration under Section 4(a)(2) of the ~~issuer~~Securities ~~chooses~~Act of 1933 and specifically Regulation D promulgated thereunder. Such offerings are marketed to ~~participate~~accredited ininvestors by the ~~program.~~Company’s ~~Issuers~~FINRA-member ~~using~~and ~~our~~SEC-registered broker-dealer ~~and~~subsidiary, ~~funding~~StartEngine ~~portal~~Primary ~~services~~LLC. ~~can~~The ~~choose~~Company generates revenue to ~~participate~~the inextent ~~our~~it ~~OWNers~~is ~~bonus~~able ~~program~~to ~~with~~sell ~~respect~~underlying securities to an SE Fund. The Company treats the ~~offerings~~amount ~~they~~it ~~are~~receives ~~making~~for ~~under~~selling ~~Regulation~~underlying Asecurities oras ~~Regulation~~revenues, CFand the acquisition cost related such underlying securities as cost of revenues. There ~~Those~~are ~~issuers~~several ~~will~~factors ~~grant~~that ~~bonus~~are ~~shares~~used in ~~their~~pricing ~~offerings~~the securities of an SE Fund, including but not limited to: the ~~members~~price (including transaction costs) the securities were purchased by the SE Fund’s affiliate, the time spent and costs involved by the SE Fund’s management team including those related to identifying, verifying, acquiring, and managing the investments, sales of the ~~StartEngine~~underlying ~~OWNers~~securities on ~~bonus~~the ~~program.~~secondary ~~The~~market, ~~bonus~~as ~~shares~~well as considerations are ~~included~~given for the illiquidity of private investments compared to publicly traded securities and investor interest in the ~~offering~~SE ~~statements~~Fund’s ~~filed~~securities. The Company also believes that there is value added by allowing investors to have an economic interest in these companies with ~~the~~less ~~SEC,~~hassle and ~~therefore~~smaller ~~offered~~denominations ~~and~~than ~~sold~~available in ~~reliance~~secondary onmarkets. Additionally, ~~Regulation~~consideration Ais oralso ~~Regulation~~given CFto broader economic and market conditions that might impact the valuation of private companies, ~~respectively~~such as industry trends, regulatory changes, and economic cycles.

StartEngine ~~Secure:~~Venture ~~Through~~Club ~~our~~(formerly ~~wholly~~OWNers ~~owned~~Bonus): ~~subsidiary,~~The ~~StartEngine~~general ~~Secure,~~public wecan ~~offer~~become ~~transfer~~members ~~agent~~of ~~services.~~the ~~These~~StartEngine ~~services~~Venture ~~include~~Club ~~tracking~~program ~~each~~on ~~investor~~StartEngine’s ~~account~~website ~~information~~for ~~and~~$275 ~~the~~per ~~amount~~year. ofThe ~~securities~~Venture ~~purchased~~Club ~~and~~entitles ~~date~~members ~~purchased.~~to ~~Our~~10% ~~goal~~bonus isshares toon ~~provide~~all ainvestments ~~seamless~~they ~~service~~make toin ~~our~~offerings ~~client~~on ~~companies.~~StartEngine ~~Our~~where ~~intent~~the isissuer ~~for~~chooses ~~our~~to ~~transfer~~participate ~~agent~~in tothe ~~have~~program. ~~agreements~~Issuers ~~with~~using our ~~various~~broker-dealer ~~entities~~and tofunding ~~allow~~portal itservices tocan ~~collect~~choose ~~information~~to onparticipate ~~investors~~in ~~and~~our ~~their~~Venture ~~investments~~Club ~~through~~program anwith ~~API~~respect ~~(application~~to ~~programming~~the ~~interface).~~offerings ~~Therefore,~~they ~~when~~are amaking ~~company~~under ~~raises~~Regulation ~~money~~A onor ~~StartEngine,~~Regulation ~~our~~CF. ~~transfer~~Those ~~agent~~issuers will begrant ~~notified~~bonus ~~and~~shares ~~sent~~in ~~the~~their ~~investor~~offerings ~~information~~to ~~and~~members of the ~~investment~~StartEngine ~~details~~Venture Club program. The ~~transfer~~bonus ~~agent~~shares ~~will~~are ~~then~~included ~~capture~~in ~~this~~the ~~information~~offering ~~into~~statements ~~its~~filed ~~redundant~~with the SEC, and ~~secure~~therefore ~~database~~offered ~~hosted~~and sold in ~~the~~reliance ~~cloud~~on ~~and~~Regulation ~~encrypt~~A ~~for~~or ~~security~~Regulation ~~purposes~~CF, respectively.

StartEngine Premium: For our Regulation Crowdfunding campaigns, we offer marketing services branded under the name “StartEngine Premium”. For an additional fee, our team will support companies with the design of their campaign pages, provide a designated account consultant to guide a company throughout the campaign creation process, and assist a company in developing a marketing strategy based on best practices and analytics from previous successful campaigns.

StartEngine Primary: By adding broker-dealer services to the mix of our offerings, we are able to take a more active role in the promotion and sale of securities in Regulation A, Regulation Crowdfunding and Regulation D offerings hosted on our platforms. Further, we are able to facilitate the secondary trades on StartEngine Secondary, see (-”StartEngine Secondary” below). StartEngine Primary received approval for a range of business lines to allow us to act as the broker-dealer for the private placements of securities (which includes securities sold under Regulation D), to effect transfers and sales on StartEngine Secondary, and to be able to receive referral fees and commissions for sales of securities. Further, to expend our services that we can offer our clients, we filed a continuing membership application with FINRA (“CMA”) to be a clearing or “carrying” broker-dealer so in addition to handling a client’s orders to buy and sell securities we can also maintain custody of a client’s securities and other assets (e.g. cash in their account). Our broker-dealer

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~~registration~~StartEngine ~~became~~Secure: ~~effective~~Through inour ~~June~~wholly ~~2019~~owned subsidiary, StartEngine Secure, we offer transfer agent services. These services include tracking each investor’s account information and the amount of securities purchased and date purchased. Our goal is to provide a seamless service to our ~~CMA~~client companies. Our intent is for ~~become~~our transfer agent to have agreements with our various entities to allow it to collect information on investors and their investments through an API (application programming interface). Therefore, when a ~~carrying~~company ~~broker-dealer~~raises ~~was~~money ~~accepted~~on atStartEngine, our transfer agent will be notified and sent the ~~end~~investor ofinformation ~~September~~and ~~2021~~the investment details. The transfer agent will then capture this information into its redundant and secure database hosted in the cloud and encrypt for security purposes.

StartEngine Primary: By adding broker-dealer services to the mix of our offerings, we are able to take a more active role in the promotion and sale of securities in Regulation A, Regulation Crowdfunding and Regulation D offerings hosted on our platforms. Further, we are able to facilitate the secondary trades on StartEngine Secondary, see (”StartEngine Secondary” below). StartEngine Primary received approval for a range of business lines to allow us to act as the broker-dealer for the private placements of securities (which includes securities sold under Regulation D), to effect transfers and sales on StartEngine Secondary, and to be able to receive referral fees and commissions for sales of securities. Further, to expend our services that we can offer our clients, we filed a continuing membership application with FINRA (“CMA”) to be a clearing or “carrying” broker-dealer so in addition to handling a client’s orders to buy and sell securities we can also maintain custody of a client’s securities and other assets (e.g. cash in their account). Our broker-dealer registration became effective in June 2019, and our CMA for become a carrying broker-dealer was accepted at the end of September 2021.

StartEngine Secondary: The goal of the StartEngine Secondary platform is to increase liquidity for shares sold in Regulation A, Regulation Crowdfunding and Regulation D offerings. We facilitate the transfer and sale of these shares by creating an alternative trading system (“ATS”) to allow for secondary trades. Sales of shares sold under Regulation A on the StartEngine platform are permitted to be quoted immediately, while holders of shares sold under Regulation Crowdfunding and Regulation D will need to wait one year in order to comply with the applicable transfer restrictions to participate on the platform. After receiving the requisite FINRA approval to operate as an ATS, StartEngine Primary launched its ATS, branded as “StartEngine Secondary” on May 18, 2020.

StartEngine Secondary has a limited operating history, and even though over 400 issuers have signed to be quoted on this platform, only twenty-five companies have been quoted on this platform to date, including the Company itself. Currently, for StartEngine Secondary, we generate revenues by charging trade commissions to the sellers of the shares and we intend to generate revenues by charging initial and annual quotation fees.

StartEngine Assets: The goal of StartEngine Assets is to provide retails investors the opportunity to invest in various asset classes - including real estate, wine, fine art, trading cards, watches, and comics. StartEngine Collectibles Fund I LLC is geared at securitizing collectible assets and selling shares to the public. As such, we previously sold securities under StartEngine Collectibles Fund I LLC , including shares in series for wine, fine art, trading cards, watches and comics, and as of September 6, 2023 is no longer selling securities. StartEngine Assets LLC had also purchased assets to securitize but does not intend to purchase anything further.

StartEngine Private: The Company provides accredited investors the opportunity to purchase membership interests in funds (“SE Funds”) which own shares of venture capital backed, late-stage private companies via its StartEngine Private product offering. The SE Funds are managed by StartEngine Private Manager LLC and advised by StartEngine Adviser LLC. SE Adviser is an exempt reporting adviser under Rule 203(m)-1 under the Investment Advisers Act of 1940. The SE Funds sell their membership interests in offerings that are exempt from registration under Section 4(a)(2) of the Securities Act of 1933 and specifically Regulation D promulgated thereunder. Such offerings are marketed to accredited investors by the Company’s FINRA-member and SEC-registered broker-dealer subsidiary, StartEngine Primary LLC.

Support Services

Our Company is focused on our core competencies and therefore we surround ourselves with third party companies who help us accomplish our non-core tasks.

We rely on the following companies for outsourced services:

●

Bryn Mawr Trust Company: Escrow Services

●

Kingdom Trust Company: Escrow Services

●

Amazon AWS: Cloud hosting

●

Google Business: Cloud email and applications

Market

Regulation A

Amended Regulation A became effective June 19, 2015. According to the SEC, the size of the Regulation A market slightly contracted to approximately $1.5 billion from July 1, 2022 to June 30, 2023 from approximately $1.8 billion for the period from July 1, 2021 to June 30, 2022.

As of April 15, 2024, we have hosted 75 Regulation A offerings, which have raised a total of approximately $282 million on our platforms, not including five offerings for StartEngine itself and 33 offerings of series of companies managed by StartEngine Assets, LLC. We believe the market for Regulation A will continue to grow as more companies become aware of the ability to raise capital

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through crowdfunding platforms. Because it permits a maximum raise of $75 million each 12 months, we believe this rule is well suited for small and midsize businesses. We have seen the demand increase significantly between 2019 and 2022, while contracting in 2023. Excluding offerings for StartEngine itself and its affiliates, we have hosted eight offerings in 2019, 13 offerings in 2020, 17 offerings in 2021, 22 offerings in 2022 and 13 offerings in 2023. The number of offerings hosted is based on the year launched and do not include offerings for StartEngine itself and the offerings of series for StartEngine Collectibles Fund I LLC. We believe the recent administrative change to increase the maximum offering amount from $50 million to $75 million and the change to permit SEC-reporting companies to make offerings in reliance on Regulation A has been and will continue to increase the size of the market and make Regulation A a more appealing form of capital formation for some companies. We expect to continue to increase the number of companies who list their offerings on our platform, although we are likely to encounter competition from other platforms and from companies who seek to raise funds online without using a platform. Further, our broker-dealer capabilities will enable us to increase the scope of services offered to our clients.Market

Regulation A

Amended Regulation A became effective June 19, 2015. According to the SEC, the size of the Regulation A market remained at approximately $1.5 billion for the periods from July 1, 2022 to June 30, 2023 and July 1, 2023 to June 30, 2024

As of March 31, 2025, we have hosted 75 Regulation A offerings, which have raised a total of approximately $282 million on our platforms, not including five offerings for StartEngine itself and 33 offerings of series of companies managed by StartEngine Assets, LLC. We believe the market for Regulation A will continue to grow as more companies become aware of the ability to raise capital through crowdfunding platforms. Because it permits a maximum raise of $75 million each 12 months, we believe this rule is well suited for small and midsize businesses. We have seen the demand increase significantly between 2020 and 2022, while contracting in 2023 and 2024. Excluding offerings for StartEngine itself and its affiliates, we have hosted 13 offerings in 2020, 17 offerings in 2021, 22 offerings in 2022, 13 offerings in 2023 and 7 offerings in 2024. The number of offerings hosted is based on the year launched and do not include offerings for StartEngine itself and the offerings of series for StartEngine Collectibles Fund I LLC.

Regulation Crowdfunding

Since its launch on May 16, 2016, we estimate that as of ~~April~~March 1531, ~~2024~~2025, 1,~~318~~312 offerings have raised over $~~589~~545 million on StartEngine through Regulation Crowdfunding. According to the SEC, the size of the Regulation Crowdfunding market was decreased to approximately $~~352~~249 million for the period from July 1, ~~2022~~2023 to June 30, ~~2023~~2024, compared with $~~368~~352 million for the period from July 1, ~~2021~~2022 to June 30, ~~2022~~2023.

We believe Regulation Crowdfunding will grow year over year after a small contraction in the previous year as more startup companies become aware of this funding method and view Regulation Crowdfunding as a viable fundraising option and market conditions improve. We have seen the demand ~~increase~~decrease ~~significantly~~ between ~~2019~~2022 and ~~2020~~2023. ~~And,~~We ~~with~~did ~~the~~see ~~2021~~an increase onin ~~the~~demand ~~annual~~between ~~cap~~2023 toand $52024 ~~million,~~despite wethe ~~have~~Company ~~seen~~adding anfewer ~~increase~~issuers into ~~interest~~the inplatform ~~this~~at ~~form~~the beginning of ~~funding~~2024, ~~from~~however ~~prospective~~this ~~issuers~~strategy ~~throughout~~was ~~2021~~reverted ~~and~~in ~~2022~~mid 2024. Regulation Crowdfunding makes it relatively inexpensive to make an offering of securities: legal, compliance and accounting costs can be less than $10,000, and offering costs can be even cheaper for companies who prepare the documentation internally. With a current maximum raise of $5 million per year, we believe that this funding method is perfect for early-stage companies.

We are working to increase awareness of the benefits of Regulation Crowdfunding through a lead generation program that includes advertising on social media, email marketing and other marketing support. We mainly focus on start-ups; however, our outreach will also include some companies further along in their development. We have and plan to continue to educate the market through the content we write and publish on our blog as well as being guest authors on other popular blogs.

Regulation D Offerings

Offerings under Regulation D include those under Rule 506(b), Rule 506(c), and Rule 504. ~~According~~Our investor base is generally the retail investors, and according to the SEC, the size of the Rule 506(b) market (excluding pooled funds) was approximately $~~2.7~~170 ~~trillion~~billion, the Rule 506(c) market (excluding pooled funds) was approximately $~~169~~12 billion and the Rule 504 market (excluding pooled funds) was approximately $~~258~~246 million for the period from July 1, ~~2022~~2023 to June 30, ~~2023~~2024. The vast majority of Regulation D sales were through Rule 506(b), which does not allow for general solicitation and allows for some non-accredited investors as well as less stringent requirements for verifying accredited status. Based on this information, we believe there is large potential market for online sales under Rule 506(c).

Rule 506(c) offerings are an inexpensive way to raise capital from accredited investors with a low cost of entry. Further, recent expansion of the definition of an “accredited investor” may widen the pool of potential investors. We estimate it can cost under $10,000 to prepare an offering under Rule 506(c). There is no limitation on the amount raised, which makes this rule attractive to companies who just completed a Regulation Crowdfunding offering or are planning a Regulation A campaign in the near future. This exemption can be used together with Regulation A and Regulation Crowdfunding. For Regulation Crowdfunding offerings, this exemption provides companies an opportunity to extend an offering beyond Regulation Crowdfunding once the maximum $5 million has been reached. For Regulation A offerings, this exemption can be used as a fundraising option prior to the launch of the offering, because of the time it takes to get a Regulation A offering qualified. While this currently represents only a small part of our overall business for issuers that we do not control; the offerings of the membership interests in the SE Funds for StartEngine Private utilizes this exemption.

StartEngine Private

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~~Funds are managed by~~ StartEngine Private Manager LLC and advised by StartEngine Adviser LLC. StartEngine Adviser LLC is an exempt reporting adviser under Rule 203(m)-1 under the Investment Advisers Act of 1940. The SE Funds sell their membership interests in offerings that are exempt from registration under Section 4(a)(2) of the Securities Act of 1933 and specifically Regulation D promulgated thereunder. Such offerings are marketed to accredited investors by the Company’s FINRA-member and SEC-registered broker-dealer subsidiary, StartEngine Primary LLC.

The Company provides accredited investors the opportunity to purchase membership interests in funds that own shares of venture capital backed, late-stage private companies (the “underlying securities”) via its StartEngine Private product offering. The offerings are made in reliance on Rule 506(c) of Regulation D. The Company does not currently have a value on the potential market size for our membership interests; but in its 2024 Annual Report from the SEC Office of the Advocate for Small Business Capital Formation, the SEC estimated that approximately 19% households in the United States qualify as accredited. Additionally, we believe that the private equity and alternative investment markets are expected to grow significantly over the next several years. The Company believes that there is interest from accredited investors to have an economic interest in the underlying securities where they do not have an interest in investing directly themselves (e.g., they do not want to invest the high minimum amount often required for companies at this stage) and/or do not have the time, financial, legal, and/or technical expertise to source these investments themselves.

Transfer Agent

The exemptions provided by Regulation A and Regulation Crowdfunding include conditional exemptions from the registration requirements of the Securities Exchange Act of 1934. One of the conditions is that should the number of a ~~company~~Company’s ~~securityholders~~security holders and/or the value of a ~~company~~Company’s assets exceed a certain threshold, a ~~company~~Company needs to use a registered transfer agent to avoid the requirement that the ~~company~~Company become a fully-registered ~~company~~Company with the SEC - an expensive proposition for many of these small companies. Therefore, the market for our transfer agent services includes all companies that have previously raised funds through Regulation A and Regulation Crowdfunding offerings. Currently, we mainly market our services to our current clients.

StartEngine Secondary

We believe that a portion of the owners of securities purchased under Regulation A, Regulation D and Regulation Crowdfunding will be interested in selling their securities to prospective buyers. There is no viable marketplace today for these securityholders to sell their securities unless the ~~company~~Company seeks a quotation on an over-the-counter marketplace. Companies who use Tier 1 of Regulation A or Regulation Crowdfunding do not qualify for quotation on the leading over-the-counter marketplace. Further even if a ~~company~~Company qualifies for that market, which would include issuers using Tier 2 of Regulation A, the quotation requirements are expensive. We believe StartEngine Secondary has the potential for success because there are limited trading forums for these securities.

Registered User Base

As of ~~April~~March 1531, ~~2024~~2025, we have approximately 1,~~374~~541,000 registered users. Of these, approximately ~~366~~391,000 have made investments on our platform. We determine registered users by tracking unique email addresses from investor profiles that have not deactivated their profiles. As an individual could have multiple email addresses across multiple profiles, or may no longer be active, even if they have not deactivated their profile, registered users are an approximate gauge and could overstate the actual number of unique registered users. There is no fee associated with becoming a registered user. Of the users who have made investments the average number of investments is approximately 2.31 28 and the amount per investment is approximately $1,~~029~~044. We are seeing week-over-week growth in registered users and expect to register more users as we add more companies to our platform.

Competition

With respect to offerings made under Regulation Crowdfunding, we compete with other intermediaries, including brokers and funding portals such as WeFunder, Republic and MicroVentures. ~~We have also seen more market entrants due to the 2021 increase in the cap size from $1.07 million to $5 million.~~

With respect to offerings under Regulation A, we compete with other platforms, hosting services and broker-dealers. Some of our competitors include Dalmore, Dealmaker, Republic and Wefunder.

With respect to offerings under Rule 506(c), or online offerings made under Regulation D (which includes non-solicited offerings), we compete with platforms such as AngelList, EquityNet, FundersClub and Fundable.

With respect to our transfer agent, we compete with transfer agents such as Computershare and VStock Transfer.

With respect to StartEngine Private, we compete with other companies such as ~~Linqto~~Forge, EquityZen and ~~Microventures~~MicroVentures.

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Strategy

Our Mission: Help entrepreneurs and investors achieve their dreams.

Our Strategy: We provide technology to allow the general public to invest in entrepreneurs.

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Our Advantages

We believe that StartEngine is one of the leaders in the global crowdfunding nation. We aim to facilitate financial ignition of innovative companies led by determined, intelligent entrepreneurs who have the energy and talent to start and grow successful companies.

We harness the power and wisdom of “The Crowd” through the internet to release entrepreneurial creativity, thereby creating jobs, economic efficiency and ultimately economic growth. We believe we not only help entrepreneurs raise capital to start and grow their businesses, but we also help them build armies of committed, long-term brand ambassadors who, as investors, promote their companies to their friends, families and colleagues.

As one of the first movers in the equity crowdfunding industry, we are active in crowdfunding legal and regulatory affairs. Our position allows us to collaborate to establish industry-wide best practices and to improve the quality of listings. We believe our backend operating systems are highly efficient. Each function operates through documented procedures to ensure consistent, quality results. Knowing what it takes to successfully grow a ~~company~~Company, we try to keep operating expenses to a minimum.

We believe that StartEngine’s key asset is its team members. We are a group of talented people who have come together to democratize finance and investment in startup and growth companies. The hallmark of the Company is talented, respectful, enthusiastic and entrepreneurial people who understand and operate on the principles of dignity and respect.

Our mission is to help entrepreneurs and investors achieve their dreams. Our objective is that by 2029, we will facilitate funding of $10 billion for companies.

Research and Development

StartEngine invested approximately $57,~~779~~796,~~920~~521 infor ~~2023~~the year ended December 31, 2024 and $45,~~667~~779,~~593~~920 infor ~~2022~~the year ended December 31, 2023 in research and development, product development, and maintenance.

Employees

As of ~~April~~March 1531, ~~2024~~2025, we had 8171 employees. We also work with a large number of contractors for user-experience design, security controls, and testing, services and marketing.

Regulation

Having platforms that host Regulation A, Regulation Crowdfunding and Regulation D offerings, we are required to comply with a variety of state and federal securities laws as well as the requirements of FINRA, a national securities association of which our funding portal subsidiary and our broker-dealer are members. Further, as a registered transfer agent, we are required to comply with a variety of state and federal securities laws and laws that govern transfer agents, as well as laws aimed at preventing fraud, tax evasion and money laundering

~~Regulation~~Our ~~Crowdfunding~~Broker-Dealer

In order to act as an intermediary under Regulation Crowdfunding, our subsidiary is registered as a funding portal with the SEC and became a member of FINRA. In the future, we may be subject to additional rules issued by other regulators, such as the money-laundering rules proposed by FinCEN.

SEC Requirements

As a funding portal, our subsidiary is prohibited from engaging in certain activities in order not to be regulated as a full-service broker-dealer. These activities are set out in Section 4(a)(6) of the Securities Act and in Regulation Crowdfunding. We have accordingly established internal processes to ensure that our subsidiary as well as its agents and affiliates do not engage in activities that funding portals are not permitted to undertake, including:

● Providing investment advice or recommendations to investors for securities displayed on our platform;

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● Soliciting purchases, sales or offers to buy securities displayed on our platform;

● Compensating employees, agents or other persons for solicitation or for the sale of securities displayed or listed on our platform; or

● Holding, managing, processing or otherwise handling investors’ funds or securities.

In addition, our funding portal has certain affirmative requirements that it is required to comply with to maintain its status. These affirmative obligations include:

● Providing a communications channel to allow issuers to communicate with investors;

● Having due diligence and compliance protocols and requirements in place so that the Company has a “reasonable basis” to believe that

● its issuers are in compliance with securities laws, have established means to keep accurate records of the securities offered and sold, and that none of their covered persons (e.g., officers, directors and certain beneficial owners) are “bad actors” and therefore disqualified from participating in the offering;

● its issuers and offerings do not present the potential for fraud or otherwise raise concerns about investor protection; and

● its investors do not invest more than they are allowed to invest under the limitations set out in Regulation Crowdfunding; and

● Creating procedures for its investors to notify them of risks regarding investing in securities hosted on its platform and providing them with required investor education and disclosure materials.

We are also required to set up protocols regarding payment procedures and recordkeeping.

FINRA Rules

As a member of FINRA, our funding portal is subject to their supervisory authority and is required to comply with FINRA’s portal requirements. Some of those rules are also applicable to the Company as an entity associated with the portal. These requirements include rules regarding conduct, compliance and codes of procedure. For instance, FINRA’s compliance rules require timely reporting of specified events, such as complaints and certain litigation against the portal or its associated persons as well as the provision of the portal’s annual financials prepared on a U.S. GAAP basis. In addition, under the conduct rules, the portal is required to conduct its business in accordance with high standards of commercial honor and just and equitable principles of trade, is limited to certain types of communications with investors and issuers, and is prohibited from using manipulative, deceptive and other fraudulent devices.

Liability

Under Section 4A(c) of the Securities Act, an issuer, including its officers and directors, may be liable to the purchaser of its securities in a transaction made under Section 4(a)(6) if the issuer makes an untrue statement of a material fact or omits to state a material fact required to be stated or necessary in order to make the statements, in light of the circumstances under which there were made, not misleading; provided, however, that the purchaser does not know of the untruth or omission, and the issuer is unable to prove that it did not know, and in the exercise of reasonable care could not have known, of the untruth or omission.

Though not explicitly stated in the statute, this section may extend liability to funding portals, and the SEC has stated that, depending on the facts and circumstances, portals may be liable for misleading statements made by issuers. However, funding portals would likely have a “reasonable care” due diligence defense. “Reasonable care” would include establishing policies and procedures that are reasonably designed to achieve compliance with the requirements of Regulation Crowdfunding, including conducting a review of the issuer’s offering documents before posting them to the platform to evaluate whether they contain materially false or misleading information. We have designed our internal processes and procedures with a view to establishing this defense, should the need arise.

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We may also face liability from existing anti-fraud rules and statutes under the securities laws. For instance, under Section 9(a)(4) of the Exchange Act anyone who “willfully participates” in an offering could be liable for false or misleading statements made to induce a securities transaction. Further, the Supreme Court Lorenzo opinion in 2019 established liability for the “dissemination” of misleading statements under Rule 10b-5 under the Exchange Act.

In addition, FINRA imposes liability for certain conduct, including violations of commercial honor and just and equitable principles of trade and acts using manipulative, deceptive and other fraudulent devices.

Regulation A and Regulation D

Broker-Dealer Regulations

Our subsidiary, StartEngine Primary, is registered as a broker-dealer with the SEC and a member of FINRA. The registration process not only includes registering with the SEC, but also requires membership in a self-regulatory organization (in our case, we are a member of FINRA) and in the Securities Investor Protection Corporation (“SIPC”), compliance with state requirements and making sure that our associate persons satisfy all applicable qualification requirements.

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SEC Requirements

Since StartEngine Primary became a broker-dealer, it has been required to comply with extensive SEC regulations with respect to its conduct and the processing of transactions. These include requirements related to conduct, financial responsibility, and other requirements such as those that relate to communications, anti-money laundering (AML) and ongoing internal controls and governance. In addition, StartEngine Primary has been approved to operate an alternative trading system for secondary trading of securities. StartEngine also need to comply with extensive SEC regulations with respect to its conduct and its execution and clearance of transactions.

FINRA Requirements

Since StartEngine Primary became a of FINRA as a broker-dealer, it has been subject to FINRA’s supervisory authority and is required to comply with FINRA’s rules and regulations. These rules and regulations include many similar requirements to those of the SEC, and in many cases are broader in scope and provide more specificity. FINRA also has rules regarding conduct, compliance and codes of procedure. For instance, FINRA members must comply with NASD’s Rules of Fair Practice, which broadly speaking requires broker-dealers to observe high standards of commercial honor and just and equitable principles of trade in conducting their business. There are also rules that relate to use of manipulative, deceptive or other fraudulent devices, suitability, payments to unregistered persons, know your customer, supervision of our employees and responsibilities related to associated persons, financial soundness, recordkeeping, maintaining procedures, arbitration for customer disputes, AML and submitting to ongoing supervision. We are also required to undertake due diligence investigations with respect to Regulation A and Regulation D offerings.

Conduct Requirements

In general, many of the rules that govern broker-dealers stem from antifraud provisions; these requirements are broad in scope and prohibit misstatements or misleading omissions of material facts, and fraudulent or manipulative acts and practices, in connection with the purchase or sale of securities. Specifically, the following rules apply:

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Section 9(a) prohibits particular manipulative practices regarding securities registered on a national securities exchange.

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Section 10(b) prohibits the use of “any manipulative or deceptive device or contrivance” in connection with the purchase or sale of any security.

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Section 15(c)(1) prohibits broker-dealers from effecting transactions in, or inducing the purchase or sale of, any security by means of “any manipulative, deceptive or other fraudulent device” in over-the-counter markets

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Section 15(c)(2) prohibits a broker-dealer from making fictitious quotes in over-the-counter markets

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Antifraud specific requirements include those related to:

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Duty of fair dealing (e.g., charging reasonable fees, promptness of executive orders, and disclosing specified material information as well as any conflict of interest);

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Regulation Best Interest (e.g., a duty to act in the “best interests” of retail customer (defined as natural persons and their legal representatives), which includes certain disclosure and care obligation and compliance obligations as well as maintaining policies and procedures to minimize the effects, if any, of conflicts of interest);

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Duty of best execution (e.g., a duty of execution requires that based on the circumstances requirement to find the most favorable terms for a customer;

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Customer confirmation (e.g., at or before the completion of transaction certain information must be provided to customers, including specifics on the sale, the payment that the broker-dealer receives, etc.);

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Disclosure of credit terms;

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Restrictions on short sales;

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Trading during an offering; and

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Restrictions on insider trading.

Finally, broker-dealers are governed by requirements regulating employees and individuals associated with the broker-dealer.

Financial Responsibility Requirements

Financial responsibility and operations requirements include: net capital requirements, margin requirements, customer protection requirements (e.g., reserve account and segregation of customer assets), risk assessment requirements, financial reporting (including an independent audit), and recordkeeping requirements. The minimum net capital requirement for StartEngine Primary is $250,000. As a self-clearing broker-dealer StartEngine Primary is specifically obligated under net capital requirements to maintain a sufficient level of net capital to cover any open trades that fail to settle.

Anti-Money Laundering

The Bank Secrecy Act, as amended by the USA PATRIOT ACT of 2001 (the “BSA/USA PATRIOT Act”), requires broker-dealers to develop anti-money laundering (“AML”) programs to assist in the prevention and detection of money laundering and combating terrorism. Broker-dealers are also are subject to U.S. sanctions laws administered by the Office of Foreign Assets Control and are expected to have policies and procedures in place to comply with these laws.

Other Requirements

Broker-dealers are subject to a host of other rules and requirements including: mandatory arbitration, submitting for SEC and FINRA examinations, maintaining and reporting information on the broker-dealers affiliates (in our case, this includes the parent organization as well as the other subsidiaries), following electronic media and communication guidelines as well as maintaining an AML program.

Liability

Under our arrangements that do not use the services of our broker-dealer subsidiary, Section 12(a)(2) of the Securities Act, which applies to Regulation A, imposes liability for misleading statements not only on the issuers of securities but also on “sellers,” which includes brokers involved in soliciting an offering. Rule 10b-5 under the Exchange Act generally imposes liability on persons who “make” or disseminate misleading statements. Currently, the information presented on our platform is driven by the issuers. Additional liability may arise from as-yet untested provisions such as Section 9(a)(4) of the Exchange Act, discussed above.

Broker-dealers are subject to heightened standards of liability. Not only do broker-dealers have potential liability under Section 12(a)(2) but we also are subject to liability under Rule 10b-5. Broker-dealers may also be subject to liability for failure to comply with SEC and FINRA requirements, including claims that we can be held liable for the behavior of our agents (control person liability), claims regarding unsuitable recommendations, violations of margin rules, breach of contract, common law claims of fraud and various claims under state laws.

Our Funding Portal

In order to act as an intermediary under Regulation Crowdfunding, you can either use a funding portal or a broker dealer as an intermediary. We are transitioning most of our Regulation Crowdfunding offering into our broker-dealer, but we have traditionally used, our subsidiary that is registered as a funding portal with the SEC and member of FINRA as the intermediary for these offerings. In addition to the rule of the SEC and FINRA, we may be subject to additional rules issued by other regulators, such as the money-laundering rules proposed by FinCEN.

SEC Requirements

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established internal processes to ensure that our subsidiary as well as its agents and affiliates do not engage in activities that funding portals are not permitted to undertake, including:

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Providing investment advice or recommendations to investors for securities displayed on our platform;

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Soliciting purchases, sales or offers to buy securities displayed on our platform;

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Compensating employees, agents or other persons for solicitation or for the sale of securities displayed or listed on our platform; or

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Holding, managing, processing or otherwise handling investors’ funds or securities.

In addition, our funding portal has certain affirmative requirements that it is required to comply with to maintain its status. These affirmative obligations include:

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Providing a communications channel to allow issuers to communicate with investors;

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Having due diligence and compliance protocols and requirements in place so that the Company has a “reasonable basis” to believe that

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its issuers are in compliance with securities laws, have established means to keep accurate records of the securities offered and sold, and that none of their covered persons (e.g., officers, directors and certain beneficial owners) are “bad actors” and therefore disqualified from participating in the offering;

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its issuers and offerings do not present the potential for fraud or otherwise raise concerns about investor protection; and

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its investors do not invest more than they are allowed to invest under the limitations set out in Regulation Crowdfunding; and

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Creating procedures for its investors to notify them of risks regarding investing in securities hosted on its platform and providing them with required investor education and disclosure materials.

We are also required to set up protocols regarding payment procedures and recordkeeping.

FINRA Rules

Liability

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~~Broker-dealers~~have ~~are~~a ~~subject~~“reasonable tocare” ~~heightened~~due ~~standards~~diligence ~~of liability~~defense. ~~Not~~“Reasonable ~~only~~care” dowould ~~broker-dealers~~include ~~have~~establishing ~~potential~~policies ~~liability~~and ~~under~~procedures ~~Section~~that ~~12(a)(2) but we also~~ are ~~subject~~reasonably designed to ~~liability~~achieve ~~under~~compliance ~~Rule~~with ~~10b-5.~~the ~~Broker-dealers~~requirements ~~may~~of ~~also~~Regulation beCrowdfunding, ~~subject~~including toconducting ~~liability~~a ~~for~~review ~~failure~~of tothe ~~comply~~issuer’s ~~with~~offering ~~SEC~~documents ~~and~~before ~~FINRA~~posting ~~requirements,~~them ~~including~~to ~~claims~~the ~~that~~platform weto ~~can~~evaluate bewhether ~~held~~they ~~liable~~contain ~~for~~materially ~~the~~false ~~behavior~~or ofmisleading ~~our~~information. ~~agents~~We ~~(control~~have ~~person~~designed ~~liability),~~our ~~claims~~internal ~~regarding~~processes ~~unsuitable~~and ~~recommendations,~~procedures ~~violations~~with ofa ~~margin~~view ~~rules,~~to ~~breach~~establishing ofthis ~~contract~~defense, ~~common~~should ~~law~~the ~~claims~~need ~~of fraud and various claims under state laws~~arise.

We may also face liability from existing anti-fraud rules and statutes under the securities laws. For instance, under Section 9(a)(4) of the Exchange Act anyone who “willfully participates” in an offering could be liable for false or misleading statements made to induce a securities transaction. Further, the Supreme Court Lorenzo opinion in 2019 established liability for the “dissemination” of misleading statements under Rule 10b-5 under the Exchange Act.

Regulation S

Regulation S provides that the registration requirements of the Securities Act do not apply to offers and sales of securities that occur outside the United States. Regulation S is a safe harbor that specifies the conditions under which transactions will be deemed to occur outside the United States, including the imposition of “distribution compliance periods” during which securities may not be resold or transferred to “US persons”. The distribution compliance periods vary accordingly to whether the issuer of securities is a domestic or foreign company and whether or not the issuer’s securities are registered under the Exchange Act and subject to ongoing reporting obligations thereunder. The securities that we are most likely to host on our platform in Regulation S offerings are those of non-reporting US issuers, whose equity securities are subject to a one-year distribution compliance period, and whose non-equity securities are subject to a 40-day distribution compliance period. During the distribution compliance period, purchasers of the securities are required to certify that they are not US persons and agree to resell only to non-US persons. Securities professionals are required to deliver confirmations to buyers of securities stating that these resale restrictions apply to the buyers. Disclosure of these restrictions are also required to be made in selling materials and on the securities themselves. “US persons,” are defined in Regulation S, which includes natural persons resident in the United States, partnerships and companies organized under US law, estates and trusts of which administrators, executors or trustees are US persons, discretionary accounts held by a US fiduciary for US persons, non-discretionary accounts held for the benefit of US persons, and certain foreign partnerships and companies created by US persons. These conditions may require limiting access to campaign pages to non-U.S. based internet addresses.

Issuers that rely on Regulation S are still required to comply with the requirements of the jurisdiction in which their securities are sold.

Operation of ~~ATSs~~ATS

The ATS must be operated by a broker-dealer. Our broker-dealer, StartEngine Primary, is governed by the rules regulating broker-dealer trading systems. Regulation ATS includes provisions that govern the operations an ATS such as those that relate to fees charged, fair access to the trading system, system requirements (capacity, integrity and security), display of orders and capacity to execute those orders, recordkeeping and reporting, and establishing procedures including related to confidentiality of trading information, among other things.

Operating an ATS, means that we also need to ensure compliance with relevant state laws, referred to as blue sky requirements. While states are preempted from regulating many facets of initial offerings (e.g., in Regulation A and Regulation Crowdfunding), secondary offerings, the type that will occur on our ATS, are not pre-empted under state laws. Therefore, even though a security may be freely tradeable under federal laws, our ATS and issuers will need to comply with the blue sky requirements as well.

Transfer Agent Regulations

As a registered transfer agent, we are required to comply with all applicable SEC rules, which predominantly includes the rules under Section 17A(c) of the Exchange Act. The requirements for transfer agents include:

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minimum performance standards regarding tracking, recording and maintaining the official record of ownership of securities of a company and related recordkeeping and reporting rules;

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timely and accurate creation of records for security holders; and

● related safeguards and data security requirements for fraud prevention.

In addition, we must comply with various state corporate and securities laws as well as provisions of the Anti-Money Laundering (AML) regulations, Office of Foreign Assets Regulations (OFAC) and the Foreign Account Tax Compliance Act (FATCA).

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related safeguards and data security requirements for fraud prevention.

Exempt Reporting Adviser

An exempt reporting adviser is an exemption from full registration with the SEC under the Investment Advisers Act of 1940., and specifically, we are the private fund adviser exemption, which is generally available to advisers that only manage private funds and have less than $150 million in assets under management. As an ERA, our subsidiary not only has to make and initial and ongoing public filing Form ADV Part 1, but also has compliance requirements including, record keeping requirements, requirements with respect to material nonpublic information and compliance with the Advisers Act’s anti-fraud provisions. Currently, StartEngine Adviser LLC is the adviser for all the SE Funds.

Intellectual Property

We have a trademark for “StartEngine” in the United States. We do not own any patents; however, we have our own proprietary source code that we use in operating our platform. We also have a patent pending covering peer to peer trading.

Litigation

From time to time we may be involved in various disputes and litigation matters that arise in the ordinary course of business. Other than discussed in Item 3. Legal Proceedings, we are currently not a party to any material legal proceeding.

Available Information and Reports to Security Holders

We are currently required to file annual, quarterly and current reports with the SEC, as well as proxy statements, information statements, and other information with the SEC. Our SEC filings will also be available to the public from commercial document retrieval services and at the website maintained by the SEC at http://www.sec.gov.

Our website address is http://www.startengine.com. Information contained on the website does not constitute part of this Registration Statement. We have included our website address in this Offering Statement solely as an inactive textual reference. We make available, through a link to the SEC’s website, electronic copies of the materials we file with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, the Section 16 reports filed by our executive officers, directors and 10% stockholders and amendments to those reports.

Item 1A. Risk Factors

Certain factors may have a material adverse effect on our business, financial condition, and results of operations. You should consider carefully the risks and uncertainties described below, in addition to other information contained in this Annual Report on Form 10-K, including our consolidated financial statements and related notes. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that adversely affect our business. If any of the following risks actually occurs, our business, financial condition, results of operations, and future prospects could be materially and adversely affected.

Risk Factors Related to the Company and its Business

We are engaged in an industry that continues to develop and rapidly change, which requires our company to be flexible in executing its business plans. We have not yet generated yearly profits, and may not do so in the near future.

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~~Risk~~StartEngine ~~Factors~~was ~~Related~~formed in 2014 and is still working on fine tuning its business plan to one that will enable it to generate profits on an annual basis and to maintain profitability. Though our core business model of operating our funding portal and broker-dealer services have been receiving revenues for nearly nine years and four years, respectively, we are still evolving aspects of business model, including modifying our revenue models, adding additional products (e.g., StartEngine Secondary, StartEngine Private), and modifying our current offerings in light of regulatory changes and/or interactions with regulators (see, “Item 1. Business – Regulation and “Item 3. Legal Proceedings”). Over the past year, our StartEngine Private has surpassed our previous products in terms of revenue generation. Accordingly, the Company’s operating history may not be indicative of future prospects. Our current and proposed operations are subject to all the business risks associated businesses in industries that are developing and rapidly changing. These include likely fluctuations in operating results as the Company reacts to developments in its ~~Business~~market, manages its growth, and develops new services as well as the entry of competitors into the market. These include likely fluctuations in operating results as the Company reacts to developments in its market, manages its growth, and develops new services as well as the entry of competitors into the market. We will only be able to pay dividends on any shares once our directors determine that we are financially able to do so. Since inception, StartEngine has not generated sufficient revenues to cover operational expenses. There is no assurance that we will be consistently profitable in the next three years or generate sufficient annual revenues to pay dividends to the holders of our shares.

We are a relatively early stage company and have not yet generated any yearly profits.

StartEngine was formed in 2014 and is still working on fine tuning its business plan to one that will enable it to generate profits on an annual basis and to maintain profitability. Though our core business model of operating our funding portal and broker-dealer services have been receiving revenues for nearly nine years and four years, respectively, we are still evolving aspects of business model, including modifying our revenue models, adding additional products (e.g., StartEngine Secondary, StartEngine Private), and modifying our current offerings in light of regulatory changes and/or interactions with regulators (see, “The Company’s Business – Regulation”). Accordingly, the Company’s operating history may not be indicative of future prospects. Our current and proposed operations are subject to all the business risks associated with relatively new enterprises that are still in growth and/or expansion phases. These include likely fluctuations in operating results as the Company reacts to developments in its market, manages its growth, and develops new services as well as the entry of competitors into the market. We will only be able to pay dividends on any shares once our directors determine that we are financially able to do so. Since inception, StartEngine has not generated sufficient revenues to cover operational expenses. There is no assurance that we will be consistently profitable in the next three years or generate sufficient annual revenues to pay dividends to the holders of our shares.

We operate in a regulatory environment that is evolving and uncertain.

The regulatory framework for online capital formation or crowdfunding is relatively new. The regulations that govern our operations have been in existence for a limited period. Further, there are constant discussions among legislators and regulators with respect to changing the regulatory environment. New laws and regulations could be adopted in the United States and abroad. Further, existing laws and regulations may be interpreted in ways that would impact our operations, including how we communicate and work with investors and the companies that use our platform’s services and the types of securities that our clients can offer and sell on our platform. For instance, in prior years, there have been several attempts to modify the current regulatory regime. Some of those suggested reforms could make it easier for anyone to sell securities (without using our services). Any such changes would have a negative impact on our business.

We operate in a highly regulated industry.

We are subject to extensive regulation and failure to comply with such regulation could have an adverse effect on our business. Further, our subsidiary StartEngine Capital LLC is registered as a funding portal; our subsidiary StartEngine Secure LLC is registered as a transfer agent; our subsidiary StartEngine Adviser LLC is registered as an Exempt Reporting Adviser; and our subsidiary StartEngine Primary LLC is registered as a broker-dealer and operates an alternative trading system under the brand “StartEngine Secondary”. As a funding portal and broker-dealer, we have to comply with stringent regulations, and the operation of our funding portal, broker-dealer and alternative trading system services exposes us to a significant amount of liability. ~~Regulated entities are frequently subject to examination~~Furthermore, ~~constraints~~new onlines ~~their~~of business, ~~and~~may insubject ~~some~~us ~~cases~~to ~~fines.~~other ~~For~~regulatory ~~instance~~regimes, ~~our~~such ~~subsidiary~~those ~~StartEngine~~regulating ~~Capital~~investment ~~LLC submitted a Letter of Acceptance~~advisers, ~~Waiver~~including ~~and Consent (“AWC”) on March 11, 2022, and FINRA accepted~~ the ~~AWC~~Investment onAdvisers ~~May 4,~~Act ~~2022.~~of ~~The AWC provides for a censure~~1940, aif ~~$350,000~~we ~~fine,~~fail ~~and a certification~~ to beremain ~~made~~in bycompliance ~~our~~with ~~funding~~certain ~~portal that it has established and implemented policies, procedures, and internal controls sufficient to address the issues identified in the AWC~~exemptions. Further we have seen increased regulations in this industry from regulators (both federal and state) and FINRA. In light of this, we expect increased compliance costs as well as potential subjecting us to additional liabilities. See “Item 1. Business – Regulation.” In addition, some of the restrictions and rules applicable to our subsidiaries could adversely affect and limit some of our business plans of other parts of our business.

We were approved as a broker-dealer in 2019, launched our alternative trading system in 2020, became a “carrying” broker-dealer in 2021, became an exempt reporting adviser in 2024, and are still in the process of adapting our business model and pricing structure.

As a broker-dealer, we not only are subjected to federal and state requirements but also have need to comply with the requirements of FINRA, the self-regulatory organization, that apply to broker-dealers and the regulations that apply to the operation of alternative trading systems. In addition, we have expanded the scope of our operation including launching our alternative trading system in May 2020, and became a “carrying” broker-dealer at the end of September 2021, which increased our net capital requirements. In 2023, we launched StartEngine Private, which required us to file as an exempt reporting adviser in early 2024 and may require us to become a registered investment adviser in the future. We are still in the process of adapting to these changes, but there have been and will be increased costs, including the need to hire personnel with specific qualifications and pay them in accordance with their experience. We are subjected to periodic examinations and we will be required to change aspects of our business processes and communications in response to the findings of those examinations. Becoming a broker-dealer and/or reporting adviser has and will continue to lead to increases in our compliance costs as well as increases in our exposure to liabilities, including subjecting us to liability for misstatements made by issuers utilizing our services; see “Item 1. Business - Regulation.”

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periodic examinations and we will be required to change aspects of our business processes and communications in response to the findings of those examinations. Becoming a broker-dealer and/or reporting adviser has and will continue to lead to increases in our compliance costs as well as increases in our exposure to liabilities, including subjecting us to liability for misstatements made by issuers utilizing our services; see “Item 1. Business - Regulation.”

We may be liable for misstatements made by issuers.

Under the Securities Act and the Exchange Act, issuers making offerings through our funding portal may be liable for including untrue statements of material facts or for omitting information that could make the statements misleading. This liability may also extend in Regulation Crowdfunding offerings to funding portals, such as our subsidiary. Further, as a broker-dealer, we may be liable for statements by issuers utilizing our services in connection with Regulation A and Regulation D offerings. See “Item 1. Business – Regulation – Regulation Crowdfunding – Liability” and “Item 1. Business – Regulation – Regulation A and Regulation D – Liability”. Even though due diligence defenses may be available; there can be no assurance that if we were sued we would prevail. Further, even if we do succeed, lawsuits are time consuming and expensive, and being a party to such actions may cause us reputational harm that would negatively impact our business. Moreover, even if we are not liable or a party to a lawsuit or enforcement action, some of our clients have been and will be subject to such proceedings. Any involvement we may have, including responding to document production requests, may be time-consuming and expensive as well.

~~The~~We ~~Company~~have ~~has~~identified ~~recently~~material ~~become~~weaknesses ain our internal control over financial reporting. ~~company~~Any ~~with~~failure to maintain effective internal control over financial reporting could impair the ~~SEC~~reliability of our financial statements, which in turn could harm our business, impair investor confidence in the accuracy and completeness of our financial reports and our access to the capital markets and cause the price of our common stock to decline and subject us to regulatory penalties.

InSection ~~June 2022,~~404 of the ~~Company’s~~Sarbanes-Oxley ~~class~~Act of ~~Common~~2002 ~~Stock~~requires ~~was~~that ~~registered~~we ~~with~~maintain internal control over financial reporting that meets applicable standards. We may err in the ~~SEC~~design or operation of our controls, and all internal control systems, asno amatter ~~result~~how well designed and operated, can provide only reasonable assurance that the ~~Company~~objectives ~~has~~of ~~become~~the acontrol ~~reporting~~system ~~public~~are ~~company~~met. ~~Becoming~~Because athere ~~reporting~~are ~~company~~inherent ~~will~~limitations ~~subject~~in ~~the~~all ~~Company~~control tosystems, ~~additional~~there ~~initial~~can ~~and~~be ~~on-going~~no ~~compliance~~assurance ~~and~~that ~~reporting~~all ~~costs~~control ~~and~~issues ~~administrative~~have ~~burdens,~~been ~~additional~~or ~~professional~~will ~~fees~~be ~~(legal~~detected. ~~and~~If ~~accounting)~~we asare ~~well~~unable, or are perceived as ~~costs~~unable, ~~associated~~to ~~with~~produce reliable financial reports due to internal ~~staff.~~control ~~Therefore~~deficiencies, ~~the~~investors ~~costs~~could ~~for~~lose ~~these~~confidence ~~functions~~in our reported financial information and operating results, which could result in ~~previous years~~a isnegative ~~not~~market ~~indicative~~reaction ofand ~~future~~a ~~costs~~decrease in our stock price.

WeIn ~~have~~the ~~identified~~past ~~material~~we ~~weakness(es)~~have inhad to restate our ~~internal~~financial ~~control~~statements, ~~over~~and during preparation for financial reporting. ~~Any~~related ~~failure~~ to ~~maintain~~the ~~effective~~year ~~internal~~ended ~~control~~December ~~over~~31, ~~financial~~2024, ~~reporting~~the ~~could~~Company ~~impair~~discovered certain errors in the ~~reliability~~preparation of ~~our~~the financial statements,. ~~which~~The inCompany’s ~~turn~~management ~~could~~conducted ~~harm~~an ~~our~~investigation ~~business,~~with ~~impair~~the ~~investor~~Company’s ~~confidence~~independent inauditors. ~~the~~As ~~accuracy~~a ~~and~~result ~~completeness~~ of ~~our~~this ~~financial~~investigation, ~~reports~~the ~~and~~Company ~~our~~determined ~~access~~that several accounts required correction to ~~the~~be ~~capital~~in ~~markets~~accordance ~~and~~with ~~cause~~US ~~the~~GAAP. ~~price~~Accordingly, ofthe ~~our~~Company ~~common~~made ~~stock~~certain corrections to ~~decline~~the ~~and~~financial ~~subject~~statements usfor tothe ~~regulatory~~year ~~penalties~~ended December 31, 2024.

~~Section~~Management ~~404~~concluded ofthat the ~~Sarbanes-Oxley~~Company’s ~~Act of 2002, requires that we maintain~~ internal control over financial reporting ~~that meets applicable standards. We may err in the design or operation of our controls~~, ~~and~~as ~~all~~defined ~~internal~~by ~~control~~Sections ~~systems, no matter how well designed~~ 13a-15(f) and ~~operated, can provide only reasonable assurance that the objectives~~ 15d-15(f) of the ~~control~~Exchange ~~system are met. Because there are inherent limitations in all control systems~~Act, ~~there~~was ~~can~~not beeffective noas ~~assurance~~of ~~that all control issues have been or will be detected. If we are unable~~December 31, ~~or are perceived as unable~~2024, toincluding ~~produce reliable financial reports~~ due to ~~internal~~the ~~control~~following ~~deficiencies,~~identified ~~investors~~material ~~could lose confidence in our reported financial information and operating results, which could result in a negative market reaction and a decrease in our stock price.~~ weaknesses:

~~During~~- ~~preparation~~Stock ~~for~~and ~~financial~~warrants ~~reporting~~held ~~related~~as toinvestments ~~the~~that ~~year~~were ~~ended~~valued ~~December~~using ~~31,~~a ~~2023,~~modified ~~the~~Black-Scholes ~~Company~~option ~~discovered~~pricing ~~certain~~model ~~errors~~per ~~in previously reported financial statements for~~ the ~~year ended December 31, 2022. The~~ Company’s ~~management~~stated ~~conducted~~policies anhad ~~investigation~~calculation ~~with~~errors ~~the~~and ~~Company’s~~needed ~~independent auditors. As a result of this investigation, the Company determined that several accounts required correction~~ to be incorrected ~~accordance~~ with USan ~~GAAP.~~adjusting Injournal ~~addition,~~entry ~~certain~~for ~~footnotes~~2024. toAdditionally, ~~such~~investment ~~financial~~securities ~~statements~~ were ~~required~~not ascounted aor ~~result~~reconciled ~~of such changes. Accordingly, the Company made certain corrections~~ to ~~previously~~detail reported financial statements for the year ended December 31, 2022, as more fully described below in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Restatement.”. records;

~~Although~~- ~~management~~The ~~concluded~~expense ~~that~~related ~~the adjustments~~ to ~~prior~~stock-based ~~year~~compensation ~~financial~~using ~~statements~~a ~~are~~modified ~~not~~Black-Scholes ~~material,~~pricing ~~management~~model ~~concluded~~had ~~that~~calculation ~~the~~errors ~~Company’s internal control over financial reporting, as defined by Sections 13a-15(f)~~ and ~~15d-15(f)~~needed ofto ~~the~~be ~~Exchange~~corrected ~~Act,~~with ~~was~~an ~~not~~adjusting ~~effective~~journal asentry offor ~~December 31, 2023~~2024.

Management has included a report on its assessment of internal control over financial reporting, including a description of identified material weaknesses, remediation efforts resulting in changes to internal control over financial reporting, and plans for further remediation in Item 9A, “Controls and Procedures.”.

If we identify new material weaknesses in our internal control over financial reporting, if we are unable to comply with the requirements of Section 404 in a timely manner, if we are unable to assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, we may be late with the filing of our periodic reports, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could be negatively affected. As a result of such failures, we could also become subject to investigations by the stock exchange on which our securities are listed, the SEC, or other regulatory authorities, and become subject to litigation from investors and stockholders, which could harm our reputation, financial condition or divert financial and management resources from our core business, and would have a material adverse effect on our business, financial condition and results of operations.

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Our compliance is focused on U.S. laws and we have not analyzed foreign laws regarding the participation of non-U.S. residents.

Some of the investment opportunities posted on our platform are open to non-U.S. residents. We have not researched all the applicable foreign laws and regulations, and we have not set up our structure to be compliant with foreign laws. It is possible that we may be deemed in violation of those laws, which could result in fines or penalties as well as reputational harm. This may limit our ability in the future to assist companies in accessing money from those investors, and compliance with those laws and regulations may limit our business operations and plans for future expansion.

StartEngine’s product offerings are relatively new in an industry that is still quickly evolving.

The principal securities regulations that we work with, Rule 506(c), Regulation A and Regulation Crowdfunding, have only been in effect in their current form since 2013, 2015 and 2016, respectively. StartEngine’s ability to continue to penetrate the market remains uncertain as potential issuer companies may choose to use different platforms or providers (including, in the case of Rule 506(c) and Regulation A, using their own online platform), or determine alternative methods of financing. Investors may decide to invest their money elsewhere. Further, our potential market may not be as large, or our industry may not grow as rapidly, as anticipated, for instance, according to the SEC, the size for the Regulation A market retracted in 2023 and remained about the same in 2024. With a smaller market than expected, we may have fewer customers. Success will likely be a factor of investing in the development and implementation of marketing campaigns, subsequent adoption by issuer companies as well as investors, and favorable changes in the regulatory environment. Finally, as more competitors enter the market, it will become more difficult to obtain business.

We have an evolving business model.

Our business model is one of innovation, including continuously working to expand our product lines and services to our clients, such as our expansion into the transfer agent and broker-dealer space as well as our foray into becoming an alternative trading system and acting as an exempt investment adviser for companies; see the “Item 1. Business - - Principal Products and Services”. It is unclear whether these services will be successful. Further, we continuously try to offer additional types of services, and we cannot offer any assurance that any of them will be successful. From time to time we may also modify aspects of our business model relating to our service offerings, for instance we are no longer focused on StartEngine Assets and securitizing collectibles in the Regulation A market and have turned our focus to the opportunity to purchase membership interests in funds (“SE Funds”) which own shares of venture capital backed, late-stage private companies via its StartEngine Private product offerings. StartEngine Private, which started in the 3rd quarter in 2023, was our main revenue generator in 2024. We cannot offer any assurance that these or any other modifications will be successful or will not result in harm to the business. We may not be able to manage this evolution effectively, which could damage our reputation, limit our growth, and negatively affect our operating results.

As we grow our business, we may not be able to manage our growth successfully.

If we are able to increase the scope of our business offerings, our customer base, the volume of our transactions and grow our business, we will face business risks commonly associated with rapidly growing companies, including the risk that existing management, information systems and financial and internal controls may be inadequate to support our growth. We cannot predict whether we will be able to respond on a timely basis, or at all, to the changing demands that our growth may impose on our existing management and infrastructure. For example, increasing demands on our infrastructure and management could cause any of the following to occur or increase:

inadequate internal controls required for a regulated entity;

inadequate financial controls needed as we transition to become a reporting company;

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delays in our ability to handle the volume of customers, including issuers; and

failure to properly review and supervise personnel to make sure we are compliant with our duties as regulated entities.

This risk is illustrated by the fact that, during preparation for financial reporting related to the year ended December 31, 2024 and 2023, and based on review from the auditors, the Company discovered certain errors (specifically for ~~warrant~~stock ~~and~~impairment, stock-based ~~valuation~~comp, ~~accrued~~as ~~liabilities,~~well ~~and~~as ~~accounts~~a ~~receivable~~significant deficiency relating revenue allocation between entities) in its previously reported quarterly financial statements for ~~the year ended December 31, 2022~~2024. The Company’s management has concluded that, in light of these errors, the Company’s ~~internal~~disclosure ~~control~~controls ~~over financial reporting as of December 31, 2023 was not effective. To address these material weaknesses, management has devoted,~~ and ~~plans~~procedures ~~to continue to devote, significant effort~~ and resources to the remediation and improvement of the Company’s internal control over financial reporting. While the Company has processes to identify and appropriately apply applicable accounting requirements, management has enhanced these processes in the past year by enhancing the process by which the Company reviews and presents financial statements, and has also invested in accounting software to ensure more accurate reporting. Management’s report on internal control over financial reporting, a description of the material weaknesses identified, resulting changes to internal control over financial reporting, and continued plans for remediation can be found in Item 9A “Controls and Procedures.” See also the above risk factor, “We have identified a material weakness(es) in our internal control over financial reporting. Failure to remediate the material weakness(es), or any other material weaknesses that we identify if the future, could result in material misstatements in our financial statements.”

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internal control over financial reporting as of December 31, 2024 was not effective. To address these material weaknesses, management has devoted, and plans to continue to devote, significant effort and resources to the remediation and improvement of the Company’s internal control over financial reporting. While the Company has processes to identify and appropriately apply applicable accounting requirements, management has enhanced these processes in the past year by enhancing the process by which the Company reviews and presents financial statements, and has also invested in additional accounting software to ensure more accurate reporting. Management’s report on internal control over financial reporting, a description of the material weaknesses identified, resulting changes to internal control over financial reporting, and continued plans for remediation can be found in Item 9A “Controls and Procedures.” See also the above risk factor, “We have identified material weaknesses in our internal control over financial reporting. Any failure to maintain effective internal control over financial reporting could impair the reliability of our financial statements, which in turn could harm our business, impair investor confidence in the accuracy and completeness of our financial reports and our access to the capital markets and cause the price of our common stock to decline and subject us to regulatory penalties.”

If we continue to have issues and/or fail to adapt our management, information systems and financial and internal controls to our growth, or if we encounter other unexpected difficulties, our business, financial condition and operating results will suffer.

We are primarily reliant on one main type of service.

Most of current services are variants on one type of service — providing a platform for online capital formation and online private securities transactions and ancillary services. Our revenues are therefore dependent upon the market for online ~~capital~~securities ~~formation~~markets.

We depend on key personnel and face challenges recruiting needed personnel.

Our future success depends on the efforts of a small number of key personnel, including our founder and Chief Executive Officer, Howard Marks, and our compliance, engineering and marketing teams. Expanding our compliance team in response to the growth in our business and the regulatory issues we have faced to date, is essential to our success, and recruiting and training compliance personnel will place demands on financial and management resources. Our software engineer team, as well as our marketing team led by Johanna Cronin, are critical to continually innovate and improve our products while operating in a highly regulated industry. In addition, due the specialized expertise required, we may not be able to recruit the individuals needed for our business needs. There can be no assurance that we will be successful in attracting and retaining the personnel we require to operate and be innovative.

StartEngine and its providers are vulnerable to hackers and cyber attacks.

As an internet-based business, we may be vulnerable to hackers who may access the data of our investors and the issuer companies that utilize our platform. Further, any significant disruption in service on the StartEngine platform or in its computer systems could reduce the attractiveness of the StartEngine platform and result in a loss of investors and companies interested in using our platform. Further, we rely on a third-party technology provider to provide some of our back-up technology as well as act as our escrow agent. Any disruptions of services or cyber attacks either on our technology provider or on StartEngine could harm our reputation and materially negatively impact our financial condition and business.

StartEngine currently relies on two vendors for escrow services.

We currently rely on Bryn Mawr Trust Company and Kingdom Trust to provide escrow services. ~~StartEngine processes its technology services in house for investment transactions (e.g., processing credit card and payments, electronic execution of the subscription agreements, etc.).~~ Any change in these relationships will require us to find another escrow agent and escrow bank. This may cause us delays as well as additional costs in transitioning our technology.

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We are dependent on general economic conditions.

Our business model is dependent on investors investing in the companies presented on our platforms. Investment dollars are disposable income. Our business model is thus dependent on national and international economic conditions. Adverse national and international economic conditions may reduce the future availability of investment dollars, which would negatively impact our revenues and possibly our ability to continue operations. It is not possible to accurately predict the potential adverse impacts on the Company, if any, of current economic conditions on its financial condition, operating results and cash flow.

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We face significant market competition.

We facilitate online capital formation and private securities transactions. Though ~~this~~online capital formation is a relatively new market, we compete against a variety of entrants in the market as well likely new entrants into the market. Some of these follow a regulatory model that is different from ours and might provide them competitive advantages. New entrants could include those that may already have a foothold in the securities industry, including some established broker-dealers. Further, online capital formation is not the only way to address helping start-ups raise capital, and the Company has to compete with a number of other approaches, including traditional venture capital investments, loans and other traditional methods of raising funds and companies conducting crowdfunding raises on their own websites. Additionally, some competitors and future competitors may be better capitalized than us, which would give them a significant advantage in marketing and operations.

Moreover, as we continue to expand our offerings, including providing administrative services to issuers, securitizing various asset classes and transfer agent services, we will continue to face headwinds and compete with companies that are more established and/or have more financial resources than we do and/or new entrants bringing disruptive technologies and/or ideas.

Finally, the Company faces increasing competition via StartEngine Private which is the Company’s new venture in which the Company provides accredited investors the opportunity to purchase membership interests in funds (“SE Funds”) which own shares of venture capital backed, late-stage private companies via its StartEngine Private product offering. As new competitors enter the market, acquisition of shares will become more difficult.

We may not be able to protect all of our intellectual property.

Our profitability may depend in part on our ability to effectively protect our proprietary rights, including obtaining trademarks for our brand names, protecting our products and websites, maintaining the secrecy of our internal workings and preserving our trade secrets, as well as our ability to operate without inadvertently infringing on the proprietary rights of others. There can be no assurance that we will be able to obtain future protections for our intellectual property or defend our current trademarks and future trademarks and patents. Further, policing and protecting our intellectual property against unauthorized use by third parties is time-consuming and expensive, and certain countries may not even recognize our intellectual property rights. There can also be no assurance that a third party will not assert infringement claims with respect to our products or technologies. Any litigation for both protecting our intellectual property or defending our use of certain technologies could have material adverse effect on our business, operating results and financial condition, regardless of the outcome of such litigation.

Our revenues and profits (if any) are subject to fluctuation.

It is difficult to accurately forecast our revenues and operating results, and these could fluctuate in the future due to a number of factors. These factors may include adverse changes in: number of investors and amount of investors’ dollars, the success of world securities markets, general economic conditions, our ability to market our platform to companies and investors, headcount and other operating costs, and general industry and regulatory conditions and requirements. The Company’s operating results may fluctuate from year to year due to the factors listed above and others not listed. At times, these fluctuations may be significant and could impact our ability to operate our business.

Natural disasters and other events beyond our control could materially adversely affect us.

Natural disasters or other catastrophic events may cause damage or disruption to our operations, international commerce and the global economy, and thus could have a strong negative effect on us. Our business operations are subject to interruption by natural disasters, fire, power shortages, pandemics and other events beyond our control. Although we maintain crisis management and disaster response plans, such events could make it difficult or impossible for us to deliver our services to our customers and could decrease demand for our services. Since the spring of 2020, large segments of the U.S. and global economies were impacted by COVID-19, a significant portion of the U.S. population were subject to “stay at home” or similar requirements. The extent of the impact of COVID-19 on our operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, impact on our customers (both issuers using our services and investors investing on our platform) and our sales cycles, impact on our customer, employee or industry events, and effect on our vendors, all of which are uncertain and cannot be predicted. At this point, the extent to which COVID-19 may impact our financial condition or results of operations is uncertain. To date, the COVID-19 outbreak has

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significantly impacted global markets, U.S. employment numbers, as well as the business prospects of many small business (our potential clients). A significant part of our business model is based on receiving a percentage of the investments made through our platform and services. Further, we are dependent on investments in our offerings to fund our business. However, to date, other than working remotely, COVID-19 has not had a negative impact on the Company itself. To the extent COVID-19 continues to wreak havoc on the markets and limits investment capital or personally impacts any of our key employees, it may have significant impact on our results and operations.

Risk Factors Related to the Common Stock

Voting control is in the hands of a few large stockholders.

Voting control is concentrated in the hands of a small number of stockholders. Our CEO and Chairman currently hold approximately 4025% of our voting shares in aggregate, including shares of our Common Stock and (on an as-converted basis) shares of our Series Seed Preferred Stock, Series A Preferred Stock and Series Seed Preferred Stock; and two other shareholders, SE Agoura Investment LLC and The Lee Miller Trust UA 09/05/2020, own approximately 21% and 11%, respectively, of our voting shares in aggregate. None of SE Agoura Investments LLC, The Lee Miller Trust UA 09/05/2020 or their beneficial owners are on our board or are employees of our company. Those four shareholders in aggregate control approximately 73% of our voting shares and approximately 52% of our preferred stock. See “Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” Holders of Common Stock are generally not be able to influence our policies or any other corporate matter, including the election of directors, changes to our company’s governance documents, expanding the employee option pool, and any merger, consolidation, sale of all or substantially all of our assets, or other major action requiring stockholder approval. Some of the larger stockholders include, or have the right to designate, executive officers and directors of our Board. These few people and entities make all major decisions regarding the company.

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Preferred Stock, Series A Preferred Stock and Series Seed Preferred Stock; and two other shareholders, SE Agoura Investment LLC and The Lee Miller Trust UA 09/05/2020, own approximately 17% and 7%, respectively, of our voting shares in aggregate. None of SE Agoura Investments LLC, The Lee Miller Trust UA 09/05/2020 or their beneficial owners serve on our Board or are employees of our Company. The trust, held on behalf of Mr. Marks’ family, which he does not control or beneficially own, owns approximately 2%. Those five shareholders in aggregate control approximately 51% of our voting shares and approximately 52% of our preferred stock. See “Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” Holders of our Common Stock are generally not be able to influence our policies or any other corporate matter, including the election of directors, changes to our Company’s governance documents, expanding the employee option pool, and any merger, consolidation, sale of all or substantially all of our assets, or other major action requiring stockholder approval. Some of the larger stockholders include, or have the right to designate, executive officers and directors of our Board. These few people and entities make all major decisions regarding the Company.

Future fundraising may affect the rights of investors.

In order to expand, the Company is likely to raise funds again in the future, either by offerings of securities or through borrowing from banks or other sources. The terms of future capital raising, such as loan agreements, may include covenants that give creditors greater rights over the financial resources of the Company.

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~~Company.

Holders of our outstanding Preferred Stock have liquidation preferences over holders of Common Stock. 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. If a liquidation event, including a sale of our ~~company~~Company, were to occur that resulted in a distribution of less than approximately $8 million, the holders of our Preferred Stock could be entitled to all proceeds of cash distributions.

There is a limited current market for our Common Stock.

Currently, the only marketplace for our Common Stock is and will be our alternative trading system or “ATS” branded as “StartEngine Secondary.” To date, we only have limited experience selling our shares on StartEngine Secondary; see “Item 1. Business – Principal Products and Services – StartEngine Secondary” and trading of our securities will only be available on StartEngine Secondary during limited periods, including periods where we do not have an open offering. To date, there has not been frequent enough trading to establish a market price. The limited volume of trading means that investors should assume that they may not be able to liquidate their investment for some time or to liquidate at their desired price. Further, it is unlikely that they will be able to pledge their shares as collateral.

Investors will need to keep records of their investment for tax purposes.

As with all investments in securities, investors who sell the Common Stock will probably need to pay tax on the long- or short-term capital gains that you realize if sold at a profit or set any loss against other income. If investors do not have a regular brokerage account, or their regular broker will not hold the Common Stock for them (and many brokers refuse to hold Regulation A securities for their customers) there will be nobody keeping records for investors for tax purposes and they will have to keep their own records, and calculate the gain on any sales of any securities they sell.

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customers) there will be nobody keeping records for investors for tax purposes and they will have to keep their own records, and calculate the gain on any sales of any securities they sell.

The price for our Common Stock may be volatile.

To date, there has not been enough trading of our shares to establish a market price. The market price of our Common Stock may be highly volatile, if and when any trading begins again in the future and there is sufficient volume of trading to establish a market price, is likely to be continue to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control, including the following:

We may not be able to compete successfully against current and future competitors.

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Our ability to obtain working capital financing.

Additions or departures of key personnel.

Sales of our shares.

Our ability to execute the business plan.

Operating results that fall below expectations.

Regulatory developments.

In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our securities. As a result, investors may be unable to resell your securities at a desired price.

Item 1B.Unresolved Staff Comments

None.

Item 1C.Cybersecurity

Risk Management and Strategy

In ~~2023~~2024, we did not identify any cybersecurity threats that have materially affected or are reasonably likely to materially affect our business strategy, results of operations, or financial condition. However, despite our efforts, we cannot eliminate all risks from cybersecurity threats, or provide assurances that we have not experienced undetected cybersecurity incidents.

Governance

Our Board has oversight of our strategic and business risk management and is responsible for ensuring that management has processes in place designed to identify and evaluate cybersecurity risks to which the Company is exposed and to implement processes and programs to manage cybersecurity risks and mitigate cybersecurity incidents. Our Board also oversees risks related to privacy and data use, including overseeing compliance with our comprehensive privacy program . Management is responsible for identifying, assessing, and managing material cybersecurity risks on an ongoing basis, establishing processes to ensure that such potential cybersecurity risk exposures are monitored, putting in place appropriate mitigation measures, maintaining cybersecurity policies and procedures, and providing regular reports to our board of directors.

Item 2.

Properties

We do not own any significant property. We are currently working remotely. We a have a service agreement for our office space at 4100 W Alameda Ave., Suite 300, Burbank, CA 91505. It is a month-to-month agreement.

Our subsidiary, StartEngine Assets LLC, owned a membership interest in a building located at 327 South Madison Way, Glendale, California 91205 in 2024. StartEngine Assets completed sale of this building on March 14, 2025.

Item 3.

Legal Proceedings

From time to time we may be involved in various disputes and litigation matters that arise in the ordinary course of business. Except as described below, the Company is not currently involved in any material litigation or threatened litigation. The Company was recently involved in an arbitration suit with an issuer whose offering was being conducted on the Company platform, StartEngine Capital. In 2021, the Company terminated the issuer’s offering and refunded investors for the amount previously raised prior to the termination. The issuer brought a claim against the Company for improperly relying on a recent SEC enforcement against a different crowdfunding portal in determining their course of action against the issuer. The Company and the issuer entered arbitration proceedings in July 2023.

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~~Currently,~~The ~~our~~matter ~~subsidiary,~~was ~~StartEngine~~resolved ~~Assets~~on ~~LLC~~January 19, ~~currently~~2024 ~~own~~and apayment ~~building~~of ~~located~~the atsettlement ~~327~~was ~~South~~resolved ~~Madison~~in ~~Way,~~March ~~Glendale,~~2024. ~~California~~The ~~91205~~settlement amount totaled $2.1 ~~StartEngine~~million ~~Assets~~of ~~intends~~which tothe ~~sell~~Company paid $200,000 with the ~~asset~~remaining in$1,900,000 ~~2024~~covered onby the ~~open~~Company’s ~~market~~liability insurance policy. The matter is now considered closed. The Company recuperated the $200,000 payment in February 2025.

Item 3. Legal Proceedings

StartEngine Capital LLC was informed on December 21, 2021 that FINRA had preliminarily determined to pursue formal charges with respect to events in the period November 2016 to January 2018. After further discussions with FINRA, our funding portal submitted a Letter of Acceptance, Waiver, and Consent (“AWC”) on March 11, 2022, and FINRA accepted the AWC on May 4, 2022. The AWC provides for a censure, a $350,000 fine, and a certification to be made by our funding portal that it has established and implemented policies, procedures, and internal controls sufficient to address the issues identified in the AWC. The issues identified in the AWC concern certain content on our website that FINRA found our funding portal knew or had reason to know was false or misleading and our funding portal’s supervision of such content.

Item 4.

Mine Safety Disclosures

None.

PART II

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

The Common Stock of the Company has been quoted on the alternative trading system branded StartEngine Secondary, and operated by our subsidiary, StartEngine Primary, under the symbol “STGC.” During the periods when the Company does not have an open offering, the Company’s Common Stock is quoted on StartEngine Secondary, and our securities may be less liquid, receive less coverage by security analysts and news media, and generate lower prices than might otherwise be obtained if they were listed on a national securities exchange.

The following table sets forth the high and low closing prices for our common stock for the quarters indicated as reported by StartEngine Secondary. These prices represent quotations between dealers without adjustment for retail mark-up, markdown or commission and may not represent actual transactions.

Our securities traded during the following period: ~~October~~January ~~2020 - June 2021. The Company effected a 3 for~~ 1, ~~split~~2024 in– ~~July~~June ~~2021~~30, we2024. We had a trading history as follows (adjusted on a post-split basis):


	HIGH		LOW
Quarter Ended:
June 30, 2021	$	4.00	$	3.00
March 31, 2024	$	0.25	$	0.10
March 31, 2021	$	4.66	$	2.83
June 30, 2024	$	0.16	$	0.13

22The Company did not register any trades from July 2024 to December 2024.

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The Company did not trade from June 2021 until January 2024, when it resumed trading on StartEngine Secondary.

Last Reported Price.

On ~~April~~March 531, ~~2024~~2025 the last reported closing price of our shares of common stock reported on the StartEngine Secondary was $20.951475 per share.

Increase in Authorized Shares and 20-for-1 Forward Split

On March 25, 2024, the Company distributed to holders of its Common Stock an Information Statement on Schedule 14C notifying them that on March 13, 2024, holders of at least a majority of the outstanding voting securities of the Company entitled to vote on the following matters (the “Consenting Stockholders”), acted by written consent in lieu of a special meeting of Stockholders to approve the Seventh Amendment and Restatement to the Company’s Certificate of Incorporation (the “Seventh Amended and Restated Certificate of Incorporation”) authorizing a forward split at a ratio of twenty shares for each one share (20-for-1) (the “Forward Split”) of issued and outstanding shares of Common Stock, Series Seed Preferred Stock, Series A Preferred Stock and Series T Preferred Stock (the “Preferred Stock”, and collectively the “Capital Stock”) and an increase in the number of authorized shares from 75,000,000 to 1,500,000,000.

The earliest these corporate actions could take effect would be May 4, 2024. For details regarding the Seventh Amended and Restated Certificate of Incorporation, the Forward Split, and the increase in the number of authorized shares, please see the Company’s Definitive Information Statement filed on March 25, 2024, available at https://www.sec.gov/Archives/edgar/data/1661779/000110465924038348/tm249584d1_def14c.htm.

Holders

As of ~~April~~March 1531, ~~2024~~2025, there were 34704,~~863~~783,~~194~~714 shares of common stock, which were held by approximately 3936,~~022~~038 shareholders of record. In addition, there were 10204,~~240~~810,~~536~~720 shares of our Series Seed Preferred Stock outstanding, which shares were held by 40 shareholders of record, there were 9185,~~272~~440,~~044~~880 shares of our Series Seed A Stock outstanding, which shares were held by 3 shareholders of record and there were ~~482~~9,~~104~~642,080 shares of our Series T Preferred Stock outstanding, which shares were held by 12 shareholders of record.

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Dividends

We have never paid cash dividends on any of our capital stock and we currently intend to retain our future earnings, if any, to fund the development and growth of our business. We do not intend to pay cash dividends to holders of our common stock in the foreseeable future.

Equity Compensation Plans


				Number of
				securities
	Number of			remaining
	securities	Weighted-		available for
	to be issued	average		future issuance
	upon	exercise		under equity
	exercise of	price of		compensation
	outstanding	outstanding		plans (excluding
	options,	options,		securities
	warrants	warrants		reflected in
Plan category	and rights (1)	and rights		column (a)) (1)
Equity compensation plans approved by security holders	11231,~~590~~800,000	$	40.1821	~~844~~16,~~797~~895,940
Equity compensation plans not approved by security holders	0	$	—	0
Total	11231,~~590~~800,000	$	40.1821	~~844~~16,~~797~~895,940

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(1) During the second quarter of 2024, the Company anticipates increasing its authorized shares of Capital Stock, including shares available for issuance under the Amended and Restated 2015 Equity Incentive Plan (the “Plan”), and effectuating a 20-for-1 forward split. Once completed, the number of shares to be issued upon exercise of outstanding options warrants and rights will be 199,667,720, and the number of shares available for future issuance under the Plan will be 16,895,940. For details, see above “Item 5 – Increase in Authorized Shares and 20-for-1 Forward Split.”

Recent Sales of Unregistered Securities and Use of Proceeds

During the past three years, the Company has engaged in the following offerings of securities*:

● From ~~August~~March 2715, ~~2021~~2022 through ~~December~~November 1910, ~~2021~~2023, the Company sold and issued 115,~~234~~404,~~922~~700 shares of Common Stock ~~under Regulation A~~ for a total of $1417,~~813~~263,~~168~~490, in addition another 13,~~128~~851,~~085~~300 shares of Common Stock was sold for a total of $134,~~958~~312,~~197~~920 by selling shareholders under ~~the Company’s~~ Regulation A ~~offering~~. Of the securities sold in the offering, ~~198~~805,~~977~~900 shares of Common Stock were sold where Dalmore was the broker-dealer and received $8030,~~586~~221 in commissions.

● From ~~March~~November 153, ~~2022~~2024 through ~~November~~December 1031, ~~2023~~2024, the Company sold and issued ~~770~~1,~~235~~816,124 shares of Common Stock for a total of $171,~~263~~966,~~490~~426, in addition another ~~192~~546,~~565~~049 shares of Common Stock was sold for a total of $4587,~~312,920~~487 by selling shareholders under Regulation A. ~~Of the securities sold in the offering, 40,295 shares of Common Stock were sold where Dalmore was the broker-dealer and received $30,221 in commissions.~~

Item 6.[Reserved]

Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and the related notes included elsewhere herein and in our consolidated financial statements.

In addition to our consolidated financial statements, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. See “Forward-Looking Statements” and “Item 1A. Risk Factors” for a discussion of the uncertainties, risks and assumptions associated with these statements.

Our Company

StartEngine Crowdfunding, Inc. was incorporated on March 19, 2014 in the State of Delaware. The Company was originally incorporated as StartEngine Crowdsourcing, Inc., but changed to the current name on May 8, 2014. The Company’s revenue-producing activities commenced in 2015 with the effectiveness of the amendments to Regulation A under the Securities Act adopted in response to Title IV of the JOBS Act. Operations expanded in 2016, as Regulation Crowdfunding, adopted in response to Title III of the JOBS Act, went into effect. On June 10, 2019, our subsidiary, StartEngine Primary LLC, was approved for membership as a broker-dealer with FINRA. The Company became an Exempt Reporting Advisor on January 8, 2024.

~~Business and Trends~~23

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~~bad~~to ~~actor~~Title ~~checks~~IV ~~for~~of ~~companies~~the ~~utilizing~~JOBS ~~our services~~Act. ~~The~~Operations ~~Company~~expanded ~~also~~in ~~receives~~2016, ~~revenues from other programs such~~ as ~~the~~Regulation ~~StartEngine~~Crowdfunding, ~~OWNers~~adopted ~~where~~in weresponse ~~sell~~to ~~annual~~Title ~~memberships~~III of the ~~StartEngine~~JOBS ~~OWNers bonus program for $275 per year~~Act, ~~and~~went ~~StartEngine~~into ~~Secondary~~effect. WeOn ~~launched StartEngine Secondary on May~~June 1810, ~~2020~~2019, ~~and~~our ~~generate revenues by charging trade commissions to the sellers of the shares. To date~~subsidiary, StartEngine ~~Secondary~~Primary ~~has a limited operating history. Through year end 2023~~LLC, ~~the~~was ~~Company~~approved ~~itself~~for asmembership ~~well~~ as ~~twenty~~a broker-~~four~~dealer ~~additional~~with ~~companies are quoted on this platform~~FINRA. InThe Q3Company’s ~~2023~~subsidiary, ~~we established~~ StartEngine ~~Private~~Adviser ~~which~~LLC ~~provides~~filed ~~accredited~~as ~~investors~~an ~~the~~exempt ~~opportunity~~reporting toadvisor ~~purchase~~with ~~membership~~the ~~interests~~SEC inon ~~funds~~January ~~our SE Funds~~8, ~~which own shares of venture capital backed, late-stage private companies~~2024.

Business and Trends

For Regulation A offerings, our broker-dealer subsidiary is permitted to charge commissions to the companies that raise funds on our platform. Regulation A offerings are subject to a commission ranging between 4% and 7% and usually include warrants to purchase shares of the Company or the securities that are the subject of the offering. The amount of commission is based on the risks and other factors associated with the offering. Through StartEngine Primary, we can also charge commissions on Regulation D offerings hosted on our platform. During the periods covered in these financial statements we did not receive any Regulation D commissions. In Regulation Crowdfunding offerings, our funding portal subsidiary is permitted to charge commissions to the companies that raise funds on our platform. We typically charge 6% to 10% for Regulation Crowdfunding offerings on our platform. We also generate revenue from services, which include a consulting package for Regulation Crowdfunding issuers called StartEngine Premium priced at $15,000 to help companies who raise capital with Regulation Crowdfunding, as well as transfer agent services marketed as StartEngine Secure. In Q2 2024, the Company shifted the Secure billing from annual invoices at $10 per user to tiered service annual contract for $250 or $350 per month. We additionally charge a $1,000 fee for certain amendments we file on behalf of companies raising capital under Regulation Crowdfunding as well as fees to run the required bad actor checks for companies utilizing our services. The Company also receives revenues from other programs such as the StartEngine Venture club (formerly OWNers bonus) program and StartEngine Secondary. Our annual memberships for the StartEngine Venture Club bonus program are $275 per year. We launched StartEngine Secondary on May 18, 2020 and generate revenues by charging trade commissions to the sellers of the shares. Through December 31, 2024, the Company itself as well as twenty-four additional companies have been quoted on this platform. In Q3 2023 the Company began providing accredited investors the opportunity to purchase membership interests in funds (“SE Funds”) which own shares of venture capital backed, late-stage private companies via its StartEngine Private product offering. The SE Funds are managed by StartEngine Private Manager LLC and advised by StartEngine Adviser LLC, an exempt reporting adviser.

Trend Information

We are operating in a relatively new industry and there is a level of uncertainty about how fast the volume of activity will increase and how future regulatory requirements may change the landscape. We continue to innovate and ~~introducing~~introduce new products to include in our current mix as well as continuing to improve our current services such as providing liquidity for our investors and issuers. For instance, StartEngine Private which was a new product launched in the Q3 2023, has become our largest revenue generator in 2024.

As we are a financial services company, our business, results of operations, and reputation are directly affected by elements beyond our control, such as economic and political conditions including unemployment rates, inflation and tax and interest rates, financial market volatility (such as we experienced during the COVID-19 pandemic), broad trends in business and finance, and changes in the markets in which such transactions occur (such as the bear markets that developed for equities in the second and third quarter of 2022), we might be disproportionately affected by declines in investor confidence caused by adverse economic conditions.

On June 10, 2019, our subsidiary, StartEngine Primary LLC, was approved for membership as a broker-dealer with FINRA. Since our approval as a broker-dealer, we have experienced increased costs for payroll and training that we believe continue to increase relative to our revenue. We anticipate that this trend will continue into 2024 as the Company explores new avenues for revenue and growth. In addition, in April 2020 we received approval to operate an ATS. StartEngine Primary launched its ATS, branded as “StartEngine Secondary” on May 18, 2020. StartEngine Secondary has a limited operating history, and even though over 400 issuers have signed to be quoted on this platform, only twenty-five companies have been quoted on this platform to date, including the Company itself. Currently, for StartEngine Secondary, we generate revenues by charging trade commissions to the sellers of the shares and we intend to generate revenues by charging a 5% commission to the seller. We ~~expect~~have experience increased costs due to technology and operations related to the operation of our ATS. We anticipate operating the ATS will initially increase our overall expenses by $50,000 per month. Further, we anticipate receiving increased revenue related to offerings under Regulation A.

~~In June 2022, we became a reporting company, as a result of which we anticipate higher internal costs related to the increased administrative burden as well as higher professional fees.~~ On August 6, 2023, the Company launched “StartEngine Private”, a venture to provide accredited investors the opportunity to purchase membership interests in series which own shares of VC backed, and generally late-stage private companies(the “underlying securities”). The Company ~~will~~treats ~~receive~~the ~~revenue~~amount atit ~~the~~receives ~~price~~for ~~sold~~selling tounderlying ~~the~~securities SEas ~~Funds~~revenues, ~~with~~and the ~~selling~~acquisition cost ~~consisting~~related ofto ~~the~~such ~~cost~~underlying ~~basis~~securities ofas ~~the~~cost ~~stock~~of ~~purchased by the Company~~revenues.

We additionally anticipate having to engage and train additional compliance personnel, to better ensure continued compliance with FINRA and SEC and also in order to expand our broker-dealer operations.24

Restatement

During preparation for financial reporting related to the year ended December 31, 2023, the Company discovered certain errors in previously reported financial statements for the year ended December 31, 2022. The Company’s management conducted an investigation with the Company’s independent auditors. As a result of this investigation, the Company determined that several accounts required correction to be in accordance with US GAAP. In addition, certain footnotes to such financial statements were required as a result of such changes. Accordingly, the Company made certain corrections to previously reported financial statements for the year ended December 31, 2022, as more fully described below.

The restatement also includes corrections for other errors identified as immaterial, individually and in aggregate, to our consolidated financial statements.

Descriptions of Misstatements

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The Company had been impairing the warrants at a flat rate, which was not compliant with GAAP. In reviewing the warrants using Black-Scholes modeling, the company determined that an additional impairment based on a Black Scholes analysis was necessary as the value of the warrants at year end 2022 was overstated. Additionally, an intercompany transaction for the transfer of assets between entities was reversed.

b. Gross up and impairment of stock compensation: The company had historically performed a flat 33% impairment of shares received as compensation. In reviewing the stock assets, however, it was determined that the certain stocks held had increased in value based on subsequent raises hosted by the Company on its proprietary site. Using the updated offer price per share, the company adjusted the prior raise stock value to the new market value of the stock. Additionally, the Company performed a more comprehensive analysis of the impairment to stock assets held and adjusted the impairment to be in line with the 33% estimated impairment for stocks that did not host an additional capital raise with the Company.

c. Correction of receivable accounts: While testing the balances of receivable accounts, the company determined that balances included in the accounts receivable, advertising loan and other reimbursable expense asset accounts were uncollectible, and the asset accounts were overstated as of year-end 2022.

d. Correction of prepaid expense amortization: While testing the beginning balance of prepaid expenses, it was determined that the expense for purchases were incurred, but not properly expensed to the income statement in 2022, resulting in an overstatement of assets and retained earnings.

e. Correction of liability accounts: While testing the subsequent activity in 2023 for 2022 accounts, it was determined that liability accounts relating to the Company credit card expenses (“Ramp card”), payroll accrual and the bonus payable to employees were not accrued for the correct amount at year end 2022 for the expense incurred in the period. This resulted in an understatement of liability accounts and an overstatement of retained earnings.

f. Reclassification of contra balance accounts: While reviewing the year-end balance sheet accounts, it was determined that several liability accounts incorrectly held debit or “contra liability” balances from items that should have been expensed in 2022. Additionally, an asset account held a credit or “contra asset” balance at year-end 2022. The result of this error was an understatement of liability accounts and an overstatement of equity accounts.

g. Reclassification of Collectible assets: While testing the beginning balance of the StartEngine Collectibles assets held for sale, it was determined that artwork had been incorrectly classified as comics, and Wine assets were overstated, resulting in an overstatement of equity and assets.

~~Description~~As a Company, we are always reevaluating processes and procedures as it pertains to the success of ~~Restatement~~the ~~Tables~~business. As such, the Company remains agile on changes in the market as well as the demand for services provided by the Crowdfunding industry. At the end of 2024, the Company determined that a reduction in workforce was required as the market for regulation A and Crowdfunding stagnated. This decision to reduce headcount by 25% was made in an effort to remain nimble in a competitive market and help reduce costs as the Company aims for profitability in 2025.

The following tables present the impact of the restatements on our previously reported consolidated balance sheet, statement of operations, and cash flows for the year ended December 31, 2022. The effects to the consolidated statement of stockholders’ equity has not been presented as such changes are reflected in the totals included in the consolidated balance sheet.

~~Position~~We additionally have engaged and ~~Adjusting~~trained ~~Entries~~and anticipate having to engage and train further additional compliance personnel, to better ensure continued compliance with FINRA and SEC regulatory requirements and also in order to expand our broker-dealer operations. Further we anticipate hiring additional sales and marketing personnel to help increase our customer base with respect to both issuers as well as investors

~~The~~In ~~Company~~2024, ~~has~~the ~~determined~~Company ~~that~~began ~~these~~hosting ~~transactions~~its ~~are~~new ~~not~~Regulation ~~material~~Crowdfunding inissuances with the ~~years~~broker-dealer ~~they~~entity ~~occurred~~for regulatory and ~~conclude~~compliance ~~that prior financial reports can be relied upon~~reasons. ~~The~~As ~~Company’s determination is based on~~ the ~~following:~~legacy ~~The~~Regulation ~~adjustments~~Crowdfunding doraises ~~not~~complete ~~cause~~their ~~any~~issuance, ~~changes to~~ the ~~previously~~remaining ~~reported~~revenue ~~cash~~from ~~balances~~them aswill ofbe ~~the~~booked ~~end~~to of the ~~period~~current inStartEngine ~~2022.~~Capital ~~The~~entity, ~~adjustments~~which ~~also~~is do not ~~cause~~a ~~any changes to revenues in the prior period~~broker-dealer. ~~The~~We ~~Company~~expect ~~has determined~~ that ~~the~~this ~~adjustments~~transition ~~have~~to ~~had~~all ~~little~~Regulation ~~effect~~A ~~on the trend of earnings over the last three years. The Company reported losses in 2021~~ and ~~2022~~Crowdfunding ~~prior~~raises ~~to the adjustments and~~ will ~~maintain~~be acomplete ~~loss~~by ~~position~~the inend ~~2023~~of 2025.

Although management concluded that the adjustments to prior year financial statements are not material, management concluded that the Company’s internal control over financial reporting, as defined by Sections 13a-15(f) and 15d-15(f) of the Exchange Act, was not effective as of December 31, 2023. Management has included a reporting on its assessment of internal control over financial reporting, including a description of identified material weaknesses, remediation efforts made, and plans for further remediation in Item 9A, “Controls and Procedures.”

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Balance Sheet:


	Year Ended December 31, 2022
	Previously
	Reported		Adjustment		As Restated
Assets:
Cash	$	15,460,469	$	—	$	15,460,469
Marketable Securities		1,856		—		1,856
AR, Net		702,257		(23,585)		678,672	(c)
Other Current Assets		1,953,756		(649,455)		1,304,301	(d) (f)
Total Current Assets	$	18,118,338	$	(673,040)	$	17,445,298

PPE	$	109,141	$	—	$	109,141
Investments - Warrants		1,496,701		(1,289,806)		206,895	(a)
Investments - Stock		6,479,340		1,464,477		7,943,817	(b)
Investment - Collectibles		3,072,227		(87,528)		2,984,699	(g)
Investments - RE		2,136,628		—		2,136,628
Intangible Assets		20,000		—		20,000
Other Assets		66,603		—		66,603
Total Assets	$	31,498,978	$	(585,897)	$	30,913,081

Liabilities:
AP	$	(284,371)	$	—	$	(284,371)
Accrued Liabilities		(1,760,920)		(1,024,580)		(2,785,500)	(e)
Deferred Revenue		(2,715,422)		—		(2,715,422)
Total Current Liabilities	$	(4,760,713)	$	(1,024,580)	$	(5,785,293)

Equity:
Series A Preferred	$	(5,286,667)	$	—	$	(5,286,667)
Series T Preferred		(983,634)		—		(983,634)
Series Seed Preferred		(1,706,756)		—		(1,706,756)
Common Stock		(332)		—		(332)
APIC		(45,639,151)		213,548		(45,425,603)	(f)
NCI		13,251		—		13,251
Retained Earnings		26,865,024		1,396,929		28,261,953
Total Equity	$	(26,738,265)	$	1,610,477	$	(25,127,788)

Statement of Operations:


	Year Ended December 31, 2022
	Previously
	Reported		Adjustment		As Restated

Revenue	$	(24,360,685)	$	—	$	(24,360,685)
Cost of Revenue		6,368,629		682,269		7,050,898	(e)
G&A		8,723,615		881,760		9,605,375	(c) (d)
Sales and Marketing		12,478,887		7,571		12,486,458	(c) (e)
R&D		4,667,593		—		4,667,593
Change in fair value - warrants		169,520		1,289,806		1,459,326	(a)
Impairment - shares		21,863		(1,464,477)		(1,442,614)	(b)
Other Income/Expense		(188,684)		—		(188,684)
Income taxes		63,563	$	—	$	63,563
Net Loss	$	7,944,301		1,396,929		9,341,230

Operating Results

Year Ended December 31, ~~2023~~2024 Compared with the Year Ended December 31, ~~2022~~2023

The following table summarizes the results of our operations for the fiscal year ended December 31, ~~2023~~2024 as compared to the fiscal year ended December 31, ~~2022~~2023.


	Year Ended December 31,
	~~2023~~2024		~~2022~~2023			$ Change


Revenues	$	48,625,508	$	23,385,998	$	25,239,510

Cost of revenues		25,873,241		8,703,894		17,169,347

Gross profit		22,752,267		14,682,104		8,070,163

Operating expenses:
General and administrative		13,758,127		10,207,544		3,550,583
Sales and marketing		16,473,905		13,013,676		3,460,229
Research and development		7,796,521		5,779,920		2,016,601
Change in fair value of warrants received for fees		135,384		11,409		123,975
Change in fair value of shares received for fees		724,933		2,122,211		(1,397,278)
Total operating expenses		38,888,870		31,134,760		7,754,110

Operating income (loss)		(16,136,603)		(16,452,656)		316,053

Other expense (income), net:
Other expense (income), net		400,055		(144,290)		544,345
Total other expense (income), net		400,055		(144,290)		544,345

Income (loss) before provision for income taxes		(16,536,658)		(16,308,366)		(228,292)

Taxes - Other		—		67,112		(67,112)

Net income (loss)		(16,536,658)		(16,375,478)		(161,180)

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				(Restated)

Revenues	$	23,385,998	$	24,360,685	$	(974,687)

Cost of revenues		8,703,894		7,050,898		1,652,996

Gross profit		14,682,104		17,309,787		(2,627,683)

Operating expenses:
General and administrative		10,207,544		9,605,375		602,169
Sales and marketing		13,013,676		12,486,458		527,218
Research and development		5,779,920		4,667,593		1,112,327
Change in fair value of warrants received for fees		11,409		1,459,326		(1,447,917)
Impairment in value of shares received for fees		2,122,211		(1,442,614)		3,564,825
Total operating expenses		31,134,760		26,776,138		4,358,622

Operating income (loss)		(16,452,656)		(9,466,351)		(6,986,305)

Other expense (income), net:
Other expense (income), net		(144,290)		(188,684)		(44,394)
Total other expense (income), net		(144,290)		(188,684)		(44,394)

Income (loss) before provision for income taxes		(16,308,366)		(9,277,667)		(7,030,699)

Taxes - Other		67,112		63,563		3,549

Net income (loss)		(16,375,478)		(9,341,230)		(7,034,248)
Less: net loss attributable to noncontrolling interest		—		(9,124)		9,124
Net Income (loss) attributable to stockholders	$	(16,375,478)	$	(9,332,106)	$	(7,043,372)

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Revenues

Our revenues during the fiscal year ended December 31, ~~2023~~2024 were $48,625,508, compared to $23,385,998, ~~which~~for ~~represented~~the afiscal ~~decrease~~year ofended ~~$974~~December 31,~~687,~~ ~~or 4%~~2023, ~~from~~which ~~revenues~~represented inan ~~the~~increase ~~same~~of ~~period~~$25,239,510, inor ~~2022~~108%. The ~~following~~table ~~are~~below represents the major components of our revenues during the year ended December 31, ~~2023~~2024 and ~~2022~~2023:


	Year Ended		Year Ended
	Ended December 31,		Ended December 31,
	~~2023~~2024		~~2022~~2023		$ Change
Regulation Crowdfunding platform fees	$	11,115,372	$	10,278,596	$	836,776
Regulation A commissions		919,825		5,421,047		(4,501,222)
StartEngine Premium		2,740,337		2,289,999		450,338
StartEngine Secure		1,426,320		1,286,483		139,837
StartEngine Private		2,709,621		—		2,709,621
OWNers Bonus revenue		4,280,009		4,437,943		(157,934)
Other service revenue		194,514		646,617		(452,103)

Total revenues	$	23,385,998	$	24,360,685	$	(974,687)
Regulation Crowdfunding platform fees	$	8,672,825	$	11,115,372	$	(2,442,547)
Regulation A commissions		2,711,712		919,825		1,791,887
StartEngine Premium		2,455,425		2,740,337		(284,912)
StartEngine Secure		1,366,502		1,426,320		(59,818)
StartEngine Private		27,883,143		2,709,621		25,173,522
Venture Club (formerly OWNers Bonus) revenue		5,352,347		4,280,009		1,072,338
Other service revenue		183,554		194,514		(10,960)

Total revenues	$	48,625,508	$	23,385,998	$	25,239,510

The ~~Company~~increase ~~experienced~~in ~~mixed~~total ~~results~~revenues ~~depending~~in onyear ~~the~~ended ~~service~~December or31, ~~products~~2024 ~~providing~~as ~~that~~compared ~~particular~~to ~~stream~~the ofsame ~~revenue~~period ~~during~~in 2023. ~~While~~is weprimarily ~~saw~~due ato ~~decrease~~StartEngine Private, which began generating revenue in aQ4 ~~Regulation~~2023. AThe ~~commissions~~$27,883,143 ~~and~~represents ~~other~~closings ~~revenues~~on 41 StartEngine Private offerings, ~~including~~and ~~related~~the Company plans to ~~the~~continue ~~closing~~growing ofthis ~~StartEngine~~revenue ~~Assets,~~source in the ~~decrease~~future. ~~was~~Though ~~muted~~this byis ~~both~~a ~~continued~~significant ~~growth~~increase in ~~platform~~revenues ~~fees~~we ~~for~~note ~~Regulation~~this CFis asa ~~well~~lower asmargin ~~the~~product, ~~introduction~~see “Cost of ~~the~~Revenue” ~~new~~below. ~~StartEngine~~

28The Company experienced varied financial performance across its other product streams in 2024. While there was a decline in Regulation CF commissions and other related revenues - partly due to the closure of StartEngine Assets - this downturn was offset by continued growth in platform fees associated with Regulation A offerings.

Specifically, for the year ended December 31, 2024, compared to the same period in 2023, the Company observed the following revenue trends across its other product lines:

●

Decrease in Regulation Crowdfunding platform fees of $2,442,547: The decline in Regulation Crowdfunding platform fees was primarily driven by lower total amounts raised, resulting from a reduced number of issuers participating in Regulation Crowdfunding offerings. In Q1 2024, the Company adopted a strategic shift aimed at prioritizing issuers with a higher likelihood of successful raises. While this approach led to slightly increased the average amount raised per issuer, the reduced issuer volume had a greater negative impact on revenue than initially projected.

Although the strategy was implemented at the beginning of 2024, its effect on revenue did not become apparent until the end of Q2 and continued through Q3 2024. In response, the Company amended its strategy to support a broader base of issuers going forward with an aim to maximize revenue for future periods.

For the year ended December 31, 2024, approximately $79 million was raised from 203 issuers, compared to $110 million raised from 277 issuers in the same period of 2023.*

●

Increase in Regulation A commissions of $1,791,887: Due primarily to higher amounts raised in Regulation A offerings for its issuers. Regulation A revenue is more sensitive to revenue variance based on the performance of the top raisers. Specifically, during the period ended December 31, 2024, the Company raised approximately $31 million for 11 issuers including $24 million for its top 3 issuers. For the period ended December 31, 2023 the Company raised approximately $13 million for 19 issuers including $9 million for its top 3 issuers.*

●

Decrease in revenues of $59,818 from StartEngine Secure: This was due primarily to a shift in pricing for the service provided. In 2024, the Company changed its Secure model from annual invoices at $10 per investor to an annual service commitment with a charge of either $350 or $250 per month depending on the tier. This change was made to ensure more issuers would utilize the service as well as increase collectability of funds as the issuers pay via credit card.

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~~Private~~● ~~which~~Decrease ~~began~~in ~~generating~~StartEngine Premium revenue inof Q4$450,338: ~~2023.~~Due ~~Specifically,~~primarily ~~between~~fewer launches during the ~~year-end~~period ended December 31, ~~2023~~2024. asThis ~~compared~~is toprimarily ~~the~~a ~~same~~Regulation ~~period~~Crowdfunding inrelated ~~2022~~product, weand ~~saw~~as the ~~following~~Crowdfunding ~~movements~~business decreased in 2024, premium revenue ~~related~~decreased toin ~~our~~tandem. ~~products:~~Further the service charge of $15,000 is collected upon first disbursement per the issuer agreement. As launches decreased for the year ended December 31, 2024, there were fewer Premium payments collected.

● Increase in ~~Regulation~~StartEngine ~~Crowdfunding~~Venture ~~platform~~Club ~~fees~~revenue of $~~836~~1,~~776~~072,338: ~~due~~Primarily ~~primarily~~related to higher ~~amounts~~sales ~~raised~~of byVenture ~~issuers~~Club induring ~~Regulation~~the ~~Crowdfunding~~period ~~offerings~~ended ~~despite~~December ~~having~~31, ~~fewer~~2024 ~~issuers.~~and ~~Specifically,~~continuing ininto ~~2023,~~2025 ~~the~~compared ~~Company~~to ~~raised~~the ~~approximately~~period ~~$110~~ended ~~million~~December ~~from~~31, ~~277~~2023. ~~issuers~~Venture ~~compared~~Club ~~with~~are ~~2022~~annual ~~raising~~packages, ~~approximately~~which ~~$102~~are ~~million~~recognized ~~from~~over ~~415~~12 issuers.*months, ~~Top~~see 5Note ~~raises~~2 in– ~~2023~~“Revenue ~~raised~~Recognition” ~~$20.9~~to ~~million~~the ofaccompanying ~~the~~financial ~~$25~~statements, ~~million~~and ~~maximum~~therefore ~~amount~~the ~~allowable~~performance toof ~~raise~~this ~~for~~product 5in ~~Regulation~~terms CFof ~~issuers~~revenue vsrecognition ~~$17.0~~lags ~~million~~behind inactual ~~2022~~sales.

● Decrease in ~~Regulation~~other Aservice ~~commissions~~revenue of $410,~~501,222,~~960: ~~due~~Other ~~primarily~~service torevenue ~~lower~~includes ~~amounts~~revenue ~~raised~~from inadditional ~~Regulation~~services Asuch ~~offerings~~as ~~for~~material ~~its~~amendments ~~issuers.~~to ~~Specifically,~~issuer inagreements ~~2023,~~and ~~the~~revenue ~~Company~~from ~~raised~~StartEngine’s ~~approximately~~Secondary ~~$15 million for issuers compared with 2022 raising approximately $60 million for issuers~~marketplace.*

● Increase in revenues of $139,837 from StartEngine Secure, primarily due to a price increase for our services from $3 per investor to $10 per investor during Q4 2022, which compensated for a slight decrease in number of issuers utilizing the service. As of December 31, 2023, we had 539 companies compared with 570 companies as of December 31, 2022.

● Increase in StartEngine Premium revenue of $450,338 due primarily to an increase in pricing of StartEngine Premium from $10,000 to $15,000 for issuers signed after Q2 2022.

● Decrease in StartEngine OWNers Bonus revenue of $157,934 related to fewer sales of OWNers Bonuses during 2022 and continuing into 2023 compared to 2022. OWNers Bonuses are annual packages, which are recognized over 12 months, see Note 2 – “Revenue Recognition” to the accompanying financial statements, and therefore the performance of this product in terms of revenue recognition lags behind actual sales.

● Decrease in other service revenue of $452,103. Other service revenue includes revenue from StartEngine Assets sales, which recorded sales of $47,773 in 2023 versus $397,715 in 2022.

● Addition of StartEngine Private revenue of $2,709,621 due to the successful raise of 5 issuances in 2023, the service began in Q4 2023.

*Offerings can span multiple periods and the amount raised during a period is based on the amounts closed on during that period.

Cost of Revenues

Our cost of revenues during the ~~year~~three months ended December 31, 2024 ~~2023~~ was $825,~~703~~873,~~894~~241, which represented an increase of $117,~~652~~169,~~996~~347, or 23197%, from the amounts during the same period in ~~2022~~2023. ~~due~~The toincrease ~~increased~~was ~~costs~~primarily ~~related to~~ due ~~diligence on new issuers, StartEngine no longer passing through credit card costs~~ to ~~new issuers as of Q2 2023 and~~ the addition of ~~selling~~cost ~~costs~~of revenue related to StartEngine Private., ~~Our~~which ~~gross~~began ~~margin~~sales in the ~~year~~last ~~ended~~quarter ~~December~~of ~~31,~~2023 ~~2022~~and ~~decreased~~totaled to$17,281,432 ~~63%~~for ~~compared to 71% in 2022~~2024. ~~This~~For ~~decrease~~StartEngine isPrivate, ~~due~~cost toof anrevenues ~~increase~~includes ~~in employee~~the ~~headcount~~costs ~~for~~of ~~further~~purchasing ~~diligence~~the onstock ~~our~~as ~~issuers~~well ~~and~~as ~~investors,~~the ascost ~~well~~of asthe ~~higher~~dedicated ~~transaction~~sales ~~costs~~staff (including ~~escrow~~commission ~~fees~~for ~~which~~sales of the ~~Company~~issuance). ~~bears~~Our ~~the~~gross ~~cost~~margin onfor ~~behalf~~this ofproduct ~~issuers~~in as2024 ~~well~~was as37%. ~~the~~Our ~~addition~~gross ofmargin ~~selling~~for ~~costs~~the ~~related~~year toended ~~StartEngine~~December ~~Private~~31, ~~which~~2024 ~~commenced~~decreased into Q447% ~~2023~~compared ~~and~~to ~~carries~~63% aduring ~~lower~~the ~~gross~~same ~~margin~~period ofin ~~approximately 33%~~2023.

Operating Expenses

~~Our~~The Company’s total operating expenses during the year ended December 31, ~~2023~~2024 amounted to $3138,~~134~~888,~~760~~870, which represented an increase of $47,~~358~~754,~~622~~110 or 1625%, from the expenses in the same period in ~~2022~~2023. The increase in operating expenses is primarily due to the following:

● Increase in general and administrative expenses of $~~602~~3,~~169~~550,583: ~~primarily~~Primarily due to the inclusion of amortization expense for the SeedInvest acquisition, which ~~totaled~~increased by $21,~~248~~179,~~963~~608 for a full year of amortization in 2024, whereas amortization did not begin in 2023. ~~This~~until ~~increase~~May when the purchase was ~~offset~~completed. byAdditionally, ~~the~~an ~~decrease~~increase in payroll expenses of $1,~~220~~518,~~085~~381 aswas ~~the~~due ~~Company~~to ~~maintained~~increased acommission ~~smaller~~relating ~~G&A~~to ~~headcount~~revenue based bonus payout, and finally increase in ~~2023~~software asexpense ~~well~~of $354,717 as the ~~$350,000~~Company ~~penalty~~leverages ~~paid~~more intechnology ~~2022~~to ~~that~~improve ~~was~~process ~~not~~efficiency ~~replicated~~and inscale ~~2023~~the business.

29● Sales and marketing expenses increased by $3,460,229 for the year ended December 31, 2024: This increase was primarily driven by a $1,071,071 rise in stock-based compensation, reflecting stock option grants issued at a higher strike price of $1.25 per share compared to previous issuances. Additionally, marketing expenses increased by $1,081,286, which was due to the Company focusing advertising to raise its brand awareness and further utilize referral services and scouts to find new issuers for the platform. Finally, sales salaries rose by $802,631 due to the hiring of additional personnel to support expanded sales efforts during the year.

●

Increase in research and development expenses of $2,016,601: Research and development expenses increased by $2,016,601 for the year ended December 31, 2024. This increase was primarily attributable to an expansion in headcount as the Company intensified its efforts to enhance the platform and underlying technology. As a result, payroll and bonus expenses related to research and development rose by $567,281. Additionally, stock-based compensation increased by $1,220,546, reflecting the issuance of stock options at a higher strike price of $1.25 per share compared to prior grants.

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●These ~~Increase~~increases inwere ~~sales~~partially ~~and~~offset ~~marketing~~by ~~expenses~~a ofdecrease ~~$527,218~~in ~~primarily~~write ~~due~~down toof anshares ~~increase~~received infor ~~stock~~fees ~~based~~by ~~compensation of~~ $1,~~950~~397,~~956~~278 ~~which~~as isthe ~~granted~~Company athad afewer ~~higher~~write ~~strike~~down ~~price~~ of ~~$25 per~~ share ~~compared~~expense toin ~~prior~~2024 ~~stock~~due ~~option~~to ~~grants. This~~ increase ~~was~~price ~~offset~~per byshare aof ~~$1,334,544~~return ~~decrease~~issuers inand ~~marketing~~less ~~advertising~~write ~~expense~~down asof ~~the~~historically ~~Company~~held ~~focused on reducing expenses~~stock.

● Increase in research and development expenses of $1,112,327 due to increased headcount as the Company focused on enhancing its platform and technology which lead to an increase of payroll and bonus expenses related to research and development of $342,615. Additionally, stock-based compensation increased $719,864 which was granted at a higher strike price of $25 per share compared to prior stock option grants.

Other Expense (Income), net

Our other ~~income~~expense, net during the year ended December 31, ~~2023~~2024 amounted to $~~144~~400,~~290~~055, which ~~represented~~included ~~cashback~~loss ~~earned~~ from ~~our credit cards during~~ the ~~period~~sale asof ~~well as dividends earn by~~ the ~~company’s~~membership ~~Vanguard~~in ~~account holdings and interest earned through~~ the ~~company’s~~apartment ~~money~~building ~~market~~of ~~accounts~~$432,148. During the same period in ~~2022~~2023 our other income, net was $~~188~~144,~~684~~290 which primarily represented cashback earned from our credit cards as well as dividends earn by the Company’s Vanguard account holdings and interest earned through the Company’s money market accounts during that period.

Net Loss ~~(Income)~~

Net loss ~~attributable to shareholders~~ totaled $16,~~375~~536,~~478~~658 for the year ended December 31, ~~2023~~2024, an increase of $7161,~~043,372~~180 compared to a net loss of $916,~~332~~375,~~106~~478 recognized during the year ended December 31, ~~2022~~2023. The primary drivers of this increase include the impairment warrants and write down of stock received by the company as compensation of $2,133,620. Additionally, the Company increased stock based compensation for employees by $3,063,977 due to the higher strike price of $25, and amortized the purchase of SeedInvest intangible assets of $2,248,963.

Critical Accounting Policies

See Note 2 in the accompanying financial statements.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, and the reported amount of expenses during the reporting periods. Significant estimates include the value of marketable securities, the value of stock and warrants received as compensation and collectability of accounts receivable. Actual results could materially differ from these estimates. It is reasonably possible that changes in estimates will occur in the near term.

A significant portion of the Company’s assets relate to investments in stock and warrants received as compensation from issuer companies undertaking Regulation Crowdfunding or Regulation A offerings. As described in Note 2, in the accompanying financial statements, stock and warrants require significant unobservable inputs, primarily related to the underlying stock price of the security received which may include marketability discounts. Warrants have further unobservable inputs related to the estimated life,. In all cases, there were sales of the stock to the public through Regulation Crowdfunding or Regulation A funding mechanism, but such sales are often not to the level that an active market existed or exists. Once the funding round is concluded it is difficult to ascertain the fair value of the issuer shares or the status of the issuer’s financial health, unless additional rounds of financing are undertaken in a public setting, or the issuer reports reliable and regular information publicly. Any change in the underlying shares would impact on the valuation of the related investments. Shares held are generally illiquid. Valuations require significant management judgment related to these unobservable inputs.

As many of the companies that undertaking Regulation Crowdfunding and Regulation A are considered emerging growth companies, require significant capital to maintain or commence operations, and often contain warnings regarding substantial doubt about the Company’s ability to continue as a going concern, it is reasonable to conclude that through the passage of time, a significant portion of the stock and warrants held by the Company will ultimately be deemed worthless, decline in value, or in the case of warrants, expire without exercise. Similar to traditional venture capital results, it is reasonable to conclude that only a small portion of each investment may ever increase in value.

Investments – Warrant Assets

In connection with negotiated platform fee agreements, we may obtain warrants giving us the right to acquire stock in companies undergoing Regulation A offerings. We hold these assets for prospective investment gains. We do not use them to hedge any economic risks nor do we use other derivative instruments to hedge economic risks stemming from these warrants.

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~~Collectibles~~events. Our warrant agreements typically contain net share settlement provisions, which permit us to receive at exercise a share count equal to the intrinsic value of the warrant divided by the share price (otherwise known as a “cashless” exercise). These warrants are recorded at fair value and ~~Real~~are ~~Estate~~classified as Investments - warrants on our consolidated balance sheet at the time they are obtained, and remeasured each reporting period.

The Company records collectibles and real estate at cost in accordance with the Company’s policy. These long-lived assets are reviewed for impairment annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In general, we believe that we purchase these assets in arms-length transactions at fair value and such transactions are evidence of fair market value in the near term. For collectibles, over time, and as trends change and economic factors effect various markets for which we hold assets, the estimation of certain assets that do not trade in a regular market may be difficult to assess for fair value. Certain assets may be subject to market manipulation or overproduction that could effect the underlying value of like or similar items. The quality of authentication bodies may effect future valuation. If there are limited data points to assess fair value, especially for one-of-a-kind collectibles, we may not identify impairments in a timely manor. Many of the collectibles have value that is in the eye of the beholder. Accordingly, there is significant uncertainty to what these assets would be valued at in subsequent arms-length transactions. For real estate assets, there tend to be more relevant data points, including comparable sales in close proximity to held real estate assets. The Company can also assess trend information in the overall economy and local economy where such assets may be held. However, sharp changes in economic conditions may make it difficult to estimate fair value and therefore potential impairment.

The grant date fair values of warrants received in connection with services performed are deemed to be revenue and recognized upon receipt.

Any changes in fair value from the grant date fair value of warrants will be recognized as increases or decreases to investments on our consolidated balance sheets and as a component of operating expenses on our consolidated statements of operations. In the event of an exercise for shares, the basis or value in the securities is reclassified from Investment - warrants to marketable securities or non-marketable securities, as described below, on the consolidated balance sheet on the latter of the exercise date or corporate action date. The shares in public companies, or companies that trade over-the-counter as allowed by Regulation A, are classified as marketable securities (provided they do not have a significant restriction from sale). The shares in private companies without an active trading market are classified as non-marketable securities.

The fair value of the warrants portfolio is a critical accounting estimate and is reviewed each reporting period. We value our warrants using a modified Black-Scholes option pricing model, which incorporates the following significant inputs, in addition to certain adjustments for general lack of liquidity:

●

An underlying asset value, which is estimated based on current information available in valuation reports, including any information regarding subsequent rounds of funding or performance of a company.

●

Stated strike price, which can be adjusted for certain warrants upon the occurrence of subsequent funding rounds or other future events.

●

Price volatility or risk associated with possible changes in the warrant price. The volatility assumption is based on historical price volatility of publicly traded companies within indices or companies similar in nature to the underlying client companies issuing the warrant.

●

The expected remaining life of the warrants in each financial reporting period.

●

The risk-free interest rate is derived from the Treasury yield curve and is calculated based on the risk-free interest rates that correspond closest to the expected remaining life of the warrant on the date of assessment.

Investments - Stock

In connection with negotiated platform fee agreements, the Company obtains shares of stock in its customers. Our accounting for investment our customers stock depends on several factors, including the level of ownership, and power to control. We base our accounting for such securities on: (i) whether the issuer has made an offering in the current year, (ii) if so, the valuation of the stock in the offering, and (iii) if not, the Company will write down the stock value at a flat 33% rate. As the stock received from customers has no readily determinable fair values and generally represent small amounts of ownership in our customers, the Company accounts for this stock received using the cost method, plus adjustments for gross up, less write downs in accordance with ASC 321-10-35-2.

Collectibles

The Company records collectibles at cost in accordance with the Company’s policy. These long-lived assets are reviewed for impairment annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In general, we believe that we purchase these assets in arms-length transactions at fair value and such transactions are evidence of fair market value in the near term. For collectibles, over time, and as trends change and economic factors affect various markets for which we hold assets, the estimation of certain assets that do not trade in a regular market may be difficult to assess for fair value. Certain assets may be subject to market manipulation or overproduction that could affect the underlying value of like or similar items. The quality of authentication bodies may affect future valuation. If there are limited data points to assess fair value, especially for one-of-a-kind collectibles, we may not identify impairments in a timely manner. Many of the collectibles have value that is in the eye of the beholder. Accordingly, there is significant uncertainty to what these assets would be valued at in subsequent arms-length transactions.

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Liquidity and Capital Resources

Statement of Cash Flows

The following table summarizes, for the periods indicated, selected items in our ~~condensed~~ Statements of Cash Flows:


	Year Ended
	December 31,
	~~2023~~2024		~~2022~~2023		$ Change
				~~(Restated)~~
Net cash used in operating activities	$	(84,~~726~~275,~~936~~484)	$	(68,~~600~~726,~~907~~936)	$	(24,~~126~~451,~~029)~~452
Net cash (used in) provided by investing activities	$	393,684	$	(1,122,997)	$	1,516,681
Net cash provided by investing activities	$	202,892	$	393,684	$	(190,792)
Net cash provided by financing activities	$	52,~~529~~258,~~081~~591	$	25,~~184~~529,~~006~~081	$	(3,~~345~~270,~~075~~490)

Our net loss ~~attributable to stockholders~~ during the year ended December 31, ~~2023~~2024 was $16,~~375~~536,~~478~~658, as compared to a net loss of $916,~~332~~375,~~106~~478 during the year ended December 31, ~~2022~~2023.

Cash used by operating activities for the year ended December 31, ~~2023~~2024 was $84,~~726~~275,~~936~~484 as compared to cash used by operating activities of $68,~~600~~726,~~907~~936 for the same period in ~~2022~~2023. The ~~increase~~decrease in cash used by operating activities in ~~2023~~2024 was primarily due to ~~the net loss in the period as well as an increase in impairment expense for investment received for fees of $2,682,055. This was offset by~~ a $21,~~248~~179,~~963~~607 increase in amortization expense of the SeedInvest purchase, and $3,~~063~~207,~~978~~334 increase in stock-based compensation~~, and finally $2,201,135 provided from deferred revenue not yet recognized~~.

Cash received from investing activities for the year ended December 31, ~~2023~~2024 was $~~393~~202,~~684~~892, as compared to cash ~~used~~received in investing activities of $1393,~~122,997~~684 in the same period in ~~2022~~2023. The cash ~~used~~received in ~~2022~~2024 relates to the ~~purchase~~sale orof ~~collectible~~a ~~assets~~portion ~~that~~of ~~are~~the ~~sold~~apartment inbuilding ~~our~~ StartEngine ~~Assets~~owns ~~offerings~~of $225,170 and cash received in 2023 relates to the sale of certain collectibles of $417,421.

Cash provided by financing activities was $52,~~529~~258,~~081~~591 and $25,~~184~~529,~~006~~081 for the year ended December 31, ~~2023~~2024 and December 31, ~~2022~~ 2023, respectively. The ~~increase~~decrease of cash inflow is primarily due to the ~~increase~~decrease in proceeds from sale of common stock of $32,~~428~~553,~~463~~913 in 2024 compared to $10,162,061 of proceeds in 2023 less $4,719,370 in offering costs. The sale of common stock in 2023 was open for almost 11 months during the year from January until November 2023, while sales in 2024 were for less than two months beginning in November.

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Balance Sheet

The following table summarizes our assets and liabilities as of December 31, ~~2023~~2024 as compared as of December 31, ~~2022~~2023:


	December 31,		December 31,
	~~2023~~2024		~~2022~~2023
				~~(Restated)~~
Assets
Current assets:
Cash	$	1210,~~656~~842,~~298~~297	$	1512,~~460~~656,~~469~~298
Marketable securities		1,856		1,856
Accounts receivable, net of allowance		2,848,880		193,696
Other current assets		1,032,932		720,767
Total current assets		14,725,965		13,572,617

Property and equipment, net		126,698		119,723
Investments - warrants		60,103		195,487
Investments - stock		10,327,834		8,623,212
Investments - Private		4,701,010		4,357,083
Investments - Collectibles		2,361,996		2,446,121
Investments - Real Estate		1,479,310		2,136,628
Due from related party		209,360		209,190
Intangible assets		18,463,620		21,892,192
Other assets		33,847		42,138
Total assets	$	52,489,743	$	53,594,391

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	542,903	$	278,691
Accrued liabilities		6,725,780		4,456,756
Deferred revenue		2,880,316		3,520,150
Total current liabilities		10,148,999		8,255,597

Total liabilities		10,148,999		8,255,597

The Company’s current assets increased by $1,153,348 from December 31, 2023 to December 31, 2024. The increase was primarily driven by an increase in accounts receivable by $2,655,184, primarily driven by StartEngine Private disbursements that were not received until early January 2025. This increase was partially offset by a decrease in cash of $1,814,001.

The Company’s long-term assets decreased by $2,257,996 from December 31, 2023 to December 31, 2024. This was driven primarily by:

●

A $3,428,572 decrease in intangible assets from the purchase of SeedInvest assets less the amortization for the period.

●

A $657,318 decrease in real estate investment as the Company sold a portion of its membership for $225,000 in 2024 and recognized a loss of $432,148 in the agreed upon sale price for the remaining membership stake, the sale of which was completed in 2025.

These decreases were partially offset by a $475,574 increase in stock investments which we earn as part of compensation for raising funds for issuers.

Current liabilities increased by $1,893,402 which is primarily due to an increase in accrued liabilities, specifically an increase in investor deposits of $722,145 as well as an increase of accrued liabilities of $1,244,131 related to year end commission and bonus payment. As the StartEngine Private business continues to scale, we expect these liabilities to be recurring for future periods.

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Marketable securities		1,856		1,856
Accounts receivable, net of allowance		193,696		678,672
Other current assets		720,767		1,304,301
Total current assets		13,572,617		17,445,298

Property and equipment, net		119,723		109,141
Investments - warrants		195,487		206,895
Investments - stock		8,623,212		7,943,817
Investments - Private		4,357,083		—
Investments - Collectibles		2,446,121		2,984,699
Investments - Real Estate		2,136,628		2,136,628
Due from related party		209,190		—
Intangible assets		21,892,192		20,000
Other assets		42,138		66,603
Total assets	$	53,594,391	$	30,913,081

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	278,691	$	284,371
Accrued liabilities		4,456,756		2,785,500
Deferred revenue		3,520,150		2,715,422
Total current liabilities		8,255,597		5,785,293

Total liabilities		8,255,597		5,785,293

The Company’s current assets decreased by $3,872,681 from December 31, 2022 to December 31, 2023. The decrease was primarily driven by a decrease in cash in the amount of $2,756,552 driven by its use in operating activities as well as a decrease in accounts receivable of $484,976 as the Company wrote off uncollectible receivables.

The Company’s long-term assets increased by $26,553,991 from December 31, 2022 to December 31, 2023. This was driven primarily by:

● A $679,395 increase in stock investments which we earn as part of compensation for raising funds for issuers.

● A $21,872,192 increase in intangible assets from the purchase of SeedInvest assets less the amortization for the period.

● A $4,357,083 increase in StartEngine Private assets held.

Current liabilities increased by $2,470,304 which is primarily due to an increase in accrued liabilities of $1,671,256 due to an increase in investor deposits of $1,040,285 as well as an increase of deferred revenue of $804,728 for purchases of OWNers Bonus and StartEngine Secure.

Liquidity and Capital Resources

We do not currently have any significant loans or available credit facilities. As of December 31, ~~2023~~2024, the Company’s current assets were $1314,~~572~~725,~~617~~965. To date, our activities have been funded from our revenues, investments from our founders, the previous sale of Series Seed Preferred Shares, Series A Preferred Shares, Series T Preferred Shares, and our Regulation A and Regulation CF offerings.

We have no off-balance sheet arrangements, including arrangements that would affect the liquidity, capital resources, market risk support, and credit risk support or other benefits.

The Company currently has no material commitments for capital expenditures.

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We believe we have the cash, marketable securities through future fundraising rounds, other current assets available, revenues, and access to funding that will be sufficient to fund operations until the Company starts generating positive cash flows from normal operations.

Item 7A.Quantitative and Qualitative Disclosures About Market Risk

As a smaller reporting Company as defined by §229.10(f)(1), StartEngine is not required to provide the information under this Item.

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Item 8.Financial Statements and Supplementary Data

Index of the Financial Statements

Report
Report of Independent Registered Public Accounting Firm	F-2
Report of Independent Registered Public Accounting Firm		F-3
Consolidated Balance Sheets	F-3
Consolidated Balance Sheets		F-4
Consolidated Statement of Operations	F-4
Consolidated Statement of Operations		F-5
Consolidated Statements of Stockholders’ Equity	F-5
Consolidated Statements of Stockholders’ Equity		F-6
Consolidated Statements of Cash Flows	F-6
Consolidated Statements of Cash Flows		F-7
Notes To Consolidated Financial Statements	F-7
Notes To Consolidated Financial Statements		F-8

F-1

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of StartEngine Crowdfunding, Inc.

To the Board of Directors and
Stockholders of StartEngine Crowdfunding, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance ~~sheet~~sheets of StartEngine Crowdfunding, Inc. and subsidiaries (the Company) as of December 31, 2024 and 2023, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the years in the two-year ~~then~~period ended December 31, 2024, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the two-year ~~then~~period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our ~~audit~~audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’/s/ ~~internal~~Haynie ~~control~~& ~~over financial reporting. Accordingly, we express no such opinion.~~Company


Haynie & Company (ID #457) Salt Lake City, Utah March 31, 2025

We have served as the Company’s auditor since 2023.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

Adjustments to Prior Period

We also have audited the adjustments described in Note 1 that were applied to restate the December 31, 2022 financial statements to correct certain errors. In our opinion, such adjustments are appropriate and have been properly applied. We were not engaged to audit, review, or apply any procedures to the December 31, 2022 financial statements of the Company other than with respect to the adjustments and, accordingly, we do not express an opinion or any other form of assurance on the December 31, 2022 financial statements taken as a whole.

/s/ Haynie & Company

Haynie & Company (ID #457)

Salt Lake City, Utah

April 15, 2024

We have served as the Company’s auditor since 2023

F-2

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Report of Independent Registered Public Accounting Firm

To the shareholders and the board of directors of StartEngine Crowdfunding, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of StartEngine Crowdfunding, Inc. (the "Company") as of December 31, 2022, the related statements of operations, stockholders' equity (deficit), and cash flows for the year then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

/s/ BF Borgers CPA PC

BF Borgers CPA PC (PCAOB ID 5041)

We have served as the Company's auditor since 2021

Lakewood, CO

March 31, 2023

F-3

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StartEngine Crowdfunding, Inc.

Consolidated Balance Sheets

December 31, 2023


	December 31,		December 31,
	2023		2022
				(Restated)
Assets
Current assets:
Cash	$	12,656,298	$	15,460,469
Marketable securities		1,856		1,856
Accounts receivable, net of allowance		193,696		678,672
Other current assets		720,767		1,304,301
Total current assets		13,572,617		17,445,298

Property and equipment, net		119,723		109,141
Investments - warrants		195,487		206,895
Investments - stock		8,623,212		7,943,817
Investments - Private		4,357,083		—
Investments - Collectibles		2,446,121		2,984,699
Investments - Real Estate		2,136,628		2,136,628
Due from related party		209,190		—
Intangible assets		21,892,192		20,000
Other assets		42,138		66,603
Total assets	$	53,594,391	$	30,913,081

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	278,691	$	284,371
Accrued liabilities		4,456,756		2,785,500
Deferred revenue		3,520,150		2,715,422
Total current liabilities		8,255,597		5,785,293

Total liabilities	$	8,255,597	$	5,785,293

Commitments and contingencies

Stockholders’ equity:
Series A Preferred Stock, par value $0.00001, 10,350,000 shares authorized, 9,272,044 and 9,272,044 shares issued and outstanding at December 31, 2023 and December 31, 2022, respectfully, liquidation preference of $5,310,409 and $5,310,409 at December 31, 2023 and December 31, 2022, respectively.		5,286,667		5,286,667
Series T Preferred Stock, par value $0.00001, 4,950,000 shares authorized, 482,104 and 482,211 shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively, liquidation preference of $1,414,172 and $1,414,486 at December 31, 2023 and December 31, 2022, respectively.		983,634		983,634
Series Seed Preferred Stock, par value $0.00001, 10,650,000 shares authorized, 10,240,536 and 10,247,938 and shares issued and outstanding at December 31, 2023 and December 31, 2022, respectfully, liquidation preference of $1,707,990 and $1,707,990 at December 31, 2023 and December 31, 2022, respectively.		1,706,756		1,706,756
Common stock, par value $0.00001, 75,000,000 shares authorized, 34,852,699 and 33,301,662 shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively.		343		332
Additional paid-in capital		82,012,075		45,369,702
Noncontrolling interest		(13,251)		(13,251)
Accumulated deficit		(44,637,430)		(28,206,052)
Total stockholders’ equity		45,338,794		25,127,788
Total liabilities and stockholders’ equity	$	53,594,391	$	30,913,081


	December 31,		December 31,
	2024		2023

Assets
Current assets:
Cash	$	10,842,297	$	12,656,298
Marketable securities		1,856		1,856
Accounts receivable, net of allowance		2,848,880		193,696
Other current assets		1,032,932		720,767
Total current assets		14,725,965		13,572,617

Property and equipment, net		126,698		119,723
Investments - warrants		60,103		195,487
Investments - stock		10,327,834		8,623,212
Investments - Private		4,701,010		4,357,083
Investments - Collectibles		2,361,996		2,446,121
Investments - Real Estate		1,479,310		2,136,628
Due from related party		209,360		209,190
Intangible assets, net		18,463,620		21,892,192
Other assets		33,847		42,138
Total assets	$	52,489,743	$	53,594,391

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	542,903	$	278,691
Accrued liabilities		6,725,780		4,456,756
Deferred revenue		2,880,316		3,520,150
Total current liabilities		10,148,999		8,255,597

Total liabilities		10,148,999		8,255,597

Commitments and contingencies

Stockholders’ equity:
Series A Preferred Stock, par value $0.00001, 207,000,000 shares authorized, 185,440,880 and 185,440,880 shares issued and outstanding at December 31, 2024 and December 31, 2023, respectfully, liquidation preference of $5,310,409 and $5,310,409 at December 31, 2024 and December 31, 2023, respectively.		5,286,667		5,286,667
Series T Preferred Stock, par value $0.00001, 99,000,000 shares authorized, 9,642,080 and 9,642,080 shares issued and outstanding at December 31, 2024 and December 31, 2023, respectively, liquidation preference of $1,414,486 and $1,414,486 at December 31, 2024 and December 31, 2023, respectively.		983,634		983,634
Series Seed Preferred Stock, par value $0.00001, 213,000,000 shares authorized, 204,810,720 and 204,810,720 and shares issued and outstanding at December 31, 2024 and December 31, 2023, respectfully, liquidation preference of $1,707,990 and $1,707,990 at December 31, 2024 and December 31, 2023, respectively.		1,706,756		1,706,756
Common stock, par value $0.00001, 1,500,000,000 shares authorized, 702,861,520 and 697,085,900 shares issued and outstanding at December 31, 2024 and December 31, 2023, respectively.		7,028		6,971
Additional paid-in capital		95,543,998		82,005,447
Noncontrolling interest		(13,251)		(13,251)
Accumulated deficit		(61,174,088)		(44,637,430)
Total stockholders’ equity		42,340,744		45,338,794
Total liabilities and stockholders’ equity	$	52,489,743	$	53,594,391

See accompanying notes to consolidated financial statements

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StartEngine Crowdfunding, Inc.

Consolidated Statement of Operations

December 31, 2023


	Year Ended December 31,
	2023		2022
				(Restated)
Revenues	$	23,385,998	$	24,360,685

Cost of revenues		8,703,894		7,050,898

Gross profit		14,682,104		17,309,787

Operating expenses:
General and administrative		10,207,544		9,605,375
Sales and marketing		13,013,676		12,486,458
Research and development		5,779,920		4,667,593
Change in fair value of warrants received for fees		11,409		1,459,326
Change in fair value of shares received for fees		2,122,211		(1,442,614)
Total operating expenses		31,134,760		26,776,138

Operating income (loss)		(16,452,656)		(9,466,351)

Other Expense (Income)
Other expense (income), net		(144,290)		(188,684)
Total other expense (income), net		(144,290)		(188,684)

Income (loss) before provision for income taxes		(16,308,366)		(9,277,667)

Taxes - Other		67,112		63,563

Net loss		(16,375,478)		(9,341,230)
Less: net loss attributable to noncontrolling interest		—		(9,124)
Net loss attributable to stockholders	$	(16,375,478)	$	(9,332,106)

Weighted average loss per share - basic and diluted	$	(0.48)	$	(0.29)
Weighted average shares outstanding - basic and diluted		34,131,228		32,152,835


	Year Ended December 31,
		2024	2023

Revenues	$	48,625,508	$	23,385,998

Cost of revenues		25,873,241		8,703,894

Gross profit		22,752,267		14,682,104

Operating expenses:
General and administrative		13,758,127		10,207,544
Sales and marketing		16,473,905		13,013,676
Research and development		7,796,521		5,779,920
Change in fair value of warrants received for fees		135,384		11,409
Change in fair value of shares received for fees		724,933		2,122,211
Total operating expenses		38,888,870		31,134,760

Operating income (loss)		(16,136,603)		(16,452,656)

Other Expense (Income)
Other expense (income), net		400,055		(144,290)
Total other expense (income), net		400,055		(144,290)

Income (loss) before provision for income taxes		(16,536,658)		(16,308,366)

Taxes - Other		—		67,112

Net loss		(16,536,658)		(16,375,478)

Weighted average loss per share - basic and diluted	$	(0.02)	$	(0.02)
Weighted average shares outstanding - basic and diluted		699,099,798		677,344,569

See accompanying notes to consolidated financial statements

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StartEngine Crowdfunding, Inc.

Consolidated Statements of Stockholders’ Equity

December 31, 2023


	Series A Preferred Stock			Series T Preferred Stock			Series Seed Preferred Stock			Common Stock				Additional	Subscription		Noncontrolling		Accumulated
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount			Paid-in Capital	Receivable		Interest		Deficit		Total
Balance at December 31, 2021	9,272,044	$	5,286,667	482,211	$	983,852	10,247,938	$	1,707,990	32,865,193	$	328	$	39,246,724	$	(367,831)	$	(4,127)	$	(18,938,969)	27,914,634
Sale of common stock	—		—	—		—	—		—	401,645		4		7,101,429		367,831		—		—	7,469,264
Offering costs (Restated)	—		—	—		—	—		—	—		—		(4,955,461)		—		—		—	(4,955,461)
Conversion to Common Stock	—		—	(107)		(218)	(7,402)		(1,234)	26,897		—		1,452		—		—		—	—
Exercise of stock options	—		—	—		—	—		—	7,927		—		38,035		—		—		—	38,035
Stock compensation expense	—		—	—		—	—		—	—		—		3,993,424		—		—		—	3,993,424
Noncontrolling interest	—		—	—		—	—		—	—		—		—		—		(9,124)		9,124	—
Net loss (Restated)	—		—	—		—	—		—	—		—		—		—		—		(9,332,106)	(9,332,106)
Balance at December 31, 2022 (Restated)	9,272,044	$	5,286,667	482,104	$	983,634	10,240,536	$	1,706,756	33,301,662	$	332	$	45,425,603	$	—	$	(13,251)	$	(28,261,951)	25,127,790


	Series A Preferred Stock			Series T Preferred Stock			Series Seed Preferred Stock			Common Stock				Additional	~~Subscription~~Noncontrolling		~~Noncontrolling~~Accumulated		~~Accumulated~~
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount			Paid-in Capital	~~Receivable~~Interest		~~Interest~~Deficit		~~Deficit~~Total		~~Total~~
Balance at December 31, 2022	9185,~~272~~440,~~044~~880	$	5,286,667	~~482~~9,~~104~~642,080	$	983,634	10204,~~240~~810,~~536~~720	$	1,706,756	33666,~~301~~033,~~662~~240	$	~~332~~6,660	$	45,~~425~~419,~~603~~275	$	—(13,251)	$	(1328,~~251~~261,952)	$25,127,789	~~(28,261,952)~~	~~25,127,789~~
Sale of common stock	—		—	—		—	—		—	455,261		3		10,162,061		—		—		—	10,162,064
Sale of Common Stock	—		—	—		—	—		—	9,105,220		91		10,161,973		—		—	10,162,064
Exercise of stock options	—		—	—		—	—		—	135,776		1		86,389		—		—		—	86,390
Offering Costs	—		—	—		—	—		—	—		—		(4,719,370)		—		—	(4,719,370)
Stock compensation expense	—		—	—		—	—		—	—		—		7,057,402		—		—		—	7,057,402
Exercise of stock options	—		—	—		—	—		—	2,747,440		28		86,362		—		—	86,390
SeedInvest Acquisition	—		—	—		—	—		—	960,000		7		23,999,990		—		—		—	23,999,997
Stock compensation expense	—		—	—		—	—		—	—		—		7,057,402		—		—	7,057,402
Offering Costs	—		—	—		—	—		—	—		—		(4,719,370)		—		—		—	(4,719,370)
SeedInvest Acquisition	—		—	—		—	—		—	19,200,000		192		23,999,805		—		—	23,999,997
Noncontrolling interest	—		—	—		—	—		—	—		—		—		—		—		—	—
Net loss	—		—	—		—	—		—	—		—		—		—		(16,375,478)	(16,375,478)
Net loss	—		—	—		—	—		—	—		—		—		—		—		(16,375,478)	(16,375,478)
Balance at December 31, 2023	185,440,880	$	5,286,667	9,642,080	$	983,634	204,810,720	$	1,706,756	697,085,900	$	6,971	$	82,005,447	$	(13,251)	$	(44,637,430)	45,338,794
Balance at December 31, 2023	9,272,044	$	5,286,667	482,104	$	983,634	10,240,536	$	1,706,756	34,852,699	$	343	$	82,012,075	$	—	$	(13,251)	$	(44,637,430)	45,338,794


	Series A Preferred Stock			Series T Preferred Stock			Series Seed Preferred Stock			Common Stock				Additional	Noncontrolling		Accumulated
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount			Paid-in Capital	Interest		Deficit		Total
Balance at December 31, 2023	185,440,880	$	5,286,667	9,642,080	$	983,634	204,810,720	$	1,706,756	697,085,900	$	6,971	$	82,005,447	$	(13,251)	$	(44,637,430)	45,338,794
Sale of Common Stock	—		—	—		—	—		—	2,362,173		27		2,553,886		—		—	2,553,913
Offering Costs	—		—	—		—	—		—	—		—		(339,997)		—		—	(339,997)
Exercise of stock options	—		—	—		—	—		—	3,413,447		30		44,645		—		—	44,675
Stock compensation expense	—		—	—		—	—		—	—		—		11,280,017		—		—	11,280,017
Net loss	—		—	—		—	—		—	—		—		—		—		(16,536,658)	(16,536,658)
Balance at December 31, 2024	185,440,880		5,286,667	9,642,080		983,634	204,810,720		1,706,756	702,861,520		7,028		95,543,998		(13,251)		(61,174,088)	42,340,744

See accompanying notes to consolidated financial statements

F-65

Table of Contents

StartEngine Crowdfunding, Inc.

Consolidated Statements of Cash Flows

December 31, 2023


	Year Ended December 31,
	2023		2022
				(Restated)
Cash flows from operating activities:
Net loss attributable to stockholders	$	(16,375,478)	$	(9,332,106)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		13,155		13,090
Amortization		2,248,965		—
Bad debt expense		722,932		638,455
Fair value of warrants received for fees		—		923,238
Fair value of investments - other received for fees		(2,804,606)		(4,216,563)
Change in fair value of warrant investments		11,409		—
Impairment of investments - other received for fees		2,125,211		169,520
Unrealized gain on investments		—		196,534
Stock-based compensation		7,057,402		3,993,424
Changes in operating assets and liabilities:
Accounts receivable		(237,956)		160,760
Other current assets		607,999		2,304,636
StartEngine Private stock purchases		(4,357,083)		—
Due from related parties		(317,007)		—
Accounts payable		(5,680)		(289,469)
Accrued liabilities		1,779,073		233,981
Deferred revenue		804,728		(1,396,407)
Net cash received (used) in operating activities		(8,726,936)		(6,600,907)

Cash flows from investing activities:
Investments - Collectibles purchases, gross		—		(1,058,305)
Investments - Collectibles sales, gross		417,421		—
Purchase of property and equipment		(23,737)		(64,692)
Net cash received (used) in investing activities		393,684		(1,122,997)

Cash flows from financing activities:
Proceeds from sale of common stock		10,162,061		6,733,601
Offering costs		(4,719,370)		(4,587,630)
Proceeds from exercise of employee stock options		86,390		38,035
Non-controlling interest		—		—
Net cash provided by financing activities		5,529,081		2,184,006

(Decrease)in cash and restricted cash		(2,804,171)		(5,539,898)
Cash and restricted cash, beginning of period		15,460,469		21,000,367
Cash and restricted cash, end of period	$	12,656,298	$	15,460,469

Supplemental disclosures of cash flow information:
Cash paid for interest	$	—	$	—
Cash paid for income taxes	$	67,112	$	62,344
Non Cash Investing & Financing Activities
Purchase of SeedInvest Intellectual Property with Common Stock	$	23,999,997	$	—
Subscription Receivable as part of Common Stock	$	—	$	367,832


	Year Ended December 31,
	2024		2023

Cash flows from operating activities:
Net loss	$	(16,536,658)	$	(16,375,478)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		15,303		13,155
Amortization		3,428,572		2,248,965
Bad debt expense		313,596		722,932
Realized loss on sale of investments - building		432,148		—
Fair value of investments - other received for fees		(2,429,556)		(2,801,296)
Change in fair value of warrant investments		135,384		11,409
Impairment of investments - other received for fees		724,934		2,121,901
Stock-based compensation		11,280,017		7,057,402
Changes in operating assets and liabilities:
Accounts receivable		(2,968,780)		(237,956)
Other current assets		(303,874)		607,999
StartEngine Private stock purchases		(18,073,404)		(6,208,037)
Proceeds from sale of StartEngine Private stock		17,813,602		1,850,954
Due from related parties		(170)		(317,007)
Accounts payable		264,212		(5,680)
Accrued liabilities		2,269,024		1,779,073
Deferred revenue		(639,834)		804,728
Net cash used in operating activities		(4,275,484)		(8,726,936)

Cash flows from investing activities:
Investments - Collectibles sales, gross		—		417,421
Purchase of property and equipment		(22,278)		(23,737)
Proceeds from sale of real estate		225,170		—
Net cash provided by investing activities		202,892		393,684

Cash flows from financing activities:
Proceeds from sale of common stock		2,553,913		10,162,061
Offering costs		(339,997)		(4,719,370)
Proceeds from exercise of employee stock options		44,675		86,390
Net cash provided by financing activities		2,258,591		5,529,081

(Decrease) in cash and restricted cash		(1,814,001)		(2,804,171)
Cash and restricted cash, beginning of period		12,656,298		15,460,469
Cash and restricted cash, end of period	$	10,842,297	$	12,656,298

Supplemental disclosures of cash flow information:
Cash paid for interest	$	—	$	—
Cash paid for income taxes	$	—	$	67,112
Non Cash Investing & Financing Activities
Purchase of SeedInvest Intellectual Property with Common Stock		—		23,999,997

See accompanying notes to consolidated financial statements

F-76

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STARTENGINE CROWDFUNDING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – NATURE OF OPERATIONS

StartEngine Crowdfunding, Inc. (the “Company”) was formed on March 19, 2014 (“Inception”) in the State of Delaware. The Company was originally incorporated as StartEngine Crowdsourcing, Inc. and changed to the current name on May 8, 2014. The ~~consolidated financial statements of StartEngine Crowdfunding, Inc. (the “~~Company~~”) are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The Company~~’s headquarters are located in Burbank, California.

The Company aims to revolutionize the startup financing model by helping both accredited and non-accredited investors invest in private companies on a public platform. StartEngine Crowdfunding Inc. has wholly-owned subsidiaries, StartEngine Capital LLC, StartEngine Secure LLC, StartEngine Assets LLC, ~~and~~ StartEngine Primary LLC, StartEngine Private Manager LLC and StartEngine Adviser LLC. StartEngine Capital LLC is a funding portal registered with the US Securities and Exchange Commission (SEC) and a member of the Financial Industry Regulatory Authority (FINRA), StartEngine Secure LLC is a transfer agent registered with the SEC. StartEngine Assets LLC was formed in 2020 to buy, hold and manage assets in various asset classes such as real estate, automobiles, luxury goods and royalty-producing intangible assets. StartEngine Primary LLC was formed in October 2017 and received approval to operate as a registered broker-dealer in July 2019. On April 16, 2020, StartEngine Primary LLC received approval to operate as an alternative trading system. Since 2023, the Company has been providing accredited investors the opportunity to purchase membership interests in funds (“SE Funds”) which own shares of venture capital backed, late-stage private companies via its StartEngine Private product offering. The SE Funds are managed by StartEngine Private Manager LLC and advised by StartEngine Adviser LLC, an exempt reporting adviser. The Company’s mission is to empower thousands of companies to raise capital and create significant amounts of jobs over the coming years.

Stock Split

On ~~July 7~~May 6, ~~2021~~2024, StartEngine Crowdfunding Inc. split its designated “Common Stock” and “Preferred Stock” on a 3 20 for 1 basis. The total number of shares of Common Stock that the Company is authorized to issue was increased to 75 1,500,000,000 shares after the split. The total number of shares of Preferred Stock that the Company is authorized to issue was increased to 25 519,~~950~~000,000 after the split. Accordingly, all share and per share amounts for all periods presented in the consolidated financial statements and notes thereto have been adjusted retroactively, where applicable, to reflect this stock split.

The Company intends to split its designated “Common Stock” and “Preferred Stock” on a 20 for 1 basis as of May 4, 2024.

Business Condition

The Company’s revenue producing activities commenced in 2015 with the approved start of Title IV of the JOBS Act, which created new rules for Regulation A, and increased since then with the start of Regulation Crowdfunding under Title III of the JOBS Act. Because this is a relatively new industry, there is a level of uncertainty about how fast the volume of activity will increase and how future regulatory requirements may change the landscape. Because there is a level of uncertainty and because we are still in the early stages of these new regulations, the Company is expected to incur losses until such time that the volume of Regulation A and Regulation Crowdfunding campaigns and the investments in those campaigns is sufficient for revenues derived from those campaigns to cover its costs. These factors could indicate substantial doubt about the Company’s ability to continue as a going concern.

The Company has cash and cash equivalents of approximately $1310.8 million, which its managements believes will cover losses for the foreseeable future. The Company’s management believes that any substantial doubt about the Company’s ability to continue as a going concern has been alleviated.

Restatement

F-8

Table of Contents

The restatement also includes corrections for other errors identified as immaterial, individually and in the aggregate, to our consolidated financial statements.

Descriptions of Misstatements

a. Impairment of warrant compensation: While reviewing the Company’s warrant assets, it was determined that the value of the warrants received as compensation had not been subjected to a Black-Scholes analysis and valuation. The Company had been impairing the warrants at a flat rate, which was not compliant with GAAP. In reviewing the warrants using Black-Scholes modeling, the company determined that an additional impairment based on a Black Scholes analysis was necessary as the value of the warrants at year end 2022 was overstated. Additionally, an intercompany transaction for the transfer of assets between entities was reversed.

Description of Restatement Tables

~~Position and Adjusting Entries~~F-7

The Company has determined that these transactions are not material in the years they occurred and conclude that prior financial reports can be relied upon. The Company’s determination is based on the following: The adjustments do not cause any changes to the previously reported cash balances as of the end of the period in 2022. The adjustments also do not cause any changes to revenues in the prior period. The Company has determined that the adjustments have had little effect on the trend of earnings over the last three years. The Company reported losses in 2021 and 2022 prior to the adjustments and will maintain a loss position in 2023.

F-9

Table of Contents

Balance Sheet:


	Year Ended December 31, 2022
	Previously
	Reported		Adjustment		As Restated
Assets:
Cash	$	15,460,469	$	—	$	15,460,469
Marketable Securities		1,856		—		1,856
AR, Net		702,257		(23,585)		678,672	(c)
Other Current Assets		1,953,756		(649,455)		1,304,301	(d) (f)
Total Current Assets	$	18,118,338	$	(673,040)	$	17,445,298

PPE	$	109,141	$	—	$	109,141
Investments - Warrants		1,496,701		(1,289,806)		206,895	(a)
Investments - Stock		6,479,340		1,464,477		7,943,817	(b)
Investment - Collectibles		3,072,227		(87,528)		2,984,699	(g)
Investments - RE		2,136,628		—		2,136,628
Intangible Assets		20,000		—		20,000
Other Assets		66,603		—		66,603
Total Assets	$	31,498,978	$	(585,897)	$	30,913,081

Liabilities:
AP	$	(284,371)	$	—	$	(284,371)
Accrued Liabilities		(1,760,920)		(1,024,580)		(2,785,500)	(e)
Deferred Revenue		(2,715,422)		—		(2,715,422)
Total Current Liabilities	$	(4,760,713)	$	(1,024,580)	$	(5,785,293)

Equity:
Series A Preferred	$	(5,286,667)	$	—	$	(5,286,667)
Series T Preferred		(983,634)		—		(983,634)
Series Seed Preferred		(1,706,756)		—		(1,706,756)
Common Stock		(332)		—		(332)
APIC		(45,639,151)		213,548		(45,425,603)	(f)
NCI		13,251		—		13,251
Retained Earnings		26,865,024		1,396,929		28,261,953
Total Equity	$	(26,738,265)	$	1,610,477	$	(25,127,788)

Statement of Operations:


	Year Ended December 31, 2022
	Previously
	Reported		Adjustment		As Restated

Revenue	$	(24,360,685)	$	—	$	(24,360,685)
Cost of Revenue		6,368,629		682,269		7,050,898	(e)
G&A		8,723,615		881,760		9,605,375	(c) (d)
Sales and Marketing		12,478,887		7,571		12,486,458	(c) (e)
R&D		4,667,593		—		4,667,593
Change in fair value - warrants		169,520		1,289,806		1,459,326	(a)
Impairment - shares		21,863		(1,464,477)		(1,442,614)	(b)
Other Income/Expense		(188,684)		—		(188,684)
Income taxes		63,563	$	—	$	63,563
Net Loss	$	7,944,301		1,396,929		9,341,230

F-10

Table of Contents

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying audited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (GAAP) and applicable rules and regulations of the Securities and Exchange Commission. The consolidated financial statements include the accounts of StartEngine Crowdfunding, Inc., its subsidiaries where we have controlling financial interests, and any variable interest entities for which we are deemed to be the primary beneficiary. All intercompany balances and transactions have been eliminated.

Principles of Consolidation

The consolidated financial statements include the accounts of StartEngine Crowdfunding, Inc.’s wholly-owned subsidiaries, including StartEngine Capital LLC, StartEngine Secure LLC, and StartEngine Primary LLC and StartEngine Assets LLC. All significant intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

Cash Equivalents

For the purposes of the statement of cash flows, the Company considers all short-term debt securities purchased with a maturity of three months or less to be cash equivalents.

The Company maintains its cash with a major financial institution located in the United States of America which it believes to be creditworthy. Balances are insured by the Federal Deposit Insurance Corporation up to $250,000. At times, the Company may maintain balances in excess of the federally insured limits. The balance of excess as of December 31, 2024 was $8,889,039.

Fair Value of Financial Instruments

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants as of the measurement date. Applicable accounting guidance provides an established hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors that market participants would use in valuing the asset or liability. There are three levels of inputs that may be used to measure fair value:

Level 1- Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2- Include other inputs that are directly or indirectly observable in the marketplace.

Level 3- Unobservable inputs which are supported by little or no market activity.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

~~Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2023. The respective carrying value of certain on~~F-~~balance-sheet financial instruments approximated their fair values. The following are level 1, 2 and 3 assets.~~8

Table of Contents

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2024. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. The following are level 1, 2 and 3 assets.

Level 1

Investments: Marketable securities are made up of mutual funds and shares of common stock that are valued based on quoted prices in active markets.

FNon-11Fungible Token (“NFT”): Blockchain based collectible images that are valued based on quoted prices in active markets.

Table of Contents

Level 2

Investments - warrants (public portfolio): Fair value measurements of warrants of publicly traded portfolio companies are valued based on the Black-Scholes option pricing model. The model uses the price of publicly traded companies (underlying stock price), stated strike prices, warrant expiration dates, the risk-free interest rate and market-observable volatility assumptions based on comparable public company.

Level 3

Investments - warrants (private portfolio): Fair value measurements of warrants of private portfolio companies are priced based on a modified Black-Scholes option pricing model to estimate the asset value by using stated strike prices, warrant expiration dates modified to account for estimates to actual life relative to stated expiration, risk-free interest rates, and volatility assumptions based on comparable public companies. Option volatility assumptions used in the modified Black-Scholes model are based on public companies who operate in similar industries as companies in our private company portfolio. For these warrants, the fair value of the underlying stock is an unobservable input consistent with Investment - stocks noted ~~above~~below. Certain adjustments may be applied as determined appropriate by management for lack of liquidity.

Investments – stock: Fair value measurements of stocks of private portfolio companies are prices based on a combination of issuer activity and the price of new issuances. The Company, on an annual basis, will review any new offerings from issuers and compare the offering price of the stock in the new issuance compared to the original value of the stock held. The Company will mark the held stock to the new stock price and adjust the carrying value accordingly. If an issuer has not made an offering in the year in review, the company will apply a flat 33% write down to the stock carrying value as a means of estimating the volatility and illiquidity of a privately held stock.

The following fair value hierarchy table presents information about our assets and liabilities that are measured at fair value as of December 31, ~~2023~~2024:


	Level 1		Level 2		Level 3		Total
Marketable securities		—		1,856		—		1,856
Investment - warrants		—		—		~~195~~60,~~487~~103		~~195~~60,~~487~~103
Investment - stock		~~381~~263,~~897~~096		—		810,~~241~~064,~~315~~738		810,~~623~~327,~~212~~834
Non-Fungible Token ("NFT")		~~730~~631		—		—		~~730~~631
	$	~~382~~263,~~627~~727	$	1,856	$	810,~~436~~124,~~802~~841	$	810,~~821~~390,~~285~~424

The following fair value hierarchy table presents information about our assets and liabilities that are measured at fair value as of December 31, ~~2022~~2023:


	Level 1		Level 2		Level 3		Total
Marketable securities		—		1,856		—		1,856
Investments - warrants (Restated)		—		—		206,895		206,895
Investment - warrants		—		—		195,487		195,487
Investment - stock (Restated)		—		—		7,943,817		7,943,817
Investment - stock		381,897		—		8,241,315		8,623,212
Cryptocurrency		16,604		—		—		16,604
Non-Fungible Token ("NFT")		730		—		—		730
Non-Fungible Token ("NFT")		64,472		—		—		64,472
	$	382,627	$	1,856	$	8,436,802	$	8,821,285
	$	81,076	$	1,856	$	8,150,712	$	8,233,644

The following table presents additional information about transfers in and out of Level 3 assets measured at fair value for the year ended December 31, 2023 and 2022 as it relates to Investments – warrants and Investments – stocks: F-9


	Investments-
	Warrants
Fair value at December 31, 2022	$	206,895
Receipt of warrants		741
Change in fair value of warrants		(12,149)
Fair value at December 31, 2023	$	195,487

F-12

Table of Contents

The following table presents additional information about transfers in and out of Level 3 assets measured at fair value for the year ended December 31, 2024 and 2023 as it relates to Investments – warrants and Investments – stocks:


	Investments-
	Warrants
Fair value at December 31, 2021	$	1,130,133
Fair value at December 31, 2023	$	195,487
Receipt of warrants (Restated)		536,088
Receipt of warrants		—
Change in fair value of warrants (Restated)		(1,459,326)
Change in fair value of warrants		(135,384)
Fair value at December 31, 2022 (Restated)	$	206,895
Fair value at December 31, 2024	$	60,103


	Investments-
	~~Stocks~~Warrants
Fair value at December 31, 2022	$	7206,~~943,817~~895
Receipt of stocks		2,801,296
Receipt of warrants		—
Change in fair value of stocks		(2,121,901)
Change in fair value of warrants		(11,408)
Fair value at December 31, 2023	$	8195,~~623,212~~487


	Investments-
	Stock
Fair value at December 31, 2021	$	3,923,788
Fair value at December 31, 2023	$	8,623,212
Receipt of stock		2,~~937~~429,~~632~~556
Change in fair value of stock (Restated)		1,082,397
Change in fair value of stock		(724,934)
Fair value at December 31, 2022 (Restated)	$	7,943,817
Fair value at December 31, 2024	$	10,327,834

The following range of variables were used in valuing Level 3 warrant assets during the year ended December 31, 2023 and 2022:


	Investments-
	Stock
Fair value at December 31, 2022	$	7,943,817
Receipt of stock		2,801,296
Change in fair value of stock		(2,121,901)
Fair value at December 31, 2023	$	8,623,212


	2023			2022
Expected life (years)		1.42 - 3.58			2.42 - 4.58
Risk-free interest rate		3.84 - 3.84	%		3.99 - 3.99	%
Expected volatility		36.0 - 102.00	%		25.07 - 89.00	%
Annual dividend yield		0	%		0	%
Underlying share values	$	0.30 – $100.00		$	0.30 – $100.00
Strike Prices	$	0.30 – $100.00		$	0.30 – $100.00

The following range of variables were used in valuing Level 3 warrant assets during the year ended December 31, 2024 and 2023:


	2024			2023
Expected life (years)		0.17 -3.08			1.42 - 3.58
Risk-free interest rate		4.16	%		3.84	%
Expected volatility		25.07 - 90.0	%		36.0 - 102.0	%
Annual dividend yield		0	%		0	%
Underlying share values	$	0.22 - 4.75		$	0.30 – $100.00
Strike Prices	$	0.30 - $100.00		$	0.30 – $100.00

For Investments — Warrants, the primary and most significant unobservable input relates to the underlying share value of the issuers for which we receive warrants. In all cases, there were sales of the stock to the public through Regulation Crowdfunding, Regulation A, or a Regulation D funding mechanism, but such sales are often not to the level that an active market existed or exists. After the sales, such shares are often illiquid, and a change in valuation is often difficult to determine due to the lack of information available. Information regarding these unobservable inputs could correspondingly change the value of these assets.

For warrants, the Company also adjusts the expected life of certain warrants to account for potential liquidation events, as well as doubts regarding the ability for the issuer companies to continue as a going concern. The quantitative measure used is based upon Black-Scholes modeling. Significant judgment is required by Management in selecting unobservable inputs, and accordingly a change in the assumptions used for the valuation could cause the value to be significantly different. In general, increases in underlying share prices, expected life and volatility, increase the value of the warrants, whereas decreases would reduce the value.

For Investments – Stock, the primary and most significant unobservable input relates to the share value of the issuers. In all cases, there were sales of the stock to the public through Regulation Crowdfunding, Regulation A, or a Regulation D funding mechanism, but such sales are often not to the level that an active market existed or exists. After the sales, such shares are often illiquid, and a change in ~~valuation is often difficult to determine due to the lack of information available. Information regarding these unobservable inputs could correspondingly change the value of these assets.~~

~~Accounts Receivable~~F-10

Accounts receivable are recorded at the recognized amount and are non-interest-bearing. The Company maintains an allowance for doubtful accounts to reserve for potential uncollectible receivables. The allowance for doubtful accounts as of December 31, 2023 and December 31, 2022 was $179,388 and $370,801, respectively. Bad debt expense for the year ended December 31, 2023 and 2022 was $722,932 and $638,455, respectively.

F-13

Table of Contents

Asvaluation is often difficult to determine due to the lack of ~~December~~information 31available. Information regarding these unobservable inputs could correspondingly change the value of these assets. The basis for writing down this stock is to evaluate if the issuer has performed a raise on the Company’s platform within the last year. If the Company has, ~~2023~~the stock value is updated to the current issuance price. If there has not been a raise, the Company ~~had~~writes ~~accounts~~down ~~receivable~~the ~~over~~value ~~90 days~~of ~~totaling~~the $0shares by 33%. This has been deemed reasonable as the shares of privately traded illiquid stocks are difficult to price, and the Company has determined through research that a markdown of this amount is reasonable due to assumed loss in value based on no new raises being hosted.

Accounts Receivable

Accounts receivable are recorded at the recognized amount and are non-interest-bearing. The Company maintains an allowance for doubtful accounts to reserve for potential uncollectible receivables. The allowance for doubtful accounts as of December 31, 2024 and December 31, 2023 was $0 and $179,388, respectively. Bad debt expense for the year ended December 31, 2024 and 2023 was $313,596 and $722,932, respectively.

As of December 31, 2024 the Company had accounts receivable over 90 days totaling $0.

Investment Securities

Marketable Securities

Our marketable securities consist of mutual funds and common stock equities that are tradable in an active market. Unrealized gains and losses on available-for-sale securities, net of applicable taxes, are reported as a component of other income, net in the accompanying consolidated statements of operations.

Non-Marketable and Other Securities

Non-marketable and other securities include investments in non-public equities. Our accounting for investments in non-marketable and other securities depends on several factors, including the level of ownership, power to control and the legal structure of the subsidiary making the investment. As further described below, we base our accounting for such securities on: (i) fair value accounting, (ii) equity method accounting, and (iii) cost method accounting.

Investments – ~~Warrant Assets~~Warrants

In connection with negotiated platform fee agreements, we may obtain warrants giving us the right to acquire stock in companies undergoing Regulation A offerings. We hold these assets for prospective investment gains. We do not use them to hedge any economic risks, nor do we use other derivative instruments to hedge economic risks stemming from these warrants.

We account for warrants in certain private and public (or publicly traded under the provisions of Regulation A) client companies as derivatives when they contain net settlement terms and other qualifying criteria under ASC 815, Derivatives and Hedging. In general, the warrants entitle us to buy a specific number of shares of stock at a specific price within a specific time period. Certain warrants contain contingent provisions, which adjust the underlying number of shares or purchase price upon the occurrence of certain future events. Our warrant agreements typically contain net share settlement provisions, which permit us to receive at exercise a share count equal to the intrinsic value of the warrant divided by the share price (otherwise known as a “cashless” exercise). These warrants are recorded at fair value and are classified as Investments - warrants on our consolidated balance sheet at the time they are obtained, and remeasured each reporting period.

The grant date fair values of warrants received in connection with services performed are deemed to be revenue and recognized upon receipt.

Any changes in fair value from the grant date to fair value of warrants will be recognized as increases or decreases to investments on our consolidated balance sheets and as a component of operating expenses on our consolidated statements of operations.

In the event of an exercise for shares, the basis or value in the securities is reclassified from Investment - warrants to marketable securities or non-marketable securities, as described below, on the consolidated balance sheet on the latter of the exercise date or corporate action date. The shares in public companies, or companies that trade over-the-counter as allowed by Regulation A, are classified as marketable ~~securities (provided they do not have a significant restriction from sale). The shares in private companies without an active trading market are classified as non-marketable securities.~~

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securities (provided they do not have a significant restriction from sale). The shares in private companies without an active trading market are classified as non-marketable securities.

Stated strike price, which can be adjusted for certain warrants upon the occurrence of subsequent funding rounds or other future events.

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The expected remaining life of the warrants in each financial reporting period.

Investments - Stock

In connection with negotiated platform fee agreements, the Company obtains shares of stock in its customers. Our accounting for investment in our customers stock depends on several factors, including the level of ownership, and power to control. We base our accounting for such securities on: (i) ~~whether~~fair ~~the~~value ~~issuer have made an offering in the current year~~accounting, (ii) ifequity ~~so,~~method ~~the valuation of the stock in the offering~~accounting, and (iii) ifcost ~~not,~~method ~~the Company will write down the stock value at a flat 33% rate~~accounting. As the stock received from customers have no readily determinable fair values and generally represent small amounts of ownership in our customers, the Company accounts for this stock received using the cost method, ~~plus~~less adjustments for ~~gross~~impairment ~~up, less write downs~~ in accordance with ASC 321-10-35-2. During the year ended December 31, ~~2023~~2024 and ~~2022~~2023, the Company received stock with a cost of $2,~~801~~429,~~296~~556 and $2,~~937~~801,~~632~~296, respectively, as payment for fees. During the year ended December 31, ~~2023~~2024 and ~~2022~~2023, write down expense related to shares received amounted to $724,934 and $2,121,901, respectively. The basis for ~~2023~~writing down this stock is to evaluate if the issuer has performed a raise on the Company’s platform within the last year. If the Company has, ~~and~~the ~~gross~~stock upvalue ~~adjustment~~is ~~related~~updated to the current issuance price. If there has not been a raise, the Company writes down the value of the shares ~~received~~by ~~amounted~~33%. This has been deemed reasonable as the shares of privately traded illiquid stocks are difficult to $1price,~~082,397,~~ ~~respectively~~and the Company has determined through research that a markdown of this amount is reasonable due to assumed loss in value based on no new raises being hosted.

Investments – Private

The Company purchases shares of venture capital backed, late-stage private companies and records the purchases at cost. The cost of the underlying asset includes the purchase price, and acquisition expenses, which include all fees, costs and expenses incurred in connection with the evaluation, investigation, and acquisition of the underlying securities. The Company purchases the private company shares either directly or through other special purpose vehicles and after a certain period of time sells its investment to an SE Fund. Each time the company sells shares to the SE Funds, it reduces its holdings by the cost basis of the sale.

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Below is a breakdown of the StartEngine Private assets held by industry at the end of the reporting period, each of these investments are small minority stakes in the underlying companies.


Industry		2024		2023
AI Chips	$	560,928	$	1,040,039
Fintech		22,823		901,784
Sales Technology		225,389		754,868
Video Games		285,844		643,558
Messaging Platforms		-		403,495
AI Software		3,379,387		-
Consumer Goods		18,552		-
Software Development		20,174		613,339
Medical Technology		187,913		-
Total	$	4,701,010	$	4,357,083

Investments – Collectibles

The Company, through its subsidiary, purchases collectibles including art, wine, memorabilia, and other collectible assets, and are recorded at cost. The cost of the underlying asset includes the purchase price, including any deposits for the underlying asset and acquisition expenses, which include all fees, costs and expenses incurred in connection with the evaluation, discovery, investigation, development and acquisition of the underlying assets.

The Company treats the underlying assets as long-lived assets, and the underlying assets will be subject to an annual test for impairment and will not be depreciated or amortized. These long-lived assets are reviewed for impairment annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset.

The underlying assets are purchased by our subsidiary, StartEngine Assets, LLC, (the “Administrative Manager”) and sold to our Series LLC subsidiary collectible funds for cash or a promissory note. The Series uses the proceeds of the offering to pay off the note. Acquisition expenses are typically paid for in advance by the Administrative Manager and are reimbursed by the Series from the proceeds of the offering in accordance with the offering circular. All such transactions are eliminated in consolidation.

The ~~below~~Company isdiscontinued athe ~~breakdown~~offerings of ~~the~~Collectibles ~~types~~in ofQ3 ~~collectibles~~2023 and ~~their~~is ~~value~~no ~~held~~longer asoffering ofpurchases ~~December~~in ~~31,~~these ~~2023:~~investments. The Company intends to sell its remaining held assets.

The below is a breakdown of the types of collectibles and their value held as of December 31, 2024 and 2023:


	Period Ended December 31,		Period Ended December 31,
	~~2023~~2024		~~2022~~2023
				~~(Restated)~~
Wine	$	278,360	$	~~388~~278,~~587~~360
Trading Cards		466,484		~~486~~466,~~657~~484
Artwork		1,322,942		1,~~287~~322,~~378~~942
Comic Books		~~324~~240,~~477~~451		~~704~~324,477
NFT		~~730~~631		~~64,472~~730
Watches		53,128		53,128

Total collectibles	$	2,~~446~~361,~~121~~996	$	2,~~984~~446,~~699~~121

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Investments – Real Estate

~~Investments~~StartEngine inhas ~~real~~invested ~~estate~~$2,136,628 to ~~are~~purchase ~~stated~~a atmembership ~~cost~~interest ~~less~~in ~~accumulated~~an ~~depreciation~~LLC ~~and~~that ~~presented~~owns one residential ~~separately~~apartment ~~from~~building ~~Property~~in ~~and Equipment used for internal operating purposes~~California. ~~Real~~The ~~Estate~~company ~~purchased~~values ~~for~~this ~~investment~~interest ~~includes~~via the adjusted cost ofmeasurement ~~the~~alternative ~~purchased~~per ~~property~~ASC 321-10-35-2, ~~including~~noting ~~the~~it ~~building,~~records ~~related~~the ~~land.~~initial ~~The~~measurement ~~Company~~at ~~allocates~~fair ~~certain~~value, ~~capitalized~~and ~~title~~in ~~fees~~subsequent ~~and~~reporting ~~relevant~~periods, ~~acquisition~~report ~~expenses~~changes toin the ~~capitalized~~fair ~~costs~~value of ~~the~~such ~~building.~~equity ~~All~~investments ~~capitalized~~in ~~property~~net ~~costs,~~income. ~~except~~As ~~for~~ the ~~value~~underlying ~~attributable~~building todoes ~~the~~not ~~land,~~have ~~are~~a ~~depreciated~~readily ~~using~~available ~~the~~fair ~~straight-line~~market ~~method~~value, ~~over~~ the ~~estimated~~company ~~useful~~alternatively ~~life~~measures ofthe ~~27.5-39 years~~investment ~~depending~~at oncost, ~~the~~minus ~~use~~impairment, ofif ~~the~~any, ~~building.~~plus ~~Additions~~or ~~and~~minus ~~property~~adjustments ~~improvements~~through inincome ~~excess~~for ofobservable ~~$5,000~~price ~~are~~changes. ~~capitalized~~To ~~and~~date, ~~depreciated using~~ the ~~straight-line~~investment ~~method~~has ~~over~~not ~~the~~had ~~estimated~~any ~~useful~~observable ~~lives~~price ~~of 5-7 years~~changes, ~~while~~and ~~routine~~as ~~repairs~~such, ~~and~~has ~~maintenance~~not ~~are~~been ~~charged~~impaired. toOn ~~expense~~August as8, ~~incurred.~~2024 At the ~~time~~Company ofexecuted ~~retirement~~a orcontract ~~other~~to ~~disposition~~sell ofa ~~property~~partial ~~and~~membership ~~equipment,~~of the ~~cost~~building. ~~and~~The ~~accumulated~~Company ~~depreciation~~agreed ~~are~~to ~~removed~~sell ~~from~~ the ~~accounts~~building ~~and~~at ~~any~~a ~~resulting~~price ~~gain~~of or$1,704,472 ~~loss is reflected~~ in ~~the~~2024 ~~consolidated~~and ~~statement~~as ~~of operations.~~

~~StartEngine has invested $2,136,628 into one residential apartment building in California as of December 31, 2023 which it plans to sell in 2024.~~F-13

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such, recognized a loss of $432,148 in 2024. The Company received $225,000 in cash as payment for this membership in August 2024. The carrying price of the building at December 31, 2024 is $1,479,310.

Intangible Assets

~~Intangible~~The ~~assets~~Company ~~are~~adheres ~~stated~~to atthe ~~gross~~provisions ~~cost~~of ~~less~~ASC ~~accumulated~~350 ~~amortization~~– Intangibles – Goodwill and ~~presented~~Other ~~separately~~concerning ~~from~~the ~~other~~valuation ~~long-term~~and presentation of intangible assets. inThe ~~accordance~~Company determined the useful life of 7 years for the purchased assets based on historical investment data for users of the StartEngine platform. In 2023, the Company received investments from users with ~~ASC~~accounts ~~350~~created from 2015-~~30-50-2~~2023 and have seen a continuation of that trend into 2024. As the Company continues to provide new offerings and work on outreach to users, we believe that this purchase will maintain its useful life for the duration. This amortization began in Q3 2023 and continue until the end of Q2 2030.

As of December 31, 2024 and 2023, the net carrying amount of the purchase was $18,463,620 and $21,872,192, respectively. Accumulated amortization as of December 31, 2024 and 2023 is $5,657,420 and $2,248,963, respectively. The estimated aggregate amortization for the five succeeding fiscal years is $17,142,860. The Company determined that there was no impairment on this asset after performing testing based on ASC 360-10 for year ended December 31, 2024.

Noncontrolling Interest

The Company presents third party minority interests in subsidiaries in accordance with ASC 810, Consolidation. Under that topic, such minority interests are presented on the Company’s balance sheet within the equity section as noncontrolling interest.

Equity Offering Costs

The Company accounts for offering costs in accordance with ASC 340, Other Assets and Deferred Costs. Prior to the completion of an offering, offering costs will be capitalized as deferred offering costs on the balance sheet. The deferred offering costs will be charged to stockholders’ equity upon the completion of an offering or to expense if the offering is not completed. Offering costs of $4339,~~719,370~~997 and $4,~~955~~719,~~461~~370 were charged to stockholders’ equity during the year ended December 31, ~~2023~~2024 and ~~2022~~2023, respectively.

Revenue Recognition

The Company accounts for revenue in accordance with ASC 606, Revenue from Contracts with Customers. ASC 606 contains a framework for analyzing potential revenue transactions by identifying the contract with a customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations in the contract, and recognizing revenue when (or as) the Company satisfies a 1performance obligation.

The Company recognizes revenues from Regulation A and Regulation D platform fees at an agreed-upon rate. In ~~2021~~2024 the rate ~~was~~is a percentage of the capital raised. Platform fees are paid to the Company from customers’ escrow accounts. For certain Regulation A offerings, the Company earns a portion of its platform fees in warrants or shares. The grant date fair values of shares and warrants received are recognized as revenue when earned. The Company’s performance obligations are satisfied as services are rendered ~~through~~throughout the duration of the campaign.

Revenues from Regulation Crowdfunding platform fees are recognized at an agreed-upon rate based on the amount invested in an offering. Platform fees are due upon the disbursement of funds from escrow and are paid to the Company from customers’ escrow accounts. The Company’s performance obligations are satisfied as services are rendered ~~through~~throughout the duration of the campaign.

The Company provides marketing services branded under the name “StartEngine Premium.” for its Regulation Crowdfunding issuers as part of services offered. The Company invoices for these services upon an issuer launching a campaign. If the campaign fails to launch, no amounts are due.

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The Company provides transfer agent services branded under the name “StartEngine Secure” through its registered transfer agent subsidiary, StartEngine Secure, LLC. The Company enters into an agreement with issuers for an annual term that commences from the date the issuers’ Regulation Crowdfunding or Regulation A offering launches and renews annually unless cancelled prior to renewal. Initial payment of services is paid from funds of the offering and is non-refundable. Renewals are invoiced on the first day of each annual period and are not subject to cancellation. The initial payment is paid from funds of the offering and is non-refundable. The transfer agent services represent a single performance obligation and is deferred over 12 months, which is the period over which the Company’s performance obligations are to be satisfied. Fees for transfer agent services are charged based on a per investor basis, subject to certain maximums. The Company may also invoice customers for ancillary services such as but not limited to: recording of stock splits, change of address, or other services. These services are provided and earned at a point-in-time based on defined amounts in the agreement. Payment for StartEngine Secure services are generally paid via customers’ escrow account, in full, during the initial year and billed to the client for cash payment for subsequent years if the customer does not have a follow-on offering or to the extent amounts in escrow are not sufficient. There are no significant judgments related to this revenue stream.

The Company ~~previously~~provides ~~offered~~services ~~campaign~~to ~~advertising~~investors ~~services~~ branded ~~under~~ the ~~name “~~StartEngine ~~Promote~~Venture club (formerly OWNers bonus) program.” ~~Under~~The ~~these~~general ~~services,~~public wecan ~~assist~~become ~~issuer~~members ~~campaigns~~of ~~through~~the ~~creating,~~StartEngine ~~designing,~~Venture ~~purchasing~~Club ~~and~~program ~~organizing~~on ~~media~~StartEngine’s ~~across~~website ~~digital~~for ~~marketing~~$275 ~~channels~~per year. ~~Promote~~The ~~services~~Venture ~~represent~~Club aentitles ~~single~~members ~~performance~~to ~~obligation.~~10% ~~The~~bonus ~~term~~shares ofon all investments they make in offerings on StartEngine where the ~~services~~issuer ~~commences~~chooses ~~upon~~to participate in the ~~agreement~~program. ~~being~~Issuers ~~signed~~using our broker-dealer and ~~through~~funding ~~the~~portal ~~closing~~services ofcan choose to participate in our Venture Club program with respect to the ~~related~~offerings ~~campaign~~they are making under Regulation A or Regulation CF. ~~The~~Those ~~revenues~~issuers ~~are~~will ~~earned~~grant ~~based~~bonus onshares ~~a percentage~~in their offerings to members of ~~additional~~the ~~investments~~StartEngine ~~attributable~~Venture toClub program. The bonus shares are included in the ~~campaign~~offering ~~advertising~~statements ~~services~~filed with the SEC, and ~~recognized monthly~~therefore tooffered ~~the~~and ~~issuer~~sold ~~throughout~~in ~~the~~reliance ~~campaign~~on Regulation A or Regulation CF, respectively. The ~~Company~~Venture ~~may~~Club ~~also~~program ~~earn~~provides amember ~~commission~~priority onaccess ~~placing~~to ~~television~~certain ~~advertisements~~collectibles onbeing ~~behalf~~offered through one of ~~the~~our ~~issuer.~~subsidiary ~~StartEngine~~Series LLC ~~Promote~~offerings, ~~fees~~notification ~~are~~of ~~charged~~new tobonus ~~the~~eligible ~~issuers~~launches and ~~are~~the ~~paid~~ability to move to the ~~Company~~front ~~from~~of ~~customers’~~the ~~escrow~~line ~~accounts~~on investment waitlists, and lower trading fees on StartEngine Secondary. The Company’s ~~performance~~recognizes ~~obligations~~the ~~are~~revenue ~~satisfied~~associated aswith ~~services~~memberships ~~are~~over ~~rendered~~12 months, which is the term of the membership. There are no significant judgments related to this revenue stream. ~~The~~Such ~~Company~~revenues ~~has~~are ~~ceased~~included ~~conducting~~in ~~these~~Venture ~~services~~Club inrevenue ~~2022~~noted below.

The Company provides ~~services~~accredited investors the opportunity to ~~investors~~purchase ~~branded~~membership interests in funds (“SE Funds”) which own shares of venture capital backed, late-stage private companies (the “underlying securities”) via its StartEngine ~~OWNers~~Private ~~bonus~~product ~~program~~offering. The ~~general~~SE ~~public~~Funds ~~can~~are ~~become~~managed ~~members~~by StartEngine Private Manager LLC and advised by StartEngine Adviser LLC (“SE Adviser”), which is a subsidiary of the ~~StartEngine~~Company ~~OWNers~~that ~~bonus~~is ~~program~~an oninvestment ~~StartEngine’s~~adviser ~~website~~that ~~for~~qualifies ~~$275~~as ~~per year.~~an ~~The~~Exempt ~~OWNers~~Reporting ~~Bonus~~Adviser ~~entitles~~under ~~members~~Rule to203(m)-1 ~~10%~~under ~~bonus~~the ~~shares~~Investment onAdvisers ~~all~~Act ~~investments~~of ~~they~~1940. ~~make~~The SE Funds sell their membership interests in offerings onthat ~~StartEngine~~are ~~where~~exempt from registration under Section 4(a)(2) of the ~~issuer~~Securities ~~chooses~~Act of 1933 and specifically Regulation D promulgated thereunder. Such offerings are marketed to ~~participate~~accredited ininvestors by the ~~program.~~Company’s ~~Issuers~~FINRA-member ~~using~~and ~~our~~SEC-registered broker-dealer subsidiary, StartEngine Primary LLC. The Company purchases the underlying securities either directly or through other special purpose vehicles and ~~funding~~after ~~portal~~a ~~services~~certain ~~can~~period ~~choose~~of time sells the underlying securities to ~~participate~~an inSE ~~our~~Fund. The ~~OWNers~~Company ~~bonus~~can ~~program~~recognize ~~with~~gross ~~respect~~revenue to the ~~offerings~~extent ~~they~~it ~~are~~is ~~making~~able ~~under~~to ~~Regulation~~sell Aunderlying orsecurities ~~Regulation~~to CFan SE Fund. ~~Those~~The ~~issuers~~Company ~~will~~treats ~~grant~~the ~~bonus~~amount ~~shares~~it inreceives ~~their~~for ~~offerings~~selling tounderlying ~~members~~securities ofas revenues, and the ~~StartEngine~~acquisition ~~OWNers~~cost ~~bonus~~related ~~program~~such underlying securities as cost of revenues. ~~The~~There ~~bonus~~are ~~shares~~several factors that are ~~included~~used in pricing the ~~offering~~securities ~~statements~~of ~~filed~~an ~~with~~SE ~~the SEC~~Fund, ~~and~~including ~~therefore~~but ~~offered~~not ~~and~~limited ~~sold~~to: inthe ~~reliance~~price on(including ~~Regulation~~transaction Acosts) orthe ~~Regulation~~securities CFwere purchased by the SE Fund’s affiliate, ~~respectively.~~the ~~The~~time ~~OWNers~~spent ~~program~~and ~~provides~~costs ~~member~~involved ~~priority~~by ~~access~~the SE Fund’s management team including those related to ~~certain~~identifying, ~~collectibles~~verifying, ~~being~~acquiring, ~~offered~~and ~~through~~managing ~~one~~the investments, sales of ~~our~~the ~~subsidiary~~underlying ~~Series LLC~~securities ~~offerings~~on the secondary market, ~~notification~~as well as considerations are given for the illiquidity of ~~new~~private ~~bonus~~investments ~~eligible~~compared ~~launches~~to publicly traded securities and investor interest in the ~~ability~~SE Fund’s securities. The Company also believes that there is value added by allowing investors to ~~move~~have an economic interest in these companies with less hassle and smaller denominations than available in secondary markets. Additionally, consideration is also given to ~~the~~broader ~~front~~economic ofand market conditions that might impact the ~~line~~valuation onof ~~investment~~private ~~waitlists~~companies, ~~and~~such ~~lower~~as ~~trading~~industry ~~fees~~trends, onregulatory ~~StartEngine~~changes, ~~Secondary~~and economic cycles. The Company ~~recognizes~~takes principal risk in its acquisition of the ~~revenue~~private ~~associated~~company ~~with~~shares ~~memberships~~and ~~over~~can ~~12 months,~~recognize ~~which~~gross revenue to the extent it is able to sell underlying securities to an SE Fund. The Company treats the ~~term~~amount ofit receives for selling underlying securities as gross revenues, and the ~~membership~~acquisition cost related such underlying securities as cost of revenues. ~~There~~Revenue ~~are~~can nobe ~~significant~~recognized ~~judgments~~upon ~~related~~each tosuch ~~this~~transaction ~~revenue~~with ~~stream~~an StartEngine Fund. The Company also provides other ancillary bundled professional services, which are recognized as such services are rendered

The Company provides accredited investors the opportunity to purchase membership interests in funds (“SE Funds”) which own shares of venture capital backed, late-stage private companies via its StartEngine Private product offering. The SE Funds are managed by StartEngine Adviser LLC (“SE Adviser”), which is a subsidiary of the Company that is an investment adviser that qualifies as an Exempt Reporting Adviser under Rule 203(m)-1 under the Investment Advisers Act of 1940. The SE Funds sell their shares in offerings that are exempt from registration under Section 4(a)(2) of the Securities Act of 1933 and specifically Regulation D promulgated thereunder. Such offerings are marketed to accredited investors by the Company’s FINRA-member and SEC-registered broker-dealer subsidiary, StartEngine Primary LLC (“SE Primary”). The Company purchases the private company shares either directly or through other special purpose vehicles and after a certain period of time sells its investment to an SE Fund. The Company takes principal risk in its acquisition of the private company shares and can recognize gross revenue from their sale to the SE Fund. Revenue can be recognized upon each such transaction with an SE Fund. The Company hosts periodic events, such as summits, and recognizes revenues from ticket sales and sponsorships. Payments from event attendees and event sponsors received prior to each event are deferred and recognized in revenue once the event occurs.

The Company also provides other ancillary bundled professional services, which are recognized as such services are rendered.

In all instances, as a practical expedient, the Company does not adjust the transaction price for the effects of a significant financing component if, at contract inception, the period between customer payment and the transfer of goods or services is expected to be one year or less.

The Company’s contracts with customers generally have a term of one year or less. As of December 31, 2023 and 2022, the Company had deferred revenue of $3,520,150 and $2,715,422, respectively, related to performance obligations yet to be fulfilled. The Company had no other customer contract assets.F-15

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Table of Contents

~~During~~The ~~the~~Company’s contracts with customers generally have a term of one year ~~ended~~or less. As of December 31, ~~2023~~2024 and ~~2022~~2023, ~~revenue~~the ~~was~~Company ~~made~~had updeferred revenue of ~~the~~$2,880,316 ~~following~~and ~~categories~~$3,520,150, ~~associated~~respectively, ~~with~~related ~~the~~to ~~above~~performance ~~described~~obligations ~~services:~~yet to be fulfilled. The Company had no other customer contract assets.

During the year ended December 31, 2024 and 2023, revenue was made up of the following categories associated with the above described services:


	~~Year~~		~~Year~~
	Year Ended December 31,		Year Ended December 31,
	~~2023~~2024		~~2022~~2023
Regulation Crowdfunding platform fees	$	11,115,372	$	10,278,596

Regulation A commissions		919,825		5,421,047
Regulation Crowdfunding platform fees	$	8,672,825	$	11,115,372
StartEngine Premium		2,740,337		2,289,999
Regulation A commissions		2,711,712		919,825
StartEngine Secure		1,426,320		1,286,483
StartEngine Premium		2,455,425		2,740,337
StartEngine Private		2,709,621		—
StartEngine Secure		1,366,502		1,426,320
OWNers Bonus revenue		4,280,009		4,437,943
StartEngine Private		27,883,143		2,709,621
Other service revenue		194,514		646,617
Venture Club (formerly OWNers Bonus) revenue		5,352,347		4,280,009

Other service revenue		183,554		194,514
Total revenues	$	23,385,998	$	24,360,685

Total revenues	$	48,625,508	$	23,385,998

Cost of Revenues

Cost of revenues consists of internal employees, hosting fees, processing fees, ~~and~~ certain software subscription fees that are required to provide services to our issuers, and for StartEngine Private acquisition costs related to underlying securities that it has sold to an SE Fund. Our cost of revenues for the year ended December 31, 2024 and 2023 was $25,873,241 and $8,703,894, respectively. The costs of revenues for StartEngine Private for year ended December 31, 2024 and 2023 was $17,281,432 and $1,850,954, respectively.

Research and Development

We incur research and development costs during the process of researching and developing our technologies and future offerings. Our research and development costs consist primarily of non-capitalizable engineering fees for both employees and consultants related to our website and future product offerings, email and other tools that are utilized for client related services and outreach. During the year ended December 31, ~~2023~~2024 and ~~2022~~2023, research and development costs were $57,~~779~~796,~~920~~521 and $45,~~667~~779,~~593~~920, respectively.

Stock-Based Compensation

The Company accounts for stock-based compensation costs under the provisions of ASC 718, Compensation—Stock Compensation, which requires the measurement and recognition of compensation expense related to the fair value of stock-based compensation awards that are ultimately expected to vest. Stock-based compensation expense recognized includes the compensation cost for all stock-based payments granted to employees, officers, and directors based on the grant date fair value estimated in accordance with the provisions of ASC 718. ASC 718 is also applied to awards modified, repurchased, or ~~cancelled~~canceled during the periods reported. Stock-based compensation is recognized as an expense over the employee’s requisite vesting period and over the nonemployee’s period of providing goods or services. The Company recognized a significant increase in Stock-Based Compensation year over year as both the fair value grant and the employee count increased, further increasing the ~~options~~a granted.

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Table of Contents

Earnings per Common and Common Equivalent Share

The computation of basic earnings per common share (“EPS”) is computed using the weighted average number of common shares outstanding during the year. The computation of diluted earnings per common share is based on the weighted average number of shares outstanding during the year plus common stock equivalents which would arise from the exercise of securities outstanding using the treasury stock method and the average market price per share during the period. Options and convertible preferred stock which are common stock equivalents are not included in the diluted earnings per share calculation for the year ended December 31, 2024 and 2023 as the effects would be anti-dilutive. See Note 6 for outstanding stock-options as of December 31, ~~2023~~2024. The weighted average shares outstanding – diluted is calculated as follows for the period ended December 31, ~~2022~~2024 and 2023:


		December 31,
		~~2023~~2024
Weighted average shares outstanding - basic		34699,~~852~~099,~~699~~798
Weighted average shares outstanding - diluted		34699,~~852~~099,~~699~~798

		December 31,
		~~2022~~2023
Weighted average shares outstanding - basic		32677,~~152~~344,~~835~~569
Weighted average shares outstanding - diluted		32677,~~152~~344,~~835~~569

The number of shares of preferred stock underlying stock-based awards excluded from the calculation of diluted net income per share attributable to common stockholders because their effect would have been anti-dilutive for the years ended December 31 2024 and 2023 were as follows:


		December 31,
		2024
Potentially issuable shares
Stock options		46,218,620
Preferred stock		119,106,320


		December 31,
		2023
Potentially issuable shares
Stock options		48,668,522
Preferred stock		119,106,320

Concentration of Credit Risk

The Company maintains its cash with a major financial institution located in the United States of America which it believes to be ~~credit worthy~~creditworthy. Balances are insured by the Federal Deposit Insurance Corporation up to $250,000. At times, the Company may maintain balances in excess of the federally insured limits.

At times, the Company may have certain vendors or customers that make up over 10% of the balance at any given time. However, the Company is not dependent on any single or group of vendors or customers, and accordingly, the loss of any such vendors or customers would not have a significant impact on the Company’s operations.

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Table of Contents

Recent Accounting Pronouncements

~~The~~Beginning ~~FASB~~in ~~issues~~2024 ~~ASUs~~annual toreporting, ~~amend~~we ~~the~~adopted ~~authoritative~~Accounting ~~literature~~Standards inUpdate ~~the~~(ASU) ~~ASC~~No. ~~There~~2023-07, ~~have~~Segment ~~been~~Reporting a(Topic ~~number~~280): ofImprovements ~~ASUs~~ to ~~date~~Reportable ~~that~~Segment ~~amend~~Disclosures ~~the~~(ASU ~~original~~2023-07) ~~text of ASC. Management believes~~ that ~~those~~was issued toby ~~date~~the ~~either~~Financial ~~(i) provide~~Accounting ~~supplemental~~Standards ~~guidance,~~Board (iiFASB) ~~are~~. ~~technical~~This ~~corrections,~~new ~~(iii) are~~standard ~~not~~requires ~~applicable~~an toenhanced usdisclosure orof ~~(iv) are not expected to have a~~ significant ~~impact~~segment ~~our~~expenses ~~consolidated~~on ~~financial~~an ~~statements~~annual basis.

We manage our company as one reportable operating segment, StartEngine Crowdfunding, Inc. The segment information aligns with how the Company’s Chief Operating Decision Maker (“CODM”) reviews and manages our business. The Company’s CODM is the Company’s Chief Executive Officer.

Financial information and annual operating plans and forecasts are prepared and reviewed by the CODM at a entity level. The CODM assesses performance for the broker-dealer segment and decides how to better allocate resources based on revenue that is reported on the Statements of Operations. The Company's objective in making resource allocation decisions is to optimize the financial results. The accounting policies of our broker-dealer segment are the same as those described in the summary of significant accounting policies herein.

For single reportable segment-level financial information, total assets, and significant non-cash transactions, see attached financial statements

NOTE 3 – MARKETABLE SECURITIES AND INVESTMENTS

~~Marketable~~The ~~Securities~~estimated fair market values of investments in securities at December 31, 2024 are as follows

Marketable securities consisted of the following as of December 31, 2023 and December 31, 2022:


	~~December 31, 2023~~	Cost	~~December 31, 2022~~	Gross Unrealized Gains/Loss		Estimated Fair Value
Common stock	$	1,856	$	1,856
Equity Securities	$	1,856	$	—	$	1,856
	$	1,856	$	1,856

~~Unrealized~~Income ~~gain~~loss ~~during~~from ~~the~~stock ~~year~~and ~~ended~~warrant ~~December~~investments ~~31,~~for ~~2023~~2024 ~~and~~consists ~~2022~~of ~~were~~the ~~$0 and $0, respectively.~~following:

~~Investments – Warrant Assets~~

Equity warrants, as described in Note 2, are equity warrants received for services provided. The warrants are valued on the date they are earned in accordance with revenue recognition criteria and again at each reporting date.


Interest and dividends	$	—
Realized and unrealized losses on investments		860,318
Total Loss	$	860,318

~~F-19~~

~~Table of Contents~~

Investments – Stock

Investments - stock, as described in Note 2, consist of shares the Company holds in various companies that launched on its platform received in exchange for services provided. The shares are recorded at cost and adjusted to the value of the stock price in an issuance within the current year or written down 33% if there is no issuance in the current year.

NOTE 4 – PROPERTY AND EQUIPMENT

As of December 31, ~~2023~~2024 and December 31, ~~2022~~2023, property and equipment consisted of the following:


	December 31, ~~2023~~2024		December 31, ~~2022~~2023
Computer equipment	$	~~160~~183,~~784~~063	$	~~137~~160,~~048~~784
Software		3,753		3,753
Total property and equipment		~~164~~186,~~537~~816		~~140~~164,~~801~~537
Accumulated depreciation		(4460,~~814~~118)		(3144,~~660~~814)
	$	~~119~~126,~~723~~698	$	~~109~~119,~~141~~723

Depreciation expense for the year ended December 31, ~~2023~~2024 and ~~2022~~2023 was $1315,~~155~~303 and $13,~~090~~155, respectively.

NOTE 5 – INTANGIBLE ASSETS

Intangibles – Seedinvest

On May 5, 2023, StartEngine Crowdfunding, Inc. (“StartEngine”) completed its purchase of substantially all of the assets of the SeedInvest business. asThis ~~conducted~~agreement byspecifically ~~Circle~~does ~~Internet~~not ~~Financial~~include ~~Limited~~the ~~through~~registered ~~its~~broker-dealer ~~subsidiary~~or ~~Pluto~~the ~~Holdings,~~Alternative ~~LLC,~~Trading aSystem ~~Delaware limited liability company~~ (“~~Pluto Holdings~~ATS”) ~~and~~belonging ~~through~~to ~~SI Securities, LLC, a New York limited liability company (“SI Securities”), and~~ SeedInvest Technology, LLC, a New York limited liability company, each a wholly-owned subsidiary of Pluto Holdings (“SeedInvest Technology,” collectively, with the assets acquired from Pluto Holdings and SI Securities, “SeedInvest”). The total consideration for the purchase is ~~960~~ 19,200,000 shares of StartEngine’s common stock, which based on StartEngine’s previous Regulation A offering price of $25 per share would be valued at $24 million. The acquisition included intellectual property including the customer list of SI Securities as well as other digital assets.

~~The Company adheres to the provisions of ASC 350~~ F- Goodwill concerning the valuation and presentation of intangible assets. The Company determined the useful life of 7 years for the purchased assets based on historical investment data for users of the StartEngine platform. In 2023, the Company received investments from users with accounts created from 2015-2023 and have seen a continuation of that trend in to 2024. As the Company continues to provide new offerings and work on outreach to users, we believe that this purchase will maintain its useful life for the duration. 18

AsTable of December 31, 2023, the gross carrying amount of the purchase was $24,121,040, accumulated amortization is $2,248,848 and the estimated aggregate amortization for the five succeeding fiscal years is $17,229,314.Contents

based on StartEngine’s previous Regulation A offering price of $1.25 per share would be valued at $24 million. The acquisition included intellectual property including the customer list of SI Securities as well as other digital assets.

The Company adheres to the provisions of ASC 350 – Intangibles – Goodwill and Other concerning the valuation and presentation of intangible assets. The Company determined the useful life of 7 years for the purchased assets based on historical investment data for users of the StartEngine platform. In 2023, the Company received investments from users with accounts created from 2015-2023 and have seen a continuation of that trend in to 2024. As the Company continues to provide new offerings and work on outreach to users, we believe that this purchase will maintain its useful life for the duration. This amortization began in Q3 2023 and continue until the end of Q2 2030.

As part of the acquisition of the SeedInvest business, the Company acquired a significant intangible asset in the form of a customer list. At the time of acquisition, the Company determined the fair value of the acquired assets, noting that approximately 100% of the gross assets acquired was concentrated in the customer list. The value of intellectual property and various immaterial contracts with vendors was deemed insignificant, and no fair value was assigned to those assets. All contracts have since been canceled, and the SeedInvest webpage and domain are solely used as a redirect to the Company’s site, where users must set up new accounts with the Company. The acquisition did not include any fixed assets, vehicles, equipment, machinery, tools, furnishings, computer hardware, or fixtures.

In accordance with the guidance in FASB ASC 350-30-35-14, the Company evaluates the customer list for impairment annually, or more frequently if events or changes in circumstances indicate that the asset might be impaired. If the carrying amount exceeds the fair value, an impairment loss is recognized in an amount equal to that excess.

The Company considers various factors that may indicate impairment of the customer list, including but not limited to:

●

Declines in customer retention rates.

●

Reductions in revenue per customer.

●

Changes in market conditions affecting the value of the customer relationships.

●

Strategic shifts that alter the utility of the acquired customer list.


2025	3,428,572
2026	3,428,572
2027	3,428,572
2028	3,428,572
Thereafter	4,749,332
Total	18,463,620

NOTE 6 – COMMITMENTS AND CONTINGENCIES

The Company is currently not involved with and does not know of any pending or threatening litigation against the Company or any of its officers.

NOTE 7 – STOCKHOLDERS’ EQUITY

Preferred Stock

As of December 31, ~~2023~~2024, the Company has authorized the issuance of 25519,~~950~~000,000 shares of our preferred stock with par value of $0.00001. Of these authorized shares, 10207,~~350~~000,000 are designated as Series A, 499,~~950~~000,000 are designated as Series T, and 10213,~~650~~000,000 are designated as Series Seed.

F-2019

Table of Contents

Series A Preferred Stock

The Series A has liquidation priority over the Series Seed and common stock. In the event of the liquidation, dissolution or winding up of the Company, the Series A shall be entitled to receive, out of the assets of the Company available for distribution to its stockholders, before any payment is made to Series Seed or common stock, liquidation distributions, which will be paid ratably with the Series T in proportion to its respective liquidation preference. Holders of Series A will receive an amount equal to $0.~~5727~~0286 per share, as adjusted, plus all declared and unpaid dividends thereon to the date fixed for such distribution. If upon such event the assets of the Company legally available for distribution are insufficient to permit payment of the full preferential amount, the entire assets available for distribution to stockholders shall be distributed to the holders of the Series A and Series T ratably in proportion to the full preferential amounts for which they are entitled. The Series A votes on an as-converted basis. The Series A is convertible by the holder at any time after issuance at the conversion price, which equates to a one-to-one basis for common stock. The Series A is automatically convertible into common stock upon the earlier of 1) the vote or written consent of at least a majority of the voting power represented by the then outstanding shares of preferred stock or 2) the closing of a firm-commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, coverts the offer and sale of common stock at an offering price of not less than $20.861430 per share, as adjusted, with aggregate gross proceeds to the Company of not less than $15,000,000. In addition, the Series A has various anti-dilution provisions which take into account future sales and issuances of common stock and other dilutive instruments. As of December 31, 2024, there are 21,559,120 remaining shares available for issuance.

Series T Preferred Stock

The Series T have liquidation priority over the Series Seed and common stock. In the event of the liquidation, dissolution or winding up of the Company, the Series T shall be entitled to receive, out of the assets of the Company available for distribution to its stockholders, before any payment is made to Series Seed or common stock, liquidation distributions, which will be paid ratably with the Series A in proportion to its respective liquidation preference. Holders of Series T will receive an amount equal to $20.931465 per share, as adjusted, plus all declared and unpaid dividends thereon to the date fixed for such distribution. If upon such event the assets of the Company legally available for distribution are insufficient to permit payment of the full preferential amount, the entire assets available for distribution to stockholders shall be distributed to the holders of the Series A and Series T ratably in proportion to the full preferential amounts for which they are entitled. The Series T votes on an as-converted basis. The Series T is convertible by the holder at any time after issuance at the conversion price, which equates to a one-to-one basis for common stock. The Series T is automatically convertible into common stock upon the earlier of 1) the vote or written consent of at least a majority of the voting power represented by the then outstanding shares of preferred stock or 2) the closing of a firm-commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, coverts the offer and sale of common stock at an offering price of not less than $20.931465 per share, as adjusted, with aggregate gross proceeds to the Company of not less than $15,000,000. In addition, the Series T has various anti-dilution provisions which take into account future sales and issuances of common stock and other dilutive instruments. As of December 31, 2024, there are 89,357,920 remaining shares available for issuance.

Series Seed Preferred stock

The Series Seed have liquidation priority over the common stock. In the event of the liquidation, dissolution or winding up of the Company, the Series Seed shall be entitled to receive, out of the assets of the Company available for distribution to its stockholders, after any payment made to Series A and Series T, but before any payment is made to the Company’s common stock, an amount equal to $0.~~1667~~0083 per share, as adjusted, plus all declared and unpaid dividends thereon to the date fixed for such distribution. If upon such event the assets of the Company legally available for distribution are insufficient to permit payment of the full preferential amount, the entire assets available for distribution to stockholders shall be distributed to the holders of Series A and Series T first, then ratably in proportion to the full preferential amounts for which they are entitled to the Series Seed. The Series Seed votes on an as-converted basis. The Series Seed is convertible by the holder at any time after issuance at the conversion price, which equates to a one-to-one basis for common stock. The Series Seed is automatically converted into common stock upon the earlier of 1) the vote or written consent of at least a majority of the voting power represented by the then outstanding shares of preferred stock or 2) the closing of a firm-commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, converts the offer and sale of common stock at an offering price of not less than $20.861430 per share, as adjusted, with aggregate gross proceeds to the Company of not less than $15,000,000. In addition, the Series Seed has various anti-dilution provisions which take into account future sales and issuances of common stock and other dilutive instruments. As of December 31, 2024, there are 8,189,280 remaining shares available for issuance.

~~F-21~~The following table summarizes the designation, shares authorized, and shares outstanding for the Company’s Preferred Stock:

F-20

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Preferred Stock Series Designation	Preferred Shares Authorized		Preferred Shares Outstanding		Potentially Issuable Preferred Shares
Series Seed		213,000,000		204,810,720		8,189,280
Series A		207,000,000		185,440,880		21,559,120
Series T		99,000,000		9,642,080		89,357,920

Common Stock

As of December 31, 2024 ~~2023~~ we had authorized the issuance of 251,500,000,000 shares of our common stock with par value of $0.00001. ~~As described in Note 1, concurrently with a stock split, we increased the authorized shares of common stock to 75,000,000.~~

During the year ended December 31, ~~2023~~2024, the Company sold ~~570~~2,~~037~~362,173 shares of common stock through its Regulation A offering for gross proceeds of $102,~~162~~553,~~061~~913 and incurred offering costs of $4339,~~719,370~~997.

During the year ended December 31, ~~2022~~2023, the Company sold ~~401~~9,~~645~~105,220 shares of common stock through its Regulation A offering for gross proceeds of $610,~~733~~162,~~601~~061 and incurred offering costs of $4,~~587~~719,~~630~~370.

Stock Options

In 2015, our Board of Directors adopted the StartEngine Crowdfunding, Inc. 2015 Equity Incentive Plan (the “2015 Plan”). The 2015 Plan provides for the grant of equity awards to employees, and consultants, including stock options, stock purchase rights and restricted stock units to purchase shares of our common stock. Up to 11231,~~590~~800,000 shares of our common stock may be issued pursuant to awards granted under the 2015 Plan. The 2015 Plan is administered by our Board of Directors, and expires ten years after adoption, unless terminated earlier by the Board.

The Company valued options granted under the 2015 Plan under ASC 718 using the Black-Scholes pricing model. . The granted options in ~~2023~~2024 and ~~2022~~2023 have exercise prices ~~ranging~~of ~~from~~ $41.~~33 to $~~25~~.00~~, generally vest over four years and expire in ten years.. The stock options granted during the year ended December 31, ~~2023~~2024 and ~~2022~~2023 were valued using the Black-Scholes pricing model using the range of inputs as indicated below:


	~~2023~~2024		~~2022~~2023
Expected life (years)	6.5		6.5
Risk-free interest rate	34.0 -4.6	%	23.56	%
Expected volatility	39.5 - 45.7	%	45.7	%
Annual dividend yield	0	%	0	%

The risk-free interest rate assumption for options granted is based upon observed interest rates on the United States government securities appropriate for the expected term of the Company’s employee stock options.

The expected term of employee stock options is calculated using the simplified method which takes into consideration the contractual life and vesting terms of the options.

The Company determined the expected volatility assumption for options granted using the historical volatility of comparable public Company’s common stock. The Company will continue to monitor peer companies and other relevant factors used to measure expected volatility for future stock option grants, until such time that the Company’s common stock has enough market history to use historical volatility.

The dividend yield assumption for options granted is based on the Company’s history and expectation of dividend payouts. The Company has never declared or paid any cash dividends on its common stock, and the Company does not anticipate paying any cash dividends in the foreseeable future.

The Company currently recognizes option forfeitures as they occur as there is insufficient historical data to accurately determine future forfeiture rates A summary of the Company’s stock option activity and related information is as follows

F-2221

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A summary of the Company’s stock option activity and related information is as follows.


				Weighted
		Weighted		average
		Average		Remaining
	Number of	Exercise		Contractual
	Shares	Price		Term
Outstanding at December 31, 2021	7,079,833	$	2.36	6.50
Outstanding at December 31, 2022	152,029,200	$	0.1995	6.50
Granted	145,~~300~~576,~~562~~920		140.599900
Exercised	(72,~~927~~676,100)		30.600275
Expired/Cancelled	(~~771~~9,~~008~~348,640)		80.297180
Outstanding at December 31, 2022	7,601,460	$	3.99	6.50
Outstanding at December 31, 2023	185,581,380	$	0.1103	6.50
Granted	222,~~278~~930,~~846~~000		191.802500
Exercised	(~~133~~3,~~805~~413,447)		0.550011
Expired/Cancelled	(~~459~~21,~~057~~966,455)		140.360008
Outstanding at December 31, 2023	9,287,444	$	3.99	6.50
Outstanding at December 31, 2024	183,131,478	$	0.1995	6.50
Exercisable at December 31, 2023	6,152,481	$	2.76	6.50
Exercisable at December 31, 2024	132,505,412	$	0.0006	6.50
Vested and expected to vest at December 31, 2023	9,287,444	$	3.99	6.50
Vested and expected to vest at December 31, 2024	183,131,478	$	0.1995	6.50

The weighted average grant date fair values of options granted during the years ended December 31, ~~2023~~2024 and ~~2022~~2023 were $190.8065 and $140.5999 per option, respectively. The Company’s fair market value is based on the offering price in its Regulation A offerings at the time of grant. During the years ended December 31, ~~2023~~2024 and ~~2022~~2023, employees exercised their vested options to purchase ~~133~~3,~~805~~413,447 and 72,~~927~~676,100 shares of common stock, and the Company received aggregate exercise proceeds of $8644,~~390~~675 and $3886,~~035~~390, respectively. The intrinsic value of the options exercised was $3,342,171 and $3,394,400 during the year ended December 31, 2024 and 2023, respectively.

Stock option expense for the years ended December 31, ~~2023~~2024 and ~~2022~~2023 was $711,~~057~~280,~~401~~018 and $37,~~993~~057,~~424~~401, respectively, and are included within the consolidated statements of operations as follows:


	~~2023~~2024		~~2022~~2023
Cost of revenues	$	~~743~~1,~~087~~380,541	$	~~185~~743,~~568~~087
General and administrative		1,~~220~~767,~~932~~907		1,~~327~~220,~~114~~932
Sales and marketing		45,~~001~~606,~~941~~323		14,~~994~~001,~~852~~941
Research and development		12,~~091~~525,~~441~~247		~~485~~1,~~890~~091,441
Total	$	711,~~057~~280,~~401~~018	$	37,~~993~~057,~~424~~401

At December 31, ~~2023~~2024, the total compensation cost related to nonvested awards not yet recognized was approximately $2018,~~229~~539,~~215~~725 and the weighted-average period over which the total compensation cost related to nonvested awards not yet recognized is expected to be recognized is 2.74 years.

NOTE 8 – INCOME TAXES

The provision for income tax expense (benefit) consists of the following:

~~ ~~ Current income tax expense (benefit) - Deferred income tax expense (benefit) - Total income tax expense (benefit) -

Effective Rate Reconciliation:


Pre-Tax income (loss)	(16,~~308~~536,~~366~~658)

F-2322

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The U.S. Federal Statutory Tax Rate for 2023 is 21%. The reconciliation of the expected income tax expense (benefit)

and the actual income tax expense (benefit) is as follows:


Expected Federal income tax expense (benefit)	(3,424,757)	21.00%
	2024		2023
State income tax expense (benefit)	(1,141,586)	7.00%
Expected Federal income tax expense (benefit)	(3,618,587)	22.10%	(3,424,757)	20.91%
Stock option compensation	926,072	-5.68%
State income tax expense (benefit)	(1,206,196)	7.37%	(1,141,586)	6.97%
Section 162(m) Limitation	364,000	-2.23%
Stock option compensation	4,278,405	(26.13)%	926,072	(5.66)%
Other permanent differences	(3,577)	0.02%
Section 162(m) Limitation	(980,000)	5.98%	364,000	(2.22)%
Prior Year True-Up Adjustments	(3,117,890)	19.12%
Other permanent differences	1,047	(0.01)%	(3,577)	0.02%
Change in Valuation Allowance	6,397,738	-39.23%
Prior Year True-Up Adjustments	(5,135,090)	31.36%	(3,117,890)	19.04%
Total income tax expense (benefit)	-
Change in Valuation Allowance	6,660,421	(40.67)%	6,397,738	(39.07)%
Total income tax expense (benefit)	-		-

The Company has U.S. Federal net operating loss (NOL) carryovers of $17,516,800. Under the Tax Cuts and Jobs Act (TCJA), Federal NOL's incurred in taxable years beginning in 2018 and later have an indefinite carryforward period, but the use of the NOL carryover is limited to 80% of taxable income in the subsequent year. Federal NOL Carryovers incurred prior to 2018 expire after 20 years. The Company has $2,217,168 of Federal NOL carryovers incurred prior to 2018 which begin to expire in 2036. The Company has NOL carryovers in California of $25,412,005 which begin to expire in 2034. NOL carryovers and capital loss carryovers are a benefit to the Company in the form of future tax savings and such carryovers are recorded as deferred tax assets, subject to a valuation allowance.

Under the Tax Cuts and Jobs Act (TCJA), Federal NOL's incurred in taxable years beginning in 2018 and later have an indefinite carryforward period, but the use of the NOL carryover is limited to 80% of taxable income in the subsequent year. Federal NOL Carryovers incurred prior to 2018 expire after 20 years. The Company has $2,217,168 of Federal NOL carryovers incurred prior to 2018 which begin to expire in 2036. The Company has NOL carryovers in California of $25,412,005 which begin to expire in 2034. NOL carryovers and capital loss carryovers are a benefit to the Company in the form of future tax savings and such carryovers are recorded as deferred tax assets, subject to a valuation allowance.

Net deferred income tax assets (liabilities) are comprised of the following:


	~~2023~~	2024	~~2022~~	2023
Deferred tax assets (liabilities)
Net Operating Loss Carryovers	~~5,457,368~~	5,924,165	~~2,987,090~~	5,457,368
Credit Carryovers	~~2,127,544~~	3,518,227	-	2,127,544
Capitalized Reserch and Development	1,752,064		-
Capitalized Research and Development		2,378,580		1,752,064
Reserves and Allowances	~~50,229~~	-	~~22,195~~	50,229
Capital Loss Carryover	~~21,557~~	21,557	-	21,557
Depreciation	~~1,922~~	(1,953)	~~3,662~~	1,922
Deferred Tax Assets	~~9,410,684~~	11,840,576	~~3,012,947~~	9,410,684
Less: Valuation Allowance	~~(9,410,684)~~	(11,840,576)	~~(3,012,947)~~	(9,410,684)
Net Deferred Tax Assets	-	-	-	-

~~NOTE 9 – SUBSEQUENT EVENTS~~F-23

~~The~~Table ~~Company~~of ~~has evaluated subsequent events that occurred after December 31, 2023 through April 15, 2024.~~Contents

~~The~~NOTE ~~Company~~9 ~~settled~~– ~~arbitration~~RELATED ~~with~~PARTY a previous issuer as mentioned in Item 3. Legal Proceedings in February 2024 for a total of $2,100,000 of which the Company was responsible for $200,000 and the remaining $1,900,000 was reimbursed through an insurance policy.TRANSACTIONS

OnThe ~~March~~Company ~~13,~~is ~~2024,~~currently ~~the~~owed ~~Board~~$180,610 offrom ~~Directors~~StartEngine ~~voted~~Collectibles ~~unanimously~~LLC ~~for~~in arelation ~~twenty-for-one~~to ~~stock~~the ~~split~~fees ofassociated ~~the~~with ~~Company’s~~initiating ~~outstanding~~and ~~shares~~selling ofcollectible ~~common~~assets ~~stock.~~since ~~Stockholders~~the inception of ~~record~~the atfund. Additionally, the ~~close~~Company ofis ~~business~~owed ~~May 4~~$28,750 ~~2024~~from ~~will~~StartEngine ~~own~~Loans, ~~twenty~~LLC ~~shares~~in ~~for~~relation ~~every~~to ~~one~~legal ~~share~~fees ~~owned~~for ascreating of the ~~split date~~entity.

The Company retained American Incline LLC for legal services in 2024. Ronald Miller, a co-founder and executive chairman of StartEngine is a registered agent at American Incline. The Company paid $107,900 to American Incline in 2024.

The Company offers accredited investors the opportunity to purchase membership interests in investment vehicles known as “SE Funds”, which are Series LLCs of StartEngine Private LLC which hold single portfolio companies, and StartEngine Private Funds LLC which hold multiple portfolio companies, through its StartEngine Private product offering. These SE Funds invest in shares of venture capital-backed, late-stage private companies (“underlying securities”). The SE Funds are managed by StartEngine Private Manager LLC and advised by StartEngine Adviser LLC.

StartEngine Primary LLC, a wholly-owned, FINRA-member and SEC-registered broker-dealer subsidiary of the Company, markets offerings of SE Fund membership interests to accredited investors. These offerings are conducted pursuant to exemptions from registration under Section 4(a)(2) of the Securities Act of 1933 and Regulation D promulgated thereunder.The Company generates revenue from the sale of underlying securities to SE Funds and recognizes such amounts as StartEngine Private revenue. This revenue can be found on the table in Note 2, as a major component of the Company’s revenues.

The Company records the acquisition cost of these securities as cost of revenue. Accordingly, transactions between the Company and the SE Funds, including the sale of securities to such affiliated investment vehicles, constitute related party transactions.

NOTE 10 – SUBSEQUENT EVENTS

The Company has evaluated subsequent events that occurred after December 31, 2024 through March 31, 2025.

On March 14, 2025, StartEngine completed the sale of its investment in the residential apartment building it owns a membership interest in for proceeds of $1,479,310.

On February 18, 2025, the Company received its cash reimbursement for the legal receivable claim it made relating to the litigation settlement in 2023. The proceeds totaled $200,000.

From January 1, 2025 to March 31, 2025, the Company sold 1,922,194 additional shares of common stock through its regulation A offering for gross proceeds of $2,121,398.

F-24

Table of Contents

Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosures

(a) Dismissal of Independent Accounting Firm

On May 30, 2023, the board of directors (the “Board”) of StartEngine Crowdfunding, Inc. (the “Company”) approved the dismissal of BF Borgers CPA PC (“Borgers”) as the Company’s independent accounting firm, effective immediately.

Borgers’ audit reports on the Company’s financial statements for the fiscal years ended December 31, 2022 and December 31, 2021 did not contain any adverse opinion or disclaimer of opinion, and were not qualified or modified as to any uncertainty, audit scope or accounting principle.

During the fiscal years ended December 31, 2022 and December 31, 2021 and the subsequent interim period preceding such dismissal, (i) there were no disagreements (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) between the Company and Borgers on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to Borgers’ satisfaction, would have caused Borgers to make reference to the matter in their report, and (ii) there were no reportable events (as defined in Item 304(a)(1)(v) of Regulation S-K).

The Company has provided Borgers with a copy of this Current Report on Form 8-K and requested that it provide the Company with a letter addressed to the SEC indicating whether or not Borgers agrees with the disclosures contained herein and, if not, the respects in which it is not in agreement. A copy of Borgers’ letter, dated June 2, 2023 is filed as Exhibit 16.1 to this Current Report on Form 8-K.

(b) Appointment of Independent Accounting Firm

On May 30, 2023, the Board approved the appointment of Haynie & Company (“Haynie”) as the Company’s new independent accounting firm. During the two fiscal years ended December 31, 2022 and the subsequent interim period preceding such appointment, neither the Company nor anyone acting on its behalf has consulted with Haynie regarding (i) the application of accounting principles to a specified transaction, either completed or proposed, (ii) the type of audit opinion that might be rendered on the Company’s financial statements, and neither a written report nor oral advice was provided to the Company that Haynie concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing, or financial reporting issue or (ii) any matter that was either the subject of a “disagreement” or “reportable event” (as each term is defined in Item 304(a)(1)(iv) and (v) of Regulation S-K, respectively).

Item 9A.Controls and Procedures

Limitations on Effectiveness of Controls and Procedures

The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, refers to controls and procedures that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact there are resource constraints and management are required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Evaluation of Disclosure Controls and Procedures

Management, with the participation of our Chief Executive Officer, who is also our principal financial officer, has evaluated as of the end of the period covered by this Annual Report on Form 10-K, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act of 1934). Based on that evaluation, our Principal Executive Officer and Principal Financial Officer concluded our disclosure controls and procedures were not effective as of December 31, ~~2023~~2024 based on material weaknesses in our internal control over financial reporting described below.

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Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15 under the Exchange Act). The Company’s internal control over financial reporting includes those policies and procedures that:

• Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the issuer;

• Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the issuer are being made only in accordance with authorizations of management and directors of the issuer; and

• Provide reasonable assurance regarding prevention of timely detection of unauthorized acquisition, use or disposition of the issuer’s assets that could have a material effect on the financial statements.

Management conducted an assessment of the effectiveness of our internal control over financial reporting based on the criteria set forth in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on the assessment, management has concluded that the Company’s internal control over financial reporting was not effective as of December 31, ~~2023~~2024 due to a material weaknesses identified below.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. The following material weaknesses were identified:

• ~~Material~~The ~~asset~~expense ~~and~~related ~~liability~~to ~~general~~stock ~~ledger~~based ~~accounts~~compensation ~~were~~using ~~not~~a ~~reconciled~~modified toBlack-Scholes ~~support~~pricing ~~schedules~~model had calculation errors and needed to be corrected;

• ~~Investment~~Stock ~~securities~~and ~~were~~warrants ~~not~~held ~~counted~~as orinvestments ~~reconciled~~were incorrectly valued due to ~~detail~~errors ~~records;~~with the calculation input for the revaulation.

•Notwithstanding ~~Stock~~this ~~and~~material ~~warrants~~weakness ~~held~~noted asabove, ~~investments~~management ~~were~~has ~~not~~concluded ~~valued~~that ~~using~~our ~~fair~~consolidated ~~value~~financial ~~accounting~~statements orand ~~cost~~related ~~method~~notes ~~less~~thereto ~~adjustments~~included ~~for~~in ~~estimated~~this ~~impairments~~Annual ~~(stock~~Report ~~investments)~~fairly orpresent ~~using~~in aall ~~modified~~material ~~Black-Scholes~~respects ~~option pricing model (warrant investments) per~~ the ~~Company’s~~financial ~~stated policies. Also~~condition, ~~period~~results ~~end~~of ~~procedures~~operations ~~did~~and ~~not~~cash ~~include~~flows ~~revaluing~~of ~~investments~~the ~~under~~ Company ~~policies~~as ~~and the inclusion~~ of, ~~sufficient~~and ~~detail~~for, in the ~~support~~periods ~~schedules~~presented ~~and~~in ~~general~~this ~~ledger~~report. Additional ~~accounts~~detail toon ~~draft~~the ~~financial~~nature ~~statement~~of ~~disclosures that properly list investments in~~ the ~~fair~~material ~~value hierarchy~~weaknesses, ~~reconcile changes in level 3 investments,~~ and ~~present~~managements ~~that~~conclusions ~~variables~~can ~~used~~be infound ~~valuing investments;~~below.

•The ~~Financial~~Company ~~spreadsheets~~made ~~used~~a concerted effort to ~~support~~remediate ~~prepaid~~and ~~assets~~correct ~~lacked~~the material weaknesses that occurred in the audit of 2023 financial statements and the weaknesses that occurred in the 2023 audit such as lack of adequate review ~~and~~over ~~were~~financial ~~susceptible~~spreadsheets, material general ledger accounts not reconciling to ~~formula~~support and ~~manual~~payroll ~~input~~recorded ~~errors;~~on ~~and~~a cash basis rather than accrual basis have been substantially remediated.

• Payroll was recorded on a cash basis, rather than an accrual basis, during the fiscal year.

A description of the Company’s ongoing remediation process is provided below in “Changes in Internal Control over Financial Reporting.”

The Company’s registered public accounting firm has not provided an attestation report on the Company’s internal control over financial reporting as of December 31, ~~2023~~2024, because the Company is an emerging growth company as defined by SEC Rule 405 of the Securities Act of 1933, as amended, and Rule 12b-2 of the Exchange Act.

~~For~~Changes ~~a complete description of errors~~ in ~~the~~Internal ~~Company’s~~Control ~~previously~~Over ~~reported financial statements for the fiscal year ended December 31, 2022, see Item 7. “Management’s Discussion and Analysis of~~ Financial ~~Condition and Results of Operations – Restatement.”~~Reporting

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~~Changes~~During inpreparation ~~Internal~~for ~~Control~~financial ~~Over~~reporting ~~Financial~~related ~~Reporting~~to the year ended December 31, 2024, and based on review from the auditors, the Company discovered certain material weaknesses described above. Management continues to evaluate the material weakness discussed above, has created a remediation plan that we have already begun implementing and continue to finalize that plan's implementation. Specifically, management enhanced the Company’ internal controls regarding the review and preparation of financial statements by adding enhanced procedures for the review of account balances and assessing collectible accounts receivables as well as a process for annual revaluation of the Company’s stocks and warrants. Additionally, the Company has added additional accounting software to assist with more accurate financial reporting for future periods. In addition, we have corrected the deficiency discovered during our annual audit process prior to the filing of this annual report.

During preparation for financial reporting related to the year ended December 31, 2023, and based on review from the auditors, the Company discovered certain material weaknesses, described above, that resulted in errors in its previously reported financial statements for the year ended December 31, 2022. Accordingly, the Company made certain corrections to previously reported financial statements for the year ended December 31, 2022, and determined that a restatement based on the corrections made was not necessary, however it has been noted in the 2023 financial statements. Management continues to evaluate the material weakness discussed above, has created a remediation plan that it has already begun implementing and continues to finalize that plan's implementation. Specifically, management enhanced the Company’ internal controls regarding the review and preparation of financial statements by adding enhanced procedures for the review of account balances and assessing collectible accounts receivables as well as a process for annual revaluation of the Company’s stocks and warrants. Additionally, the Company has added additional accounting software to assist with more accurate financial reporting for future periods. In addition, we have corrected the deficiency discovered during our annual audit process prior to the filing of this annual report.

However, assurance as to when all remediation efforts will be complete cannot be provided and the material weakness cannot be considered remedied until the applicable controls have operated for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. Management cannot provide assurances that the measures that have been taken to date, and are continuing to be implemented, will be sufficient to remediate the material weakness identified or to avoid potential future material weaknesses.

Item 9B. ~~Insider~~Other ~~Trading Arrangement~~Information

~~(a)~~Insider ~~None.~~Trading Arrangement and Policies

~~(b).~~ None of the Company’s officers or directors have entered into a contract, established a plan, or issued instructions that provides for the purchase or sale of any equity securities of the Company intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) of the Exchange Act.

We have not adopted an insider trading policy and procedures governing the purchase, sale, and/or other dispositions of the registrant’s securities by directors, officers and employees, or the registrant itself, that are reasonably designed to promote compliance with insider trading laws, rules and regulations, and any listing standards applicable to the registrant. We expect that such a policy will be adopted prior to any listing of the Company’s shares on a national securities exchange or StartEngine Secondary.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

None.

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PART III

Item 10.Directors, Executive Officers and Corporate Governance

As of April 15, 2024, our directors, executive officers and significant employees were as follows:


			Term of Office (if	Approximate hours
			indefinite, give date	per week (if
Name	Position	Age	appointed)	part-time)/full-time
Executive Officers:
Howard Marks	CEO	6162	January 1, 2014, Indefinitely	Full-time
Johanna Cronin	Chief Marketing Officer	3536	March 2014, Indefinitely	Full-time
Jonathan Reyes	Chief Compliance Officer	3738	March 2020, Indefinitely	Full-time
Allen Jebsen (1)	SVP, Fundraising	32	March 2019-April 2024 (1)	Full-time
Joshua Amster	VP, Fundraising	34	July 2016, Indefinitely	Full-time
Joshua Amster	VP, Fundraising	33	July 2016, Indefinitely	Full-time
Hunter Strassman	VP, Finance	33	October 2021, Indefinitely	Full-time
Hunter Strassman	VP, Finance	32	October 2021, Indefinitely	Full-time
Joseph Mathews	VP, Engineering	52	March 2019, Indefinitely	Full-time
Joseph Mathews	VP, Engineering	51	March 2019, Indefinitely	Full-time

Directors:
Howard Marks	Director	6162	April 17, 2014, Indefinitely
Ronald Miller	Director and Chairman	6162	April 17, 2014, Indefinitely

Significant Employees:
N/A

(1) Allen Jebsen left StartEngine on April 4, 2024

Howard Marks, Co-founder, CEO and Director

Howard Marks is one of our co-founders and has served as our CEO since January 1, 2017. From our founding in March 2014 until December 2016, Howard served as our Executive Chairman. Howard founded StartEngine, an unrelated entity, in November 2011 as a startup accelerator with the mission to help make Los Angeles a top tech entrepreneurial city. In March 2014, Howard and Ron Miller founded the Company as an equity crowdfunding platform. Howard was the founder and CEO of Acclaim Games, a publisher of online games now part of The Walt Disney company. Before Acclaim, Howard was the Chairman of Activision Studios from 1991 until 1997. As a former Board Member and Executive Vice-President of video-game giant Activision, he and a partner took control in 1991 and turned the ailing company into the $20 billion market cap video game industry leader. As a games industry expert, Howard built one of the largest and most successful games studios in the industry, selling millions of games. Howard is the 2015 “Treasure of Los Angeles” recipient, awarded for his work to transform Los Angeles into a leading technology city. Howard is a member of Mayor Eric Garcetti’s technology council. Howard has a Bachelor of Science in Computer Engineering from the University of Michigan. He is bilingual and is a triple national of the United States, United Kingdom, and France.

Ronald Miller, Co-founder and Executive Chairman

Ron Miller is the executive chairman and cofounder of StartEngine. Ron served as our CEO and a director since our founding in March 2014 until December 2016. On January 1, 2017, Ron became our executive chairman. He is also currently the founder of the Disability Group Inc., and has served as its CEO since 2004. When Howard and Ron initially met in the fall of 2013, they recognized that the JOBS Act represented the greatest advancement for entrepreneurship in a generation. From direct experience as entrepreneurs, they recognized that the key to bringing new technologies and innovations to market required capital that is not readily available. As a serial start-up entrepreneur, Ron immediately went into action to advocate for SEC rulemaking to give life to the JOBS Act, raise the initial capital and built a leadership team to drive the sales and market plan to help StartEngine establish a leadership place in the market.

Prior to StartEngine, Ron founded built and sold five companies through management buyouts, private equity, private investors, and public markets. He was also nominated as a four-time Inc.500/5000 award recipient and was Ernst & Young entrepreneur of the year award finalist. As the executive chairman, Ron brings his deep experience as a leader and strategist to the Company.

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Johanna Cronin, Chief Marketing Officer

Johanna Cronin is the Chief Marketing Officer at StartEngine and is the sole manager of our subsidiary StartEngine Assets LLC. She was the first employee and began working for StartEngine in 2014. Prior to that she served as an SEM analyst, managing paid media budgets and purchasing media placements for small businesses, for Dex Media, Inc. from March 2012 until March 2014. Johanna received her Bachelor of Arts from Northwestern University, where she was a psychology major with a Spanish minor.

Jonathan Reyes, Chief Compliance Officer

Jonathan Reyes has served as the Chief Compliance Officer at StartEngine Crowdfunding Inc., StartEngine Capital, LLC, and StartEngine Primary LLC since December 2020. Before becoming Chief Compliance Officer, Jonathan was the first in-house attorney to work for StartEngine, serving in various roles on the compliance team dating back to May 2017. ~~Prior to joining StartEngine,~~ Jonathan ~~served as co-founder of and Chief Operations Officer of Dryvrs, a mobile app ridesharing startup. Jonathan~~ received his Juris Doctorate and Masters in Business Administration from Pepperdine University, and received a fellowship certificate from Pepperdine’s Geoffrey H. Palmer Center for Entrepreneurship & the Law. Before that, Jonathan received his Bachelor of Science from Boston College where he was a triple major in Management and Leadership, Marketing, and Human Resource Management.

Joshua Amster, VP, Fundraising

Josh Amster is Vice President of Fundraising at StartEngine. He joined StartEngine in February of 2016. Before joining StartEngine, he worked alongside Allen Jebsen in business development and sales operations at AEG. He graduated from Middlebury College with a Bachelor of Arts in History. He holds his Series 7, 63, 79, and 24 certifications from FINRA.

Hunter Strassman, VP, Finance

Hunter Strassman is VP of Finance and is responsible for the finance and operations of StartEngine. Prior to joining StartEngine in April 2021, Hunter worked as the Director of Finance at AlphaFlow, a real estate asset management platform (November 2018 to April 2021). From July 2017 to November 2018, Hunter was the Senior Controller at Karbone Inc., a leading renewable energy brokerage. From January 2017 to July 2017, Hunter was the assistant controller at ACT Commodities. Hunter began his career at the public accounting firm Grant Thornton in their New York office, where he focused on hedge funds, private equity and fund of funds.

Hunter received his Bachelors in Accounting from Bentley University, and a Masters in Taxation from Baruch College. Hunter is a licensed CPA in the State of New York, is a member of the AICPA, and holds the Series 7, 63, 24 and 27 certifications from FINRA. He has also passed the CISA and CRISC exams administered by ISACA.

Joseph Mathews, VP, Engineering

Joe Mathews is Vice President of Engineering at StartEngine, and has been leading Engineering and Product teams. Joe started his engineering career with NIIT Technologies, followed by Microsoft Inc, after which he worked for a number of startups, including co-founding one. In May 2017, Joe worked as Director of Platform Engineering at Science37, and since July of 2018, he’s been enjoying his work at StartEngine.

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Corporate Governance

Board Committees and Nominations

The Company does not have a standing nominating, compensation, or audit committee, and does not have an audit committee financial expert. Due to the size of our Board of Directors, the entire Board performs the functions of these committees. We do not believe that our Board of Directors needs to appoint such committees or an audit committee financial expert because the low volume of matters that come before our Board permits the directors to give sufficient time and attention to such matters. There is a potential conflict of interest in that our directors have the authority to determine issues concerning management compensation, nominations, and audit issues that may affect management decisions. We are not required to have such committees since the Company’s stock is not listed on a national securities exchange.

The Board has not implemented a policy regarding the consideration of any director candidates recommended by stockholders because the Company is closely held and controlled by the Board members and certain stockholders as disclosed in Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Code of Ethics

The Company has adopted a Code of Ethics and Business Conduct that applies to all of its employees, executive officers, including its chief executive officer, principal financial officer, principal accounting officer or controller, or other employees performing similar functions, and directors. We published our Code of Ethics and Business Conduct on our website at https://www.startengine.com/annual-reports. We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding amendments to, or waivers from a provision of our Code of Ethics and Business Conduct by posting that information on our website at https://www.startengine.com/annual-reports.

Communications with the Board of Directors

The Company’s stockholders or other interested party may contact the Board members individually or as a group by writing to [our Secretary at 4100 W Alameda Ave., Suite 300, Burbank, CA 91505 with a request to forward the communication to the intended recipient or recipients. In general, any stockholder communication delivered to our Secretary for forwarding to the Board or specified Board member or members will be forwarded in accordance with the stockholder’s instructions. However, our Secretary reserves the right not to forward to Board members any abusive, threatening, or otherwise inappropriate materials. Information regarding the submission of comments or complaints relating to our accounting, internal accounting controls, or auditing matters can be found on our website at https://www.startengine.com/contact-us.

Item 11.Executive Compensation

The following discussion and analysis of compensation arrangements should be read with the compensation tables and related disclosures set forth below. This discussion contains forward looking statements that are based on our current plans and expectations regarding future compensation programs. The actual compensation programs that we adopt may differ materially from the programs summarized in this discussion.

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This section describes the material elements of the compensation awarded to, earned by, or paid to our Chief Executive Officer, Howard Marks, and our three most highly compensated executive officers (other than our Chief Executive Officer), Johanna Cronin, Chief Marketing Officer, Joshua Amster, VP, Fundraising, and Allen Jebsen, SVP, Fundraising, for our fiscal year ended December 31, ~~2023~~2024.


												Nonqualified
										Nonequity		deferred
Name and						Stock		Option		incentive plan		compensation		All other
principal		Salary		Bonus		awards		awards		compensation		earnings		compensation		Total
position		($)		($)(1)		($)		($)(1)(2)(3)		($)		($)		($)		($)
Howard Marks, Chief Executive Officer	~~2023~~2024	$	745,000	$	—745,000	$	—	$	21,~~500~~288,~~000~~200	$	—	$	—	$	—	$	32,~~245~~778,~~000~~200
	~~2022~~2023	$	~~645~~745,000	$	—	$	—	$	~~1,895,160~~—	$	—	$	—	$	—	$	2745,~~540,160~~000
Allen Jebsen, VP of Sales	2023	$	100,000	$	329,611	$	—	$	1,250,000	$	—	$	—	$	—	$	1,679,611
Johanna Cronin, Chief Marketing Officer	2024	$	400,000	$	400,000	$	—	$	644,100	$	—	$	—	$	—	$	1,444,100
	~~2022~~2023	$	~~100~~350,000	$	~~358~~175,~~035~~000	$	—	$	~~252~~631,~~688~~500	$	—	$	—	$	—	$	~~710~~1,~~723~~156,500
Josh Amster, VP of Sales	2023	$	100,000	$	306,608	$	—	$	1,250,000	$	—	$	—	$	—	$	1,656,608
Hunter Strassman, VP of Finance	2024	$	300,000	$	350,000	$	—	$	644,100	$	—	$	—	$	—	$	1,294,100
	~~2022~~2023	$	~~100~~250,000	$	~~422~~74,~~180~~000	$	—	$	~~252~~631,~~688~~500	$	—	$	—	$	—	$	~~774~~955,~~868~~500
Johanna Cronin, Chief Marketing Officer	2023	$	350,000	$	—	$	—	$	1,250,000	$	—	$	—	$	—	$	1,600,000
	2022	$	300,000	$	—	$	—	$	252,688	$	—	$	—	$	—	$	552,688

(1) Options, if any, have not yet been granted for fiscal year ~~2023~~2025, but options have been granted in ~~2023~~2024 for the ~~2022~~2023 fiscal year. Stock option grants awarded for ~~2023~~2025 performance remain subject to Board approval.

(2) Amounts reflect the aggregate grant date fair value of the options granted in ~~2023~~2024 and ~~2022~~2023, computed in accordance with Financial Accounting Standards Board ASC Topic 718 (ASC 718). This amount does not reflect the actual economic value realized by the officer.

(3)

Options are subject to vesting with 25% vesting one year after date of grant and then 1/48 per month thereafter.

Principal Elements of Compensation

The compensation of the Company’s executive officers comprises of the following major elements: (a) base salary; (b) an annual, discretionary cash bonus; and (c) long-term equity incentives, consisting of stock options, restricted stock awards, performance compensation awards and/or other applicable awards granted under the Company’s equity incentive plan (the “Equity Incentive Plan”) and any other equity plan that may be approved by the Board from time to time. These principal elements of compensation are described below.

Base Salaries

Base salary is provided as a fixed source of compensation for our executive officers. Adjustments to base salaries will be reviewed annually and as warranted throughout the year to reflect promotions or other changes in the scope of breadth of an executive officer’s role or responsibilities, as well as to maintain market competitiveness.

Annual Bonuses

Annual bonuses may be awarded based on qualitative and quantitative performance standards and will reward performance of our executive officers individually. The determination of an executive officer’s performance may vary from year to year depending on economic conditions and conditions in the cannabis industry and may be based on measures such as stock price performance, the meeting of financial targets against budget, the meeting of acquisition objectives and balance sheet performance.

Equity Incentive Plan

The Equity Incentive Plan provides continual motivation for our officers, employees, consultants and directors to achieve our business and financial objectives and align their interests with the long-term interests of our stockholders. The purpose of our Equity Incentive Plan is to promote greater alignment of interests between employees and stockholders, and to support the achievement of our longer-term performance objectives, while providing a long term retention element.

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Amended and Restated 2015 Equity Incentive Plan

In May 2015, the Company established the 2015 Equity Incentive Plan which was approved by the Company’s Board and by stockholders in June 2015. The 2015 Equity Incentive Plan authorized the issuance of 3600,000,000 shares of common stock. In December 2015, the 2015 Plan was amended to increase the number of shares authorized for issuance under the Plan from 120,000,000 to 240,~~030~~600,000, further amended in September 2020 to increase the number of shares from 240,~~030~~600,000 to 250,~~530~~600,000, and then further amended in July 2021 to increase the number of shares under the plan on a post- split basis to 7151,~~590~~800,000 shares. The Company amended and restated the Plan in 2023 to increase the number of shares of Common Stock reserved for issuance by 480,000,000. As of March 18, 2023, there are 11231,~~590~~800,000 shares available under the plan. The Amended and Restated 2015 Equity Incentive Plan permits us to provide equity-based compensation in the form of stock options, restricted stock units, unrestricted stock and other stock bonus awards and performance compensation awards.

The Amended and Restated 2015 Equity Incentive Plan is administered by our Board of Directors, or a committee appointed by the Board of Directors, which determines recipients and the number of shares subject to the awards, the exercise price and the vesting schedule. The term of stock options granted under the Amended and Restated 2015 Equity Incentive Plan cannot exceed ten years. As of December 31, ~~2023~~2024, the Plan had 130,~~518~~375,~~797~~940 shares of Common Stock reserved for issuance.

Subject to effectuation of the Company’s proposed twenty-for-one (20-for-1) stock split, the Plan would have 16,895,940 shares available for issuance as of May 4, 2024, at the earliest.

Employment Agreements with Key Executives

We entered into an employment agreement Mr. Marks, our CEO, with an effective date of January 1, 2024. The agreement is for two years, and will automatically renew for an additional one year period, unless either party gives notice more than sixty days prior to the initial term date of the agreement or each renewal period. The agreement provides that Mr. Marks’ base salary will be $745,000. Mr. Marks is eligible to participate in all employee bonus plans of ~~company~~Company, if any. Mr. Marks is also entitled receive bonuses (a) in an amount up to 100% of his base salary if the Company achieves its revenue goals of $30 million. The bonus goal for 2025 fiscal year will bepay ~~set~~Mr. ~~and~~Marks ~~approved~~an byamount up to 100% of his base salary if the ~~Board~~Company inachieves ~~December~~its ~~2024~~EBITDA goal of $10 million. In 2024, Mr. Marks ~~will~~received ~~also receive 100~~2,000,000 stock options exercisable at $251.0038 per share and vesting over four (4) years. At this time, no options have been granted in 2025.

Compensation and Insider Participation

During ~~2023~~2024, the Company did not have a compensation committee or any other committee performing equivalent functions of a compensation committee. Howard Marks, our Chief Executive Officer, in his capacity as a director, participated in deliberations of the Board concerning executive officer compensation and was employed by the Company.

Director Compensation

There is currently no agreement or arrangement to pay any of our directors for their services as directors.

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Outstanding Equity Awards at Fiscal Year-End


Option awards						Stock awards
								Market	Equity	Equity incentive
				Equity incentive				value of	incentive	plan awards:
				plan awards:				shares or	plan awards:	market
				number			Number	units of	number of	or payout
		Number of	Number of	of securities			of shares	stock	unearned	value of
		securities	securities	underlying	Option		or units	that have	shares, units or	unearned
		underlying	underlying	unexercised	exercise		of stock	not	other rights that	shares, units or
		unexercised	unexercised	unearned	price	Option	that have	vested	have not	other rights that
	Grant	options - (#)	options - (#)	options		expiration	not vested		vested	have not vested
Name	date	exercisable	unexercisable	(#)	($)	date	(#)	($)	(#)	($)
Howard Marks, Chief Executive Officer	1/13/2018	~~300~~6,000,000	—	—	0.~~264~~013	1/13/2028	—	—	—	—
	12/16/2020	~~265~~6,~~833~~000,000	~~34,167~~—	—	40.~~333~~217	12/16/2030	—	—	—	—
	1/1/2022	~~186~~4,~~458~~562,500	~~113~~1,~~542~~437,500		130.5675	1/1/2032	—	—	—	—
Allen Jebsen, SVP, Fundraising	6/14/2016	30,000	—	—	0.097	6/14/2026	—	—	—	—
	6/14/2024	—	2,000,000		1.380	6/14/2034	—	—	—	—
	2/7/2017	30,000	—	—	0.097	2/7/2027	—	—	—	—
Johanna Cronin, Chief Marketing Officer	6/15/2015	13,917,440	—	—	0.004	6/15/2025	—	—	—	—
	12/187/~~2018~~2017	753,000,000	—	—	0.~~264~~005	16/1815/~~2028~~2025	—	—	—	—
	81/3113/2018	~~150~~600,000	—	—	10.~~667~~013	82/317/~~2028~~2027	—	—	—	—
	41/2418/~~2019~~2018	~~150~~1,200,000	—	—	20.~~500~~013	41/2413/~~2029~~2028	—	—	—	—
	14/223/~~2020~~2019	~~150~~3,000,000	—	—	20.~~500~~125	1/218/~~2030~~2028	—	—	—	—
	125/1615/~~2020~~2019	661,~~458~~500,000	~~8,542~~—	—	40.~~333~~125	124/1623/~~2030~~2029	—	—	—	—
	1/12/~~2022~~2020	243,~~861~~000,000	~~15,139~~—	—	130.5125	15/115/~~2032~~2029	—	—	—	—
	412/1816/~~2023~~2020	141,~~687~~500,000	~~35,313~~—	—	~~25.~~0.217	41/182/~~2033~~2030	—	—	—	—
Josh Amster, VP, Fundraising	2/16/2016	11,474	—	—	0.097	2/16/2026	—	—	—	—
	1/1/2022	608,333	191,667.00	—	0.675	12/16/2030	—	—	—	—
	14/118/~~2017~~2023	30432,~~000~~638	—567,362.00	—	01.~~097~~250	1/1/~~2027~~2032	—	—	—	—
	16/114/~~2018~~2024	~~75,000~~-	—1,000,000.00	—	01.~~264~~250	14/118/~~2028~~2033	—	—	—	—
	7/6/2018	150,000	—	—	1.667	7/6/2028	—	—	—	—
Hunter Strassman, VP of Finance	4/19/2021	563,333	36,667	—	0.217	4/19/2031	—	—	—	—
	41/241/~~2019~~2022	~~150~~608,~~000~~333	—191,667	—	20.~~500~~675	41/241/~~2029~~2032	—	—	—	—
	14/218/~~2020~~2023	~~150~~432,~~000~~638	—567,362.00	—	21.~~500~~250	14/218/~~2030~~2033	—	—	—	—
	126/1614/~~2020~~2024	~~66,458~~-	81,~~542~~000,000	—	41.~~333~~250	126/1614/~~2030~~2034	—	—	—	—
	1/1/2022	24,861	15,139	—	13.5	1/1/2032	—	—	—	—
	4/18/2023	14,687	35,313	—	25.0	4/18/2033	—	—	—	—
Johanna Cronin, Chief Marketing Officer	6/15/2015	695,872	—	—	0.083	6/15/2025	—	—	—	—
	2/7/2017	150,000	—	—	0.097	2/7/2027	—	—	—	—
	1/18/2018	30,000	—	—	0.264	1/18/2028	—	—	—	—
	1/13/2018	60,000	—	—	0.264	1/13/2028	—	—	—	—
	5/15/2019	150,000	—	—	2.500	5/15/2029	—	—	—	—
	1/2/2020	75,000	—	—	2.500	1/2/2030	—	—	—	—
	4/23/2019	150,000	—	—	2.500	4/23/2029	—	—	—	—
	12/16/2020	66,458	8,542	—	4.333	12/16/2030	—	—	—	—
	1/1/2022	24,861	15,139	—	13.5	1/1/2032	—	—	—	—
	4/18/2023	14,687	35,313	—	25.0	4/18/2033	—	—	—	—

Long-Term Incentive Plans

There are no arrangements or plans in which we provide pension, retirement or similar benefits.

Compensation Committee

We currently do not have a compensation committee of the Board of Directors. The Board of Directors as a whole determines executive compensation.

Compensation of Directors

For the years ended December 31, ~~2023~~2024 and ~~2022~~2023, no members of our board of directors received compensation in their capacity as directors.

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Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets out certain information with respect to the beneficial ownership of the voting securities of the Company, as of ~~April~~March 1531, ~~2024~~2025, for:

●

Each person who we know beneficially owns more than five percent of any class of our voting securities.

●

Each of our director and director nominees.

●

Each of our executive officers.

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●

All of our directors, director nominees and executive officers as a group.

We have determined beneficial ownership in accordance with the rules of the Commission. Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons and entities named in the table below have sole voting and investment power with respect to all securities that they beneficially own, subject to applicable community property laws.


		Amount	Amount
		and	and
		nature of	nature of
	Name and address	beneficial	beneficial		Percent of
Title of class	of beneficial owner	ownership	ownership acquirable		Class (2)
Common Stock	Howard Marks (1)(4)	8179,~~975~~391,~~623~~789	~~600~~12,000,000	(5)	25.7552	%
			~~752~~16,~~291~~808,333	(6)	28.5346	%(3)
Common Stock	The Ronald David Miller Trust U/A 08/04/2020 (Ron Miller) (1)	374,~~733~~625,~~803~~228	~~300~~6,000,000	(5)	10.7162	%
			~~150~~3,000,000	(6)	11.8575	%(3)
Common Stock	SE Agoura Investment LLC (7)	~~151~~2,~~032~~903,455	9182,~~148~~966,~~309~~180	(5)	0.4341	%
					2120.1398	%(3)
Common Stock	The Lee Miller Trust UA 09/05/2020 (Lee Miller)	374,~~733~~625,~~803~~228	~~300~~6,000,000	(5)	10.7162	%
			~~150~~3,000,000	(6)	11.8575	%(3)
Common Stock	All executive officers and directors as a group (87 members including Howard Marks and Ron Miller)(1)	12254,~~733~~470,~~613~~518	~~900~~18,000,000	(5)	36.5420	%
			475,~~451~~489,~~771~~251	(7)	4443.9868	%
Preferred Stock	Howard Marks (4)	~~600~~12,000,000			3.00	%

Preferred Stock	The Ronald David Miller Trust U/A 08/04/2020 (Ron Miller)(1)	~~300~~6,000,000			1.50	%

Preferred Stock	SE Agoura Investment LLC (7)	9182,~~148~~966,~~309~~180			45.75	%

Preferred Stock	The Lee Miller Trust UA 09/05/2020 (Lee Miller)	~~300~~6,000,000			1.50	%

(1)

Unless otherwise indicated, the address for each beneficial owner is c/o StartEngine Crowdfunding, Inc., 4100 W Alameda Ave., Suite 300, Burbank, California 91505

(2) Based on 34702,~~852~~861,~~699~~520 shares of Common Stock, 19399,~~994~~893,~~684~~680 shares of Preferred Stock outstanding.

(3)

This calculation is the amount the person owns now, plus the amount that person is entitled to acquire. That amount is then shown as a percentage of the outstanding amount of securities in that class if no other person exercised their rights to acquire those securities. The result is a calculation of the maximum amount that person could ever own based on their current and acquirable ownership, which is why the amounts in this column may not add up to 100% for each class.

(4)

These shares are held by Howard E. Marks Living Trust U/A Dated 12/21/2001 (Howard Marks) and does not include the 999,360 shares held by the Marks Irrevocable Trust for the benefit of Mr. Marks’ family.

(5)

Shares acquirable through conversion of Preferred Stock.

(6)

Shares acquirable through the exercise of stock options. The options were granted under the 2015 Equity Incentive Plan.

(7)

SE Agoura Investment LLC is beneficially owned by Aubrey Chernick. The address for SE Agoura Investment LLC is 333 South Grand Avenue, Suite 1470, Los Angeles, CA 90071.

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Item 13.Certain Relationships and Related Transactions, and Director Independence

Except as otherwise indicated herein, there have been no related party transactions or any other transactions or relationships required to be disclosed pursuant to Item 404 of Regulation S-K.

The Company is currently owed $180,~~440~~610 from StartEngine Collectibles LLC in relation to the fees associated with initiating and selling collectible assets since the inception of the fund. Additionally, the Company is owed $28,750 from StartEngine Loans, LLC in relation to legal fees for creating the entity.

Director Independence

As of the date of this Form 10-K, the Company does not have any independent directors under the corporate governance rules of The Nasdaq Stock Market LLC (Nasdaq).

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Item 14.Principal Accountant Fees and Services

The following is a summary of fees paid to the Company’s independent accountant for services rendered.


	For the year ended
	December 31, ~~2023~~2024 (1)		December 31, ~~2022 (2)~~2023
Audit fees (3)	$	100,000	$	129,300
Audit fees (2)	$	166,500	$	178,700
Audit-related fees (4)	$	0	$	0
Audit-related fees (3)	$	227,100	$	86,300
Tax fees (5)	$	—	$	8,100
Tax fees (4)	$	—	$	—
All other fees (6)	$	0	$	0
All other fees (5)	$	0	$	0
Total fees	$	~~100~~393,~~000~~600	$	~~137~~265,~~400~~000

(1) The Company engaged ~~Hainey~~Haynie & Company as the Company’s independent accounting firm for the fiscal year ending December 31, ~~2023~~2024 onand ~~May 30,~~ 2023.

(2) BFAudit ~~Borgers~~fees ~~CPA~~consist PCof ~~was~~the fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the Company’s ~~independent~~annual ~~accounting~~financial ~~firm~~statements ~~until~~and ~~May~~review ~~30,~~of ~~2023~~financial statements in our Form 10-Q or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years.

(3) Audit-related fees consist of the fees billed ~~for~~in each of the last two fiscal ~~years~~year for ~~professional~~assurance ~~services~~and ~~rendered~~related services by the principal accountant ~~for~~that are reasonably related to the performance of the audit or review of the Company’s ~~annual~~ financial statements and ~~review~~are ofnot ~~financial~~reported ~~statements~~under in“Audit ~~our~~fees.” ~~Form~~Audit 10related fees for 2023 include 1) Consent on Reg A filings ($2,300) and stand-Qalone oraudit ~~services~~of ~~that~~subsidiary ~~are~~StartEngine ~~normally~~Primary ~~provided~~($84,000). byAudit ~~the~~related ~~accountant~~fees infor ~~connection~~2024 ~~with~~include ~~statutory~~1) Re-audit of 2022 financial statements and ~~regulatory~~amending ~~filings~~10-K or($133,000) ~~engagements~~and ~~for~~standalone ~~those~~audit ~~fiscal~~of ~~years~~subsidiary StartEngine Primary ($94,100).

(4) Audit-related fees consist of the fees billed in each of the last two fiscal year for assurance and related services by the principal accountant that are reasonably related to the performance of the audit or review of the Company’s financial statements and are not reported under “Audit fees.”43

~~(5)~~Table ~~Tax~~of fees comprise fees billed for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning. These services include tax preparation for fiscal year 2023 and tax preparation for fiscal year 2022.Contents

(64) ~~All~~Tax ~~other~~ fees comprise fees billed for ~~products~~professional ~~and~~ services ~~provided~~rendered by the principal accountant ~~other~~for ~~than~~tax ~~those~~compliance, ~~specified~~tax ~~in audit~~advice, ~~audit-related~~and tax planning. These services include tax preparation for fiscal year 2023 and tax ~~fees~~preparation for fiscal year 2023.

(5)

All other fees comprise fees for products and services provided by the principal accountant other than those specified in audit, audit-related and tax fees.

The policy of the Company’s Board of Directors (the “Board”) is to pre-approve all audit and permissible non-audit services provided by the independent accountants. These services may include audit services, audit-related services, tax services, and other services. The Board generally pre-approves particular services or categories of services on a case-by-case basis. The independent registered public accounting firm and management are required to periodically report to the Board regarding the extent of services provided by the independent registered public accounting firm in accordance with these pre-approvals, and the fees for the services performed to date.

All of the services of Haynie & Company for ~~2023,~~2024 ~~and Borgers & Associates LLC for 2022,~~ described above were pre-approved by the Board.

PART IV

Item 15.Exhibit and Financial Statement Schedules

Financial Statements

The financial statements and Report of Independent Registered Public Accounting Firm are listed in the “Index to Financial Statements and Schedules” on page F-1 and included on pages F-1 to F-24 of this annual report on Form 10-K

Financial Statement Schedules

All schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission (the “Commission”) are either not required under the related instructions, are not applicable (and therefore have been omitted), or the required disclosures are contained in the financial statements included herein.

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Exhibits (including those incorporated by reference).

Copies of the following documents are included as exhibits to this report pursuant to Item 601 of Regulation S-K.


Exhibit No.	Title of Document	Form	File No.	Exhibit	Filing Date	Filed Herewith
2.1	Seventh Amended and Restated Certificate of Incorporation 000-56415	8-K	000-56415	3.1	May 10, 2024
2.2	Second Amended and Restated Bylaws	8-K	000-56415	3.2	May 10, 2024
3.1	Seventh Amended and Restated Certificate of Incorporation	1-A	000-56415	2.1	May 10, 2024
3.2	Second Amended and Restated Bylaws	1-A	000-56415	2.2	May 10, 2024
4.1	Second Amended and Restated Investors’ Rights Agreement	1-A	024-11177	3.1	March 12, 2020
10.1	Amended and Restated 2015 Equity Incentive Plan	1-A	024-11806	6.1	February 13, 2023
10.2+*	Employment Agreement effective as of January 1, 2024 (Howard Marks)	10-K	000-56415	10.2	March 31, 2025
10.3	Asset Purchase Agreement	8-K	000-56415	99.2	November 28, 2022
23.1	Consent of Independent Registered Public Accounting Firm					X
31.1	Certification of the principal executive officer and principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002					X

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32.1 #

Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


ExhibitNumber	ExhibitDescription	Form	File No.	Exhibit	Filing Date	Filed Herewith
3.1	Sixth Amended and Restated Certificate of Incorporation	1-A	024-11487	2.1	July 13, 2021
3.2	Amended and Restated Bylaws	1-A	024-11177	2.2	March 12, 2020
4.1	Second Amended and Restated Investors’ Rights Agreement	1-A	024-11177	3.1	March 12, 2020
10.1	Amended and Restated 2015 Equity Incentive Plan	1-A	024-11806	6.1	February 13, 2023
10.2+*	Employment Agreement effective as of January 1, 2024 (Howard Marks)					X
10.3	Asset Purchase Agreement	8-K	000-56415	99.2	November 28, 2022
31.1	Certification of the principal executive officer and principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002					X
32.1 #	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002					X

101.INS	Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).

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101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB	Inline XBRL Taxonomy Extension Labels Linkbase Document.

101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).


101.INS	Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	Inline XBRL Taxonomy Extension Labels Linkbase Document.
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

+	Management contract or compensatory plan or arrangement.

*	Portions of this exhibit have been omitted pursuant to the instructions to Item 601(a) of Regulation S-K.

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This certification is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (Exchange Act), or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act.

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SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized.


		STARTENGINE CROWDFUNDING, INC.
		(Registrant)
Date: April 15, 2024
Date: March 31, 2025
	By:	/s/ Howard Marks
		Howard Marks
		Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

/s/ Howard Marks Howard Marks, Chief Executive Officer, principal financial officer, principal accounting officer and Director Date: ~~April~~March 1531, ~~2024~~2025

/s/ Ronald Miller Ronald Miller, Director and Chairman Date: April 15, 2024


/s/ Ronald Miller
Ronald Miller, Director and Chairman
Date: March 31, 2025

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