If they are smart, anybody who does this, does everything they possibly can to avoid it being classified as a security. I have no idea about what goes on with Canadian securities laws, but if he was smart, he would have a very smart attorney drafting all the documents, and they would be framing this as an "experience" and not an investment. Unless you are considering going in on this, who cares anyway? Seems like a lot of haters, which is not uncommon here.