Is that what happened with this company? That's the model of kickstarters and the like, but this story sounds like it was a real company offering a product for sale. If a company can form, offer a product, sell 350 units, pay employees & expenses, then fold without delivering product or refund, nor facing any legal repercussions, what's to stop the same employees and founders from following that method ad infinitum? Form company #2, offer a different vapor, take in money from sales of the never-to-be product, spend it on salaries, declare that the product won't be delivered nor refunds given, and move on to company #3. If that's what this company has done, and the court systems are never burdened with tackling such an issue, it is a viable if entirely unethical model for the people involved.