If you form a corp in California (even a single-owner LLC) you will owe a minimum of $800 in taxes next year (and every year until you dissolve the corp) regardless of whether you make money or even do a single thing other than file the papers.

I don't know what the situation is in NY (the other state they cover).

This is still a nice offer for serious startups, but make sure you're aware of the tax implications in your state before you form any sort of corporation.

Most investors want to only invest in Delaware companies. If you are serious about raising money. It'll cost you more later to convert a California company to a Delaware one. So unless these guys are incorporating you in Delaware or you are not interested in raising any money, then I wouldn't take their offer.