Adia Nutrition, Inc. (ADIA)

[Jason Coombs]

The spin-out approval is now automatic from the IRS because of a "no rule" rule change (yes, that's confusing, but it's the IRS so it is supposed to be confusing) which took effect in 2013. The spin-out definitely satisfies the requirements of IRS Section 355 of the IRC.

See:
http://en.wikipedia.org/wiki/Internal_Revenue_Code_section_355
http://www.law.cornell.edu/uscode/text/26/355
http://www.irs.gov/pub/irs-irbs/irb13-28.pdf#page=11
http://www.stblaw.com/docs/default-source/cold-fusion-existing-content/publications/pub1624.pdf?sfvrsn=2

There's also an application to FINRA that must be made, and I have experience with the FINRA approval process -- we will have no problem obtaining approval from FINRA as soon as Bill Hodson files the required annual list of officers and directors with the Nevada Secretary of State.

The FINRA requirement is for a pro-rata stock dividend, whereas IRC Section 355 seems to allow dividends that are not pro-rata -- it is my understanding that the latter is only applicable to privately-held companies. It makes sense that FINRA expects pro-rata dividends for spin-outs, or the investors who buy shares via public markets could easily be diluted into nothing through a spin-out.

To conclude a pro-rata stock dividend with FINRA approval Bill Hodson must finish the claw-back of the improperly-issued shares that Shelly Singhal instructed Wen Peng to issue to his affiliates, including his wife. Everything that has NOT happened that should have happened by now and that I was promised in January seems to revolve around this share claw-back. Shelly objects to it for some reason, but he also objects to the spin-out on the grounds that it will create a tax liability. It clearly won't create a tax liability for anybody, it is fully compliant with the letter and the spirit of IRC Section 355.

On the business development and capital formation side, I have both customers and investors who are merely waiting for Shelly and Bill. As soon as the conflict is resolved with the help of their attorney, I'll be moving everything forward substantially and will provide regular updates -- if the final JOBS Act Rules contain flaws that impose large financial burdens on startups then I will be filing a registration statement for Homeland Forensics, Inc. and/or Public Startup Company, Inc. rather than relying on the JOBS Act for crowdfunding next year.