Adia Nutrition, Inc. (ADIA)

[Jason Coombs]

Just wondering how long will it take for that turnaround on your part?

In 2006 the reason I became CEO/Chairman of PIVX was that a long-term turnaround over the next 25 years was a certainty other people were ignoring. It made no sense to me for the company to cease to exist, when every problem experienced by any small public startup becomes easier to solve with time.

In 2008 the SEC revised Rule 144 making a "former shell company" ineligible to lift restrictions on restricted securities, which meant none of the paper certificate holders (our direct investors) would ever be able to resell their shares through a broker.

https://www.sec.gov/rules/petitions/2008/petn4-572.pdf

Berkshire Hathaway is a former shell company, too. When this Rule change happened, PIVX still had a registered class of securities, our Common stock, which required periodic reporting and compliance with the 1934 Exchange Act. That was extremely expensive and time consuming, but not a problem if other Rules permitted PIVX to raise new capital to pay those expenses. At the time there was no JOBS Act with its new Rules for capital formation.

I published a Letter to Stakeholders explaining this situation:

https://homelandforensics.com/Company/Letter_to_Stakeholders_December_21_2008.pdf

Paying to remain 1934 Exchange Act-registered when the only income we had was my personal expert witness forensics income, and the only products we had required more capital and a new team to grow, didn't make sense to me. Because of the change to Rule 144 the one path to new capital formation that in 2006 was built-in to being a public company, the eventual right of shareholders to have their restrictions lifted after a sufficient holding period and to resell through a broker, was taken away from PIVX. Either the company had to become current in its reporting requirements back to 2004 or no restrictions on paper certificates issued to previous or future investors could ever be lifted. It is the same with the "custodian" and any company that might reverse-merge into ADIA today.

In 2006 it was perfectly clear to me that a 25-year turnaround plan was reasonable and achievable. I always talked about it as a 25-year plan privately, because the legacy debts and other barriers to new capital formation would, in my view, only have enabled a modest annual influx of new investors from the pool of global investors who were willing to act long-term and hold a microcap security with a minimum two-year holding period.

Alternatives were explored from 2006-2008 to make the process go faster. Some of those were explained in my Letter to Stakeholders.

Rule 504, the "Seed Capital Exemption" could have provided a restart right away, if that Rule had actually functioned in practice the way the new JOBS Act Rules do today.

What we did instead was begin developing new startups, companies that were never "shell companies" in the past and so they could go public in the future without being deprived by the SEC of the right to rely on Rule 144. New investors could be found (some were, this plan was working) and nobody would ever need to worry about their shares being permanently locked-up as a punishment for the company's former "shell" status. Raising new capital when the investors are told they will never be able to resell unless there is a new stock exchange listing was unreasonably difficult, far more difficult than raising capital for a brand-new startup, or even for a blank check.

Just one new product, minimally-viable, built into a new startup, solves every problem the parent company has ever had. And we do that without dilution. If there were a textbook explaining how to solve the problems of an insolvent former shell company, I'm sure it would explain that building a new minimally-viable product around a new startup with new capital from new investors is the right thing to do and this point of view is supported by Eric Ries ("Lean Startup") in his published works and through the recent launch of his new Long Term Stock Exchange (LTSE.COM).

How the process took a detour into ADIA and how my first startups hit a different funding barrier (again, before the JOBS Act Rules) that wasn't supposed to exist, and why that funding barrier was not instantly solved in 2013 when Wen Peng resigned and I was supposed to have the right to resume governing PIVX/ADIA/Homeland Forensics myself without interference, is a story for another day.

As for ADIA being downgraded to the Grey Sheets if it doesn't become current in the next 9 months, you aren't referring to becoming fully-reporting under the 1934 Exchange Act again, are you? There is no requirement that the company ever re-register with the SEC. The only reason the company would be unable to maintain its "Stop Sign" status with OTC quotation is if something improper happens like a custodianship pump-and-dump or deceptive "reverse merger" after a corporate hijacking occurs. Then you are correct, post-hijacking there is no way the SEC and the OTC Markets Group will allow ADIA to continue to trade, even with a "stop sign" indefinitely while the hijackers do their fraudulent nonsense and reverse-split the stock while violating everyone's trust by manufacturing billions of new shares that get dumped through unethical brokers into the investment accounts of people who still believe there are fewer than 14 million free-trading shares outstanding.

I don't intend to re-register ADIA until there are profits, such as from one of our startups, to pay that large ongoing annual expense. While the company remains a non-reporting but honest development-stage public startup it is far more reasonable for its startups which have never been "shell companies" by Rule to be launching and listing in places such as the Long Term Stock Exchange and the new digital securities alternative trading systems.

Also, since 2008 the emergence of peer-to-peer cryptocurrency has given us all a third option for bringing new valuable creations to market using cryptoeconomics.

Together with the new JOBS Act Rules, which a former shell company is eligible to utilize, possibly in part because of my input to the SEC staff during the JOBS Act Rulemaking, (a former shell company is even allowed to use the services of a Crowdfunding Portal if we wish, to raise up to a million dollars per year through the new "Regulation Crowdfunding" Rule) it is a certainty going forward that there won't be new barriers to capital formation like there were before.

Easier, Faster, Better, Stronger.