Adia Nutrition Inc (ADIA)

[Jason Coombs]

put a time frame next to each challenge i highlighted below

I would like to be able to give accurate forecasts. Without the ability to forecast anything accurately since 2006 the capital formation effort has been virtually impossible. This creates, for most startup companies, an overwhelming pressure to make false promises because many investors offer funding on the condition that there is a forecast. Numerous times in the last seven years I have been offered substantial funding if I will simply fabricate a false promise, and each time I have refused to do so.

Only when we have recurring virtuous circles and business processes that are producing revenue or at least user growth and automated intellectual property creation (which can lead to revenue in the future, such as the inherent economic value of an online community which benefits from the "network effect" where the community is more valuable to each person the more people there are in the community) will forecasts based on real metrics actually be feasible.

So, your question is at once completely valid and also irrelevant because I'm not going to answer it with a false promise. Until the capital is located, therefore, no promise or forecast of any kind can be given -- this is not a situation where we are burning capital and have a runway and our operations must meet targets in order to receive follow-on rounds of funding to keep operating.

With no capital, operations will be what they economically can be and revenues alone will define our progress and also constrict our scale and our growth.

Our long-term potential customer base is literally every person in the entire world, but we must work up to that future market one step at a time. Everyone needs cybersecurity and forensics, and everyone is not an exaggeration. Everyone needs cyber literacy and training, too, and we'll be able to provide those services while also selling products to our customers around the world.

For Public Startup Company, Inc. specifically, the limited number of metrics that can be pinpointed presently for what our inherent potential is, when funded, revolve around business use of social media which is, as you may know, a very small percentage of the market. See, for example:

http://techcrunch.com/2013/11/18/facebook-smb-25-m/

How many of the 25 million small businesses who have business pages on Facebook can we reach with no advertising budget?

To give you an idea of what previous test marketing has produced for us, it cost about $475.00 for us to attract 475 legitimate followers from outside the United States, here:

https://www.facebook.com/farawaycapital

At an acquisition cost of $1.00 per follower, and presuming metrics such as $10,000.00 of revenue for every one thousand followers, which I think is a fairly accurate estimate, based on how many people we have had to connect with on social media thus far in order to produce the revenue we have produced already, we should be able to create $10,000,000.00 of recurring revenue for each $1,000,000.00 that we spend attracting another 1,000,000 followers. This is due to the very high value of what we offer, which only a very few people will need or want to pay us for but that I believe a consistent one-tenth-of-one-percent of our followers will be ready, willing and able to pay an average of $10,000.00 for us to provide to them during any given year.

I care more about metrics and repeatable business processes than about trying to forecast what we'll actually accomplish, because the false promise of $10,000,000.00 of revenue from $1,000,000.00 of sales and marketing investment is totally meaningless if nobody invests the $1,000,000.00 to make the sales and marketing possible in the first place.

5. Our old software must be brought up-to-date in an economical and useful way, which requires cost-effective access to talent

I have made explicit offers to many people to invite co-founders to join in this business development and technology development effort. That is the most cost-effective method to access talent. It is producing results, but they are slow. This is to be expected because the only way to speed it up is to write checks which cannot be written, in order to buy people's full attention and time. I am ready to launch several new products and services that are based on my own software development efforts and that do not require any additional programmers but that do require additional IT support staff. As soon as we have a budget for support staff who can take care of our customers' needs, we'll be able to restart sales of our old software and my new products and automated services.

I'm not ready to disclose those products and automated services in detail, in part because I am working on Kickstarter campaigns that I believe need to be the first step in attracting early adopter customers for each of them. Although I believe strongly in full disclosure transparency, obviously it would be pointless to keep giving away all of my ideas and helping other people launch successful Kickstarter campaigns for the same or similar creations.

As soon as I have the ability to hire IT support staff, we will have our first new revenue from software licensing and computing solutions of value to users for purposes such as cybersecurity and forensics. This is a cost-effective way to expand, both in terms of equity cost and salary expense, because we can train support staff to be able to show our users how much we care about their problems and to ensure that what we're doing is helping them. This is more cost-effective than hiring additional software developers.

8. The SEC is actively conducting an informal investigation into Public Startup Company, Inc. which is strategically-important to our future growth, so if the SEC decides to take enforcement action for some reason it could disrupt our current plan of execution which has been in process since 2007

Additional details will be released about this in the coming week.

It is important to understand that if the SEC does not choose to take any enforcement action, we will not necessarily be notified that they have concluded their informal inquiry and elected not to take any action.

Everyone should presume that they, and everyone else, are always under investigation by regulators and by any number of government agencies, because in fact everyone is always under investigation.

This is part of the reason that many people believe strongly in small government: given nearly unlimited resources (i.e. the NSA) naturally government will do nearly everything that can be accomplished, technically, to investigate everyone, everywhere all the time.

I chose to disclose the existence of this "informal inquiry" by the SEC in part because I am aware that everyone is always under investigation and I believe it is extremely important for everyone to be aware of this fact. It is, for better or worse, a feature of our modern civilization. We have made it easy to do certain things with technology that maybe we should not have made so easy, but that has created very substantial new market opportunities and I'm personally dedicated to creating solutions to these new problems precisely because I view new technology as a feature and not as a bug. It is better to improve it than to fight against it.

10. As summarized in my previous Letters to Stakeholders, without new capital we are limited, for practical reasons, to ... professional services

I have turned away consulting projects for the last four years while I have worked on other things that I considered to be more important to our company and to the future value that can be created for our shareholders. We are beginning to accept consulting projects again, because we have new products and services that are the result of my work over the last few years, and there will be news this week about our first steps in these new directions.

The amount of revenue produced already is sufficient to keep things moving forward, but we have obligations extending through the end of 2014 because of the commitments we have made to our new consulting clients. It should not be misunderstood to be free cash flow yet because it is not even close to being that substantial, but I see more immediate potential in this work than in anything else that could be done instead, in any industry, which is why I have been working on it at all. Shareholders would not have received any substantial benefit if I had decided to simply work on consulting projects and if I had continued providing expert testimony in civil and criminal court cases as I was doing previously. Homeland Forensics will continue to provide expert witness services and other expert consulting in the future when we have a larger team of experts in addition to myself, but we simply must provide these services in the context of our growing forensic computing and forensic social media platforms and technology solutions, otherwise we will never break away from the constraints of scale inherent to a law firm partnership business model.

There are many problems with operating as a law firm partnership operates, including the fact that all revenue in a law firm is tied to the hourly billing rates of those who provide the professional services. It is very hard to scale a business when the leverage comes from inflating people's hourly billing rates.

Some people are obviously worth more by the hour than other people, in any business, but nobody would ever pay a CEO two thousand times more than a regular worker if everyone were valued in terms of an hourly billing rate. This is essentially the same problem that attorneys have with their ever-increasing hourly billing rates. How many times more valuable is your attorney compared to you? Exactly. Not very many times more valuable, and you would prefer to pay them less because they don't create any value for you at all, in most cases, unless you don't need them to do anything. Sort of like a CEO. I don't like business models that are based on tricking customers into paying increasing multiples of their own hourly incomes. Leverage and growth should come from something more intrinsically-valuable than a political deception.

http://www.bloomberg.com/news/2013-04-30/ceo-pay-1-795-to-1-multiple-of-workers-skirts-law-as-sec-delays.html

http://www.reuters.com/article/2013/09/18/us-usa-sec-ceopay-munis-idUSBRE98H0EX20130918

http://www.washingtonpost.com/blogs/on-leadership/wp/2013/09/19/whats-the-right-ratio-for-ceo-to-worker-pay/

Ironically, the small amount of revenue we have produced since September seems to me to be the most heavily-regulated revenue ever produced in history.

I am literally doing more work for the SEC than I'm doing for our clients at this point, which is both frustrating and amusing at the same time.

This extreme regulatory compliance burden will almost certainly stop when the details of this over-regulation become public, and if it doesn't then I believe that our shareholders would be justified in seeking a jury verdict for millions of dollars by suing the SEC. At least then we would have the capital that we require to widely advertise these services that are of particular concern to the SEC, and we could also finish developing and launching our security and forensics products and services along the way.