|1||Polarizing junk news makes us angry and divided. We're doing something about it and growing 700% YoY|
|2||As the producer of the Media Bias Chart, we have organically grown into one of the most recognized and trusted news rating organizations|
|3||A news rating company should be independent and owned by people who care deeply about having a healthy information ecosystem and democracy|
We are what we read.
Its a simple thing, but it says so much about why we need to understand the relative context and reliability of where we get our news, information, and our opinion analysis.
The political polarization of our country, along with the destruction of the business model of printed news leads to the need for analysis of our news sources.
Ad Fontes Media, was the first concept I’ve come across enabling a reader to understand a news institution’s bias and fact/analysis/editorial content relative to its peers. If we have any hope of saving our fourth estate, we must understand its biases.
In the run-up to the 2016 election, I thought it was nuts how people would share "news" articles that were loose with the facts and really biased.
In my profession as a patent attorney, I explain complicated things through words and pictures and find the pictures are often the most helpful. I thought up a way to map the news sources out there visually, from best to worst, and left to right. As a hobby, I made this first Media Bias Chart to talk to my friends about news and politics on Facebook. It went super viral, launching conversations, copycats, criticism, and praise from all corners.
I got inquiries from people all across the internet. They mostly wanted three things: 1) more sources, 2) more features, and 3) good underlying data. People were using it in classrooms and publishing it in textbooks, so I felt a responsibility to make it better. I wanted to make it more rigorous and minimize the effects of my own bias. I knew I needed some help from a team. So in September 2018 I launched an Indiegogo crowdfunding campaign to improve the Media Bias Chart and we raised over $32,000!
We conducted a large multi-analyst ratings project to rate thousands of articles, developed software to collect, weight, and display our ratings, and created an educational SaaS platform to teach news literacy in schools.
As a result, our current interactive and static Media Bias Charts are used in thousands of classrooms across the country, and our recently launched CART News Literacy platform is gaining traction because of the popularity of the Media Bias Chart as a teaching tool.
Since we've successfully figured out a way to rate news content, publishers, news aggregators, researchers, and more are coming to us asking for more content ratings. The applications for using them to improve our news ecosystem are endless.
Social media companies can integrate them into their news feeds; publishers can use them to promote trust in their content; advertisers can use them to filter out advertising purchases on junk news sites, and researchers can use them to study the effects of news consumption.
So far, having rated just a fraction of the news landscape, we've become a trusted, independent, third-party resource, with our work having been cited by The Economist, The New Yorker, and others.
But we have only been able to scratch the surface of the number of news content ratings we want to do, and the only product we've had for most of our existence is a license to use the Media Bias Chart. With that alone, we've still bootstrapped enough revenue to keep us growing, with over 1800 paying customers to date. We're tiny compared to where we can be.
This volume of rated news sources will greatly expand the usefulness and commercial value of our ratings. It will also help us progress on developing a human-AI hybrid model for rating news sources on-demand and at scale. Imagine if every story on your social media feed could show you its Media Bias Chart rating instantly. It could transform the choices people make about their news consumption and ultimately, how we relate to each other as citizens.
Ad Fontes Media has financial statements ending May 31 2020. Our cash in hand is $1,500, as of June 2020. Over the three months prior, revenues averaged $3,325/month, cost of goods sold has averaged $200/month, and operational expenses have averaged $3,944/month.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes and other financial information included elsewhere in this offering. Some of the information contained in this discussion and analysis, including information regarding the strategy and plans for our business, includes forward-looking statements that involve risks and uncertainties. You should review the "Risk Factors" section for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
We rate news articles and sources for reliability and bias. We currently do this with a small team of human analysts who have political views from across the spectrum. They are trained to look at the content of the news and score it according to our methodology. We provide the news source ratings themselves as a reference product for consumers and educators---mainly a Media Bias Chart. We also offer a software platform for educators to teach students how to rate the news themselves.
We want to be the industry leader in this emerging field of news content ratings, and be doing it in an automated fashion. There are content ratings for movies, TV, and video games, and it will soon be obvious that we need content ratings for bias and reliability of news. As the industry leader, consumers and business will rely on our news ratings; ad tech companies will use it for brand safety, publishers will use it to market themselves, and social media platforms will use it to screen content
Ad Fontes Media, Inc. was incorporated in the State of Colorado in February 2018.
Since then, we have:
-Organically grown into one of the most recognized and trusted news rating organizations due to the popularity of our Media Bias Chart
-Sold to over 1800 customers in three different product categories, achieved over 1M website visits in the first half of 2020, and grew revenues over 370% YoY in 2020
Historical Results of Operations
Our company was organized in February 2018 and has limited operations upon which prospective investors may base an evaluation of its performance.
Liquidity & Capital Resources
After the conclusion of this Offering, should we hit our minimum funding target, our projected runway is 9 months before we need to raise further capital.
We plan to use the proceeds as set forth in this Form C under "Use of Funds". We don’t have any other sources of capital in the immediate future.
We will likely require additional financing in excess of the proceeds from the Offering in order to perform operations over the lifetime of the Company. We plan to raise capital in 18 months. Except as otherwise described in this Form C, we do not have additional sources of capital other than the proceeds from the offering. Because of the complexities and uncertainties in establishing a new business strategy, it is not possible to adequately project whether the proceeds of this offering will be sufficient to enable us to implement our strategy. This complexity and uncertainty will be increased if less than the maximum amount of securities offered in this offering is sold. The Company intends to raise additional capital in the future from investors. Although capital may be available for early-stage companies, there is no guarantee that the Company will receive any investments from investors.
Runway & Short/Mid Term Expenses
Ad Fontes Media, Inc. cash in hand is $1,500, as of June 2020. Over the last three months covered by our financials (ending May 31, 2020), revenues have averaged $3,325/month, cost of goods sold has averaged $200/month, and operational expenses have averaged $3,944/month, for an average burn rate of $819 per month. Our intent is to be profitable in 1 month.
In June of 2020, the company took out a working capital loan of $6,000 from their merchant provider. This loan has a flat fee of $958 remitting back to the merchant provider. Repayment is done daily via 30% of credit card sales collected. The current balance on the loan is $4404.60
Our monthly income in June and July increased in comparison to January-May 2020, with revenue in June of over $7100 and in July of over $5500.
Our accounts receivable for August-October 2020 are projected to be higher due to contracts currently secured that are due to be paid during those months. Those trends are what account for our expected increased revenues over the next three to six months, which are listed below.
Revenues anticipated to be between $7-10K per month just continuing at our current growth rate, not including anticipated revenue increases due to investing in our growth. Expenses will increase commensurate with our revenue increases, because as we have more revenue to hire analysts and pay for software development, we will do so.
We have the ability to adjust expenses according to revenue received by increasing or decreasing the number of analysts hired. Other sources of capital are unnecessary due to the ability to intentionally scale expenses as revenue grows, but the company could reliably secure up to $100,000 in debt funding if necessary between small business loans, working capital loans, home equity loans, and credit cards.
Most of the Ad Fontes team, including Founder/CEO Vanessa Otero, has been working part-time since its inception. Vanessa and other team members have only recently transitioned to full-time. A successful fundraising round will allow Vanessa to continue to devote full-time effort to growing Ad Fontes Media, but if we do not hit our revenue goals in 9 months or secure additional funding, she will have to return to part-time status.
The Company may never receive a future equity financing or elect to convert the Securities upon such future financing. In addition, the Company may never undergo a liquidity event such as a sale of the Company or an IPO. If neither the conversion of the Securities nor a liquidity event occurs, the Purchasers could be left holding the Securities in perpetuity. The Securities have numerous transfer restrictions and will likely be highly illiquid, with no secondary market on which to sell them. The Securities are not equity interests, have no ownership rights, have no rights to the Company’s assets or profits and have no voting rights or ability to direct the Company or its actions.
Our future success depends on the efforts of a small management team, all of whom are also part-time, but several of whom will be able to work for us full-time upon successful fundraising. The loss of services of the members of the management team in the future may have an adverse effect on the company. There can be no assurance that we will be successful in attracting and retaining other personnel we require to successfully grow our business.
The cost of manually rating news articles is high, and there is no established market for news content ratings. While we have shown that some customers have been willing to pay for our ratings, and while we have identified several target markets, the potential size of these markets is unknown, and may be minimal or non-existent.
It is very difficult to accurately replicate human content analysis, especially in the manner we do it (rating reliability and bias) at scale using AI. Current technology that tries to rate content using AI are 1) limited to heuristics that are easy to measure (such as counting certain types of words) or 2) have the current accuracy limitations of natural language processing technology.
Our ability to truly scale to the point where we can rate all news content accurately and mostly automatically will require us to have technological breakthroughs in this area, and there is no guarantee that we can do that. If we cannot achieve such breakthroughs and are always limited to manual ratings, the rate at which we can commercialize our ratings may be very limited.
Certain news and news-like sources that dislike our mission because they receive low ratings according to our method may attempt to disrupt our work in one or more ways. For example, third parties may undertake negative online social media campaigns, hacking, or frivolous litigation.
There are several competitors entering the field of news source ratings, each of whom has different approaches. We are betting that our two-dimensional rating taxonomy of bias and reliability will provide us a competitive advantage, but this may not be the case. Several of our competitors are better funded and therefore may be further ahead in developing their technology.
Temporary Rule 201(z)(2) provides temporary relief from certain financial information requirements by allowing issuers to omit the financial statements required by Rule 201(t) in the initial Form C filed with the Commission. This offering has commenced in reliance of Temporary Rule 201(z)(2).
Our future success depends on the efforts of a small management team. The loss of services of the members of the management team may have an adverse effect on the company. There can be no assurance that we will be successful in attracting and retaining other personnel we require to successfully grow our business.
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