IPDN – Professional Diversity Network, Inc.

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IPDN  –  Professional Diversity Network, Inc.   Nasdaq

-3.9m shares outstanding

-approximately 410k float

-approximately 12m cash on hand

-core business last quarter adjusted EBITDA loss reduced to $342k , due to cost cutting measures.

  • IPDN is one of the lowest float stocks on the Nasdaq following a reverse split ( approximately 410k after the split see table below ).
  • Unlike most reverse splits that create low float stocks but have no cash and no future growth story,  IPDN has cash and new majority investors that recently bought 55% ( over $20million)  of the Company for $9.60   ( IPDN stock closed at $9.70 today January 23, 2017 ).   They recently added 312k shares at $9.60 on January 17, 2017. The new investors Cosmic Forward,  put their own people in as CEO and several Board members as normal when a Company is taken over majority share.
  • The new owners plan to grow the business with several parts to the growth strategy, including expanding the professional networking for women into China , e-commerce in the USA,  and developing other new businesses .
  • The new owners are successful in China as they own GnetGroup O2O e-commerce  ( Forbes called O2O e-commerce a potential trillion dollar industry )  and mentioned exploring e-commerce in the USA.
  • Would an Investment group make a large investment in  IPDN at $9.60 in order to sit back and do nothing?    Would they recently add to their position if the goal wasn’t to grow the Company and add value to their investment at $9.60?

Core business – Professional Diversity Network, Inc. operates online professional networking communities with career resources in the United States. It operates through three segments: Professional Diversity Network, National Association of Professional Women, and Noble Voice Operations. The company serves various cultural groups, such as women; Hispanic-Americans; African-Americans; Asian-Americans; disabled; military professionals; lesbians, gays, bisexuals, and transgenders; and students and graduates. It offers single and multiple job postings, recruitment media, talent recruitment communities, corporate memberships, and hiring campaign marketing and advertising, as well as e-newsletter marketing, research, and outreach services. The company also provides consumer advertising and consumer marketing solutions through advertising and job postings on its Websites. It serves federal, state, and local governments, as well as companies and contractors that serve governmental entities; small and medium sized businesses; and large enterprises. As of December 31, 2015, the company had approximately 7,485,000 registered users. Professional Diversity Network, Inc. was founded in 2003 and is headquartered in Chicago, Illinois.

A) Aug 2016  Professional Diversity Network Announces Definitive Agreement For Common Stock Offering Resulting In Sale of Controlling Interest

Chinese investors  Cosmic Forward Limited entered in to agreement to buy 51% of the Company and  a reverse split was also announced shortly thereafter.    Cosmic Forward bought 51% for spit adjusted $9.60   (todays closing price was $9.70 )

At the time Purpose of the transaction stated  was to expand into China and other growth opportunities.

Cosmic Forward  in the last week on January 17, 2017  bought 312k more shares of the Company at $9.60 to increase ownership to 55% .

Float analysis   :  3.9 million shares outstanding.   Approximately 410k  Float per my calculations with SEC document reference:

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White Winston is the old banker of IPDN and IPDN paid the White Winston debt in full.   White Winston had warrants for 246k shares that were in the money and registered.  Theoretically they could sell.  Even if they did, the IPDN float would still be one of the smallest out there on the Nasdaq.   However in July 2016 when they reported their stake it stated they thought the shares were undervalued.   1 Jul 2016  White Winston Select Asset Funds, LLC discloses 15.8% stake – 13D filing The Fund acquired the Warrants in the belief that the Shares were undervalued. The Reporting Persons have been in discussions with members of the Issuers management and Board of Directors since November 2015 regarding a possible investment in the Issuer, ways to enhance shareholder value, and the possibility of representation for the Fund on the Issuers Board of Directors. – Source TradeTheNews.com

B) Future Plans –   Professional Diversity Network Announces Executive Transitions And Post-Transaction Opportunities  –   

Mr. Jingbo Song, Co-Chairman of PDN’s Board of Directors, agreed noting, “We held our first Board meeting the week that we closed.  In the brief time since then, we have met again to review qualifications and understand our resources, which has allowed us to appoint our committee members and chairs, develop a working relationship and focus those resources toward the goal of profitably growing this business and maximizing value to our stockholders.”

Mr. Wang noted that the Company has identified multiple areas of opportunity which, if realized, may position PDN for healthy growth into the future, including:

(1) Leveraging the Company’s relationship with CFL and its affiliates’ technical expertise, Chinese contacts and resources, and the Company’s existing human and technology capital, to develop new U.S. business lines, potentially including a China-U.S. education brokerage and an e-commerce business;

(2) Developing a PDN wholly foreign-owned enterprise (“WFOE”) in China and using both the Company’s existing expertise and related resources in the networking business and CFL’s China expertise and contacts to expand the NAPW networking business and other potential educational and training businesses to China;

(3) Developing a PDN wholly-owned subsidiary or Special Purpose Vehicle (“SPV”) in Hong Kong, and leveraging both PDN and its relationship with CFL to develop new businesses through the SPV in China, potentially including a broad-scale education platform;

(4) Identifying financing in the capital markets to help with the company expansion.

C)  O2O  –   O2O Online To Offline Sales is a new potential Trillion dollar industry per Forbes.  Quote about the O2O industry – Robin Li, the CEO of Baidu, the world’s No. 3 digital ad player after Google and Facebook, has even said that O2O services and retail are the company’s future, as opposed to search ads, where the company gets most revenue today. And he has complained that investors in the U.S., where Baidu is listed, don’t understand how important O2O is.

IPDN new majority owners own Gnet in China which is a rapidly growing O2O company in China.  In their last press release $IPDN said “Leveraging the Company’s relationship with CFL and its affiliates’ technical expertise, Chinese contacts and resources, and the Company’s existing human and technology capital, to develop new U.S. business lines, potentially including a China-U.S. education brokerage and an e-commerce business;” .

MOXC (Moxian, Inc.) recently uplisted on the Nasdaq and is an O2O Company in China.   They have no revenues and a market capitalization of $206m dollars.   For comparison sakes ,  If IPDN were to have a market capitalization of $206m dollars like MOXC that would be $206m divided by 3.9m shares outstanding , or a share price of $52.82 .

Here are articles on the O2O industry :

1) O2O Article 1

2)  O2O Article 2 

3)  O2O Article 3

Summary:

  • IPDN is one of the lowest float stocks on the Nasdaq following a reverse split ( approximately 410k after the split see table below ).
  • Unlike most reverse splits that create low float stocks but have no cash and no future growth story,  IPDN has cash and new majority investors that recently bought 55% ( over $20million)  of the Company for $9.60   ( IPDN stock closed at $9.70 today January 23, 2017 ).   They recently added 312k shares at $9.60 on January 17, 2017. The new investors Cosmic Forward,   put their own people in as CEO and several Board members as normal when a Company is taken over majority share.
  • The new owners plan to grow the business with several parts to the growth strategy, including expanding the professional networking for women into China , e-commerce in the USA,  and developing other new businesses .
  • The new owners are successful in China as they own GnetGroup O2O e-commerce  ( Forbes called O2O e-commerce a potential trillion dollar industry )  and mentioned exploring e-commerce in the USA.
  • Would an Investment group make a large investment in  IPDN at $9.60 in order to sit back and do nothing?    Would they recently add to their position if the goal wasn’t to grow the Company and add value to their investment at $9.60?

Disclaimer: I am long IPDN. This is not investment advice. The valuation section does not represent price target predictions whatsoever. The stock in this article may never appreciate in price and may depreciate in price. Do not make investment decisions based on this article. This article is for information only. I am not an investment advisor. I am not responsible for your investment decisions. I may sell my position in IPDN at any time.