SEC Company Response from Professional Diversity Network, Inc. (IPDN) (CIK 0001546296) (IPDN) — Oct 5, 2012
Professional Diversity Network, Inc. (IPDN) (CIK 0001546296)
Date: Oct. 5, 2012 · CIK: 0001546296 · Accession: 0001193125-12-416776
AI Filing Summary & Sentiment
File numbers found in text: 333-181594
Referenced dates: August 20, 2012, August 3, 2012, September 28, 2012
Show Raw Text
CORRESP
1
filename1.htm
CORRESP
October 5, 2012
Barbara C. Jacobs
Assistant Director
Division of Corporation Finance
Securities and Exchange Commission
100 F. Street, N.E.
Washington, D.C. 20549
Re:
Professional Diversity Network, LLC
Amendment No. 4 to Registration Statement on Form S-1
Filed September 7, 2012
File No. 333-181594
Dear Ms. Jacobs:
By letter dated September 28, 2012 (the “SEC Letter”), the staff (the “Staff”) of the Securities and Exchange Commission (the
“Commission”) provided comments on Amendment No. 4 (the “Amendment”) to the Registration Statement on Form S-1 (the “Registration Statement”) submitted by Professional Diversity Network, LLC (the
“Company”).
In order to facilitate your review, this letter responds to each of the comments set forth in the SEC Letter on a
point-by-point basis. The numbered paragraphs set forth below respond to the Staff’s comments and correspond to the numbered paragraphs in the SEC Letter.
Firm Commitment Underwritten IPO prospectus
Prospectus Summary, page 1
1. Please revise the overview section of the prospectus summary to disclose the percentage of revenues from Monster Worldwide and
the Apollo Group for the most recent period presented by your financial statements in addition to the information you have presented for the year ended December 31, 2011.
We have revised the overview section of the prospectus summary to disclose the percentage of revenues from Monster Worldwide and the Apollo Group for the most recent period presented in our financial
statements.
Summary Financial Data, page 13
2. According to footnote (2) to your balance sheet data on page 14, the pro forma, as adjusted column assumes the sale of common stock in your directed share offering under the Customer Stock
Ownership Plan. However, the third bullet point preceding the balance sheet data table assumes only the sale of common stock in this offering. Please clarify these apparent inconsistencies. Also, to the extent that you intend to assume the sale of
CSOP shares in your pro forma disclosures, please explain further how you determined that this meets the factually supportable criteria of Article 11(b)(6) of Regulation S-X.
We have revised footnote (2) to our balance sheet on page 14 regarding the pro forma, as adjusted
column, to remove the reference that such column assumes the sale of common stock in our directed share offering under the Customer Stock Ownership Plan.
Certain Relationship and Related Party Transactions
Agreements with Directors
and Executive Officers, page 71
3. We note that you have not revised your disclosure to indicate that no further payments to
Mr. Kirsch would be required after the outstanding notes convert into equity in response to prior comment 8 of our letter dated August 3, 2012 although your response letter indicates that you included such disclosures in this section and
in the notes to the financial statements. As previously requested in prior comment 8, please add to your disclosures here and in Note 8 to the financial statements that no further payments to Mr. Kirsch would be required after the outstanding
notes convert into equity in connection with the initial public offering.
We have added disclosures in the Agreements with Directors and
Executive Officers section and in Note 8 to the financial statements to state that no further payments to Mr. Kirsch would be required after the outstanding notes convert into equity in connection with the initial public offering.
Underwriting and Plan of Distribution
IPO Customer Stock Ownership Plan, page 84
4. Please disclose in this section
that the closing of the IPO CSOP is conditioned on the closing of the firm commitment IPO.
We have added a sentence in the Underwriting
and Plan of Distribution section to state that the closing of the IPO CSOP is conditioned on the closing of the offering made pursuant to the prospectus for the underwritten offering.
Consolidated Financial Statements
General
5. It appears that you are presenting comprehensive income in a single continuous statement. If true, please revise to refer to this as your Statement
of Comprehensive Income. We refer you to the guidance in ASC 220-10-45-1C.
In response to the Staff’s comment, we have renamed our
“Statements of Income” to “Statements of Income and Other Comprehensive Loss.”
IPO CSOP prospectus
General
6.
We note that the Chief Executive Officer of LOYAL3, the statutory underwriter, conducted an interview on May 23, 2012 in which he mentioned Professional Diversity’s IPO CSOP (video available on
http://video.foxbusiness.com/v/1653099248001/how-tobuy-a-stock-in-three-clicks/). It appears that these statements were made before the filing of the IPO CSOP prospectus on August 1, 2012. Please provide us with your analysis as to how you
believe these communications do not constitute an “offer” for purposes of the Securities Act. Explain to us in your response letter the nature of any public communications by the company or its underwriter regarding the offering. Provide
us with copies of any such communications, either written or electronic, and tell us the extent and circumstances of the distribution.
The referenced statements of LOYAL3’s Chief Executive Officer, which were made in response to a
question asked in the Fox television interview conducted on May 23, 2012, by a person (i) in the business of television broadcasting, (ii) which was not and is not affiliated with the Company or any other offering participant, and
(iii) to which no payment or other consideration was given by the Company or any other offering participant for the interview or its dissemination, preceded the filing of Amendment No. 3 to the Registration Statement on August 1,
2012, which for the first time included in the Registration Statement the IPO CSOP prospectus. However, such statements were specifically made only after we had publicly disclosed in the Registration Statement filed via EDGAR earlier on
May 23, 2012 our use in our initial public offering of an IPO Customer Stock Ownership Plan administered by LOYAL 3 Securities, Inc. (see “Plan of Distribution – IPO Customer Stock Ownership Plan”, page 73). Accordingly, if
these statements were deemed to constitute an “offer” for purposes of the Securities Act of 1933, as amended (the “Act”), then they would at the same time constitute a free writing prospectus permitted by Rule 433(f)
promulgated under the Act (“Rule 433(f)”). Furthermore, if these statements were deemed to constitute such a free writing prospectus, that free writing prospectus would be exempt from the filing requirements of Rule 433(f) pursuant
to the provisions of subparagraph 2(i) thereof, inasmuch as the substance of this putative free writing prospectus, i.e., the reference to LOYAL3’s participation in the Company’s IPO CSOP offering, had been included in the
Registration Statement as filed prior to its use.
We also note that the statement was made more than four months from the date hereof, and as
a result of the passage of time, a “cooling off” period should not be necessary.
To our knowledge, in addition to the reference to
the offering covered by the Registration Statement in the Fox News interview, LOYAL3’s CEO, in response to a question regarding the IPO CSOP offering in the TechCrunch Disrupt Conference on September 12, 2012, answered that the IPO CSOP
offering is in the quiet period and that he, accordingly, would not discuss it.
To our knowledge, neither we nor LOYAL3 has made any other
public communications, either written or electronic, with respect to the offering described in the Registration Statement, other than in the Registration Statement. After the filing of a preliminary prospectus that includes the price range for the
offering, the Company plans, as it has referenced in its previous response letter to the Staff, to use notices consistent with Rule 134 promulgated under the Act, as well as issuer free writing prospectuses, in its promotion of the IPO CSOP. To the
extent that the Company uses issuer free writing prospectuses, it will file those as and to the extent required under Rule 433 promulgated under the Act.
7. We will contact you separately regarding the screenshots that you submitted supplementally.
To our knowledge, we believe that LOYAL3 has provided revised screenshots to the Staff. As per the Staff’s request, included with this correspondence as Exhibit A and Exhibit B are the letter from
LOYAL3 and the IPO CSOP screenshots, respectively, that we believe were submitted to the Staff by LOYAL3.
Prospectus Cover Page
8. Please refer to prior comment 8 and revise the cover page to briefly describe the underwriting arrangements. In this regard,
disclose that this is a best efforts offering, the company is not required to sell any specific number of dollar amount of securities, and that there is no assurance that any shares will be sold in this offering. See Item 501(b)(8)of Regulation
S-K.
LOYAL3 Securities has no obligation with regard to the sale of shares and is neither engaged in a firm-commitment nor a best-efforts
underwriting. In response to the Staff’s comment, we have clarified on the cover page of the IPO CSOP Prospectus that it has no obligation:”LOYAL3 Securities, Inc., which has no obligation with regard to the number of shares purchased,
will receive 4% of gross proceeds in the IPO CSOP and is considered a statutory underwriter for the IPO CSOP.” We have also included a conforming reference on page A-14.
9. In response to prior comment 8 of our letter dated August 20, 2012, you state that you have
removed the prominence of “LOYAL3 Securities” on the cover page, but it appears that the company is still prominently displayed on the cover page although we note that you have removed the IPO CSOP logo.
In response to the Staff’s comment, we have removed the reference to “LOYAL3 Securities, Inc.” on the bottom of the prospectus cover page.
10. Please revise the table and footnote 1 to the table on the prospectus cover page to indicate that the company has agreed to pay
“commissions” rather than “fees” to LOYAL3 Securities, Inc. in connection with the IPO CSOP. Ensure that corresponding changes are made to the Plan of Distribution section.
We have revised the table and footnote 1 to the table on the prospectus cover page and all corresponding references to “fees” in the IPO CSOP
prospectus, replacing “fees” with “commissions” (A-2, A-6, and A-14). The Company has also revised the sentence that referred to “underwriting fees or discounts” so that on pp. A-2, A-6 and A-14 it now reads:
“No underwriting discounts will be granted by us to LOYAL3 with respect to the IPO CSOP, nor are any overallotment shares being provided to LOYAL3.”
11. It appears that you have not revised the cover page of the IPO CSOP prospectus to state that you “will be deemed a controlled company pursuant to NASDAQ corporate governance requirements”
as you indicate in the firm commitment underwritten IPO prospectus. Please revise to ensure that the disclosure in the two prospectuses is consistent.
We have revised the cover page of the IPO CSOP prospectus to conform to the cover page of the firm-commitment underwritten IPO prospectus to reflect the fact that the Company “will be deemed a
controlled company pursuant to NASDAQ corporate governance requirements.”
12. In response to prior comment 10 of our letter dated
August 20, 2012, you state that the offering will end with the “earlier of 5,000 reservations or approximately four days before the anticipated final pricing date for the initial public offering.” Please clarify whether the 5,000
reservation threshold that will trigger the end of the offering is regardless of the investment amount of each reservation.
The
referenced sentence on the cover page of the IPO CSOP prospectus has been amended to read as follows: “The offering will end with the earlier of receipt of 5,000 reservations (regardless of the investment amount of the reservations) or
approximately four business days before the anticipated final pricing, date subject to LOYAL3 Securities, Inc.’s discretion to close the offering at any other time prior to final pricing.” (A conforming change has been made on page
A-7.).”
13. Further to the comment above, tell us supplementally how investors will know how to calculate the “four days
before the anticipated final pricing date.”
We agree that potential investors may not know when the four business days would start.
However, because the offering is open until the earlier of receipt of the first 5,000 reservations or approximately four business days before the anticipated final pricing date, potential investors know that the period of the offering may be even
shorter and pre-empted by reaching 5,000 reservations. To further underscore our inability to precisely define the ending of the offering period, we have added the reference to LOYAL3’s discretion to close the IPO CSOP offering, stating the end
of the IPO CSOP offering as occurring “with the earlier of receipt of 5,000 reservations (regardless of the investment amount of the reservations) or approximately four business days before final pricing, subject to LOYAL3 Securities
Inc.’s discretion to end the offering at any other time prior to final pricing.” (Again, a conforming change has been made on page A-7.)
(In addition, the investor will know when the IPO CSOP is closed because, when the closing occurs, LOYAL3 will place such notice on the IPO CSOP landing page.)
Plan of Distribution, page A14
14. We note your response to prior comment 19 of our letter dated August 20, 2012 that LOYAL3 Securities, Inc. does not and will not engage in solicitation activities. However, we also note that
LOYAL3’s website promotes IPO CSOPs and may provide direct links to company websites. Accordingly, please revise your statement that LOYAL3 is not engaging in any solicitation activities.
We understand that LOYAL3, using a model that relies upon issuer promotion using lawful means of issuer promotion (such as Rule 134
notices as free writing prospectuses) as referenced in our answer to question no. 6 above, does not plan to engage directly in solicitation activities with regard to the IPO CSOP offering, and that its public website is structured to provide a
neutral list of available CSOPs (direct stock purchase plans) and IPO CSOPs, which even a non-broker-dealer would be able to provide.1The Company also understands that LOYAL3 has discussed this model specifically, and in detail, with senior staff members
of the Divisions of Corporation Finance and Trading and Markets, including the fact that there may at times be only one or two issuers on that list. For that reason, the Company does not believe it needs to revise the statement regarding
LOYAL3’s not engaging in solicitation activities.
15. We note that your revised disclosure in response to prior comment 19 of our
letter dated August 20, 2012 still has information about the firm commitment underwritten offering that does not appear necessary to understand or participate in the IPO CSOP. Please revise to limit the disclosure regarding the firm commitment
underwritten offering with regard to the underwriting agreement and lock-up agreements.
In response to the Staff’s comments, we have
significantly reduced the disclosure regarding the firm commitment underwriting to two sentences on page A-15.
If you have any questions,
please contact our counsel Brian Lee or Michael Froy at SNR Denton US LLP. Mr. Lee may be reached (212) 768-6926 and Mr. Froy at (312) 876-8222.
Sincerely,
/s/ James Kirsch
James Kirsch
cc:
Brian Lee, Esq.
SNR Denton US
LLP
1
See StockPower No-Action letter, publicly available July 24, 1998 in the context of direct stock purchase plans but nevertheless offerings
(including for initially issued shares) under registration statements.
E