Networking Partners, Inc.
857 Sarno Road
Melbourne, Florida 32935
(321) 984-8858
June 16, 2011
Securities and Exchange Commission
Division of Corporation Finance
Office of Manufacturing and Construction
100 F Street, N.E.
Washington, D.C. 20549
Attention: Jan Woo, Esq. Attorney-Advisor
and
Barbara C. Jacobs, Assistant Director
Division of Corporation Finance
Re: Networking Partners, Inc.
Amendment No. 1 to Registration Statement on Form S-1
Filed on May 27, 2011
File No. 333-173790
Dear Madam or Sir,
This letter is in response to your letter to me of June 14, 2011, regarding
the above referenced matter ("Comment Letter"). Networking Partners, Inc. is not
filing an amendment to the referenced Form S-1 ("amendment") along with this
letter. The purpose of this letter is to resolve the first two comments in the
Comment Letter.
Our responses to the first two comments in the Comment Letter follow:
General
1. WE NOTE A RECENT PRESS RELEASE BY THE COMPANY ON MAY 19, 2011 THAT STATES:
"NOW, I HAVE TO MAKE A FULL DISCLOSURE HERE. I AM A DIRECTOR OF NETWORKING
PARTNERS INC., A BUSINESS DEVELOPING SOCIAL TECHNOLOGIES. WE OWN THE
KOINICLUB.COM WHICH IS GOING GREAT GUNS WITH 150,000+ MEMBERS. IT IS INNOVATIVE
AND WE HAVE JUST DONE OUR REGISTRATION STATEMENT TO BECOME LISTED. CRAZY! I HERE
YOU SAY, WELL, MAYBE, BUT WE DECIDED THAT WE WANTED TO LOOK AT THE MARKETS TO
ALLOW PEOPLE TO GET INVOLVED WITH OUR BUSINESS WHILE WE ARE DEVELOPING AND RAISE
FUNDING IN THAT WAY. FOR US IT MAKES MORE SENSE TO GO TO MARKET AND ALLOW OUR
INVESTORS TO BUY SHARES IN OUR COMPANY AT A MARKET DICTATED PRICE THAN STAY
PRIVATE AND RELY ON VENTURE CAPITAL FIRMS FOR OUR FUNDING NEEDS. IT MAY SEEM A
LITTLE OFF THE WALL BUT IT WORKS FOR US, AND WITH THE FIRST DAY OF TRADING
PRODUCING 150% FOR LINKEDIN IT WOULD SEEM THAT BEING ABLE TO OFFER LISTED SHARES
IN SOCIAL TECHNOLOGY BUSINESS RIGHT NOW IS NOT SUCH BAD {SIC} IDEA."
2. FURTHER TO THE ABOVE COMMENT, TO THE EXTENT KNOWN, PLEASE EXPLAIN TO US IN
YOUR RESPONSE LETTER THE CIRCUMSTANCES SURROUNDING THESE MEDIA REPORTS AND
PUBLIC COMMUNICATIONS BY OFFICERS AND DIRECTORS OF THE COMPANY AND OTHER
SOURCES, IF KNOWN. PLEASE DESCRIBE THE NATURE OF THE RELATIONSHIP BETWEEN THE
COMPANY AND ANY SUCH OTHER SOURCES. WITH RESPECT TO ANY SUCH REPORTS OR
COMMUNICATIONS THAT ARE NOT AVAILABLE ELECTRONICALLY, PLEASE TELL US THE EXTENT
AND CIRCUMSTANCES OF THEIR DISTRIBUTION. IN ADDITION, PROVIDE US WITH YOUR
ANALYSIS AS TO HOW YOU BELIEVE THESE COMMUNICATIONS DO NOT CONSTITUTE AN OFFER
FOR PURPOSES OF THE SECURITIES ACT.
Response to Comments #1 and #2:
The excerpt of the press release noted above ("press release") was
published on the Koini Press page, HF-Markets [a personal blog of our Director,
David Bradley-Ward ("DBW")], and EvanCarmichael.com, an article aggregator of
entrepreneurs' comments and news. A full copy of the press release is attached
to this letter. We are not aware of any other article, media report, press
release or other public communication that has been made by the company or our
representatives that discusses our anticipated initial public offering. The
initial links where the press release was published are as follows:
http://hf-markets.com/2011/05/linkedin-100-rise-on-the-first-day-of-trading%E2%8
0%A6-tech-bubble-anyone/
http://www.evancarmichael.com/Sales/5107/Linkedin-tops-150-rise-on-the-first-day
-of-trading-tech-bubble-anyone.html
http://www.koini.com/press/linkedin-100-rise-on-the-first-day-of-trading-tech-bu
bble-anyone/
Based on our interview with DBW, the press release was simply an effort by DBW
to disclose that DBW had a connection with Networking Partners, Inc. (i.e.,
"Look at me" type thing) and was not intended to prep or condition the market
for our common stock.
In addition to the links above, the following sites "scraped" the article:
http://www.pr-inside.com/linkedin-100-rise-on-the-first-r2605074.htm
http://www.evancarmichael.com/Sales/5107/Linkedin-tops-150-rise-on-the-first-day
-of-trading-tech-bubble-anyone.html
http://www.feedagg.com/feed/4895676/Koinicom-Press-Releases
http://hf-markets.com/2011/05/linkedin-100-rise-on-the-first-day-of-trading%E2%8
0%A6-tech-bubble-anyone/
http://www.koini.com/press/linkedin-100-rise-on-the-first-day-of-trading-tech-bu
bble-anyone/
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http://www.5z5.com/Feeds/?0d5a3c5c1174eaf9
Some of the sites immediately above simply scrape articles and blogs. Additional
sites that have scraped the article are:
http://hf-markets.com/2011/05/networking-partners-inc-announces-that-the-koinicl
ub-com-site-integrates-facebook-news-feed/
http://www.koini.com/press/networking-partners-inc-announces-that-the-koiniclubc
om-site-integrates-facebook-news-feed/
http://www.feedagg.com/feed/4895676/Koinicom-Press-Releases
http://www.5z5.com/Feeds/?0d5a3c5c1174eaf9
http://hf-markets.com/2011/05/networking-partners-koiniclub-com-site-hits-150000
-members/
http://www.pr-inside.com/networking-partners-koiniclub-com-site-r2599014.htm
We have searched Bing, Google, Dogpile and Yahoo and the above links are
all that we could find.
Aside from the personal blog of DBW, the Company does not have any
relationship with the sites that published, scraped or reproduced the press
release.
REMEDIAL ACTION
After receiving the Comment Letter, our Board of Directors has severely
admonished DBW for his actions in publishing the press release. We have also
emphasized to all officers, directors and employees the significance of
complying with the quiet period and have forbidden any verbal or written mention
or discussion of our registration statement or plan to sell common stock.
In order to halt any further scraping of the site and posting of the
article, we have removed the press release from the following sites:
www.hf-markets.com
www.koini.com/press
www.evancarmichael.com
3
However, we were unable to remove the article from the following sites:
http://www.pr-inside.com/linkedin-100-rise-on-the-first-r2605074.htm
http://www.5z5.com/Feeds/?0d5a3c5c1174eaf9
http://www.feedagg.com/feed/4895676/Koinicom-Press-Releases
http://www.chinaproductreviews.com/html/tag/tech (this has the title of the
press release but returns a 404 error and does not show the article)
We have emailed PR-Inside and asked them to remove the article. Other sites
are simply automated Google Ad-Sense farms that basically scrape any and all
data from everywhere they can find it and serve Google ads on the pages.
There are thousands of other sites and the only way to search those sites
is via the search engines. The Google-bot is the most voracious of all the
robots searching for things to index and many of the search engines just scrape
Google indexed material.
We have also searched Dogpile, Ask Jeeves, 20 Search, "All the web," Alta
Vista, AOL Search, Excite, Gigablast, Iwon, Joeant, Lycos, Mamma, Netscape,
DMOZ, Webcrawler. The press release does not show up on these sites and they all
return "page not found" or another landing page.
We will continue to monitor these sites and if possible, remove the press
release or the link to the press release from the sites. However, we may not
have control over these sites.
ANALYSIS OF IF WE BELIEVE THESE COMMUNICATIONS CONSTITUTE AN OFFER FOR
PURPOSES OF THE SECURITIES ACT.
We do not believe publication of the press release violates the Securities
Act because (i) it was not authorized by the Company (our first knowledge of its
existence was when we received the Comment Letter); (ii) at the time the press
release was published, there had been a lot of publicity about social networking
companies making initial public offerings (i.e., Renn (Chinese company),
LinkedIn and lots of talk about Facebook's deal with an investment banker) and
DBW simply got caught up in the moment and wanted to let his friends know that
he was involved with the Company (i.e., "look at me, I am involved with a social
networking company.") and he did so without any intention of prepping or
conditioning the market for our common stock; (iii) after canvassing our
employees, officers and directors, we have been advised that none of them
received any phone calls, emails or other communications from persons who had
seen the press release asking or talking about our offering or our common stock;
and (iv) our common stock is not presently traded or quoted on a stock exchange
or quotation service.
Going Forward
In fairness to all potential investors in our Company, we believe that we
should amend our prospectus to include the full text of the press release, an
explanation of the circumstances surrounding its publication and adding a risk
factor regarding consequences if we were found to have violated the Securities
Act as a result of the press release's publication.
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Therefore, we propose to add the following disclosure and risk factor to our
prospectus:
"Information about Networking Partners has been published in a press
release appearing in May 2011, on the following websites:
http://hf-markets.com/2011/05/linkedin-100-rise-on-the-first-day-of-trading%E2%8
0%A6-tech-bubble-anyone/
http://www.evancarmichael.com/Sales/5107/Linkedin-tops-150-rise-on-the-first-day
-of-trading-tech-bubble-anyone.html
http://www.koini.com/press/linkedin-100-rise-on-the-first-day-of-trading-tech-bu
bble-anyone/
The text of the press release, which is included in this prospectus as
Appendix A, contains information derived from a press release made by one of our
Directors, David Bradley-Ward, after the filing of our registration statement of
which this prospectus is a part. The press release includes quotations from
David Bradley-Ward and has been reprinted or republished on a number of other
websites. The press release presented certain statements about our Company in
isolation and did not disclose any of the related risks and uncertainties
described in this prospectus. The press release also mentioned LinkedIn and its
initial public offering. Our Company is much smaller and not any where close to
being as successful, popular or profitable as LinkedIn; therefore, prospective
purchasers of our common stock should disregard the LinkedIn reference in the
press release. As a result, the press release should not be considered in
isolation and you should make your investment decision only after reading this
entire prospectus carefully.
You should carefully evaluate all the information in this prospectus,
including the risks described in this section and throughout this prospectus.
We do not believe our involvement in the press release constitutes a
violation of Section 5 of the Securities Act of 1933. However, if our
involvement were held by a court to be a violation of the Securities Act of
1933, we could be required to repurchase the shares sold to purchasers in this
offering at the original purchase price, plus statutory interest from the date
of purchase, for a period of one year following the date of the violation. We
would contest vigorously any claim that a violation of the Securities Act
occurred. The SEC has also requested additional information concerning the
publication of the press release.
See the Risk Factor entitled "IF OUR INVOLVEMENT IN A MAY 2011 PRESS
RELEASE WERE HELD TO BE IN VIOLATION OF THE SECURITIES ACT OF 1933, WE COULD BE
REQUIRED TO REPURCHASE SECURITIES SOLD IN THIS OFFERING. YOU SHOULD RELY ONLY ON
STATEMENTS MADE IN THIS PROSPECTUS IN DETERMINING WHETHER TO PURCHASE OUR
SHARES."
We would propose to add the following risk factor to our prospectus:
"IF OUR INVOLVEMENT IN A MAY 2011 PRESS RELEASE WERE HELD TO BE IN VIOLATION OF
THE SECURITIES ACT OF 1933, WE COULD BE REQUIRED TO REPURCHASE SECURITIES SOLD
IN THIS OFFERING. YOU SHOULD RELY ONLY ON STATEMENTS MADE IN THIS PROSPECTUS IN
DETERMINING WHETHER TO PURCHASE OUR SHARES.
5
The text of the press release, which is included in Appendix A to this
prospectus, contains information derived from a press release made by one of
our Directors, David Bradley-Ward, after the filing of our registration
statement of which this prospectus is a part. The press release includes
quotations from David Bradley-Ward and has been reprinted or republished on a
number of other websites. The press release presented certain statements about
our Company in isolation and did not disclose any of the related risks and
uncertainties described in this prospectus. The press release also mentioned
LinkedIn and its initial public offering. Our Company is much smaller and not
any where close to being as successful, popular or profitable as LinkedIn;
therefore, prospective purchasers of our common stock should disregard the
LinkedIn reference in the press release. As a result, the press release should
not be considered in isolation and you should make your investment decision only
after reading this entire prospectus carefully.
You should carefully evaluate all the information in this prospectus,
including the risks described in this section and throughout this prospectus.
We do not believe our involvement in the press release constitutes a
violation of Section 5 of the Securities Act of 1933. However, if our
involvement were held by a court to be a violation of the Securities Act of
1933, we could be required to repurchase the shares sold to purchasers in this
offering at the original purchase price, plus statutory interest from the date
of purchase, for a period of one year following the date of the violation. We
would contest vigorously any claim that a violation of the Securities Act
occurred. The SEC has also requested additional information concerning the
publication of the press release." (End of risk factor)
The only representatives of our Company who will be authorized to make
investor presentations on our behalf are Enzo Taddei, our CFO, and Pino G.
Baldassarre, our President. Neither DBW nor any of our other employees, officers
or directors will make investor presentations in connection with our offering.
Based on the foregoing, we would appreciate the Staff working with our
securities counsel, David E. Wise, Esq., to resolve these two comments, so that
we can move forward with an amendment to our Form S-1.
Please address any further comments to our attorney, David E. Wise, Esq.
Mr. Wise's contact information is set forth below:
Law Offices of David E. Wise
Attorney at Law
The Colonnade
9901 IH-10 West, Suite 800
San Antonio, Texas 78230
Telephone: (210) 558-2858
Facsimile: (210) 579-1775
Email: wiselaw@gvtc.com
Sincerely,
By: /s/ Pino G. Baldassarre
-------------------------------
Pino G. Baldassarre
President
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APPENDIX A
TORONTO MAY 19TH, NETWORKING PARTNERS INC . (HTTP://WWW.NETWORKINGPARTNERS.COM)
a company that develops social technologies and invests in and acquires the
same. The Company is the owner of the social networking site KoiniClub.com that
has 145,000+ members and is the foremost social networking site that
concentrates on competitions between its members. Ranked highly in the world's
most popular sites KoiniClub.com is the foundation of the Company's development
of social technologies.
Linkedin, the business social network will start trading today after increasing
its IPO price from $42 to $45, valuing the Company at around $4.3 billion. That
is a huge number, especially for a company that does not expect to be profitable
next year. The media therefore is unanimous; the tech bubble is back!! The first
day of trading for Linkedin can only help to fuel that kind of sentiment with
the share price increasing at one stage to $120 dollars a 150%+ increase over
the IPO price!
So is the tech bubble back? Well we have huge valuations for Twitter and
Facebook, we also have nerdy 20 something's getting rich and billion dollar
takeover bids for Twitter and Groupon have filled the headlines. We now see 150%
first day trading for an IPO, so it must be true right?
Well yes and no. Let's look first at the relative valuations of the companies
that are seen as the bubble companies. Facebook has a valuation after Goldman
Sachs' latest investment of $75 billion that is a valuation on reported revenue
of $4bn which is 20x. Zynga the gaming company is valued at $10 billion on $2bn
of revenue which is only 5x. Groupon is $15bn valuation 7x revenue and Twitter
is higher than all these on 28x revenue making a $7bn valuation. Linkedin by the
way, at the valuation placed on it by the market today is 32x.
The bottom line is that it is a few investors getting hot under the collar about
a few companies whose revenues make the valuations not way out of the
stratosphere. We are not at stage where we are in Boo.com or any of those
massively overvalued farces, the valuations been placed on Internet companies at
the moment are a result of 10 years of understanding by investors who have some
idea what may make money and what won't.
The thing that the investor must be asking is `are these companies fully valued
at these levels?' We have literally bought the t-shirt and watched the movie on
Facebook and we know that the valuation has been getting bigger and bigger since
day one and that cannot go on forever. Some investors have made billions and
maybe now is their time for an exit. So are these hyper-IPO's a good investment?
To be honest I don't know, but on the subject of this article, Linkedin, I can
offer some opinion.
For a start off when did you last use it? I set up a profile a long time ago and
have not touched it since then; I also have not received an invite from anyone
on Linkedin for a long, long time. It is not just Linkedin, I am a member of
other business networks that I have also ignored so I am not sure that looking
at Linkedin as a social network is right. I asked a colleague what Linkedin is
now, they said `Isn't is just a jobs board now?' Fans of Linkedin say its
revenue base is better than Facebook et al because of the fact it has more than
just advertising and that seems to me to be the way of the future, but $4
billion dollars worth? I am not so sure. I have read an article today that says
in 5 years time Linkedin will be worth $25 billion I don't see how. The guys
over there, especially Reid Hoffman, are obviously very talented so maybe it
will be the inevitable purchase of other businesses that will propel Linkedin
forward, your guess is as good as mine.
I think what Linkedin has done, however, is put down a marker for the sector. It
is saying social is it, it is here, and you can make money out of it if you have
the right idea. As an investor, therefore, I would be looking at where I can get
value from reflected glory, where I can get in on these kinds of businesses on
the ground floor.
Now, I have to make a full disclosure here. I am a director of Networking
Partners Inc, a business developing social technologies. We own the
KoiniClub.com which is going great guns with 150,000+ members. It is innovative
and we have just done our registration statement to become listed. Crazy! I here
you say, well, maybe, but we decided that we wanted to look at the markets to
allow people to get involved with or business while we are developing and raise
funding in that way. For us it makes more sense to go to market and allow our
investors to buy shares in our company at a market dictated price than stay
private and rely on venture capital firms for our funding needs. It may seem a
little off the wall but it works for us, and with the first day of trading
producing 150%+ for Linkedin it would seem that being able offer listed shares
in social technology business right now is not such a ad idea.
The long and the short of it is that we may be seeing huge valuations for some
Internet companies but we are far from the tech bubble that saw such beauties as
Webvan.com which saw $375 million down the toilet in eighteen months, Pets.com
who devoured $82 million in nine months and my personal favorite Boo.com who
burned through $160 million in less than two years. These companies were just
the tip of the iceberg; I met several companies who were raking in huge funding
for ideas that were even more crazy. I am not sure that we have got to that
stage again yet, but when companies such as ours and others begin to give any
sort of return then we are bound to see others following just like that tech
bubble we saw ten years ago.
If you want to see how this happens and IS happening today then take a look at
the Groupon situation. The daily deals site comes from nowhere, gets an offer
from Google for nearly $7 billion (and turns it down) and then we see hundreds,
if not thousands of clone sites instantly pop up.
If today has taught us anything with the Linkedin trade it is the old adage `The
key to the game of making money is to get in early'. By the way that name you
are now looking back in this article for is Networking Partners Inc.
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