The most recent deal to acquire RCP Advisors 3 by P10 INDUSTRIES INC COM USD0.001 (OTCMKTS:PIOE), as well as good news on its ability to trade its shares on the OTC markets after being delisted from the NASDAQ, have led to a surge in the share price of the company over the past two weeks.As seen in the chart below, the company’s share price is seen to trend upwards: PIOE Daily ChartThis article will review the stock, assessing its potential upside based on its strategy and financial performance. We want to bring out our view on the benefits accruing to an investor investing at this stock for either the short or long term.Having said this, it is important for us to briefly review the company for readers with rudimentary knowledge of its operations.P10 Industries Inc: An OverviewP10 Industries Inc was founded in 1992 as Active Power company in Austin, Texas. The mother company, however, was acquired in November 19, 2016 by Piller Power Systems Inc where the company name was changed to P10 Industries Inc. Previously, it was engaged in the design, manufacture, sale, and service of flywheel-based uninterruptible power supply products and modular infrastructure solutions.Over time, there has been significant transformation within the company. Currently, PIOE prides itself on engaging in the investment sector with the role of monetizing intellectual property and acquiring profitable businesses (within the commercial and industrial markets) to generate positive cash flows and profits. This is in line with a restructuring process that is currently taking place within the company (discussed later in this piece).In the period till April 2017, PIOE had been undergoing financial strain over which time they had filed for bankruptcy during which period, it was delisted from the NASDAQ. However, on April 20, 2017 they averted the bankruptcy process through their acquisition by Piller Power Systems Inc at $4.65 million for 21.65 million shares. Piller Inc also bought out the accrued debt by PIOE therefore reducing their debt load and reviving the company.PIOE also had to obtain a new ticker symbol courtesy of their new trading platform: OTC markets as at June 2017. This was after FINRA (The Financial Industry Regulatory Authority) gave a go-ahead for the company to begin trading on this market.The above series of information illustrates a grim situation that was later salvaged and followed by positive ray of light. We shall then henceforth assess the ramifications of their current decisions on the future of the company and its performance.Recent AcquisitionsOn October 5, 2017, PIOE closed on the acquisition of RCP Advisors 2, LLC, and entered into a purchase agreement to acquire RCP Advisors 3, LLC, in January 2018 (collectively, "RCP Advisors") through an exchange of 44,171,233 newly issued shares of P10 (representing approximately 49% of P10 outstanding shares), alongside cash and seller notes.This is the first major deal that PIOE obtained after their restructuring move. To put it into perspective, RCP Advisors is a leading sponsor of private equity funds, of-funds, secondary funds, and co-investment funds. Additionally, the firm provides advisory and research services. Since its founding nearly two decades ago, RCP Advisors has raised approximately $6 billion of committed capital and maintains one of the largest internal teams dedicated to North American lower middle market buyouts. This move has had share prices sky-rocketing as can be seen earlier in this piece.In a statement by the Chief Executive officer of the company, Mark A. Ascolese:
"We are excited to announce the acquisition of RCP Advisors, further building on our commitment to create shareholder value over time.”
Source:The strategy adopted by the company, from the above, speaks to their need to gain shareholder value. This is a major plus for them and for people reviewing the company as a possible investment venture.Growth financing: Is it possible?PIOE’s financial position has been growing steadily since its acquisition in 2016. Their net loss reduced from over $1.891 million in the three months to June 2016 to only $7,000 in the three months to June 2017. This is attributable to the income from discontinued operations of $633,000 obtained over the period to June 2017. Over the same period, moreover, the company’s CEO agreed to a pay-cut through a reversal of his stock options of about $350,000.Moreover, the company’s cash position increased by $4.65 million courtesy of the acquisition by Pillar Power Systems Inc. PIOE’s management stipulates that it will use this money to grow as well as implement its strategy as it seeks to build its reputation in the investment sector.Finally, the net cash outflows from operating activities reduced from $3.67 million in the period to June 2016 to $1.58 million in the period to June 2017. This was attributable to the reduction in the cash outflows from discontinued operations from $2.96 million to $821,000 in the period to June 2016/17 respectively. This supports the move by the company to discontinue some of its loss-making operations over this period.As can be assessed above, the company seeks to grow in the future and is making vital decisions that are pivotal to their financial growth and their standing in the industry.ConclusionPIOE represents one of the success stories in the market given that they bounced back from the bottom. This turnaround in their financial performance will go a long way in ensuring it secures a footing in the investment sector and eventually in the financial industry at large.We will be updating our subscribers as soon as we know more. For the latest updates on PIOE, sign up below!Image courtesy of privateequityforum via FlickrDisclosure: We have no position in PIOE and have not been compensated for this article.
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