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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Form
10-Q
(Mark
One)
☒ |
QUARTERLY
REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended March 31, 2023
or
☐ |
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the transition period from ________ to________
Commission
file number: 001-35824
Professional
Diversity Network, Inc.
(Exact
name of Registrant as Specified in Its Charter)
Delaware |
|
80-0900177 |
(State
or Other Jurisdiction of
Incorporation
or Organization) |
|
(I.R.S.
Employer
Identification
No.) |
|
|
|
55
E. Monroe Street, Suite 2120
Chicago,
Illinois |
|
60603 |
(Address
of Principal Executive Offices) |
|
(Zip
Code) |
(312)
614-0950
(Registrant’s
telephone number, including area code)
Securities
registered pursuant to Section 12(b) of the Act:
Title
of each class |
|
Name
of each exchange on which registered |
Common
Stock, $0.01 par value per share |
|
The
Nasdaq Stock Market LLC |
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes
☒ No ☐
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant
to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit and post such files).
Yes
☒ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”
and “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:
Large
accelerated filer ☐ |
Accelerated
filer ☐ |
Non-accelerated
filer ☒ |
Smaller
reporting company ☒ |
Emerging
growth company ☐ |
|
|
|
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
There
were 10,269,530 shares outstanding of the registrant’s common stock as of May 15, 2023.
Note
Regarding Forward-Looking Statements
This
Quarterly Report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements concern expectations, beliefs, projections,
plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. Specifically,
this Quarterly Report contains forward-looking statements regarding:
|
● |
our
beliefs regarding our ability to capture and capitalize on market trends; |
|
● |
our
expectations on the future growth and financial health of the online diversity recruitment industry and the industry participants,
and the drivers of such growth; |
|
● |
our
expectations regarding continued membership growth; |
|
● |
our
beliefs regarding the increased value derived from the synergies among our segments; and |
|
● |
our
beliefs regarding our liquidity requirements, the availability of cash and capital resources to fund our business in the future and
intended use of liquidity. |
These
forward-looking statements reflect our current views about future events and are subject to risks, uncertainties and assumptions. We
wish to caution readers that certain important factors may have affected and could in the future affect our actual results and could
cause actual results to differ significantly from those expressed in any forward-looking statement. The most important factors that could
prevent us from achieving our goals, and cause the assumptions underlying forward-looking statements and the actual results to differ
materially from those expressed in or implied by those forward-looking statements include, but are not limited to, the following:
|
● |
our
ability to raise funds in the future to support operations; |
|
● |
our
failure to realize synergies and other financial benefits from mergers and acquisitions within expected time frames, including increases
in expected costs or difficulties related to integration of merger and acquisition partners; |
|
● |
inability
to identify and successfully negotiate and complete additional combinations with potential merger or acquisition partners or to successfully
integrate such businesses; |
|
● |
our
history of operating losses; |
|
● |
our
limited operating history in a new and unproven market; |
|
● |
increasing
competition in the market for online professional networks; |
|
● |
our
ability to comply with increasing governmental regulation and other legal obligations related to privacy; |
|
● |
our
ability to adapt to changing technologies and social trends and preferences; |
|
● |
our
ability to attract and retain a sales and marketing team, management and other key personnel and the ability of that team to execute
on the Company’s business strategies and plans; |
|
● |
our
ability to obtain and maintain intellectual property protection; |
|
● |
any
future litigation regarding our business, including intellectual property claims; |
|
● |
general
and economic business conditions; and |
|
● |
legal
and regulatory developments. |
The
foregoing list of important factors may not include all such factors. You should consult other disclosures made by the Company (such
as in our other filings with the Securities and Exchange Commission (“SEC”) or in company press releases) for additional
factors, risks and uncertainties that may cause actual results to differ materially from those projected by the Company. Please refer
to Part I, Item 1A, “Risk Factors” of our 2022 Annual Report for additional information regarding factors that could affect
our results of operations, financial condition and cash flow. You should consider these factors, risks and uncertainties when evaluating
any forward-looking statements and you should not place undue reliance on any forward-looking statement. Forward-looking statements represent
our views as of the date of this Quarterly Report, and we undertake no obligation to update any forward-looking statement to reflect
the impact of circumstances or events that arise after the date of this Quarterly Report.
PROFESSIONAL
DIVERSITY NETWORK, INC.
FORM
10-Q
FOR
THE THREE MONTHS ENDED MARCH 31, 2023
TABLE
OF CONTENTS
Item
1. FINANCIAL STATEMENTS
Professional
Diversity Network, Inc. and Subsidiaries
CONSOLIDATED
BALANCE SHEETS (Unaudited)
The
accompanying notes are an integral part of these consolidated financial statements.
Professional
Diversity Network, Inc. and Subsidiaries
CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited)
The
accompanying notes are an integral part of these consolidated financial statements.
Professional
Diversity Network, Inc. and Subsidiaries
CONSOLIDATED
STATEMENT OF STOCKHOLDERS’ EQUITY (Unaudited)
| |
| | |
| | |
| | |
| | |
| | |
| | |
Accumulated | | |
Non- | | |
| |
| |
Common Stock | | |
Additional Paid in | | |
Accumulated | | |
Treasury Stock | | |
Other Comprehensive | | |
controlling Interest in | | |
Total Stockholders’ | |
| |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Shares | | |
Amount | | |
Income (Loss) | | |
Subsidiary | | |
Equity | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Balance at January 1, 2022 | |
| 8,033,627 | | |
$ | 80,337 | | |
$ | 98,520,509 | | |
$ | (95,779,818 | ) | |
| 524 | | |
$ | (37,117 | ) | |
$ | 6,565 | | |
$ | 317,429 | | |
$ | 3,107,905 | |
Balance | |
| 8,033,627 | | |
$ | 80,337 | | |
$ | 98,520,509 | | |
$ | (95,779,818 | ) | |
| 524 | | |
$ | (37,117 | ) | |
$ | 6,565 | | |
$ | 317,429 | | |
$ | 3,107,905 | |
Acquisition of RemoteMore | |
| 139,860 | | |
| 1,398 | | |
| 398,602 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| | | |
| 400,000 | |
Share-based compensation | |
| - | | |
| - | | |
| 124,484 | | |
| | | |
| - | | |
| - | | |
| - | | |
| | | |
| 124,484 | |
Stock buyback plan | |
| - | | |
| - | | |
| - | | |
| - | | |
| 70,994 | | |
| (139,979 | ) | |
| - | | |
| | | |
| (139,979 | ) |
Translation adjustments | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 900 | | |
| | | |
| 900 | |
Net loss | |
| - | | |
| - | | |
| - | | |
| (703,265 | ) | |
| - | | |
| - | | |
| - | | |
| (204,551 | ) | |
| (907,816 | ) |
Balance at March 31, 2022 | |
| 8,173,487 | | |
$ | 81,735 | | |
$ | 99,043,595 | | |
$ | (96,483,083 | ) | |
| 71,518 | | |
$ | (177,096 | ) | |
$ | 7,465 | | |
$ | 112,878 | | |
$ | 2,585,494 | |
Balance | |
| 8,173,487 | | |
$ | 81,735 | | |
$ | 99,043,595 | | |
$ | (96,483,083 | ) | |
| 71,518 | | |
$ | (177,096 | ) | |
$ | 7,465 | | |
$ | 112,878 | | |
$ | 2,585,494 | |
The
accompanying notes are an integral part of these consolidated financial statements.
Professional
Diversity Network, Inc. and Subsidiaries
CONSOLIDATED
STATEMENTS OF CASH FLOWS (Unaudited)
The
accompanying notes are an integral part of these consolidated financial statements.
Professional
Diversity Network, Inc. and Subsidiaries
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
1.
Basis of Presentation and Description of Business
The
accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the
United States of America (“GAAP”) pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”)
for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial
statements. The accompanying consolidated financial statements include all adjustments, which consist of normal recurring adjustments
and transactions or events discretely impacting the interim periods, considered necessary by management to fairly state our results of
operations, financial position and cash flows. The operating results for interim periods are not necessarily indicative of results that
may be expected for any other interim period or for the full year. These consolidated financial statements should be read in conjunction
with the audited consolidated financial statements and notes thereto included in our 2022 Form 10-K.
Professional
Diversity Network, Inc. (“the Company”, “PDN, Inc.”, “we,” “our,” or “us,”)
is both the operator of the Professional Diversity Network (the “PDN Network,” or the “Professional Diversity Network”)
and a holding company for NAPW, Inc., a wholly-owned subsidiary of the Company and the operator of the National Association of Professional
Women (the “NAPW Network” or “NAPW”). The PDN Network operates online professional networking communities with
career resources specifically tailored to the needs of different diverse cultural groups including: Women, Hispanic-Americans, African-Americans,
Asian-Americans, persons with disabilities, Military Professionals, Lesbians, Gay, Bisexual, Transgender and Queer (LGBTQ+), and
Students and Graduates seeking to transition from education to career. The networks’ purposes, among others, are to assist their
registered users in their efforts to connect with like-minded individuals, identify career opportunities within the network and connect
with prospective employers. The Company’s technology platform is integral to the operation of its business. In January 2023, the Company purchased the assets and operations of Expo Experts LLC. Expo Experts, LLC specializes
in producing premier face-to-face and virtual recruiting events for Engineering, Technology and
Security Clearance positions, designed to attract diverse candidates who may also have STEM-based
background (see Note. 4 – Business Combinations).
The
NAPW Network is a networking organization for professional women, whereby its members can develop their professional networks, further
their education and skills, and promote their business and career accomplishments. NAPW provides its members with opportunities to network
and develop valuable business relationships with other professionals through its website, as well as at virtual and in-person events
hosted at its local chapters across the country.
RemoteMore
USA is an innovative, global entity that provides remote-hiring marketplace services for developers and companies. RemoteMore connects
companies with reliable, cost-efficient, vetted developers, and empowers software developers to find meaningful jobs regardless of their
location. As of March 31, 2023, PDN, Inc. owned 65.62% of RemoteMore USA, Inc. (“RemoteMore USA”
or “RemoteMore”). The Company consolidates RemoteMore USA’s operations into its consolidated financial statements.
In
March 2020, our Board of Directors decided to suspend all China operations. The results of China operations are presented in the consolidated
statements of operations and comprehensive loss as net loss from discontinued operations.
2.
Going Concern and Management’s Plans
At
March 31, 2023, the Company’s principal sources of liquidity were its cash and cash equivalents.
The
Company had an accumulated deficit of $(99,451,467)
at March 31, 2023. During the three months ended March 31, 2023, the Company generated a loss from continuing operations, net of
tax, of $(1,109,323).
During the three months ended March 31, 2023, the Company used cash in continuing operations of $394,158.
At March 31, 2023, the Company had a cash balance of $964,306.
Total revenues were approximately $1,955,000
and $2,053,000
for the three months ended March 31, 2023 and 2022. The Company had a working capital deficit from continuing operations of
approximately $1,068,000
and $187,000
at March 31, 2023 and December 31, 2022. These conditions raise substantial doubt about its ability to continue as a going concern.
The ability of the Company to continue as a going concern is dependent on the Company’s ability to further implement its
business plan, raise capital, and generate revenues. The consolidated financial statements do not include any adjustments that might
be necessary if the Company is unable to continue as a going concern.
Management
believes that its available cash on hand and cash flow from operations may be sufficient to meet our working capital requirements for
the fiscal period ending December 31, 2023, however in order to accomplish our business plan objectives, the Company will need to continue
its cost reduction efforts, increase revenues, and raise capital through the issuance of common stock, or through a strategic merger
or acquisition. There can be no assurances that our business plans and actions will be successful, that we will generate anticipated
revenues, or that unforeseen circumstances will not require additional funding sources in the future or require an acceleration of plans
to conserve liquidity. Future efforts to improve liquidity through the issuance of our common stock may not be successful, or if available,
they may not be available on acceptable terms.
3.
Summary of Significant Accounting Policies
Basis
of Presentation - The accompanying consolidated financial statements have been prepared in accordance with GAAP.
Use
of Estimates – The preparation of consolidated financial statements in conformity with GAAP requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting
period. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of
the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered
in formulating its estimate, could change in the near term due to one or more future intervening events. Accordingly, the actual results
could differ significantly from estimates.
Significant
estimates underlying the financial statements include: the fair value of acquired assets and liabilities associated with acquisitions,
the assessment of goodwill for impairment, intangible assets and long-lived assets for impairment, allowances for doubtful accounts and
assumptions related to the valuation allowances on deferred taxes, impact of applying the revised federal tax rates on deferred taxes,
the valuation of stock-based compensation and the valuation of stock warrants.
Principles
of Consolidation - The accompanying consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries,
and non-wholly-owned subsidiaries that require consolidation per GAAP. All significant intercompany balances and transactions have been
eliminated in consolidation.
Cash
Equivalents - The Company considers cash equivalents to include all short-term, highly liquid investments that are readily convertible
to known amounts of cash and have original maturities of three months or less.
Accounts
Receivable - Accounts receivable represent receivables generated from fees earned from customers and advertising revenue. The
Company’s policy is to reserve for uncollectible accounts based on its best estimate of the amount of probable credit losses in
its existing accounts receivable. The Company periodically reviews its accounts receivable to determine whether an allowance for doubtful
accounts is necessary based on an analysis of past due accounts and other factors that may indicate that the realization of an account
may be in doubt.
Our estimate of the required allowance for credit losses is based on:
| ● | Available and relevant internal and/or external information
about historical loss experience with similar assets, |
| | |
| ● | Current conditions, and |
| | |
| ● | Reasonable and supportable forecasts that affect the expected
collectibility of the reported amount of financial assets |
Account
balances deemed to be uncollectible are charged to the allowance after all means of collection have been exhausted and the potential
for recovery is considered remote. Write offs are recognized as a deduction from the allowance for credit losses. Amounts previously
written off that are expected to be recovered are included in the determination of the allowance for credit losses to the extent
that these expected recoveries do not exceed the aggregate of amounts previously written off. As of March 31, 2023 and December 31,
2022, the allowance for doubtful accounts was approximately $111,000
and $103,000,
respectively.
Other
Receivables – Other receivables represents amounts that are owed to the Company that are not considered trade receivables.
The Company periodically reviews its other receivables for credit risk to determine whether an allowance is necessary and other factors
that may indicate that the realization of an account may be in doubt. Account balances deemed to be uncollectible are charged to the
allowance after all means of collection have been exhausted and the potential for recovery is considered remote. As of March 31, 2023
and December 31, 2022, the balance in other receivables as reported on the consolidated balance sheets was deemed collectible.
Property
and Equipment - Property and equipment is stated at cost, including any cost to place the property into service, less accumulated
depreciation. Depreciation is recorded on a straight-line basis over the estimated useful lives of the assets which currently range from
three to five years. Leasehold improvements are amortized over the shorter of their estimated useful lives or the term of the lease.
Maintenance, repairs and minor replacements are charged to operations as incurred; major replacements and betterments are capitalized.
The cost of any assets sold or retired and related accumulated depreciation are removed from the accounts at the time of disposition,
and any resulting profit or loss is reflected in income or expense for the period. Depreciation expense during the three months ended
March 31, 2023 and 2022 was approximately $2,000 and $2,000, respectively, and is recorded in depreciation and amortization expense in
the accompanying consolidated statements of operations.
Lease
Obligations - The Company leases office space and equipment under various operating lease agreements, including an office for
its corporate headquarters, as well as office spaces for its events business, sales and administrative offices under non-cancelable lease
arrangements that provide for payments on a graduated basis with various expiration dates.
On
September 23, 2020, the Company entered into a new office lease agreement for its corporate headquarters. The office lease is for 4,902
square feet of office space and the lease term is for 84 months, commencing on October 1, 2020.
Capitalized
Technology Costs - In accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification
(“ASC”) 350-40, Internal-Use Software, the Company capitalizes certain external and internal computer software costs incurred
during the application development stage. The application development stage generally includes software design and configuration, coding,
testing and installation activities. Training and maintenance costs are expensed as incurred, while upgrades and enhancements are capitalized
if it is probable that such expenditures will result in additional functionality. Capitalized software costs are amortized over the estimated
useful lives of the software assets on a straight-line basis, generally not exceeding three years.
Business
Combinations - ASC 805, Business Combinations (“ASC 805”), applies the acquisition method of accounting for business
combinations to all acquisitions where the acquirer gains a controlling interest, regardless of whether consideration was exchanged.
ASC 805 establishes principles and requirements for how the acquirer: a) recognizes and measures in its financial statements the identifiable
assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree; b) recognizes and measures the goodwill acquired
in the business combination or a gain from a bargain purchase; and c) determines what information to disclose to enable users of the
financial statements to evaluate the nature and financial effects of the business combination. Accounting for acquisitions requires the
Company to recognize, separately from goodwill, the assets acquired and the liabilities assumed at their acquisition-date fair values.
Goodwill as of the acquisition date is measured as the excess of consideration transferred and the net of the acquisition-date fair values
of the assets acquired and the liabilities assumed. While the Company uses its best estimates and assumptions to accurately value assets
acquired and liabilities assumed at the acquisition date, the estimates are inherently uncertain and subject to refinement. As a result,
during the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the assets
acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination
of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the interim
consolidated statements of operations. (See Note 4 – Business Combinations.)
Goodwill
and Intangible Assets - The Company accounts for goodwill and intangible assets in accordance with ASC 350, Intangibles –
Goodwill and Other (“ASC 350”). ASC 350 requires that goodwill and other intangibles with indefinite lives should be tested
for impairment annually or on an interim basis if events or circumstances indicate that the fair value of an asset has decreased below
its carrying value.
Goodwill
is tested for impairment at the reporting unit level on an annual basis (December 31 for the Company) and between annual tests if an
event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value.
The Company considers its market capitalization and the carrying value of its assets and liabilities, including goodwill, when performing
its goodwill impairment test.
When
conducting its annual goodwill impairment assessment, the Company initially performs a qualitative evaluation of whether it is more likely
than not that goodwill is impaired. If it is determined by a qualitative evaluation that it is more likely than not that goodwill is
impaired, the Company then compares the fair value of the Company’s reporting unit to its carrying or book value. If the fair value
of the reporting unit exceeds its carrying value, goodwill is not impaired and the Company is not required to perform further testing.
If the carrying value of a reporting unit exceeds its fair value, the Company will measure any goodwill impairment losses as the amount
by which the carrying amount of a reporting unit exceeds its fair value, not to exceed the total amount of goodwill allocated to that
reporting unit.
Treasury
Stock – Treasury stock is recorded at cost as a reduction of stockholders’ equity in the accompanying balance sheets.
Revenue
Recognition – Revenue is recognized when all of the following conditions exist: (1) persuasive evidence of an arrangement
exists, (2) services are performed, (3) the sales price is fixed or determinable, and (4) collectability is reasonably assured. (See
Note 5 – Revenue Recognition.)
Deferred
revenue includes customer payments which are received prior to performing services and revenues are recognized upon the completion of
these services. Annual membership fees collected at the time of enrollment are recognized as revenue ratably over the membership period,
which are typically for a 12-month membership period.
Discontinued
Operations
China
Operations
The
Company previously disclosed in its Form 10-K for the year ending December 31, 2019 (the “2019 10-K”) and subsequently that
the assets of PDN China were frozen by Chinese local authorities in November 2019 in connection with the criminal investigation of alleged
illegal public fund raising by Gatewang Group (the “Gatewang Case”), a separate company organized under the laws of the People’s
Republic of China (“Gatewang”), with which Mr. Maoji (Michael) Wang, the former Chairman and CEO of the Company was affiliated.
A subsequent investigation led by a special committee of the Board concluded that it did not find any evidence that the Company or PDN
China had engaged in the criminal activity of illegal fund-raising as alleged against Gatewang. The Company subsequently discontinued
all of its operations in China.
The
Company also previously disclosed in the 2019 Form 10-K that the seizure of PDN China’s assets had been lifted in March 2020.
However, on April 22, 2021, the Company learned that RMB 18,841,064.15 (approximately $2.9 million) had been seized from the PDN China
Account by Longxu District Court of Wuzhou City in Guangxi Province to satisfy a judgment in favor of the plaintiffs in the Gatewang
Case. On April 26, 2021, the Company concluded that the seizure of such cash assets was a material reduction of Company assets and was
reflected in its consolidated balance sheets subsequent to the occurrence.
The
Company has asserted its claim to these funds as the genuine owner to the Chinese officials and asked for their return. The Company plans
to pursue all possible legal alternatives to have these funds returned to the Company but such return is uncertain at this time.
All
historical operating results for the Company’s China operations are included in a loss from discontinued operations, net of tax,
in the accompanying statements of operations. For the three months ended March 31, 2023, loss from discontinued operations was approximately
$12,000 as compared to a loss from discontinued operations of approximately $18,000 for the three months ended March 31, 2022.
Assets
and liabilities of China operations are included in current assets and long-term assets from discontinued operations, and current
liabilities and long-term liabilities from discontinued operations. Current assets from discontinued operations were $4,600 as
of each of March 31, 2023 and December 31, 2022, and long-term assets from discontinued operations were $197,000 at
each of March 31, 2023, and December 31, 2022. As of March 31, 2023, current liabilities from discontinued operations were $482,000,
compared to $503,000 as
of December 31, 2022.
Operating
Results of Discontinued Operations
The
following table represents the components of operating results from discontinued operations, which are included in the statements of
operations and comprehensive loss for the three months ended March 31, 2023 and 2022, net of intercompany eliminations:
Schedule
of Operating Results of Discontinued Operations
| |
| | | |
| | |
| |
Three Months Ended March 31, | |
| |
2023 | | |
2022 | |
| |
| | |
| |
Revenues | |
$ | - | | |
$ | - | |
| |
| | | |
| | |
General and administrative | |
$ | 11,730 | | |
$ | 18,181 | |
Non-operating expense | |
| - | | |
| 111 | |
Loss from discontinued operations before income tax | |
| (11,730 | ) | |
| (18,292 | ) |
Income tax expense (benefit) | |
| - | | |
| - | |
Net loss from discontinued operations | |
$ | (11,730 | ) | |
$ | (18,292 | ) |
Advertising
and Marketing Expenses – Advertising and marketing expenses are expensed as incurred or the first time the advertising
takes place. The production costs of advertising are expensed the first time the advertising takes place. For the three months ended
March 31, 2023 and 2022, the Company incurred advertising and marketing expenses of approximately $281,000 and $255,000. These amounts
are included in sales and marketing expenses in the accompanying statements of operations. At March 31, 2023 and December 31, 2022, there
were no prepaid advertising expenses, recorded in the accompanying balance sheets.
Concentrations
of Credit Risk - Financial instruments, which potentially subject the Company to concentration of credit risk, consist principally
of cash and cash equivalents and accounts receivable. The Company places its cash with high credit quality institutions. At times, such
amounts may be in excess of the FDIC insurance limits. The Company has not experienced any losses in such accounts and believes that
it is not exposed to any significant credit risk on the account.
Income
Taxes - The Company accounts for income taxes in accordance with ASC 740, Income Taxes (“ASC 740”), which requires
that the Company recognize deferred tax liabilities and assets based on the differences between the financial statement basis and tax
basis of assets and liabilities, using enacted tax rates in effect for the year in which the differences are expected to reverse. The
Company estimates the degree to which tax assets and credit carryforwards will result in a benefit based on expected profitability by
tax jurisdiction. A valuation allowance for such tax assets and loss carryforwards is provided when it is determined to be more likely
than not that the benefit of such deferred tax asset will not be realized in future periods. If it becomes more likely than not that
a tax asset will be used, the related valuation allowance on such assets would be reduced.
ASC
740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with
ASC 740-20 and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax
position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not
to be sustained upon examination by taxing authorities. There were $131,597 of deferred tax liabilities as of March 31, 2023. The Company is
currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.
The
Company may be subject to potential income tax examinations by federal or state authorities. These potential examinations may include
questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal and
state tax laws. Management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve
months. Tax years that remain open for assessment for federal and state tax purposes include the years ended December 31, 2019 through
2022.
The
Company’s policy for recording interest and penalties associated with audits is to record such expense as a component of income
tax expense. There were no amounts accrued for penalties or interest as of March 31, 2023.
Fair
Value of Financial Assets and Liabilities - Financial instruments, including cash and cash equivalents, short-term investments
and accounts payable, are carried at cost. Management believes that the recorded amounts approximate fair value due to the short-term
nature of these instruments.
Net
Loss per Share - The Company computes basic net loss per share by dividing net loss available to common stockholders by the weighted
average number of common shares outstanding for the period and excludes the effects of any potentially dilutive securities. Diluted earnings
per share, if presented, would include the dilution that would occur upon the exercise or conversion of all potentially dilutive securities
into common stock using the “treasury stock” and/or “if converted” methods as applicable. The computation of
basic net loss per share for the three months ended March 31, 2023 and 2022 excludes the potentially dilutive securities summarized in
the table below because their inclusion would be anti-dilutive.
Schedule of Antidilutive Securities Excluded
from Computation of Earnings Per Share
| |
| | | |
| | |
| |
As of March 31, | |
| |
2023 | | |
2022 | |
| |
| | |
| |
Stock options | |
| 33,063 | | |
| 33,063 | |
Unvested restricted stock | |
| 34,557 | | |
| 79,762 | |
Total dilutive securities | |
| 67,620 | | |
| 112,825 | |
Reclassifications
- Certain prior year amounts in the Consolidated Statements of Operations and Comprehensive Loss have been reclassified to conform
with the current year presentation.
Recent
Accounting Pronouncements
In
June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial
Instruments. The main objective of this update is to provide financial statement users with more decision-useful information about the
expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date.
To achieve this objective, the amendments in this update replace the incurred loss impairment methodology in current GAAP with a methodology
that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform
credit loss estimates. For public business entities that are SEC filers that are Smaller Reporting Companies, the amendments in this
update are effective for fiscal years beginning after January 2023, including interim periods within those fiscal years. The Company
has adopted this new guidance on its financial position, results of operations, statement of comprehensive
income, and cash flows in the first quarter of fiscal 2023.
4.
Business Combinations
RemoteMore
On
September 20, 2021, the Company acquired a 45.62% interest in RemoteMore, a software developer recruiting company, for an estimated total
purchase price of $1,363,333, paying $863,333 in cash and $500,000 to be paid within one year of the acquisition date, or until certain
factors of the agreement were met.
In
February 2022, in connection with the September 2021 acquisition of the 45.62%
interest in RemoteMore, and as a component of the aforementioned $500,000
still to be paid, the Company issued 139,860
shares of its common stock, with a value of $400,000,
to the co-founders of RemoteMore. In January 2023, the Company exercised its option to purchase an additional 20%
interest in RemoteMore at a purchase price of $116,667.
As of March 31, 2023, the Company owned a 65.62%
interest in RemoteMore.
In
May 2023, the Company acquired an additional 7% interest in RemoteMore for approximately $235,000. The acquisition interest and price
were based on the original valuation of RemoteMore in September 2021. This acquisition increases the Company’s interest in RemoteMore
to 72.62%.
Expo
Experts
In
January 2023, the Company formed a wholly-owned subsidiary, Expo Experts Events, LLC, and pursuant to an asset purchase agreement with
Expo Experts, LLC (“Expo Experts”), an Ohio limited liability company, has purchased the assets and operations of Expo Experts
for a total consideration of $600,000 funded by the payment of $400,000 in cash and the issuance of restricted shares of PDN common stock
valued at $200,000 based on the volume weighted-average price as of twenty (20) days prior to the closing date. Expo Experts specializes
in producing premier face-to-face and virtual recruiting events for Engineering, Technology and
Security Clearance positions, designed to attract diverse candidates who may also have STEM-based
background.
The
purchase price allocation as of the date of the acquisition was based on a detailed analysis of the fair value of assets
acquired. No liabilities were assumed other than the deferred revenue amount listed below. The major classes of assets and
liabilities to which we have allocated the purchase price were as follows:
Schedule of Company Measurement
| |
| | |
Goodwill | |
$ | 126,301 | |
Intangible assets | |
| 541,400 | |
Deferred revenue | |
| (67,701 | ) |
Business
combination total | |
$ | 600,000 | |
The
goodwill recognized in connection with the acquisition is primarily attributable to anticipated synergies from future growth and is expected
to be deductible for tax purposes.
Intangible
assets purchased in connection with the acquisition primarily represent specific events acquired which are expected to create revenue
throughout fiscal 2023 and are reflected in the Company’s consolidated balance sheets at gross amounts, net of accumulated amortization
(see Note 7 – Intangible Assets).
Expo
Experts’ accounts and operations have been reflected in the PDN Network for segment reporting purposes (see 14. Segment Information).
5.
Revenue Recognition
The
Company recognizes revenue under the core principle of ASC 606 – Revenue from Contracts with Customers (“ASC 606”),
to depict the transfer of control to its customers in an amount reflecting the consideration to which it expects to be entitled. In order
to achieve that core principle, the Company has applied the following five-step approach: (1) identify the contract with a customer,
(2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to
the performance obligations in the contract, and (5) recognize revenue when a performance obligation is satisfied.
The
Company’s contracts with customers may provide for multiple promised goods and services. The Company typically analyzes the contract
and identifies the performance obligations by evaluating whether the promised goods and services are capable of being distinct within
the context of the contract at contract inception. Promised goods and services that are not distinct at contract inception are combined.
The next step after identifying the performance obligations is determining the transaction price, which includes the impact of variable
consideration, based on contractually fixed amounts and an estimation of variable consideration. The Company allocates the transaction
price to each performance obligation based on relative stand-alone selling price. Judgment is exercised to determine the stand-alone
selling price of each distinct performance obligation. The Company estimates the stand-alone selling price by reference to the total
transaction price less the sum of the observable stand-alone selling prices of other goods or services promised in the contract. In general,
transaction price is determined by estimating the fixed amount of consideration to which we are entitled for transfer of goods and services
and all relevant sources and components of variable consideration. Revenues are generally recognized when control of the promised goods
or services is transferred to their customers either at a point in time or over time, in an amount that reflects the consideration it
expects to be entitled to in exchange for those goods or services.
Many
of the Company’s contracts have one performance obligation and all consideration is allocated to that performance obligation and
recognized at a point in time contemporaneous when the service is performed or with the date of the event.
Payment is typically due in full, at net 30, from the moment control of
the goods or services have begun to transfer, unless both parties have negotiated an installment-based payment arrangement through the
term of the contract. The
Company may have contracts where there is an extended timing difference between payment and the time when control of the goods or services
is transferred to the customer.
Nature
of Goods and Services
The
following is a description of principal activities from which the Company generates its revenue:
Recruitment
Services
The
Company’s recruitment services revenue is derived from the Company’s agreements through single and multiple job postings,
recruitment media, talent recruitment communities, basic and premier corporate memberships, hiring campaign marketing and advertising,
e-newsletter marketing and research and outreach services. Recruitment revenue includes revenue recognized from direct sales to customers
for recruitment services and events, as well as revenue from the Company’s direct e-commerce sales. Direct sales to customers are
most typically a twelve-month contract for services and as such the revenue for each contract is recognized ratably over its twelve-month
term. Event revenue is recognized in the period that the event takes place and e-commerce sales are for sixty to ninety-day job postings
and the revenue from those sales are recognized when the service is provided. The Company’s recruitment services mainly consist
of the following products:
● |
On-line
job postings to our diversity sites and to our broader network of websites including the NAACP, National Urban League, Kappa Alpha
Psi, Phi Beta Sigma and many other partner organizations; |
|
|
● |
OFCCP
job promotion and recordation services; |
|
|
● |
Diversity
job fairs, both in person and virtual fairs; |
|
|
● |
Diversity
recruitment job advertising services; and |
|
|
● |
Diversity
executive staffing services. |
Membership
Fees and Related Services
Membership
fees are typically month to month; however, members may prepay for a 12-month period. Memberships are collected up-front and member benefits
become available immediately. At the time of enrollment, membership fees are recorded as deferred revenue and are recognized as revenue
ratably over the membership period. Members who are enrolled in 12-month plan may cancel their membership in the program at any time
and receive a partial refund (amount remaining in deferred revenue) or due to consumer protection legislation, a full refund based on
the policies of the member’s credit card company.
Monthly
membership revenues are recognized in the same month fees are collected.
Revenue
from related membership services are derived from fees for development and set-up of a member’s personal on-line profile and/or
press release announcements. Fees related to these services are recognized as revenue at the time the on-line profile is complete and
press release is distributed.
Products
offered to members relate to custom made plaques. Product sales are recognized as deferred revenue at the time the initial order is placed.
Revenue is then recognized at the time these products are shipped. The Company’s shipping and handling costs are included in cost
of sales in the accompanying consolidated statements of operations.
Contracted
Software Development
Revenues
for RemoteMore are generated from providing customized software solutions to customers and are recognized in the period work is performed.
Consumer
Advertising and Marketing Solutions
The
Company provides career opportunity services to its various partner organizations through advertising and job postings on their websites.
The Company works with its partners to develop customized websites and job boards where the partners can generate advertising, job postings
and career services to their members, students and alumni. Consumer advertising and marketing solutions revenue is recognized as jobs
are posted to their hosted sites.
Revenue
Concentration
The
Company is in an alliance with another company to build, host, and manage the Company’s job boards and website. This alliance member
also sells two of the Company’s recruitment services products and bills customers, collects fees, and provides customer services.
For the three months ended March 31, 2023 and 2022, the Company recorded approximately 10% and 11% of its recruitment services revenue
from this alliance sales relationship.
Disaggregation
of revenue
Revenue
is disaggregated by product line and timing of transfer of products and services and is in line with our reportable segments as described
in Note 14 - Segment Information.
Contract
Balances
The
Company’s rights to consideration for work completed, but not billed at the reporting date, is classified as a receivable, as it
has an unconditional right to payment or only conditional for the passage of time. The Company has no recorded contract assets as of
March 31, 2023.
Consideration
received in advance from customers is recorded as a contract liability, if a contract exists under ASC 606, until services are delivered
or obligations are met and revenue is earned. Contract liability represents the excess of amounts invoiced over amounts recognized as
revenues. Contract liabilities to be recognized in the succeeding twelve-month period are classified as current contract liabilities
and the remaining amounts, if any, are classified as non-current contract liabilities. Contract liabilities of approximately $2,191,000
are included in current deferred revenues, on the consolidated balance sheets as of March 31, 2023. For the three months ended March
31, 2023, we recognized revenue associated with contract liabilities of approximately $1,153,000 that were included in the contract liabilities
balance at the beginning of the period.
Deferred
revenue includes customer payments which are received prior to performing services and revenues are recognized upon the completion of
these services. Annual membership fees collected at the time of enrollment are recognized as revenue ratably over the membership period,
which are typically for a 12-month membership period.
Transaction
price allocated to the remaining performance obligations
The
Company applies the optional exemptions and does not disclose: a) information about remaining performance obligations that have an original
expected duration of one year or less or b) transaction price allocated to unsatisfied performance obligations for which variable consideration
is allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied promise to transfer a distinct good or
service that forms part of a single performance obligation in accordance with the series guidance.
The
typical duration of all event related and other contracts is one year or less and, as a result, the Company applies the optional exemptions
and does not disclose information about remaining performance obligations that have an original expected duration of one year or less.
Allowance for credit losses
Credit loss activity consists of the following for the three months ended
March 31, 2023 and 2022, respectively:
Schedule
of Allowance for Credit Loss Activity
| |
2023 | | |
2022 | |
| |
| | |
| |
Balance, beginning of period | |
$ | 102,515 | | |
$ | 247,190 | |
Credit loss expense | |
| 8,816 | | |
| (66,208 | ) |
Balance, end of period | |
$ | 111,331 | | |
$ | 180,982 | |
There were no write-offs or recoveries during the
three months ended March 31, 2023 and 2022, respectively.
The numbers presented above relate solely to our portfolio of trade accounts receivable as no allowance for credit
losses was recognized on other receivables as presented on our consolidated balance sheets. We determine the allowance for credit losses
by using an accounts receivable aging schedule and utilizing historical loss percentages adjusted for the effects of current conditions
and reasonable and supportable forecasts of the future.
6.
Capitalized Technology
Capitalized
Technology, net is as follows:
Schedule of Capitalized Technology
| |
| | | |
| | |
| |
March 31, 2023 | | |
December 31, 2022 | |
Capitalized cost: | |
| | | |
| | |
Balance, beginning of period | |
$ | 64,499 | | |
$ | 43,038 | |
Additional capitalized cost | |
| 29,800 | | |
| 45,196 | |
Provision for amortization | |
| (10,605 | ) | |
| (23,735 | ) |
Balance, end of period | |
$ | 83,694 | | |
$ | 64,499 | |
For
the three months ended March 31, 2023 and 2022, amortization expense was approximately $10,600 and $4,400, respectively, and is recorded
in depreciation and amortization expense in the accompanying statements of operations.
7.
Intangible Assets
Intangible
assets, net was as follows:
Schedule
of Intangible Assets
| |
Useful Lives | | |
Gross Carrying | | |
Accumulated | | |
Net Carrying | |
March 31, 2023 | |
(Years) | | |
Amount | | |
Amortization | | |
Amount | |
Long-lived intangible assets: | |
| | | |
| | | |
| | | |
| | |
Sales Process | |
| 10 | | |
$ | 2,130,956 | | |
$ | (2,016,645 | ) | |
$ | 114,311 | |
Paid Member Relationships | |
| 5 | | |
| 803,472 | | |
| (803,472 | ) | |
| - | |
Member Lists | |
| 5 | | |
| 8,186,181 | | |
| (8,094,514 | ) | |
| 91,667 | |
Developed Technology | |
| 3 | | |
| 648,000 | | |
| (648,000 | ) | |
| - | |
Trade Name/Trademarks | |
| 4 | | |
| 442,500 | | |
| (441,250 | ) | |
| 1,250 | |
Contracts and events acquired in acquisitions | |
| 3 - 12 months | | |
| 1,377,083 | | |
| (1,027,783 | ) | |
| 349,300 | |
| |
| | | |
| 13,588,192 | | |
| (13,031,664 | ) | |
| 556,528 | |
Indefinite-lived intangible assets: | |
| | | |
| | | |
| | | |
| | |
Trade name | |
| | | |
| | | |
| | | |
| 90,400 | |
Intangible assets, net | |
| | | |
| | | |
| | | |
$ | 646,928 | |
| |
Useful Lives | | |
Gross Carrying | | |
Accumulated | | |
Net Carrying | |
December 31, 2022 | |
(Years) | | |
Amount | | |
Amortization | | |
Amount | |
Long-lived intangible assets: | |
| | | |
| | | |
| | | |
| | |
Sales Process | |
| 10 | | |
$ | 2,130,956 | | |
$ | (1,997,593 | ) | |
$ | 133,363 | |
Paid Member Relationships | |
| 5 | | |
| 803,472 | | |
| (803,472 | ) | |
| - | |
Member Lists | |
| 5 | | |
| 8,086,181 | | |
| (8,086,181 | ) | |
| - | |
Developed Technology | |
| 3 | | |
| 648,000 | | |
| (648,000 | ) | |
| - | |
Trade Name/Trademarks | |
| 4 | | |
| 442,500 | | |
| (441,042 | ) | |
| 1,458 | |
Contracts acquired in RemoteMore acquisition | |
| 3 - 12 months | | |
| 935,683 | | |
| (935,683 | ) | |
| - | |
| |
| | | |
| 13,046,792 | | |
| (12,911,971 | ) | |
| 134,821 | |
Indefinite-lived intangible assets: | |
| | | |
| | | |
| | | |
| | |
Trade name | |
| | | |
| | | |
| | | |
| 90,400 | |
Intangible assets, net | |
| | | |
| | | |
| | | |
$ | 225,221 | |
As
of March 31, 2023, estimated amortization expense in future fiscal years is summarized as follows:
Schedule of Future Annual Estimated
Amortization Expense
| |
| | |
Year ended December 31, | |
| |
Remaining of 2023 | |
$ | 432,081 | |
2024 | |
| 91,114 | |
2025 | |
| 33,333 | |
Net Carrying Amount | |
$ | 556,528 | |
For
the three months ended March 31, 2023 and 2022, amortization expense was approximately $120,000 and $275,000, respectively, and is recorded
in depreciation and amortization expense in the accompanying consolidated statements of operations.
8.
Long-term Investments
On
September 27, 2022, the Company entered into a Stock Purchase Agreement (the “SPA”) with Koala Malta Limited, a private limited
liability company registered under the laws of Malta (the “Seller”).
Upon
the execution of the SPA, the Company purchased 65,700 issued ordinary shares of Koala Crypto Limited (“KCL”) from Seller,
representing 9 percent of the total issued share capital of KCL, and in exchange, the Company issued 1,726,784 shares of its common stock
to Seller in a private placement (the “Consideration Shares”). The Consideration Shares were valued at $1,350,000 in the
aggregate based on the volume weighted average price of the common stock of the Company for the 20 trading days immediately prior to
the date of the SPA and is recorded in the consolidated balance sheet as long-term investments.
Upon
execution of the SPA, the Company, the Seller and KCL also entered into a Shareholders’ Agreement. The Shareholders’ Agreement
imposes certain transfer restrictions on the Seller and the Company as shareholders of KCL, provides for certain governance and approval
rights among the parties, and gives the Company a put option with respect to its investment in KCL in the event of a change of control
of the Seller. At the same time, Alan Tak Wai Yau, an individual and the majority shareholder of Koala Capital Limited, which is the
parent company of the Seller (“Koala Capital”), provided the Company with a share charge over 15 percent of the issued share
capital of Koala Capital (the “Share Charge”) and Koala Capital provided the Company with a guaranty and indemnity (the “Guarantee”),
which Share Charge and Guarantee were granted as security for a number of the Seller’s obligations as set forth therein including
obtaining the lifting of the voluntary suspension of KCL’s virtual financial assets license by the Malta Financial Services Authority
(“MFSA”). Koala Capital has submitted and responded to all queries raised by the MFSA, and that the authorization/supervision unit is currently reviewing its application and is in the process of presenting it to the Regulatory Committee for consideration and approval.
9.
Commitments and Contingencies
Lease
Obligations - The Company leases office space and equipment under various operating lease agreements, including an office for
its headquarters, as well as office spaces for its events business, sales and administrative offices under non-cancelable lease arrangements
that provide for payments on a graduated basis with various expiration dates.
As
of March 31, 2023, right of use assets and related lease obligations were $349,053 and $425,560, as recorded on the Company’s consolidated
balance sheets.
Other
- PDN China’s bank account with a balance of approximately $195,000, at March 31, 2023, was frozen by Guangzhou Police
due to the Gatewang Case. The Company has classified this entire cash balance as a long-term asset presented in discontinued operations
(see Note 3 - Summary of Significant Accounting Policies – Discontinued Operations).
Legal
Proceedings
The
Company and its wholly owned subsidiary, NAPW, Inc., are parties to a proceeding captioned Deborah Bayne, et al. vs. NAPW, Inc. and Professional
Diversity Network, Inc., No. 18-cv-3591 (E.D.N.Y.), filed on June 20, 2018, and alleging violations of the Fair Labor Standards Act and
certain provisions of the New York Labor Law. Plaintiffs are seeking monetary damages and equitable relief. The Company disputes that
it or its subsidiary violated the applicable laws or that either entity has any liability and intends to vigorously defend against these
claims. The matter is in the final stages of discovery, and we have completed depositions of relevant witnesses. During the first quarter
of 2020, the Company recorded a $450,000 litigation settlement reserve in the event of an unfavorable outcome in this proceeding. In
November 2020, both parties entered into mediation proceedings, but a settlement was not reached.
General
Legal Matters
From
time to time, the Company is involved in legal matters arising in the ordinary course of business. While the Company believes that such
matters are currently not material, there can be no assurance that matters arising in the ordinary course of business for which the Company
is, or could be, involved in litigation, will not have a material adverse effect on its business, financial condition or results of operations.
10.
CFL Transaction
On
August 12, 2016, the Company entered into a stock purchase agreement (the “Purchase Agreement”), with CFL, a Republic of
Seychelles company wholly-owned by a group of Chinese investors. Pursuant to the Purchase Agreement, the Company agreed to issue and
sell to CFL, and CFL agreed to purchase, upon the terms and subject to the conditions set forth in the Purchase Agreement, a number of
shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”), such that CFL would hold shares
of Common Stock equal to approximately 51% of the outstanding shares of Common Stock, determined on a fully-diluted basis, after giving
effect to the consummation of the transactions contemplated by the Purchase Agreement.
At
the closing of the CFL Transaction, the Company entered into a Stockholders’ Agreement, dated November 7, 2016 (the “Stockholders’
Agreement”) with CFL and each of its shareholders: Maoji (Michael) Wang, Jingbo Song, Yong Xiong Zheng and Nan Kou (the “CFL
Shareholders”). The Stockholders’ Agreement sets forth the agreement of the Company, CFL and the CFL Shareholders relating
to board representation rights, transfer restrictions, standstill provisions, voting, registration rights and other matters following
the transaction.
As
of March 31, 2023, CFL beneficially holds shares of the Company’s outstanding Common Stock equal to approximately 25.0%. The decrease
in CFL’s percentage of the Company’s total outstanding common stock is a result of dilution from other equity offerings.
11.
Stockholders’ Equity
As
previously disclosed in a Report on Form 8-K filed on November 28, 2022, the Company’s stockholders approved an amendment to the
Company’s Amended and Restated Certificate of Incorporation to effect a reverse stock split (the “Reverse Stock Split”)
of the Company’s common stock, par value $0.01 per share (the “Common Stock”), between the range of 1.5 to 1 and 5
to 1 at the direction of the management (the “Split Ratio”), depending upon which exact ratio is deemed necessary and desirable
to achieve a minimum share price of at least $1.00 per share in the market trading price of the Common Stock. On January 3, 2023, the board
of directors of the Company (the “Board”) adopted resolutions by unanimous written consent, pursuant to which the Board determined
that it is advisable and in the best interests of the Company to fix the Split Ratio at 2 to 1. As a result of the effected Reverse
Stock Split, all shares of common stock that were held by the Company as treasury shares related to the Company’s share repurchase
plan were retired in accordance with Section 243 of the Delaware General Corporation Law, immediately prior to the effectiveness of the
Reverse Stock Split, and such shares resumed the status of authorized and unissued shares of Common Stock.
Preferred
Stock – The Company has no preferred stock issued. The Company’s amended and restated certificate of incorporation
and amended and restated bylaws include provisions that allow the Company’s Board of Directors to issue, without further action
by the stockholders, up to 1,000,000 shares of undesignated preferred stock.
Common
Stock – The Company has one class of common stock outstanding with a total number of shares authorized of 45,000,000. As
of March 31, 2023, the Company had 10,269,530 shares of common stock outstanding.
In
January 2023, in connection with the acquisition of Expo Experts, the Company issued 99,339 shares of its common stock, with a value
of $200,000, to the co-founders of Expo Experts (see Note 4 – Business Combinations).
In
March 2023, the Company entered into a stock purchase agreement with Ms. Yiran Gu, a former investor of the Company and a citizen of
the People’s Republic of China, in connection with the purchase by Ms. Gu of 333,181 shares of common stock of the Company at a
price of approximately $2.10 per share for aggregate gross proceeds of $700,000.
12.
Stock-Based Compensation
Equity
Incentive Plans – The Company’s 2013 Equity Compensation Plan (the “2013 Plan”) was adopted for the purpose
of providing equity incentives to employees, officers, directors and consultants including options, restricted stock, restricted stock
units, stock appreciation rights, other equity awards, annual incentive awards and dividend equivalents. Through a series of amendments
to the 2013 Plan, the total number of authorized shares available for issuance of common stock under the Plan is 750,000 shares.
On April 11,
2023, the Board of Directors adopted a new equity incentive plan, the Professional Diversity Network, Inc. 2023 Equity Compensation
Plan (the “2023 Equity Compensation Plan”), subject to the approval of the Company’s stockholders. The 2023 Equity Compensation
Plan is intended to supersede and replace the 2013 Plan, and no new awards will be granted under the 2013 Plan. Any awards outstanding
under the 2013 Plan remain subject to and will be paid under the 2013 Plan. The 2023 Equity Compensation Plan reserves 750,000 shares
of common stock for issuance of awards to directors, officers, employees and qualifying consultants of the Company and its affiliates.
Stock
Options
The
fair value of options is estimated on the date of grant using the Black-Scholes option pricing model. The valuation determined by the
Black-Scholes pricing model is affected by the Company’s stock price as well as assumptions regarding a number of highly complex
and subjective variables. These variables include, but are not limited to, expected stock price volatility over the term of the awards,
and actual and projected employee stock option exercise behaviors. The risk-free rate is based on the U.S. Treasury rate for the expected
life at the time of grant, volatility is based on the average long-term implied volatilities of peer companies, the expected life is
based on the estimated average of the life of options using the simplified method, and forfeitures are estimated on the date of grant
based on certain historical data. The Company utilizes the simplified method to determine the expected life of its options due to insufficient
exercise activity during recent years as a basis from which to estimate future exercise patterns. The expected dividend assumption is
based on the Company’s history and expectation of dividend payouts.
Forfeitures
are required to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from
those estimates.
The
following table summarizes the Company’s stock option activity for the three months ended Mach 31, 2023 and 2022:
Schedule
of Stock Option Activity
| |
| | |
| | |
Weighted | | |
| |
| |
| | |
| | |
Average | | |
| |
| |
| | |
Weighted | | |
Remaining | | |
| |
| |
| | |
Average | | |
Contractual | | |
Aggregate | |
| |
Number of | | |
Exercise | | |
Life | | |
Intrinsic | |
| |
Options | | |
Price | | |
(in Years) | | |
Value | |
Outstanding - January 1, 2023 | |
| 33,063 | | |
$ | 9.04 | | |
| 6.8 | | |
$ | - | |
Granted | |
| - | | |
| - | | |
| - | | |
| | |
Exercised | |
| - | | |
| - | | |
| - | | |
| | |
Forfeited | |
| - | | |
| - | | |
| - | | |
| | |
Outstanding - March 31 2023 | |
| 33,063 | | |
$ | 9.04 | | |
| 6.5 | | |
$ | - | |
| |
| | | |
| | | |
| | | |
| | |
Exercisable at March 31, 2023 | |
| 23,063 | | |
$ | 11.14 | | |
| 5.7 | | |
$ | - | |
| |
| | |
| | |
Weighted | | |
| |
| |
| | |
| | |
Average | | |
| |
| |
| | |
Weighted | | |
Remaining | | |
| |
| |
| | |
Average | | |
Contractual | | |
Aggregate | |
| |
Number of | | |
Exercise | | |
Life | | |
Intrinsic | |
| |
Options | | |
Price | | |
(in Years) | | |
Value | |
Outstanding - January 1, 2022 | |
| 33,063 | | |
$ | 9.04 | | |
| 7.8 | | |
$ | - | |
Granted | |
| - | | |
| - | | |
| - | | |
| | |
Exercised | |
| - | | |
| - | | |
| - | | |
| | |
Forfeited | |
| - | | |
| - | | |
| - | | |
| | |
Outstanding - March 31 2022 | |
| 33,063 | | |
$ | 9.04 | | |
| 7.5 | | |
$ | - | |
| |
| | | |
| | | |
| | | |
| | |
Exercisable at March 31, 2022 | |
| 18,063 | | |
$ | 13.06 | | |
| 6.1 | | |
$ | - | |
Total
unrecognized stock-based compensation expense related to unvested stock options at March 31, 2023 was approximately $13,000 and is expected
to be recognized through the second quarter of 2024.
Restricted
Stock Units
As
of March 31, 2023 and 2022, the following is a summary of restricted stock unit activity:
Schedule
of Restricted Stock Unit Activity
| |
Number of | |
| |
Shares | |
Outstanding - January 1, 2023 | |
| 69,114 | |
Granted | |
| - | |
Forfeited | |
| - | |
Vested | |
| - | |
Outstanding – March 31, 2023 | |
| 69,114 | |
| |
Number of | |
| |
Shares | |
Outstanding - January 1, 2022 | |
| 79,763 | |
Granted | |
| - | |
Forfeited | |
| - | |
Vested | |
| - | |
Outstanding – March 31, 2022 | |
| 79,763 | |
During
the period ended March 31, 2023, the Company granted no restricted stock units.
The
Company recorded non-cash stock-based compensation expense of approximately $33,000
and $124,000
as a component of general and administrative expenses in the accompanying consolidated statements of operations for the three months
ended March 31, 2023 and 2022, respectively, pertaining to granting of restricted stock awards.
Total
unrecognized stock-based compensation expense related to unvested restricted stock at March 31, 2023 was approximately $22,000
and is expected to be recognized in the second
quarter of 2023.
13.
Income Taxes
The
Company’s quarterly income tax provision is based upon an estimated annual income tax rate. The Company’s quarterly provision
for income taxes also includes the tax impact of discrete items, if any, including changes in judgment about valuation allowances and
effects of changes in tax laws or rates, in the interim period in which they occur.
During
the three months ended March 31, 2023 and 2022, the Company recorded income tax benefit of $10,873 and $25,788, respectively. The decrease
in income tax benefit during the current three-month period, as compared to the same periods in the prior year, was primarily due to
a decrease in discrete tax items and changes in the Company’s net operating losses.
In
assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all
of the deferred income tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the
generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the
scheduled reversal of deferred income tax liabilities, projected future taxable income, and tax planning strategies in making this assessment.
Based on consideration of these items, management has determined that enough uncertainty exists relative to the realization of the deferred
income tax asset balances to warrant the application of a valuation allowance as of March 31, 2023. The valuation allowance at March
31, 2023 was approximately $10,230,315. The net change in the valuation allowance during the three months ended March 31, 2023 was an increase
of approximately $252,000.
14.
Segment Information
The
Company operates in the following segments: (i) PDN Network, (ii) NAPW Network, and (iii) RemoteMore. The financial results of China Operations have been reclassified from the Company’s reportable
segments to discontinued operations for all periods presented.
The
following tables present key financial information related of the Company’s reportable segments related to financial position as
of March 31, 2023 and December 31, 2022 and results of operations for the three months ended March 31, 2023 and 2022:
Schedule
of Segment Information
| |
| | | |
| | | |
| | | |
| | | |
| | |
| |
Three Months Ended March 31, 2023 | |
| |
PDN | | |
NAPW | | |
| | |
Corporate | | |
| |
| |
Network | | |
Network | | |
RemoteMore | | |
Overhead | | |
Consolidated | |
Membership fees and related services | |
$ | - | | |
$ | 128,923 | | |
$ | - | | |
$ | - | | |
$ | 128,923 | |
Recruitment services | |
| 1,103,395 | | |
| - | | |
| - | | |
| - | | |
| 1,103,395 | |
Contracted software development | |
| - | | |
| - | | |
| 698,266 | | |
| - | | |
| 698,266 | |
Consumer advertising and marketing solutions | |
| 24,625 | | |
| - | | |
| - | | |
| - | | |
| 24,625 | |
Total revenues | |
| 1128,020 | | |
| 128,923 | | |
| 698,266 | | |
| - | | |
| 1,955,209 | |
Income (loss) from continuing operations | |
| (354,632 | ) | |
| (247,066 | ) | |
| (104,884 | ) | |
| (420,198 | ) | |
| (1,126,780 | ) |
Depreciation and amortization | |
| 112,760 | | |
| 19,667 | | |
| 347 | | |
| - | | |
| 132,774 | |
Income tax expense (benefit) | |
| (3,080 | ) | |
| (3,571 | ) | |
| 850 | | |
| (5,072 | ) | |
| (10,873 | ) |
Net loss from continuing operations, net of tax | |
| (348,726 | ) | |
| (243,442 | ) | |
| (102,029 | ) | |
| (415,126 | ) | |
| (1,109,323 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
| |
As of March 31, 2023 | |
Goodwill | |
$ | 465,752 | | |
$ | - | | |
$ | 952,001 | | |
$ | - | | |
$ | 1,417,753 | |
Intangibles assets, net | |
| 531,367 | | |
| 114,311 | | |
| 1,250 | | |
| - | | |
| 646,928 | |
Assets from continuing operations | |
| 6,787,713 | | |
| 209,964 | | |
| (373,490 | ) | |
| - | | |
| 6,624,187 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
| |
Three Months Ended March 31, 2022 | |
| |
PDN | | |
NAPW | | |
| | |
Corporate | | |
| |
| |
Network | | |
Network | | |
RemoteMore | | |
Overhead | | |
Consolidated | |
Membership fees and related services | |
$ | - | | |
$ | 196,009 | | |
$ | - | | |
$ | - | | |
$ | 196,009 | |
Recruitment services | |
| 1,333,364 | | |
| - | | |
| - | | |
| - | | |
| 1,333,364 | |
Contracted software development | |
| - | | |
| - | | |
| 477,092 | | |
| - | | |
| 477,092 | |
Consumer advertising and marketing solutions | |
| 46,415 | | |
| - | | |
| - | | |
| - | | |
| 46,415 | |
Total revenues | |
| 1,379,779 | | |
| 196,009 | | |
| 477,092 | | |
| - | | |
| 2,052,880 | |
Income (loss) from continuing operations | |
| 272,290 | | |
| (207,877 | ) | |
| (378,279 | ) | |
| (602,347 | ) | |
| (916,213 | ) |
Depreciation and amortization | |
| 6,222 | | |
| 19,432 | | |
| 255,618 | | |
| - | | |
| 281,272 | |
Income tax expense (benefit) | |
| 9,087 | | |
| (13,017 | ) | |
| - | | |
| (21,858 | ) | |
| (25,788 | ) |
Net income (loss) from continuing operations, net of tax | |
| 266,221 | | |
| (194,696 | ) | |
| (380,560 | ) | |
| (580,489 | ) | |
| (889,524 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
| |
As of December 31, 2022 | |
Goodwill | |
$ | 339,451 | | |
$ | - | | |
$ | 935,334 | | |
$ | - | | |
$ | 1,274,785 | |
Intangibles assets, net | |
| 90,400 | | |
| 133,363 | | |
| 1,458 | | |
| - | | |
| 225,221 | |
Assets from continuing operations | |
| 6,718,226 | | |
| 203,534 | | |
| (287,455 | ) | |
| - | | |
| 6,634,305 | |
15.
Subsequent Events
The
Company has evaluated subsequent events through the filing of this Quarterly Report on Form 10-Q and determined that there have been
no events that have occurred that would require adjustments to our disclosures in the consolidated financial statements other than those disclosed in Note 4 Business Combinations and Note 12 Stock-Based Compensation.
ITEM
2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Basis
of Presentation
This
MD&A should be read in conjunction with the accompanying consolidated financial statements and the notes thereto, and the audited
consolidated financial statements and notes thereto included in our 2022 Form 10-K.
Forward-looking
statements in this MD&A are not guarantees of future performance and may involve risks and uncertainties that could cause actual
results to differ materially from those projected. Refer to the “Note Regarding Forward-Looking Statements” section of this
Quarterly Report on Form 10-Q and Item 1A. Risk Factors of our 2022 Form 10-K for a discussion of these risks and uncertainties.
Overview
We
are an operator of professional networks with a focus on diversity, employment, education and training. We use the term
“diversity” (or “diverse”) to describe communities, or “affinities,” that are distinct based on
a wide array of criteria, which may change from time to time, including ethnic, national, cultural, racial, religious or gender
classification. We serve a variety of such communities, including Women, Hispanic-Americans, African-Americans, Asian-Americans,
persons with disabilities, Military Professionals, and Lesbian, Gay, Bisexual and Transgender (LGBTQ+), and Students and Graduates
seeking to transition from education to career. The Company’s technology platform is integral to the operation of its business.
We
currently operate in three business segments. PDN Network, our primary business segment, includes online professional job seeking
communities with career resources tailored to the needs of various diverse cultural groups and employers looking to hire members of
such groups. Our second business segment consists of the NAPW Network, a women-only professional networking organization. Our third
business segment consists of RemoteMore, which connects companies with reliable, cost-efficient software developers with less effort
and friction, and empowers developers to find meaningful jobs regardless of their location.
We
believe that the combination of our solutions allows us to approach recruiting and professional networking in a unique way and thus create
enhanced value for our members and customers by:
|
● |
Helping
employers address their workforce diversity needs by connecting them with the right candidates from our diverse job seeking communities
such as African Americans, Hispanics, Asians, Veterans, individuals with disabilities and members of the LGBTQ+ community (with the
ability to roll out to our other affinities); |
|
|
|
|
● |
Providing
a robust online and in-person network for our women members to make professional and personal connections; and |
|
|
|
|
● |
Connecting
companies with reliable, cost-efficient developers to meet their software needs. |
Sources
of Revenue
We
generate revenue from (i) paid membership subscriptions and related services, (ii) recruitment services, (iii) contracted software development,
and (iv) consumer advertising and consumer marketing solutions. The following table sets forth our revenues from each product as a percentage
of total revenue for the periods presented. The period-to-period comparison of financial results is not necessarily indicative of future
results.
| |
Three Months Ended March 31, | |
| |
2023 | | |
2022 | |
Revenues: | |
| | | |
| | |
Membership fees and related services | |
| 6.6 | % | |
| 9.5 | % |
Recruitment services | |
| 56.4 | % | |
| 64.9 | % |
Contracted software development | |
| 35.7 | % | |
| 23.2 | % |
Consumer advertising and marketing solutions | |
| 1.3 | % | |
| 2.3 | % |
Recruitment
Services. We provide recruitment services through PDN Network to medium and large employers seeking to diversify their
employment ranks. Our recruitment services revenue is derived from the Company’s agreements through single and multiple job
postings, recruitment media, career fair events, talent recruitment communities, basic and premier corporate memberships, hiring
campaign marketing and advertising, e-newsletter marketing and research and outreach services. Recruitment revenue includes revenue
recognized from direct sales to customers for recruitment services and events, as well as revenue from the Company’s direct
e-commerce sales. The majority of recruitment services revenue comes from job recruitment advertising. We also offer to businesses subject to
the regulations and requirements of the Equal Employment Opportunity Office of Federal Contract Compliance Program
(“OFCCP”) our OFCCP compliance product, which combines diversity recruitment advertising with job postings and
compliance services.
Membership
Fees and Related Services. We offer paid membership subscriptions through our NAPW Network, a women-only professional networking
organization, operated by our wholly-owned subsidiary. Members gain access to networking opportunities through a members-only website
at www.iawomen.com and “virtual” events which occur in a webcast setting, as well as through in-person networking local chapters
nationwide, additional career and networking events such as the National Networking Summit Series, Power Networking Events and the PDN
Network events. NAPW members also receive ancillary (non-networking) benefits such as educational discounts, shopping, and other membership
perks. The basic package is the Initiator level, which provides online benefits only. Upgrades to an Innovator membership include the
Initiator benefits, as well as membership in local chapters. The most comprehensive level, the Influencer,
provides all the aforementioned benefits plus expanded opportunities for marketing
and promotion, including the creation and distribution of a press release, which is sent over major
newswires. Additionally, all memberships offer educational programs with discounts or at no cost, based on the membership level. NAPW
Membership is renewable and fees are payable on an annual or monthly basis, with the first fee payable at the commencement of the membership.
We offer to new purchasers of our NAPW memberships the opportunity to purchase a commemorative wall plaque at the time of purchase.
Contracted
Software Development. RemoteMore generates revenue by providing contracted programmers to assist customers with their software solutions
through customized software development.
Consumer
Advertising and Consumer Marketing Solutions. We work with partner organizations to provide them with integrated job boards on their
websites which offer their members or customers the ability to post recruitment advertising and job openings. We generate revenue from
fees charged for those postings.
Cost
of Revenue
Cost
of revenue primarily consists of costs of producing job fair and other events, revenue sharing with partner organizations, costs of web
hosting and operating our websites for the PDN Network. Costs of hosting member conferences and local chapter meetings are also included
in the cost of revenue for NAPW Network. Costs of paying outside developers are included in the cost of revenue for RemoteMore.
| |
Three Months Ended March 31, | |
| |
2023 | | |
2022 | |
Cost of revenues: | |
| | | |
| | |
PDN Network | |
| 34.4 | % | |
| 57.6 | % |
NAPW Network | |
| 5.0 | % | |
| 13.6 | % |
RemoteMore | |
| 60.6 | % | |
| 28.8 | % |
Results
of Operations
Revenues
Total
Revenues
The
following tables set forth our revenue for the periods presented. The period-to-period comparison of financial results is not necessarily
indicative of future results.
| |
Three
Months Ended March 31 | | |
Change | | |
Change | |
| |
2023 | | |
2022 | | |
(Dollars) | | |
(Percent) | |
| |
(in thousands) | | |
| | |
| |
Revenues: | |
| | |
| | |
| | |
| |
Membership fees and related services | |
$ | 129 | | |
$ | 196 | | |
$ | (67 | ) | |
| (34.2 | )% |
Recruitment services | |
| 1,103 | | |
| 1,333 | | |
| (230 | ) | |
| (17.3 | )% |
Contracted software development | |
| 698 | | |
| 477 | | |
| 221 | | |
| 46.3 | % |
Consumer advertising and marketing solutions | |
| 25 | | |
| 47 | | |
| (22 | ) | |
| (46.8 | )% |
Total revenues | |
$ | 1,955 | | |
$ | 2,053 | | |
$ | (98 | ) | |
| (4.8 | )% |
Total
revenues for the three months ended March 31, 2023 decreased approximately $98,000, or 4.8 percent, to approximately $1,955,000 from
approximately $2,053,000 during the same period in the prior year. The decrease was predominately attributable to recruitment services revenues of approximately $230,000 and an approximate $67,000 decrease in membership fees and
related services revenues, as compared to the same period in the prior year. Partially
offsetting the decrease were increases of approximately $221,000 of contracted software development related to RemoteMore, as compared to the
same period in the prior year, and approximately $83,000 of event revenue from the recently acquired Expo Experts for which there was
no comparable revenue in the same period of the prior year.
Revenues
by Segment
The
following table sets forth each operating segment’s revenues for the periods presented. The period-to-period comparison is not
necessarily indicative of future results.
| |
Three Months Ended March 31, | | |
Change | | |
Change | |
| |
2023 | | |
2022 | | |
(Dollars) | | |
(Percent) | |
| |
(in thousands) | | |
| | |
| |
PDN Network | |
$ | 1,128 | | |
$ | 1,380 | | |
$ | (252 | ) | |
| (18.3 | )% |
NAPW Network | |
| 129 | | |
| 196 | | |
| (67 | ) | |
| (34.2 | )% |
RemoteMore | |
| 698 | | |
| 477 | | |
| 221 | | |
| 46.3 | % |
Total revenues | |
$ | 1,955 | | |
$ | 2,053 | | |
$ | (98 | ) | |
| (4.8 | )% |
During
the three months ended March 31, 2023, our PDN Network generated approximately $1,128,000 in revenues compared to approximately $1,380,000
in revenues during the three months ended March 31, 2022, a decrease of approximately $252,000 or 18.3 percent. The decrease in revenues
was primarily driven by the continued softening in client hiring due to the macroeconomic environment change in the latter half of 2022,
which continued in the first quarter of 2023. In addition, we recorded $74,000 of job placement commissions in the three months ended
March 31, 2022, for which there were no comparable transactions in the same period of the current year. Offsetting the decrease was
an increase in event revenues of $83,000 related to Expo Experts operations for which there was no comparable activity in the same period
of the prior year.
During
the three months ended March 31, 2023, NAPW Network revenues were approximately $129,000, compared to revenues of approximately $196,000
during the same period in the prior year, a decrease of approximately $67,000 or 34.2 percent. We believe that the membership services
that we provide to our customers continue to represent a discretionary spending item and the services that we provide were postponed
or halted by the consumer as a result of the financial and economic impact of COVID-19 and the current economy.
During
the three months ended March 31, 2023, RemoteMore revenue was approximately $698,000, compared to revenues of approximately $477,000
during the same period in the prior year, an increase of approximately $221,000, or 46.3 percent.
Costs
and Expenses
The
following tables set forth our costs and expenses for the periods presented. The period-to-period comparison of financial results is
not necessarily indicative of future results.
| |
Three Months Ended March 31, | | |
Change | | |
Change | |
| |
2023 | | |
2022 | | |
(Dollars) | | |
(Percent) | |
| |
(in thousands) | | |
| | |
| |
Cost and expenses: | |
| | | |
| | | |
| | | |
| | |
Cost of revenues | |
$ | 1,074 | | |
$ | 862 | | |
$ | 212 | | |
| 24.6 | % |
Sales and marketing | |
| 822 | | |
| 719 | | |
| 103 | | |
| 14.3 | % |
General and administrative | |
| 1,053 | | |
| 1,107 | | |
| (54 | ) | |
| (4.9 | )% |
Depreciation and amortization | |
| 133 | | |
| 281 | | |
| (148 | ) | |
| (46.8 | )% |
Total pre-tax cost and expenses: | |
$ | 3,082 | | |
$ | 2,969 | | |
$ | 113 | | |
| 3.8 | % |
Cost
of revenues: Cost of revenues during the three months ended March 31, 2023 was approximately $1,074,000, an increase of approximately
$212,000, or 24.6 percent, from approximately $862,000 during the same period of the prior year. The increase was predominately attributed
to an increase of approximately $184,000 of contracted software development costs related to RemoteMore, as compared to the same period
of the prior year.
Sales
and marketing expense: Sales and marketing expense during the three months ended March 31, 2023 was approximately $822,000, an increase of approximately
$103,000, or 14.3 percent, from $719,000 during the same period in the prior year.
General
and administrative expense: General and administrative expenses decreased by approximately $54,000, or 4.9 percent, to approximately
$1,053,000 during the three months ended March 31, 2023, as compared to the same period in the prior year. The decrease was predominately
due to decreases in accounting expenses of approximately $113,000, $91,000 in share based compensation expenses, and legal expense of $19,000, as
compared to the same period in the prior year. Offsetting the decrease were increases in salary-related costs of approximately $84,000,
other purchased services of approximately $53,000, and bad debt expenses of $40,000.
Depreciation
and amortization expense: Depreciation and amortization expense during the three months ended March 31, 2023 was approximately
$133,000, a decrease of approximately $148,000, compared to approximately $281,000 during the same period in the prior year. The
decrease was primarily attributable to approximately $255,000 of amortization expense related to RemoteMore’s intangible
assets in the first quarter of 2022, for which there were no comparable charges in the same period of the current year, and assets
and intangible assets reaching the end of their useful lives, partially offset by amortization expense of approximately $100,000
related to Expo Experts’ intangible assets for which there were no comparable charges in the same period of the prior
year.
Costs
and Expenses by Segment
The
following table sets forth each operating segment’s costs and expenses for the periods presented. The period-to-period comparison
is not necessarily indicative of future results.
| |
Three Months Ended March 31, | | |
Change | | |
Change | |
| |
2023 | | |
2022 | | |
(Dollars) | | |
(Percent) | |
| |
(in thousands) | | |
| | |
| |
PDN Network | |
$ | 1,481 | | |
| 1,107 | | |
| 374 | | |
| 33.8 | % |
NAPW Network | |
| 376 | | |
| 404 | | |
| (28 | ) | |
| (6.9 | )% |
RemoteMore | |
| 803 | | |
| 856 | | |
| (53 | ) | |
| (6.1 | )% |
Corporate Overhead | |
| 422 | | |
| 602 | | |
| (180 | ) | |
| (29.9 | )% |
Total costs and expenses: | |
$ | 3,082 | | |
$ | 2,969 | | |
$ | 113 | | |
| 3.8 | % |
For
the three months ended March 31, 2023, costs and expenses related to our PDN Network segment increased by approximately $374,000, or
33.8 percent, as compared to the same period in the prior year. The increase is primarily as a result of increases of approximately
$260,000 related to Expo Experts for which there were no comparable expenses in the same period of the prior year. Also, primarily
contributing to the period increase as compared to the same period of the prior were approximately $80,000 of salary related costs,
and $38,000 related to bad debt expense.
For
the three months ended March 31, 2023, costs and expenses related to the NAPW Network decreased by approximately $28,000, or 6.9 percent.
The decrease is primarily as result of approximately $17,000 of legal expenses and approximately $25,000 related to costs of revenues,
sales and marketing, as compared to the same period in the prior year. Partially offsetting the decrease was an increase in general and
administrative and other costs of approximately $14,000.
For
the three months ended March 31, 2023, cost and expenses related to RemoteMore was approximately $803,000, a decrease of
approximately $53,000, as compared to the same period in the prior year, predominately consisting of decreases in amortization
expenses of approximately $255,000 offset by increases in contractor costs of approximately $184,000, and other operating costs of
approximately $18,000, as compared to the same period of the prior year.
For
the three months ended March 31, 2023, costs and expenses related to Corporate Overhead decreased by approximately $180,000, or 29.9
percent, as compared to the same period in the prior year. The reduction is primarily as a result of decreases in accounting costs of
approximately $113,000 and stock-based compensation costs of approximately $91,000, and other costs of approximately $11,000. Partially
offsetting the reductions was an increase in payroll related costs of approximately $35,000, as compared to the same period in the prior
year.
Income
Tax Benefit
| |
Three Months Ended March 31, | | |
Change | | |
Change | |
| |
2023 | | |
2022 | | |
(Dollars) | | |
(Percent) | |
| |
(in thousands) | | |
| | |
| |
Income tax expense (benefit) | |
$ | (11 | ) | |
$ | (26 | ) | |
$ | 15 | | |
| 57.7 | % |
During
the three months ended March 31, 2023, and 2022, we recorded income tax benefits of approximately $11,000 and $26,000. The decrease
in income tax benefit during the current period was primarily due to changes in discrete tax items and in the Company’s net
operating losses.
Net
loss from Continuing Operations
The
following table sets forth each operating segment’s net income or loss for the periods presented. The period-to-period comparison
is not necessarily indicative of future results.
| |
Three Months Ended March 31, | | |
Change | | |
Change | |
| |
2023 | | |
2022 | | |
(Dollars) | | |
(Percent) | |
| |
(in thousands) | | |
| | |
| |
PDN Network | |
$ | (349 | ) | |
| 266 | | |
| (615 | ) | |
| (231.2 | )% |
NAPW Network | |
| (243 | ) | |
| (195 | ) | |
| (49 | ) | |
| 25.2 | % |
RemoteMore | |
| (102 | ) | |
| (381 | ) | |
| 279 | | |
| 73.3 | % |
Corporate Overhead | |
| (415 | ) | |
| (580 | ) | |
| 165 | | |
| (28.4 | )% |
Consolidated net loss from continuing operations | |
$ | (1,109 | ) | |
$ | (890 | ) | |
$ | (220 | ) | |
| 24.7 | % |
Consolidated
Net Loss from Continuing Operations. As the result of the factors discussed above, during the three months ended March 31, 2023,
we incurred a net loss of approximately $1,109,000 from continuing operations, an increase in the net loss of approximately $220,000
or 24.7 percent, compared to a net loss of approximately $890,000 during the three months ended March 31, 2022.
Discontinued
Operations
In
March 2020, our Board decided to suspend all China operations generated by the former CEO, Michael Wang. The results of operations for
China operations are presented in the statements of operation and comprehensive loss as loss from discontinued operations.
Operating
Results of Discontinued Operations
The
following table represents the components of operating results from discontinued operations, which are included in the statements of
operations and comprehensive loss for the three months ended March 31, 2023 and 2022:
| |
Three Months Ended March 31, | |
| |
2023 | | |
2022 | |
| |
(in thousands) | |
Revenues | |
$ | - | | |
$ | - | |
| |
| | | |
| | |
General, administrative and other expenses | |
$ | 12 | | |
$ | 18 | |
Non-operating expense | |
| - | | |
| 0 | |
Loss from discontinued operations before income tax | |
| (12 | ) | |
| (18 | ) |
Income tax expense (benefit) | |
| - | | |
| - | |
Net loss from discontinued operations | |
$ | (12 | ) | |
$ | (18 | ) |
Liquidity
and Capital Resources
The
following table summarizes our liquidity and capital resources as of March 31, 2023 and December 31, 2022:
| |
March 31, 2023 | | |
December 31, 2022 | |
| |
(in thousands) | |
Cash and cash equivalents | |
$ | 964 | | |
$ | 1,237 | |
Working deficiency from continuing operations | |
$ | (1,068 | ) | |
$ | (187 | ) |
Our
principal sources of liquidity are our cash and cash equivalents, including net proceeds from the issuances of common stock, if any.
As of March 31, 2023, we had cash and cash equivalents of $964,000 compared to cash and cash equivalents of $1,237,000 at December 31,
2022. We had an accumulated deficit of $99,451,467 at March 31, 2023.
We
continue to focus on our overall profitability by reducing operating and overhead expenses. We have continued to generate negative
cash flows from operations, and we expect to incur net losses for the foreseeable future, especially considering the recessionary
and inflationary environments has had and may continue on our liquidity and financial position. These conditions raise substantial
doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent on our ability to
further implement our business plan, raise capital, and generate revenues. The consolidated financial statements do not include any
adjustments that might be necessary if we are unable to continue as a going concern.
We
are closely monitoring operating costs and capital requirements. Our Management continues to contain and reduce costs, including terminating
non-performing employees and eliminating certain positions, replacing and negotiating with certain vendors, and implementing technology
to reduce manual time spent on routine operations. If we are still not successful in sufficiently reducing our costs, we may then need
to dispose of our other assets or discontinue business lines.
While
we believe that our cash and cash equivalents at March 31, 2023 and cash flow from operations may be sufficient to meet our working capital
requirements for the fiscal year ending December 31, 2023, beyond that time frame our available funds and cash flow from operations may
not be sufficient to meet our working capital requirements without the need to increase revenues or raise capital by the issuance of
common stock. There can be no assurances that our business plans and actions will be successful, that we will generate anticipated revenues,
or that unforeseen circumstances will not require additional funding sources in the future or require an acceleration
of plans to conserve liquidity. Future efforts to raise additional funds may not be successful or they may not be available on acceptable
terms, if at all.
Our
PDN Network sells recruitment services to employers, generally on a 30-to-60-day period or a one-year contract basis. This revenue is
also deferred and recognized over the period of the contract. Our payment terms for PDN Network customers range from 30 to 60 days. We
consider the difference between the payment terms and payment receipts a result of transit time for invoice and payment processing and
to date have not experienced any liquidity issues as a result of the payments extending past the specified terms. Our NAPW Network collects
membership fees generally at the commencement of the membership term or at renewal periods thereafter. The memberships we sell are for
one year and we defer recognition of the revenue from membership sales and renewals and recognize it ratably over the twelve-month period.
We also offer monthly membership for IAW USA for which we collect a fee on a monthly basis. RemoteMore generates revenue by providing
contracted programmers to assist customers with their software solutions through customized software development. Customers are charged
for the period the work is performed and payment terms are typically net 10 days.
| |
Three Months Ended March 31, | |
| |
2023 | | |
2022 | |
Cash provided by (used in) continued operations | |
(in thousands) | |
Operating activities | |
$ | (394 | ) | |
$ | (287 | ) |
Investing activities | |
| (548 | ) | |
| (2 | ) |
Financing activities | |
| 700 | | |
| (140 | ) |
Effect of exchange rate fluctuations on cash and cash equivalents | |
| 0 | | |
| 1 | |
Cash provided by (used in) discontinued operations | |
| (30 | ) | |
| (1 | ) |
Net increase (decrease) in cash and cash equivalents | |
$ | (272 | ) | |
$ | (429 | ) |
Cash
and Cash Equivalents
The
Company considers cash and cash equivalents to include all short-term, highly liquid investments that are readily convertible to known
amounts of cash and have original maturities of three months or less and may consist of cash on deposit with banks and investments in
money market funds, corporate and municipal debt and U.S. government and U.S. government agency securities. As of March 31, 2023 and
December 31, 2022, cash and cash equivalents consisted of cash on deposit with banks and investments in money market funds.
Net
Cash Used in Operating Activities
Net
cash used in operating activities from continuing operations during the three months ended March 31, 2023, was approximately
$394,000. We had a net loss from continuing operations of approximately $1,109,000 during the three months ended March 31, 2023,
which included stock-based compensation expense of approximately $33,000, depreciation and amortization expense of approximately
$133,000, allowance for credit losses of approximately 9,000, and noncash lease expense of $23,000, which was partially offset by
deferred tax benefit of approximately $11,000. Changes in operating assets and liabilities provided approximately $529,000 of cash
during the three months ended March 31, 2023, consisting primarily of decreases in accounts receivable, prepaid expenses, accounts
payable and lease liability, partially offset by increases in and accrued expenses and deferred revenues.
Net
cash used in operating activities from continuing operations during the three months ended March 31, 2022, was approximately
$287,000. We had a net loss of approximately $890,000 during the three months ended March 31, 2022, which included a stock-based
compensation expense of approximately $124,000, depreciation of amortization expense of $281,000 and noncash lease expense of
23,000, which was partially offset by allowance for credit losses of approximately $127,000, and deferred tax benefit of
approximately $26,000. Changes in operating assets and liabilities used approximately $120,000 of cash during the three months ended
March 31, 2022, consisting primarily of increases in accounts receivable, accounts payable, lease liability, deferred revenue and
accrued expenses, partially offset by decreases in deferred revenue.
Net
Cash Used in Investing Activities
Net
cash used in investing activities from continuing operations during the three months ended March 31, 2023, was approximately $548,000,
which consisted of $400,000 related to the acquisition of Expo Experts, $116,667 related to additional investment in RemoteMore, and
$32,000 related to investments in developed technology and computer equipment purchases.
Net
cash used in investing activities from continuing operations during the three months ended March 31, 2022, was approximately $2,000,
related to computer equipment purchases.
Net
Cash Provided by Financing Activities
Net
cash provided in financing activities from continuing operations during the three months ended March 31, 2023 was approximately $700,000
representing the proceeds from the sale of restricted stock.
Net
cash used in financing activities from continuing operations during the three months ended March 31, 2022 was $140,000, which consisted of the reacquisition of previously issued common stock.
Non-GAAP
Financial Measure
Adjusted
EBITDA
We
believe Adjusted EBITDA provides a meaningful representation of our operating performance that provides useful information to investors
regarding our financial condition and results of operations. Adjusted EBITDA is commonly used by financial analysts and others to measure
operating performance. Furthermore, management believes that this non-GAAP financial measure may provide investors with additional meaningful
comparisons between current results and results of prior periods as they are expected to be reflective of our core ongoing business.
However, while we consider Adjusted EBITDA to be an important measure of operating performance, Adjusted EBITDA and other non-GAAP financial
measures have limitations, and investors should not consider them in isolation or as a substitute for analysis of our results as reported
under GAAP. Further, Adjusted EBITDA, as we define it, may not be comparable to EBITDA, or similarly titled measures, as defined by other
companies.
The
following non-GAAP financial information in the tables that follow are reconciled to comparable information presented using GAAP, derived
by adjusting amounts determined in accordance with GAAP for certain items presented in the accompanying selected operating statement
data.
The
following table provides a reconciliation of net loss from continuing operations to Adjusted EBITDA for the three months ended March
31, 2023 and 2022, the most directly comparable GAAP measure reported in our consolidated financial statements:
| |
Three Months Ended March 31, | |
| |
2023 | | |
2022 | |
| |
(in thousands) | |
Loss from Continuing Operations | |
$ | (1,109 | ) | |
$ | (890 | ) |
Stock-based compensation | |
| 33 | | |
| 124 | |
Litigation settlement reserve | |
| - | | |
| 17 | |
Loss attributable to noncontrolling interest | |
| 52 | | |
| 205 | |
Depreciation and amortization | |
| 133 | | |
| 281 | |
Other (expense) income, net | |
| (7 | ) | |
| (3 | ) |
Income tax expense (benefit) | |
| (11 | ) | |
| (26 | ) |
Adjusted EBITDA | |
$ | (909 | ) | |
$ | (292 | ) |
Off-Balance
Sheet Arrangements
Since
inception, we have not engaged in any off-balance sheet activities within the meaning of Item 303 of
Regulation S-K
Critical
Accounting Policies and Estimates
Our
management’s discussion and analysis of financial condition and results of operations is based on our consolidated financial statements,
which have been prepared in accordance with accounting principles generally accepted in the United States, or U.S. GAAP. The preparation
of these consolidated financial statements requires us to exercise considerable judgment with respect to establishing sound accounting
policies and in making estimates and assumptions that affect the reported amounts of our assets and liabilities, our recognition of revenues
and expenses, and disclosure of commitments and contingencies at the date of the consolidated financial statements.
We
base our estimates on our historical experience, knowledge of our business and industry, current and expected economic conditions, the
attributes of our products, the regulatory environment, and in certain cases, the results of outside appraisals. We periodically re-evaluate
our estimates and assumptions with respect to these judgments and modify our approach when circumstances indicate that modifications
are necessary. These estimates and assumptions form the basis for making judgments about the carrying values of assets and liabilities
that are not readily apparent from other sources.
While
we believe that the factors we evaluate provide us with a meaningful basis for establishing and applying sound accounting policies, we
cannot guarantee that the results will always be accurate. Since the determination of these estimates requires the exercise of judgment,
actual results could differ from such estimates.
While
our significant accounting policies are more fully described in Note 3 to our consolidated financial statements included in Part I, Item
I of this Quarterly Report, we believe that the following accounting policies are the most critical to aid you in fully understanding
and evaluating our reported financial results and affect the more significant judgments and estimates that we use in the preparation
of our consolidated financial statements.
Accounts
Receivable
Our
policy is to reserve for uncollectible accounts based on our best estimate of the amount of probable credit losses in our existing accounts
receivable. We periodically review our accounts receivable to determine whether an allowance for doubtful accounts is necessary based
on an analysis of past due accounts and other factors that may indicate that the realization of an account may be in doubt. Account balances
deemed to be uncollectible are charged to the allowance after all means of collection have been exhausted and the potential for recovery
is considered remote.
Goodwill
and Intangible Assets
The
Company accounts for goodwill and intangible assets in accordance with ASC 350, Intangibles – Goodwill and Other (“ASC 350”).
ASC 350 requires that goodwill and other intangibles with indefinite lives should be tested for impairment annually or on an interim
basis if events or circumstances indicate that the fair value of an asset has decreased below its carrying value.
Goodwill
is tested for impairment at the reporting unit level on an annual basis (December 31 for the Company) and between annual tests if an
event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value.
The Company considers its market capitalization and the carrying value of its assets and liabilities, including goodwill, when performing
its goodwill impairment test.
When
conducting its annual goodwill impairment assessment, the Company initially performs a qualitative evaluation of whether it is more likely
than not that goodwill is impaired. If it is determined by a qualitative evaluation that it is more likely than not that goodwill is
impaired, the Company then compares the fair value of the Company’s reporting unit to its carrying or book value. If the fair value
of the reporting unit exceeds its carrying value, goodwill is not impaired and the Company is not required to perform further testing.
If the carrying value of a reporting unit exceeds its fair value, the Company will measure any goodwill impairment losses as the amount
by which the carrying amount of a reporting unit exceeds its fair value, not to exceed the total amount of goodwill allocated to that
reporting unit.
Capitalized
Technology Costs
We
account for capitalized technology costs in accordance with ASC 350-40, Internal-Use Software (“ASC 350-40”). In accordance
with ASC 350-40, we capitalize certain external and internal computer software costs incurred during the application development stage.
The application development stage generally includes software design and configuration, coding, testing and installation activities.
Training and maintenance costs are expensed as incurred, while upgrades and enhancements are capitalized if it is probable that such
expenditures will result in additional functionality. Capitalized software costs are amortized over the estimated useful lives of the
software assets on a straight-line basis, generally not exceeding three years.
Business
Combinations
ASC
805, Business Combinations (“ASC 805”), applies the acquisition method of accounting for business combinations to all acquisitions
where the acquirer gains a controlling interest, regardless of whether consideration was exchanged. ASC 805 establishes principles and
requirements for how the acquirer a) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities
assumed, and any non-controlling interest in the acquiree; b) recognizes and measures the goodwill acquired in the business combination
or a gain from a bargain purchase; and c) determines what information to disclose to enable users of the financial statements to evaluate
the nature and financial effects of the business combination. Accounting for acquisitions requires the Company to recognize, separately
from goodwill, the assets acquired and the liabilities assumed at their acquisition-date fair values. Goodwill as of the acquisition
date is measured as the excess of consideration transferred and the net of the acquisition-date fair values of the assets acquired and
the liabilities assumed. While the Company uses its best estimates and assumptions to accurately value assets acquired and liabilities
assumed at the acquisition date, the estimates are inherently uncertain and subject to refinement. As a result, during the measurement
period, which may be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities
assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values
of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the consolidated statements
of comprehensive loss.
Revenue
Recognition
Our
principal sources of revenue are recruitment revenue, consumer marketing and consumer advertising revenue, event revenues from
career fairs, membership subscription fees, and contracted software development. Recruitment revenue includes revenue recognized
from direct sales to customers for recruitment services and events, as well as revenue from our direct ecommerce sales. Revenues
from recruitment services are recognized when the services are performed, evidence of an arrangement exists, the fee is fixed or
determinable and collectability is probable. Our recruitment revenue is derived from agreements through single and multiple job
postings, recruitment media, talent recruitment communities, basic and premier corporate memberships, hiring campaign marketing and
advertising, e-newsletter marketing and research and outreach services.
Consumer
marketing and consumer advertising revenue is recognized either based upon a fixed fee for revenue sharing agreements in which payment
is required at the time of posting or billed based upon the number of impressions (the number of times an advertisement is displayed)
recorded on the websites as specified in the customer agreement.
Revenue
generated from NAPW Network membership subscriptions is recognized ratably over the 12-month membership period, although members pay
their annual fees at the commencement of the membership period. We also offer a monthly membership for which we collect fees on a monthly
basis and we recognize revenue in the same month as the fees are collected. Revenue from related membership services is derived from
fees for development and set-up of a member’s personal on-line profile and/or press release announcements. Fees related to these
services are recognized as revenue at the time the on-line profile is complete and press release is distributed.
Revenues
generated from RemoteMore consist of contracts entered into to provide customers with software solutions and are recognized in the month
work is performed.
Revenue
Concentration
We
are in an alliance with another company to build, host, and manage our job boards and website. This alliance member also sells two of
our recruitment services products and bills customers, collects fees, and provides customer services. For the three months ended March
31, 2023 and 2022, we recorded approximately 10% and 11% of our recruitment services revenue from this alliance sales relationship.
Recent
Accounting Pronouncements
See
Note 3 to our financial statements.
ITEM
3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not
applicable.
ITEM
4 – CONTROLS AND PROCEDURES
Evaluation
of disclosure controls and procedures
As
of March 31, 2023, our management conducted an evaluation of the effectiveness of the design and operation of our disclosure controls
and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (“Exchange
Act”), under the supervision of and with the participation of our management, including the Chief Executive Officer and Chief Financial
Officer. Based on that evaluation, our management, including the Chief Executive Officer and Chief Financial Officer, concluded that
our disclosure controls and procedures were effective on March 31, 2023.
There
were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d)
of Exchange Act Rules 13a-15 or 15d-15 that occurred during our first quarter of fiscal 2023, that have materially affected, or are reasonably
likely to materially affect, our internal control over financial reporting.
PART
II
ITEM
1 – LEGAL PROCEEDINGS
We
and our wholly-owned subsidiary, NAPW, Inc., are parties to a proceeding captioned Deborah Bayne, et al. vs. NAPW, Inc. and Professional
Diversity Network, Inc., No. 18-cv-3591 (E.D.N.Y.), filed on June 20, 2018 and alleging violations of the Fair Labor Standards Act and
certain provisions of the New York Labor Law. Plaintiffs are seeking monetary damages and equitable relief. We dispute that we or our
subsidiary violated the applicable laws or that either entity has any liability and intend to vigorously defend against these claims.
The matter is in the final stages of discovery, and we have completed depositions of relevant witnesses. During the first quarter of
2020, we recorded a $450,000 litigation settlement reserve in the event of an unfavorable outcome in this proceeding. In November 2020,
both parties entered into mediation proceedings, but a settlement was not reached.
General
Legal Matters
From
time to time, the Company is involved in legal matters arising in the ordinary course of business. While the Company believes that such
matters are currently not material, there can be no assurance that matters arising in the ordinary course of business for which the Company
is, or could be, involved in litigation, will not have a material adverse effect on its business, financial condition or results of operations.
ITEM
1A – RISK FACTORS
In
addition to other information set forth in this report, you should carefully consider the risk factors described in Part I, Item 1A,
“Risk Factors” in our 2022 Annual Report on Form 10-K, which could materially affect our business, financial condition or
future results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially
and adversely affect our business, financial condition and/or operating results.
ITEM
2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Not applicable.
ITEM
3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM
4. MINE SAFETY DISCLOSURE
Not
applicable.
ITEM
5. OTHER INFORMATION
None.
ITEM
6. EXHIBITS
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
|
PROFESSIONAL
DIVERSITY NETWORK, INC. |
|
|
|
Date:
May 15, 2023 |
By: |
/s/
Larry Aichler |
|
Name:
|
Larry
Aichler |
|
Title: |
Chief
Financial Officer |
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