8-K
Professional Diversity Network, Inc. (IPDN)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 15, 2021
PROFESSIONAL
DIVERSITY NETWORK, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 001-35824 | 80-0900177 |
|---|---|---|
| (State<br> or other jurisdiction | (Commission | (I.R.S.<br> Employer |
| of<br> incorporation) | File<br> Number) | Identification<br> No.) |
55 E. Monroe Street, Suite 2120, Chicago, Illinois 60603
(Address of principal executive offices)
Registrant’s telephone number, including area code: (312) 614-0950
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written<br> communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting<br> material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement<br> communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement<br> communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title<br> of each class | Trading<br> Symbol(s) | Name<br> of each exchange on which registered |
|---|---|---|
| Common<br> Stock, $.01 par value | IPDN | The<br> NASDAQ Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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 financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item8.01. Other Events.
On November 15, 2021, the Company issued a press release, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
Item9.01. Financial Statements and Exhibits
(d) Exhibits
| 99.1 | Press Release, dated November 15, 2021. |
|---|---|
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Professional<br> Diversity Network, Inc. | |
|---|---|
| Date:<br> November 15, 2021 | /s/ Larry Aichler |
| Larry<br> Aichler, Chief Financial Officer |
Exhibit99.1
ProfessionalDiversity Network, Inc. Announces Financial Results for the Quarter Ended September 30, 2021
Chicago, IL, November 15, 2021 (GLOBE NEWSWIRE) — Professional Diversity Network, Inc. (NASDAQ:IPDN), (“IPDN” or the “Company”), a global developer and operator of online and in-person networks that provides access to networking, training, educational and employment opportunities for diverse individuals, today announced its financial results for the quarter ended September 30, 2021.
“Our PDN Network continues to show stability with its third consecutive strong quarter of fiscal 2021. We believe that there is still room for additional corporate and political awareness in terms of greater investment in diversity recruitment and inclusion initiatives, and in turn society as a whole, which continue to benefit the Company. We remain committed to strengthening the financial position of the Company through investing in our operating segments to drive organic growth, synergetic acquisitions, as evident by acquisition of RemoteMore USA, and timely equity transactions, as evident by the multiple common stock transactions the Company entered into in the quarter.” said Adam He, CEO of Professional Diversity Network, Inc.
ThirdQuarter Financial Highlights:
| ● | Total<br> consolidated revenues for the 3 months ended September 30, 2021, increased approximately $0.4 million or 29 percent as compared to<br> the same period in the prior year. PDN Network segment revenues increased $0.4 million or 45 percent compared to revenues<br> during the same period in the prior year. The increase in PDN Network segment revenues was attributable to continued new client acquisitions<br> and continued growth in our recruitment business as political and corporate diversity and inclusion efforts remain a focus in today’s<br> society. Revenues for the three months ended September 30, 2021 from Other revenues, which include the NAPW segment and to a lesser<br> extent RemoteMore USA, decreased less than approximately $0.1 million as compared to the same period in the prior year. The decrease<br> in revenues was primarily due to a decrease in legacy membership retention rates and the continued<br> effects of COVID-19 as new members are increasing as the economy allows for increased discretionary spending. Revenues for<br> RemoteMore USA during the period were immaterial and there were no revenues in the comparable period. |
|---|---|
| ● | Basic<br> and diluted net loss per share improved by $0.06, from a net loss per share of $0.07 during the three months ended September 30,<br> 2020, as compared to a net loss per share of $0.01 during the three months ended September 30, 2021. |
| ● | As<br> of September 30, 2021, cash balances were $4.1 million. The Company raised gross proceeds of approximately $3.5 million from the<br> issuance of common stock during the three months ended September 30, 2021. The Company raised gross proceeds of approximately $1.8<br> million from the issuance of common stock during the three months ended September 30, 2020. |
| ● | The<br> largest shareholder of the Company, CFL, entered into two stock transfer agreements with the Company and an existing shareholder<br> to purchase 1,700,504 shares of its common stock. On September 22, 2021 and October 30, 2021. CFL beneficially holds shares of the<br> Company’s outstanding Common Stock equal to approximately 32% upon closing of both transactions. |
FinancialResults for the Three Months Ended September 30, 2021
Revenues
Total revenues for the three months ended September 30, 2021 increased approximately $378,000, or 29 percent to approximately $1,683,000 from approximately $1,305,000 during the same period in the prior year. The increase was predominately attributable to an approximate $438,000 increase in recruitment services revenues in the current period, partially offset by an approximate $79,000 decrease in legacy membership fees and related services revenues, as compared to the same period in the prior year.
During the three months ended September 30, 2021, our PDN Network generated approximately $1,368,000 in revenues compared to approximately $930,000 in revenues during the three months ended September 30, 2020, an increase of approximately $438,000 or 47 percent. The increase in PDN Network segment revenues was attributable to continued new client acquisitions and continued growth in our recruitment business as political and corporate diversity and inclusion efforts remain a focus in today’s society.
During the three months ended September 30, 2021, Other revenues were approximately $258,000, compared to revenues of approximately $319,000 during the same period in the prior year, a decrease of approximately $61,000 or 19 percent. The decrease in revenues was primarily due to a decrease in legacy membership retention rates and the continued effects of COVID-19 as new members are increasing as the economy allows for increased discretionary spending. Revenues for RemoteMore USA during the period were immaterial and there were no revenues in the comparable period.
Costsand Expenses
Cost of revenues during the three months ended September 30, 2021 was approximately $347,000, an increase of approximately $141,000 or 68 percent from approximately $206,000 during the same period of the prior year, as a result of increased revenues*.*
General and administrative expenses decreased by approximately $689,000, or 44 percent, to approximately $873,000 during the three months ended September 30, 2021, as compared to the same period in the prior year. The decrease, as compared to the same period in the prior year, was primarily a result of reductions in professional services charges of approximately $645,000 payroll related costs of approximately $62,000, and bad debt charges of approximately $34,000, partially offset by expenses related to RemoteMore of approximately $53,000, for which there was no charges in the comparable period.
NetLoss from Continuing Operations
As the result of the factors discussed above, during the three months ended September 30, 2021, we incurred a net loss of approximately $88,000 from continuing operations, an improvement of approximately $824,000 or 90 percent, compared to a net loss of approximately $912,000 during the three months ended September 30, 2020.
FinancialResults for the Nine Months Ended September 30, 2021
Revenues
Total revenues for the nine months ended September 30, 2021 increased approximately $1,389,000, or 43 percent to approximately $4,628,000 from approximately $3,239,000 during the same period in the prior year. The increase was predominately attributable to an approximate $1,626,000 increase in recruitment services revenues in the current period, partially offset by an approximate $295,000 decrease in membership fees and related services revenues, as compared to the same period in the prior year.
During the nine months ended September, 2021, our PDN Network generated approximately $3,845,000 in revenues compared to approximately $2,180,000 in revenues during the nine months ended September 30, 2020, an increase of approximately $1,665,000 or 76.4 percent. The increase in revenues was predominately driven by continued improvements in our e-commerce platform and new sales collaborations, higher new client acquisitions and a significant increase in diversity recruitment initiatives by our clients
During the nine months ended September 30, 2021, Other revenues were approximately $783,000, compared to revenues of approximately $1,059,000 during the same period in the prior year, a decrease of approximately $276,000 or 26.1 percent. The decrease in revenues was primarily due a continued decrease in legacy membership retention rates and the continued effects of COVID- for the NAPW network of approximately $295,000. Revenues for RemoteMore USA during the period were immaterial and there were no revenues in the comparable period. We believe that the membership services that we provide to our customers turned into a discretionary spending decision for our patrons during 2020 and continued throughout the first nine months of 2021. Many of the services that we provide, including all in-person events, were postponed as a result of the COVID-19 pandemic. Revenues for RemoteMore USA during the period were immaterial.
Costsand Expenses
Cost of revenues during the nine months ended September 30, 2021 was approximately $868,000, an increase of approximately $319,000, or 58 percent, from approximately $549,000 during the same period in the prior year, as a direct result of increased revenues of approximately $1,389,000, or 43 percent.
General and administrative expenses decreased by approximately $1,994,000, or 38 percent, to approximately $3,303,000 during the nine months ended September 30, 2021, as compared to the same period in the prior year. The decrease was primarily a result of a reduction in professional services charges of approximately $1,459,000, litigation settlement reserve of $450,000 recorded in the first quarter of 2020, partially offset by an increase in litigation settlement reserve of $75,000 in the second quarter of 2021, bad debt charges of approximately $82,000, stock-based compensation costs of approximately $73,000, bad debt charges of approximately $82,000, and payroll related costs of approximately $79,000, as compared to the same period in the prior year. Offsetting the decrease were expenses related to RemoteMore of approximately $53,000, for which there was no charges in the comparable period.
NetLoss from Continuing Operations
As the result of the factors discussed above, during the nine months ended September 30, 2021, we incurred a net loss of approximately $1,434,000 from continuing operations, an increase of approximately $2,682,000 or 65 percent, compared to a net loss of approximately $4,116,000 during the same period in the prior year.
Summaryof the Quarter’s Financial Information
Amounts in following tables are in thousands except for per share amounts and outstanding shares.
Summaryof Financial Position
| September 30, 2021 | December 31, 2020 | |||
|---|---|---|---|---|
| Current Assets: | ||||
| Cash and cash equivalents | $ | 4,093 | $ | 2,118 |
| Other current assets | 1,667 | 1,403 | ||
| Total current assets | $ | 5,760 | $ | 3,521 |
| Long-term assets | 4,040 | 5,152 | ||
| Total Assets | $ | 9,800 | $ | 8,673 |
| Total current liabilities | $ | 4,740 | $ | 4,677 |
| Total long-term liabilities | 709 | 650 | ||
| Total liabilities | $ | 5,449 | $ | 5,327 |
| Total Professional Diversity Network, Inc. stockholders’ equity | 3,859 | 3,346 | ||
| Total stockholders’ equity – noncontrolling interests | 492 | - | ||
| Total liabilities and stockholders’ equity | $ | 9,800 | $ | 8,673 |
Summaryof Financial Operations
| Nine Months Ended<br><br> <br>September 30, | Change | Change | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | (Dollars) | (Percent) | |||||||||
| Revenues: | ||||||||||||
| Membership fees and related services | $ | 761 | $ | 1,056 | $ | (295 | ) | (27.9 | )% | |||
| Recruitment services | 3,695 | 2,069 | 1,626 | 78.6 | % | |||||||
| Products sales and other | 23 | 4 | 19 | 475.0 | % | |||||||
| Consumer advertising and marketing solutions | 149 | 110 | 39 | 35.5 | % | |||||||
| Total revenues | $ | 4,628 | $ | 3,239 | $ | 1,389 | 42.9 | % | ||||
| Cost and expenses: | ||||||||||||
| Cost of revenues | $ | 868 | $ | 549 | $ | 319 | 58.1 | % | ||||
| Sales and marketing | 1,826 | 1,404 | 422 | 30.1 | % | |||||||
| General and administrative | 3,303 | 5,297 | (1,994 | ) | (37.6 | )% | ||||||
| Depreciation and amortization | 88 | 138 | (50 | ) | (36.2 | )% | ||||||
| Total pre-tax cost and expenses: | $ | 6,085 | $ | 7,388 | $ | (1,303 | ) | (17.6 | )% | |||
| Loss from continuing operations, net of tax | $ | (1,434 | ) | $ | (4,116 | ) | $ | 2,682 | 65.2 | % | ||
| Basic and diluted loss per share: | ||||||||||||
| Continuing operations | $ | (0.11 | ) | $ | (0.38 | ) | ||||||
| Weighted average shares outstanding: | ||||||||||||
| Basic and diluted | 13,830,777 | 10,756,911 |
| Three Months Ended<br><br> <br>September 30, | Change | Change | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | (Dollars) | (Percent) | |||||||||
| Revenues: | ||||||||||||
| Membership fees and related services | $ | 240 | $ | 319 | $ | (79 | ) | (24.8 | )% | |||
| Recruitment services | 1,368 | 930 | 438 | 47.1 | % | |||||||
| Products sales and other | 20 | - | 20 | 100.0 | % | |||||||
| Consumer advertising and marketing solutions | 55 | 56 | (1 | ) | (1.8 | )% | ||||||
| Total revenues | $ | 1,683 | $ | 1,305 | $ | 378 | 29.0 | % | ||||
| Cost and expenses: | ||||||||||||
| Cost of revenues | $ | 347 | $ | 206 | $ | 141 | 68.4 | % | ||||
| Sales and marketing | 526 | 420 | 106 | 25.2 | % | |||||||
| General and administrative | 873 | 1,562 | (689 | ) | (44.1 | )% | ||||||
| Depreciation and amortization | 29 | 38 | (9 | ) | (23.7 | )% | ||||||
| Total pre-tax cost and expenses: | $ | 1,775 | $ | 2,226 | $ | (451 | ) | (20.3 | )% | |||
| Loss from continuing operations, net of tax | $ | (88 | ) | $ | (912 | ) | $ | 824 | (90.3 | )% | ||
| Basic and diluted loss per share: | ||||||||||||
| Continuing operations | $ | (0.01 | ) | $ | (0.07 | ) | ||||||
| Weighted average shares outstanding: | ||||||||||||
| Basic and diluted | 15,115,167 | 12,488,268 | ||||||||||
| Summary of Cash Flows from Continued Operations | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | ||||||
| Nine Months Ended September 30, | ||||||||||||
| 2021 | 2020 | |||||||||||
| Cash (used in) provided by continued operations | ||||||||||||
| Operating activities | $ | (1,160 | ) | $ | (2,768 | ) | ||||||
| Investing activities | (1,279 | ) | (78 | ) | ||||||||
| Financing activities | 4,445 | 4,928 | ||||||||||
| Net increase in cash and cash equivalents from continued operations | $ | 2,006 | $ | 2,082 |
ProfessionalDiversity Network, Inc. and Subsidiaries
Non-GAAP(Adjusted) Financial Measures
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 table provides a reconciliation of net loss from continuing operations to Adjusted EBITDA for the three and nine months ended September 30, 2021 and 2020, the most directly comparable GAAP measure reported in our consolidated financial statements:
| Three Months Ended September 30, | ||||||
|---|---|---|---|---|---|---|
| 2021 | 2020 | |||||
| (in thousands) | ||||||
| Loss from Continuing Operations | $ | (88 | ) | $ | (912 | ) |
| Stock-based compensation | 127 | 111 | ||||
| Litigation settlement reserve | - | 766 | ||||
| Loss attributable to noncontrolling interest | 19 | - | ||||
| Depreciation and amortization | 30 | 38 | ||||
| Interest and other income | (2 | ) | 5 | |||
| Income tax expense (benefit) | (2 | ) | (14 | ) | ||
| Adjusted EBITDA | $ | 82 | $ | (6 | ) | |
| Nine Months Ended September 30, | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| 2021 | 2020 | |||||
| (in thousands) | ||||||
| Loss from Continuing Operations | $ | (1,434 | ) | $ | (4,116 | ) |
| Stock-based compensation | 436 | 509 | ||||
| Litigation settlement reserve | 75 | 1,475 | ||||
| Loss attributable to noncontrolling interest | 19 | - | ||||
| Depreciation and amortization | 88 | 138 | ||||
| Interest and other income | (5 | ) | (1 | ) | ||
| Income tax benefit | (19 | ) | (32 | ) | ||
| Adjusted EBITDA | $ | (840 | ) | $ | (2,027 | ) |
AboutProfessional Diversity Network
Professional Diversity Network, Inc. (NASDAQ: IPDN) is a global developer and operator of online and in-person networks that provides access to networking, training, educational and employment opportunities for diverse professionals. We operate subsidiaries in the United States including International Association of Women (IAW), which is one of the largest, most recognized networking organizations of professional women in the country, spanning more than 200 industries and professions. Through an online platform and our relationship recruitment affinity groups, we provide our employer clients a means to identify and acquire diverse talent and assist them with their efforts to comply with the Equal Employment Opportunity Office of Federal Contract Compliance Program. Our mission is to utilize the collective strength of our affiliate companies, members, partners and unique proprietary platform to be the standard in business diversity recruiting, networking and professional development for women, minorities, veterans, LGBTQ and disabled persons globally.
Forward-LookingStatements
This press release contains certain forward-looking statements based on our current expectations, forecasts and assumptions that involve risks and uncertainties. This release does not constitute an offer to sell or a solicitation of offers to buy any securities of any entity. Forward-looking statements in this release are based on information available to us as of the date hereof. Our actual results may differ materially from those stated or implied in such forward-looking statements, due to risks and uncertainties associated with our business, which include the risk factors disclosed in our most recently filed Annual Report on Form 10-K and in our subsequent filings with the Securities and Exchange Commission. Forward-looking statements include statements regarding our expectations, beliefs, intentions or strategies regarding the future and can be identified by forward-looking words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “should,” and “would” or similar words. We assume no obligation to update the information included in this press release, whether as a result of new information, future events or otherwise. Our most recently filed Annual Report on Form 10-K, together with this press release and the financial information contained herein, are available on our website, www.prodivnet.com. Please click on “Investor Relations.”
Investor Inquiries:
investors@ipdnusa.com
+1 (312) 614-0950
Source: Professional Diversity Network, Inc.
Released August 16, 2021