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CST: 22/05/2019 01:15:39   

Professional Diversity Network, Inc. Reports Fiscal Year 2018 Financial Results

35 Days ago

CHICAGO, April 16, 2019 (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 year ended December 31, 2018.

Fiscal Year 2018 Financial Highlights:

  • Net loss from continuing operations was $14.6 million for the year ended December 31, 2018, a decrease of 32.5% from $21.6 million for the year ended December 31, 2017.
     
  • Total costs and expenses was $24.6 million for the year ended December 31, 2018, a 37.5% decrease compared to $39.3 million for the year ended December 31, 2017.
     
  • From January 9, 2019 to April 2, 2019, the Company sold an aggregate of 232,515 shares of its common stock at a purchase price ranging from $1.146 to $3.85 per share, representing 120% of the closing price the trading day immediately prior to the date of subscription. As of the date of this annual report, the Company has received an aggregate gross proceeds of $479,931 under this private placement.

Michael Wang, Chairman and CEO of Professional Diversity Network, said, "In the year 2018, we have made great efforts on rebranding our business and conducted rigorous cost control to reduce losses. As a result, our net loss from continuing operations decreased 7 million or 32.5% from the year ended December 31, 2017. ”

Mr. Wang continued, “This year we will continue enhancing our diversity recruitment and women's networking segments and expanding our China business to increase shareholder value and move toward sustainable profitability.”

Fiscal Year 2018 Financial Results

Revenue

For the year ended December 31, 2018, IPDN reported total revenue of $8.5 million, a 47.4% decrease from $16.1 million for the year ended December 31, 2017. The decrease is mainly the result of management’s focus on reduction in sales and operations workforce as a means to cost savings and rebranding the business.

Costs and Expenses

Total costs and expenses was $24.6 million for the year ended December 31, 2018, a 37.5% decrease compared to $39.3 million for the year ended December 31, 2017. This decrease is primarily the result of decrease in impairment charge of $6.6 million or 44.9%, combined with $3.6 million or 31.0% decrease in general and administrative expenses, and $3.3 million or 45.4% decrease in sales and marketing expenses.

Net Loss

Net loss for the year ended December 31, 2018 was $15.1 million or $3.29 per share - compared to a net loss of $22.3 million, or $5.68 per share, for the year ended December 31, 2017.

Net Loss from Continuing Operations

Net loss from continuing operations was $14.6 million for the year ended December 31, 2018, a decrease of 32.5% from $21.6 million for the year ended December 31, 2017. The changes were primarily attributable to a $6.6 million decrease in impairment charge taken against NAPW Network, and reduction of revenue by $7.6 million year over year at NAPW Network and China Operations. Reduction of year over year net loss from continuing operations was also caused by continuing efforts to reduce sales and marketing and general administrative expenses.

Cash and Financial Position

As of December 31, 2018, the Company had cash and cash equivalents of $1.4 million, compared to $2.9 million as of December 31, 2017. The Company had a working capital deficiency of of $3.4 million as of December 31, 2018, compared to a working capital deficiency of $1.1 million as of December 31, 2017.

Net cash used in operating activities in continuing operations was $5.0 million for the year ended December 31, 2018, and net cash used in operating activities in continuing operations was 6.4 million for the year ended December 31, 2017.

Professional Diversity Network, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS

    December 31,  
    2018     2017  
Current Assets:                
Cash and cash equivalents (Amount related to variable interest entity of $683,043, and $1,671,378 in 2018 and 2017, respectively)   $ 1,441,607     $ 2,926,088  
Accounts receivable, net     816,698       905,723  
Incremental direct costs     20,797       145,292  
Prepaid expenses and other current assets     350,906       478,379  
Current assets from discontinued operations     126,270       1,180,099  
Total current assets     2,756,278       5,635,581  
                 
Property and equipment, net       83,608         221,184  
Capitalized technology, net       194,833         153,381  
Goodwill       339,451         5,590,150  
Intangible assets, net       1,020,942         6,264,706  
Merchant reserve       760,849         760,849  
Security deposits       82,139         225,957  
Long-term assets from discontinued operations     -       137,114  
Total assets   $ 5,238,100     $ 18,988,922  
                 
Current Liabilities:                
Accounts payable   $   1,843,688     $   1,120,444  
Accrued expenses       989,626         1,166,214  
Deferred revenue       2,460,436         4,004,015  
Note Payable – related party     500,000       -  
Current liabilities from discontinued operations     346,528       484,524  
Total current liabilities     6,140,278       6,775,197  
                 
Deferred tax liability     194,786       1,803,519  
Deferred rent     13,742       56,082  
Other liabilities     82       52,321  
Total liabilities     6,348,888       8,687,119   
                 
Commitments and contingencies                
                 
Stockholders’ Equity                
Common stock, $0.01 par value, 45,000,000 shares authorized, 4,856,213 shares and 3,963,864 shares issued as of December 31, 2018 and 2017, respectively, and 4,855,165 and 3,962,816 shares outstanding as of December 31, 2018 and 2017, respectively     48,562       39,639  
Additional paid in capital     83,728,903       80,016,218  
Accumulated other comprehensive income     (24,340     28,848  
Accumulated deficit     (84,826,796 )     (69,745,785 )
Treasury stock, at cost; 1,048 shares at December 31, 2018 and 2017     (37,117 )     (37,117 )
Total stockholders’ equity     (1,110,788     10,301,803  
                 
Total liabilities and stockholders’ equity   $ 5,238,100     $ 18,988,922  
                 
                 

Professional Diversity Network, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

    Year Ended December 31,
    2018     2017  
Revenues:          
Membership fees and related services   $ 4,991,950     $ 9,371,843  
Recruitment services     2,571,935       2,578,597  
Product sales and other     19,239       100,289  
Education and training     606,557       3,776,546  
Consumer advertising and marketing solutions     262,946       252,980  
Total revenues     8,452,627       16,080,255  
               
Costs and expenses:              
Cost of revenues     1,612,858       2,693,408  
Sales and marketing     3,969,508       7,269,001  
General and administrative      8,016,716       11,612,024  
Litigation settlement      342,472       155,216  
Impairment charge      8,047,090       14,611,040  
Depreciation and amortization     2,617,774       3,007,664  
Total costs and expenses     24,606,418       39,348,353  
               
Loss from operations     (16,153,791 )     (23,268,098 )
               
Other (expense) income              
Interest expense     (4,637 )     (12,399 )
Interest and other income     299       8,165  
Other income (expense)     22,558       8,421  
Other income, net     18,220       4,187  
               
Loss before income tax expense (benefit)     (16,135,571 )     (23,263,911 )
Income tax expense (benefit)     (1,563,712 )     (1,687,370 )
Loss from continuing operations     (14,571,859 )     (21,576,541 )
Loss from discontinued operations (net of tax benefit of $52,340, and net of tax benefit of $58,144 in 2018 and 2017, respectively), including gain on sale of $63,687 in 2018     (509,153 )     (711,008 )
Net loss   $ (15,081,012 )     (22,287,549 )
               
Other comprehensive loss:              
Foreign currency translation adjustment     (53,188 )     28,848  
Comprehensive loss   $ (15,134,200 )     (22,258,701 )
               
Basic and diluted loss per share:              
Continuing operations   $ (3.18 )   $ (5.50 )
Discontinued operations   $ (0.11 )   $ (0.18 )
Net loss   $ (3.29 )   $ (5.68 )
               
Weighted average outstanding shares used in computing net loss per common share:              
Basic and diluted     4,578,834       3,920,849  
                 
                 

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, the most directly comparable GAAP measure reported in our consolidated financial statements:

    Year Ended  
    December 31,  
    2018     2017  
       
    (in thousands)  
Loss from Continuing Operations   $ (14,572 )   $ (21,577 )
Stock-based compensation expense     800       900  
Impairment charge     8,047       14,611  
Depreciation and amortization     2,618       3,008  
Litigation settlement     342       155  
Interest Expense     5       12  
Interest and other income     -       (8
Income tax expense (benefit)     (1,564     (1,687
Adjusted EBITDA   $ (4,324 )   $   (4,586 )
                 
                 

About Professional 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 and China 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, LGBT and disabled persons globally.

Forward-Looking Statements
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."

Contact:
Dragon Gate Investment Partners LLC

Tel: +1(646)-801-2803
Email: ipdn@dgipl.com

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