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
SubsidiariesCONSOLIDATED 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
SubsidiariesCONSOLIDATED 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 StatementsThis 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)-801-2803Email: ipdn@dgipl.com
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