CHICAGO, Aug. 14, 2017 (GLOBE NEWSWIRE) -- Professional Diversity Network, Inc., (NASDAQ:IPDN) ("PDN" 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 professionals, today announced financial results for the quarter ended June 30, 2017.

Highlights of Q2 Results
  • Noble Voice lead generation segment revenue grew 13.3% to $1,605,000 compared to second quarter of 2016
  • New China Education and Training segment generated revenue of $505,000
  • Women's networking in China started with first International Association of Women ("IAW") marketing event held near the end of second quarter of 2017

Michael Wang, PDN Chief Executive Officer, stated, "In the second quarter of 2017, we continued to develop our new business segments and revenue streams in China. Absent a one-time, non-cash impairment charge in the quarter and a one-time non-recurring legal expense of $250,000, we saw a net improvement in our sequential quarterly cash burn and losses. I believe this represents an early indication of our progress, having implemented previously stated operational efficiencies, post my taking over as the CEO just prior to Q1."

Mr. Wang continued, "In November of 2016 and January of 2017, Cosmic Forward Limited ("CFL") invested approximately $20 million in our Company by cumulatively purchasing approximately 54.64% of our common stock at a price of $9.60 per share, which is over double the current market price.  CFL made this investment because it believed in our ability to drive the Company's U.S. operations toward profitability, while simultaneously expanding into new business segments in China.  I believe this quarter's results reflect our progress in doing just that."

In China, the Company successfully launched its Education and Training segment, holding seven paid events to-date.  Those events have provided live marketing research, and the results have helped to plan and enhance future events.  The Company also launched in China its Women's Networking segment, holding its first marketing event near the end of the second quarter.  The Company is currently building the framework for its third new China business, Education Services. The model involves working on partnerships with educational institutions, the first of which we announced during the second quarter. 

Mr. Wang noted, "Management's collective goal remains achieving profitability for its operations and building shareholder value for its shareholders. I believe my personal goals are completely aligned with those of all of our shareholders. In fact, I personally was a recent buyer of our stock in the open market as evidenced by my recent Form 4 filing.  We are keenly aware that creating value is a process rather than an event. Towards that end, I believe our process is working.   When we initially set out to transform our U.S. business segments and create new ones in China, we knew that would not come without sizeable investment in the future."

Second quarter revenues declined $1.6 million, to $5.3 million, compared to the same period in 2016.  The revenue decline was primarily due to downsizing the NAPW segment salesforce in order to implement new sales practices with the right sales team, as well as the elimination of unprofitable NAPW revenues with our focus on creating higher "life time value" through enhanced member services and benefits as well as brand positioning.  

Total costs and expenses for the second quarter increased to $17.7 million, compared to $7.8 million in the same period in 2016.  The period-over-period increase was primarily caused by a one-time, non-cash $9,920,000 NAPW segment goodwill impairment charge, an increase of $802,000 in general and administrative expense, partially offset by $844,000 lower sales and marketing expense due to reduction of salesforce.

Loss from operations in the second quarter increased to $12.4 million compared to $0.9 million for the same quarter in 2016, primarily as a result of the decrease in revenue at NAPW, NAPW segment goodwill impairment charge, and increase in what we expect to be non-recurring legal expense.  Commensurately, Net Loss increased $11.3 million, to $12.1 million. At the end of the quarter, the Company had just under $5 million in cash.

Mr. Wang concluded, "I am encouraged by our progress.  Absent the impairment and other non-recurring charges, we showed real improvement in the second quarter.  Between our management team's efforts in the U.S. and our China go-to-market strategy, I am encouraged about our future together."

   
Professional Diversity Network, Inc.   
CONDENSED CONSOLIDATED BALANCE SHEETS  
   
    June 30,     December 31,  
    2017       2016  
    (Unaudited)        
Current Assets:            
Cash and cash equivalents   $ 4,951,849       $ 6,068,973  
Accounts receivable, net     2,130,885         2,170,529  
Incremental direct costs     332,780         423,023  
Prepaid expenses and other current assets     712,427         957,140  
Total current assets     8,127,941         9,619,665  
                 
Property and equipment, net     242,270         277,534  
Capitalized technology, net     130,753         173,368  
Goodwill     10,280,885         20,201,190  
Intangible assets, net     7,749,239         9,183,439  
Merchant reserve     780,849         1,426,927  
Security deposits     213,931         220,754  
Other assets     -         35,000  
Total assets   $ 27,525,868       $ 41,137,877  
                 
Current Liabilities:                
Accounts payable   $ 1,520,274       $ 2,172,332  
Accrued expenses     1,245,827         962,172  
Deferred revenue     4,849,619         5,485,599  
Customer deposits     185,179         -  
Total current liabilities     7,800,899         8,620,103  
                 
Deferred tax liability     2,662,927         3,653,274  
Deferred rent     50,318         55,718  
Other liabilities     4,743         33,159  
Total liabilities     10,518,887         12,362,254  
                 
Commitments and contingencies                
                 
Stockholders' Equity                
Common stock, $0.01 par value; 45,000,000 shares authorized; 3,934,616 shares and 3,623,899  shares issued as of June 30, 2017 and December 31, 2016, respectively; and 3,931,838 shares and  3,619,338 shares outstanding as of June 30, 2017 and December 31, 2016, respectively     39,329         36,204  
Additional paid in capital     79,637,909         76,234,772  
Accumulated other comprehensive loss     1,621         -  
Accumulated deficit     (62,634,761 )       (47,458,236 )
Treasury stock, at cost; 1,048 shares at June 30, 2017 and December 31, 2016     (37,117       (37,117 )
Total stockholders' equity     17,006,981         28,775,623  
                 
Total liabilities and stockholders' equity   $ 27,525,868       $ 41,137,877  
                   

   
Professional Diversity Network, Inc.  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited)  
   
    Three Months Ended June 30,     Six Months Ended June 30,  
    2017     2016     2017     2016  
                             
Revenues:                            
Membership fees and related services   $ 2,444,797     $ 4,259,144     $ 5,260,293     $ 9,299,318  
Lead generation     1,604,767       1,415,958       3,328,934       2,935,549  
Recruitment services     624,103       717,360       1,282,647       1,340,669  
Product sales and other     26,573       404,590       72,941       491,583  
Education and training     505,490       -       829,694       -  
Consumer advertising and marketing solutions     58,327       53,976       124,029       127,052  
Total revenues     5,264,057       6,851,028       10,898,538       14,194,171  
                                 
Costs and expenses:                                
Cost of revenues     834,281       803,646       1,534,927       1,688,391  
Sales and marketing     2,584,426       3,428,115       5,839,323       7,249,691  
General and administrative     3,551,163       2,749,214       8,085,665       5,917,631  
Litigation settlement     -       -       -       500,000  
Goodwill impairment charge     9,920,305       -       9,920,305       -  
Depreciation and amortization     800,783       811,232       1,636,613       1,678,242  
Total costs and expenses     17,690,958       7,792,207       27,016,833       17,033,955  
                                 
Loss from operations     (12,426,901 )     (941,179 )     (16,118,295 )     (2,839,784 )
                                 
Other (expense) income                                
Interest expense     -       (778 )     (12,399 )     (1,167 )
Interest and other income     2,851       (481 )     5,101       651  
Other finance income     4,088       -       1,764       -  
Other (expense) income, net     6,939       (1,259     (5,534 )     (516 )
                                 
Loss before income tax benefit     (12,419,962 )     (942,438 )     (16,123,829 )     (2,840,300 )
Income tax benefit     (345,018 )     (136,169 )     (947,304 )     (594,393 )
Net loss     (12,074,944 )     (806,269 )     (15,176,525 )     (2,245,907 )
                                 
Other comprehensive loss:                                
Foreign currency translation adjustment     1,733       -       1,621       -  
Comprehensive loss   $ (12,073,211 )   $ (806,269 )   $ (15,174,904 )   $ (2,245,907 )
                                 
Net loss per common share, basic and diluted   $ (3.07 )   $ (0.45 )   $ (3.89 )   $ (1.24 )
                                 
Weighted average shares used in computing net loss per common share:                                
Basic and diluted     3,932,886       1,808,314       3,901,809       1,808,314  
                                 
                                 

The following table provides a reconciliation of Adjusted EBITDA to Net Loss, the most directly comparable GAAP measure reported in our consolidated financial statements:
             
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2017     2016     2017     2016  
    (in thousands)                  
Net loss   $ (12,075 )   $ (806 )   $ (15,177 )   $ (2,246 )
Stock-based compensation expense     70       43       585       100  
Depreciation and amortization     801       811       1,637       1,678  
Litigation settlement     -       -       -       500  
Gain on lease cancellation     -       (424 )     -       (424 )
Goodwill impairment charge     9,920       -       9,920       -  
Interest expense     -       1       12       1  
Interest and other income      (3       -       (5 )     (1 )
Income tax benefit     (345 )     (136 )     (947 )     (594 )
Adjusted EBITDA   $ (1,632 )   $ (511 )   $ (3,975 )   $ (986 )
                                 

About Professional Diversity Network (PDN)

Professional Diversity Network, Inc. (PDN) 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 Noble Voice, a career placement and career counseling call center and National Association of Professional Women (NAPW), 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.ipdnusa.com . Please click on "Investor Relations."
CONTACT: Professional Diversity Network, Inc.Jason Assad - Investor Relationsjwassad@prodivnet.com678-570-6791Chris Wesser - EVP and Secretarycwesser@prodivnet.com516-659-8560Jim Kirsch - Co Executive Chairmanjkirsch@prodivnet.com312-614-9021

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