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 ~~September~~June 30, ~~2022~~2023

☐	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 ~~18,409,281~~10,983,640 shares outstanding of the registrant’s common stock as of ~~November 14, 2022.~~August 11, 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 ~~2021~~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 AND NINE~~SIX MONTHS ENDED ~~SEPTEMBER~~JUNE 30, ~~2022~~2023

TABLE OF CONTENTS

	PAGE
PART I

ITEM 1. FINANCIAL STATEMENTS	3
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	24
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	3836
ITEM 4 CONTROLS AND PROCEDURES	3836

PART II

ITEM 1 LEGAL PROCEEDINGS	3937
ITEM 1A RISK FACTORS	3937
ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	4037
ITEM 3 DEFAULTS UPON SENIOR SECURITIES	4037
ITEM 4 MINE SAFETY DISCLOUSRES	4037
ITEM 5 OTHER INFORMATION	4037
ITEM 6 EXHIBITS	4138

Item 1. FINANCIAL STATEMENTS

Professional Diversity Network, Inc. and Subsidiaries

~~CONDENSED~~ CONSOLIDATED BALANCE SHEETS (Unaudited)

	September 30, 2022			December 31, 2021			June 30, 2023			December 31, 2022
	(Unaudited)						(Unaudited)
Current Assets:
Cash and cash equivalents	$	1,462,958		$	3,402,697		$	2,206,677		$	1,236,771
Accounts receivable, net		896,307			1,389,112			849,924			1,318,217
Other receivables		350,252			350,000			50,000			350,000
Prepaid expense and other current assets		728,096			450,784			803,241			347,807
Current assets from discontinued operations		4,600			4,600			4,600			4,600
Total current assets		3,442,213			5,597,193			3,914,442			3,257,395

Property and equipment, net		35,852			29,040			38,698			35,341
Capitalized technology, net		44,530			43,038			101,871			64,499
Goodwill		1,274,785			1,274,785			1,417,753			1,274,785
Intangible assets, net		244,482			968,281			515,534			225,221
Right-of-use assets		381,311			427,652			332,493			365,324
Merchant reserve		30,849			380,849
Security deposits		66,340			66,340			66,340			66,340
Long-term investments		1,350,000			-
Other assets								1,864,310			1,350,000
Long-term assets from discontinued operations		197,201			197,595			197,073			197,228
Total assets	$	7,067,563		$	8,984,773		$	8,448,514		$	6,836,133

Current Liabilities:
Accounts payable	$	417,225		$	248,595		$	818,419		$	338,600
Accrued expenses		1,122,274			1,878,415			1,126,252			1,071,842
Deferred revenue		1,678,890			2,149,885			2,109,677			1,925,788
Stock to be issued		-			400,000
Lease liability, current portion		91,387			81,825			81,426			103,555
Current liabilities from discontinued operations		483,841			420,850			497,692			503,090
Total current liabilities		3,793,617			5,179,570			4,633,466			3,942,875

Lease liability, non-current portion		372,208			434,938			324,684			341,165
Other long-term liabilities		100,000			100,000			-			100,000
Deferred tax liability		120,707			162,360			129,457			143,069
Total liabilities		4,386,532			5,876,868			5,087,607			4,527,109

Commitments and contingencies		-			-			-			-

Stockholders’ Equity
Common stock, $0.01 par value; 45,000,000 shares authorized, 18,989,165 shares and 16,068,300 shares issued as of September 30, 2022 and December 31, 2021, and 18,409,281 and 16,067,252 shares outstanding as of September 30, 2022 and December 31, 2021.		184,093			160,673
Common stock, $0.01 par value; 45,000,000 shares authorized, 10,984,164 and 10,898,376 shares issued as of June 30, 2023 and December 31, 2022, and 10,983,640 and 10,367,431 shares outstanding as of June 30, 2023 and December 31, 2022.								109,837			103,675
Additional paid in capital		100,606,407			98,440,172			104,484,673			101,728,600
Accumulated other comprehensive (loss) income		(14,604	)		6,565			(17,854	)		(10,986	)
Accumulated deficit		(97,351,520	)		(95,779,817	)		(100,864,047	)		(98,382,540	)
Treasury stock, at cost; 579,884 shares at September 30, 2022 and 1,048 shares at December 31, 2021		(552,562	)		(37,117	)
Treasury stock, at cost; 524 and 530,945 shares at June 30, 2023 and December 31, 2022								(37,117	)		(892,482	)
Total Professional Diversity Network, Inc. stockholders’ equity		2,871,814			2,790,476			3,675,492			2,546,267
Noncontrolling interest		(190,783	)		317,429			(314,585	)		(237,243	)
Total stockholders’ equity		2,681,031			3,107,905			3,360,907			2,309,024
Total liabilities and stockholders’ equity	$	7,067,563		$	8,984,773		$	8,448,514		$	6,836,133

The accompanying notes are an integral part of these ~~condensed consolidated financial statements.~~

~~Professional Diversity Network, Inc. and Subsidiaries~~

~~CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited)~~

2022 2021 2022 2021
Three Months Ended
September 30, Nine Months Ended
September 30,
2022 2021 2022 2021
Revenues:
Membership fees and related services $ 152,462 $ 240,048 509,906 764,470
Recruitment services 1,165,213 1,368,440 3,839,608 3,695,205
Product sales and other 757,492 19,010 1,882,452 19,010
Consumer advertising and marketing solutions 39,328 55,517 130,916 149,347
Total revenues 2,114,495 1,683,015 6,362,882 4,628,032

Costs and expenses:
Cost of revenues 1,228,542 346,525 3,022,657 867,726
Sales and marketing 759,885 525,820 2,179,136 1,826,319
General and administrative 1,003,956 873,504 2,468,934 3,303,143
Depreciation and amortization 232,748 29,668 746,057 88,351
Total costs and expenses 3,225,131 1,775,517 8,416,784 6,085,539

Loss from continuing operations (1,110,636 ) (92,502 ) (2,053,902 ) (1,457,507 )

Other income (expense)
Interest and other income (10,083 ) 2,393 (19,519 ) 5,128
Other income (expense), net (10,083 ) 2,393 (19,519 ) 5,128

Loss before income tax expense (benefit) (1,120,719 ) (90,109 ) (2,073,421 ) (1,452,379 )
Income tax expense (benefit) (25,479 ) (1,724 ) (35,720 ) (18,767 )
Loss from continuing operations, net of tax (1,095,240 ) (88,385 ) (2,037,701 ) (1,433,612 )
Loss from discontinued operations (13,319 ) (10,714 ) (42,213 ) (71,800 )
Net loss including non-controlling interests $ (1,108,559 ) $ (99,099 ) (2,079,914 ) (1,505,412 )
Net loss attributable to non-controlling interests 149,059 18,537 508,212 18,537
Net loss attributable to Professional Diversity Network, Inc. $ (959,500 ) $ (80,562 ) (1,571,702 ) (1,486,875 )

Other comprehensive loss, net of tax:
Net loss attributable to Professional Diversity Network, Inc. $ (959,500 ) $ (80,562 ) (1,571,702 ) (1,486,875 )
Foreign currency translation adjustments (10,787 ) (799 ) (21,169 ) (289,452 )
Comprehensive loss, net of tax $ (970,287 ) $ (81,361 ) (1,592,871 ) (1,776,327 )

Loss per share attributable to Professional Diversity Network, Inc., basic and diluted:
Continuing operations $ (0.07 ) $ (0.01 ) (0.13 ) (0.10 )
Discontinued operations $ - $ - - (0.01 )
Net loss attributable to Professional Diversity Network, Inc. $ (0.07 ) $ (0.01 ) (0.13 ) (0.11 )

Weighted average shares outstanding:
Basic and diluted 16,922,988 15,115,167 16,390,563 13,830,777
~~The accompanying notes are an integral part of these condensed~~ consolidated financial statements.

43

Professional Diversity Network, Inc. and Subsidiaries
~~CONDENSED~~ CONSOLIDATED ~~STATEMENT~~STATEMENTS OF ~~STOCKHOLDERS’ EQUITY~~OPERATIONS AND COMPREHENSIVE LOSS (Unaudited)

Accumulated
Additional Other Noncontrolling Total
Common Stock Paid in Accumulated Treasury Stock Comprehensive Interests in Stockholders’
Shares Amount Capital Deficit Shares Amount Income (Loss) Subsidiary Equity
Balance at January 1, 2022 16,067,252 $ 160,673 $ 98,440,172 $ (95,779,818 ) 1,048 $ (37,117 ) $ 6,565 $ 317,429 $ 3,107,905

Issuance of common stock 2,006,504 20,065 1,729,935 - - - - - 1,750,000
Share-based compensation 335,525 3,355 436,300 - - - - - 439,655
Stock Buyback Plan - - - - 579,884 (515,445 ) - - (515,445 )
Translation adjustments - - - - - - (21,169 ) (21,169 )
Net loss - - - (1,571,702 ) - - - (508,212 ) (2,079,914 )
Balance at September 30, 2022 18,409,281 $ 184,093 $ 100,606,407 $ (97,351,520 ) 580,932 $ (552,562 ) $ (14,604 ) $ (190,783 ) 2,681,031
Accumulated
Additional Other Noncontrolling Total
Common Stock Paid in Accumulated Treasury Stock Comprehensive Interests in Stockholders’
Shares Amount Capital Deficit Shares Amount Income (Loss) Subsidiary Equity
Balance at January 1, 2021 12,819,843 $ 128,198 $ 95,985,080 $ (93,022,835 ) 1,048 $ (37,117 ) $ 292,506 $ - $ 3,345,832

Sale of common stock 2,919,355 29,194 4,249,256 - - - - - 4,278,451
Issuance of common stock 279,054 2,791 163,709 - - - - - 166,500
Share-based compensation - - 435,915 - - - - - 435,915
Adjustment from discontinued operations - - (2,591,724 ) - - - - - (2,591,724 )
Noncontrolling interest in subsidiary - - - - - - - 510,184 510,184
Translation adjustments - - - - - - (289,452 ) - (289,452 )
Net loss - - - (1,486,875 ) - - - (18,537 ) (1,505,412 )
Balance at September 30, 2021 16,018,252 $ 160,183 $ 98,242,246 $ (94,509,710 ) 1,048 $ (37,117 ) $ 3,054 $ 491,647 4,350,293
2023 2022 2023 2022
Three Months Ended June 30, Six Months Ended June 30,
2023 2022 2023 2022
Revenues:
Membership fees and related services $ 136,235 $ 161,435 265,158 357,444
Recruitment services 1,076,023 1,341,031 2,179,418 2,674,395
Contracted software development 603,444 647,868 1,301,710 1,124,960
Consumer advertising and marketing solutions 25,523 45,173 50,148 91,588
Total revenues 1,841,225 2,195,507 3,796,434 4,248,387

Costs and expenses:
Cost of revenues 765,241 932,443 1,839,722 1,794,115
Sales and marketing 1,116,085 700,622 1,937,588 1,419,251
General and administrative 1,244,005 357,458 2,297,236 1,464,978
Depreciation and amortization 147,159 232,037 279,933 513,309
Total costs and expenses 3,272,490 2,222,560 6,354,479 5,191,653

Loss from continuing operations (1,431,265 ) (27,053 ) (2,558,045 ) (943,266 )

Other income (expense)
Interest expense - - - -
Interest and other income 497 (10,337 ) 7,081 (9,436 )
Other income (expense), net 497 (10,337 ) 7,081 (9,436 )

Loss before income tax expense (benefit) (1,430,768 ) (37,390 ) (2,550,964 ) (952,702 )
Income tax expense (benefit) 950 15,547 (9,923 ) (10,241 )
Loss from continuing operations, net of tax (1,431,718 ) (52,937 ) (2,541,041 ) (942,461 )
Loss from discontinued operations (6,078 ) (10,602 ) (17,808 ) (28,894 )
Net loss including non-controlling interests $ (1,437,796 ) $ (63,539 ) (2,558,849 ) (971,355 )
Net loss attributable to non-controlling interests 25,216 154,602 77,342 359,153
Net income (loss) attributable to Professional Diversity Network, Inc. $ (1,412,580 ) $ 91,063 (2,481,507 ) (612,202 )

Other comprehensive loss, net of tax:
Net income (loss) attributable to Professional Diversity Network, Inc. $ (1,412,580 ) $ 91,063 (2,481,507 ) (612,202 )
Foreign currency translation adjustments (9,437 ) (11,282 ) (6,868 ) (10,382 )
Comprehensive loss, net of tax $ (1,422,017 ) $ 79,781 (2,488,375 ) (622,584 )

Basic and diluted loss per share:
Continuing operations $ (0.14 ) $ (0.01 ) (0.25 ) (0.12 )
Discontinued operations $ (0.00 ) $ (0.00 ) (0.00 ) (0.00 )
Net loss per share $ (0.14 ) $ (0.01 ) (0.25 ) (0.12 )

Weighted-average outstanding shares used in computing net loss per common share:
Basic and diluted $ 10,387,359 $ 8,202,793 10,149,410 8,103,557

The accompanying notes are an integral part of these ~~condensed~~ consolidated financial statements.

~~Professional Diversity Network, Inc. and Subsidiaries~~
~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)~~
2022 2021
Nine Months Ended
September 30,
2022 2021
Cash flows from operating activities:
Loss from continuing operations $ (2,037,701 ) $ (1,433,612 )
Adjustments to reconcile net loss from continuing operations to net cash used in operating activities - continuing operations:
Depreciation and amortization 746,057 88,351
Deferred tax benefit (35,720 ) (18,347 )
Amortization of right-of-use asset (6,827 ) 68,540
Stock-based compensation expense 439,655 435,914
Litigation settlement reserve (908,564 ) 75,000
Reduction of merchant reserve 350,000 380,000
Changes in operating assets and liabilities, net of effects of discontinued operations:
Accounts receivable 492,553 (379,828 )
Prepaid expenses and other current assets (277,312 ) 103,263
Incremental direct costs - 10,845
Accounts payable 168,630 (441,603 )
Accrued expenses 146,490 (150,649 )
Deferred revenue (470,995 ) 102,381
Net cash used in operating activities - continuing operations (1,393,734 ) (1,159,745 )
Net cash used in operating activities - discontinued operations (5,633 ) (33,443 )
Net cash used in operating activities (1,399,367 ) (1,193,188 )

Cash flows from investing activities:
Costs incurred to develop technology (17,085 ) (28,663 )
Purchases of property and equipment (13,477 ) (37,282 )
Payments for investment deposits - (350,000 )
Acquisition of equity interest in RemoteMore USA, Inc. - (863,333 )
Net cash used in investing activities (30,562 ) (1,279,278 )

Cash flows from financing activities:
Proceeds from the sale of common stock - 4,444,950
Repurchases of common stock (515,445 ) -
Net cash (used in) provided by financing activities (515,445 ) 4,444,950

Effect of exchange rate fluctuations on cash and cash equivalents 5,635 2,420
Net (decrease) increase in cash and cash equivalents (1,939,739 ) 1,974,904
Cash, cash equivalents, beginning of period 3,402,697 2,117,569
Cash and cash equivalents, end of period 1,462,958 4,092,473

Supplemental disclosures of other cash flow information:
Cash paid for income taxes $ - $ -
~~The accompanying notes are an integral part of these condensed consolidated financial statements.~~
64

Professional Diversity Network, Inc. and Subsidiaries
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (Unaudited)
Shares Amount Capital Deficit Shares Amount Income (Loss) Subsidiary Equity
Common Stock Additional Paid in Accumulated Treasury Stock Accumulated Other Comprehensive Non-controlling Interest in Total Stockholders’
Shares Amount Capital Deficit Shares Amount Income (Loss) Subsidiary Equity

Balance at
January 01, 2023
10,367,431 $ 103,675 $ 101,728,600 $ (98,382,540 ) 530,945 $ (892,482 ) $ (10,986 ) $ (237,243 ) $ 2,309,024
Sale of common
stock 803,106 8,031 2,691,969 - - - - - 2,700,000
Commitment fee 176,222 1,762 748,238 - - - - - 750,000
Issuance of common stock 99,339 993 199,007 - - - - - 200,000
Share-based compensation 67,963 680 62,576 - - - - - 63,256
Stock Buyback Plan (530,421 ) (5,304 ) (850,061 ) - (530,421 ) 855,365 - - -
Investment in subsidiary - (95,656 ) - - - - - (95,656 )
Translation adjustments - - - - - - (6,868 ) - (6,868 )
Net loss - - - (2,481,507 ) - - - (77,342 ) (2,558,849 )
Balance at June 30, 2023 10,983,640 $ 109,837 $ 104,484,673 $ (100,864,047 ) 524 $ (37,117 ) $ (17,854 ) $ (314,585 ) $ 3,360,907
Shares Amount Capital Deficit Shares Amount Income (Loss) Subsidiary Equity
Common Stock
Additional
Paid in
Accumulated Treasury Stock
Accumulated
Other
Comprehensive

Non-
controlling
Interest in

Total
Stockholders’

Shares Amount Capital Deficit Shares Amount Income (Loss) Subsidiary Equity

Balance at January 01, 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
Sale of common stock - - - - - - - - -
Issuance of common stock 139,860 1,399 398,601 - - - - - 400,000
Share-based compensation 167,763 1,678 403,736 - - - - - 405,414
Stock Buyback Plan - - - - 208,998 (386,538 ) - - (386,538 )
Translation adjustments - - - - - - (10,382 ) - (10,382 )
Net loss - - - (612,202 ) - - - (359,153 ) (971,355 )
Balance at June 30, 2022 8,341,250 $ 83,414 $ 99,322,846 $ (96,392,020 ) 209,522 $ (423,655 ) $ (3,817 ) (41,724 ) 2,545,044
Balance 8,341,250 $ 83,414 $ 99,322,846 $ (96,392,020 ) 209,522 $ (423,655 ) $ (3,817 ) (41,724 ) 2,545,044
The accompanying notes are an integral part of these consolidated financial statements.
5
Professional Diversity Network, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
2023 2022
Six Months Ended June 30,
2023 2022
Cash flows from operating activities:
Loss from continuing operations $ (2,541,041 ) $ (942,461 )
Adjustments to reconcile net loss from continuing operations to net cash used in operating activities - continuing operations:
Depreciation and amortization 279,933 513,309
Deferred income taxes (9,923 ) (10,241 )
Noncash lease expense 45,692 45,693
Stock-based compensation expense 63,256 405,414
Litigation settlement reserve - (908,564 )
Allowance for credit losses 832 (91,032 )
Reduction of merchant reserve - 190,000
Changes in operating assets and liabilities, net of effects of discontinued operations:
Accounts receivable 467,460 558,557
Prepaid expenses and other current assets 219,566 (57,694 )
Accounts payable 479,816 (235 )
Accrued expenses 50,725 (48,772 )
Lease liability (51,471 ) (50,246 )
Deferred revenue 116,188 (173,273 )
Net cash used in operating activities - continuing operations (878,967 ) (569,545 )
Net cash used in operating activities - discontinued operations (30,513 ) (712 )
Net cash used in operating activities (909,480 ) (570,257 )

Cash flows from investing activities:
Costs incurred to develop technology (61,200 ) (1,907 )
Payments for investment deposits - -
Purchases of property and equipment (8,375 ) (5,322 )
Acquisition of assets of Expo Experts (400,000 ) -
Additional acquisition of equity interest in RemoteMore USA, Inc. (351,633 ) -
Net cash used in investing activities - continuing operations (821,208 ) (7,229 )
Net cash used in investing activities - discontinued operations - -
Net cash used in investing activities (821,208 ) (7,229 )

Cash flows from financing activities:
Proceeds from the sale of common stock 2,700,000 -
Stock buyback plan - (386,538 )
Net cash provided by financing activities - continuing operations 2,700,000 (386,538 )
Net cash provided by (used in) financing activities 2,700,000 (386,538 )

Effect of exchange rate fluctuations on cash and cash equivalents 594 712
Net decrease in cash and cash equivalents 969,906 (963,311 )
Cash, cash equivalents, beginning of period 1,236,771 3,402,697
Cash and cash equivalents, end of period 2,206,677 2,439,386

Supplemental disclosures of other cash flow information:
Non-cash stock issuance $ 200,000 $ 400,000
Cash paid for income taxes $ - $ -
The accompanying notes are an integral part of these consolidated financial statements.
6
Professional Diversity Network, Inc. and Subsidiaries
NOTES TO ~~CONDENSED~~ CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1. Basis of Presentation and Description of Business

The accompanying ~~condensed~~ 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 ~~condensed~~ 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 ~~condensed~~ consolidated financial statements should be read in conjunction with the audited ~~condensed~~ consolidated financial statements and notes thereto included in our ~~2021~~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, ~~Disabled,~~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 ~~its~~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 ~~addition, PDN, Inc. owns~~ ~~45.62%~~ ~~of RemoteMore USA, Inc. (“RemoteMore USA” or “RemoteMore”). Due to having significant influence in its guidance~~January 2023, the Company purchased the assets and operations ~~the Company consolidates RemoteMore USA’s operations into its condensed consolidated financial statements.~~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 June 30, 2023, PDN, Inc. owned 72.62% 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 ~~condensed~~ consolidated statements of operations and comprehensive loss as net loss from discontinued operations.

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2. Going Concern and Management’s Plans

At ~~September~~June 30, ~~2022,~~2023, the Company’s principal sources of liquidity were its cash and cash equivalents.

The Company had an accumulated deficit of $($~~97,351,520~~100,864,047 ) at ~~September~~June 30, ~~2022.~~2023. During the ~~three and nine~~six months ended ~~September~~June 30, ~~2022,~~2023, the Company generated a loss from continuing operations, net of tax, of $($~~1,095,240~~2,541,041~~) and $(2,037,701~~). During the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, the Company used cash in continuing operations of $~~1,393,734~~878,967. At ~~September~~June 30, ~~2022,~~2023, the Company had a cash balance of $~~1,462,958~~2,206,677. Total revenues were approximately $~~6,363,000~~3,796,000 and $~~4,628,000~~4,248,000 for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021. Total revenues were approximately $2,114,000~~ ~~and $1,683,000for the three months ended September 30, 2022 and 2021.~~2022. The Company had a working capital ~~surplus~~deficit from continuing operations of approximately $~~128,000~~226,000 and $~~834,000~~187,000 at ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021.~~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 ~~condensed~~ consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

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Management believes that its available cash on hand and cash flow from operations ~~should~~may be sufficient to meet our working capital requirements for the fiscal period ending December 31, ~~2022,~~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, issue capital in relation to the aforementioned line of equity, 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 ~~condensed~~ 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 ~~condensed~~ 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 ~~condensed~~ 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.

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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 ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the allowance for doubtful accounts was approximately $~~129,000~~103,000 and $~~247,000~~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 ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the balance in other receivables as reported on the consolidated balance sheets was deemed collectible.

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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 ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 was approximately $~~7,000~~5,000 ~~and $24,000~~and for three months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 was approximately $~~2,000~~3,000 ~~and $6,000~~, and is recorded in depreciation and amortization expense in the accompanying ~~condensed~~ 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~~The Company ~~entered into a new office lease agreement for~~leases 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. Interest is the lessor of (i) 4 percent per annum above the then-current Base Rate, and (ii) the maximum rate permitted by applicable requirements as defined in the lease agreement.

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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 ~~condensed~~ 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.
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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~~(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.

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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 ~~condensed~~ 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 and ~~nine~~six months ~~ended September~~June 30, ~~2022,~~2023, loss from discontinued operations was approximately $($~~13,000~~6,000) and $($~~42,000~~18,000) as compared to a loss from discontinued operations of approximately $($11,000) and $($~~72,000~~29,000) for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022.
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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 and $4,600, as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively, and long-term assets from discontinued operations were approximately $~~197,201~~197,000 at ~~September~~June 30, ~~2022,~~2023, compared to $~~197,595~~197,000 as of December 31, ~~2021.~~2022. As of ~~September~~June 30, ~~2022,~~2023, current liabilities from discontinued operations were approximately $~~483,841~~498,000, compared to $~~420,850~~503,000 as of December 31, ~~2021.~~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 and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, net of intercompany eliminations:
Schedule of Operating Results of Discontinued Operations
2023 2022 2023 2022
Three Months Ended June 30, Six Months Ended June 30,
2023 2022 2023 2022
(in thousands) (in thousands)
Revenues $ - $ - $ - $ -

Cost of Sales - - - -
Depreciation and amortization - - - -
Sales and marketing - - - -
General and administrative 6 11 18 29
Non-operating expense - 0 - 0
Loss from discontinued operations before income tax (6 ) (11 ) (18 ) (29 )
Income tax expense (benefit) - - - -
Net loss from discontinued operations $ (6 ) $ (11 ) $ (18 ) $ (29 )
2022 2021 2022 2021

Three Months Ended
September 30,

Nine Months Ended
September 30,

2022 2021 2022 2021

Revenues $ - $ - $ - $ -

General, administrative and other expenses (13,319 ) (10,713 ) (42,213 ) (71,800 )
Loss from discontinued operations before income tax (13,319 ) (10,713 ) (42,213 ) (71,800 )
Income tax expense (benefit) - - - -
Net loss from discontinued operations $ (13,319 ) $ (10,713 ) $ (42,213 ) $ (71,800 )
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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 and ~~nine~~six months ended ~~September~~June 30, 2023, the Company incurred advertising and marketing expenses of approximately $342,000 and $624,000. For the three and six months ended June 30, 2022, the Company incurred advertising and marketing expenses of approximately $~~347,000~~260,000 and $~~862,000~~515,000~~, as compared to approximately $198,000~~ ~~and $608,000~~ ~~in the same periods of the fiscal 2021.~~. These amounts are included in sales and marketing expenses in the accompanying statements of operations. At ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~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.

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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 ~~no unrecognized~~$129,457 of deferred tax ~~benefits~~liabilities as of ~~September~~June 30, ~~2022.~~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, ~~2018~~2019 through ~~2021.~~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 ~~September~~June 30, ~~2022.~~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 and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~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
2023 2022
As of June 30,
2023 2022

Stock options 28,063 23,063
Unvested restricted stock 30,488 69,114
Total dilutive securities 58,551 92,177
2022 2021
As of
September 30,
2022 2021

Warrants to purchase common stock - 125,000
Stock options 46,126 26,126
Unvested restricted stock 138,228 159,524
Total dilutive securities 184,354 310,650
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Reclassifications - Certain prior year amounts in the Consolidated Statements of ~~Operations and Comprehensive Loss~~Cash Flows have been reclassified to conform ~~with~~to 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 adopted ASU 2022-02 on a prospective basis effective January 1, 2023, and concluded there is ~~currently evaluating~~no material impact to the ~~impact of adopting this new guidance on its~~consolidated financial ~~position, results of operations, statement of comprehensive income, and cash flows, and will adopt~~statements or disclosures through the ~~provisions of this statement in the first~~second quarter of ~~fiscal~~ 2023.
4. Business Combinations
RemoteMore

On September 20, 2021, the Company acquired a ~~45.62%~~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 ~~are~~were met. ~~The~~
In February 2022, in connection with the September 2021 acquisition ~~is expected~~of the 45.62% interest in RemoteMore, and as a component of the aforementioned $500,000 still to ~~significantly grow~~be paid, the ~~Company’s revenues and recruiting platform and also included bringing onboard Boris Krastev and Boris Borisov,~~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.
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 increased the Company’s interest in RemoteMore to 72.62%.
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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 ~~about~~of the fair value of assets acquired. No liabilities were ~~assumed.~~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 $ 935,334 $ 126,301
Intangible assets 427,999 541,400
Deferred revenue (67,701 )
Business combination total $ 1,363,333 $ 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 ~~contracts~~specific events acquired ~~and~~which are expected to ~~a lesser extent trademarks,~~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).

~~Operations for RemoteMore are included in the Company’s consolidated financial statements at gross amounts as the Company has significant influence in the way RemoteMore operates. The~~ ~~54.38%~~ interest retained by the seller are included in the Company’s consolidated financial statements as noncontrolling interest. For the three and nine months ended September 30, 2022, RemoteMore generated consolidated amounts of approximately $~~757,000~~ ~~and $1,882,000~~ ~~of revenues and incurred approximately $1,034,000~~ ~~and $2,802,000~~ ~~of operating costs, inclusive of amortization expense associated with the aforementioned intangible assets of approximately $205,000~~ ~~and $667,000, for a loss before income taxes of approximately $277,000~~ ~~and $945,000, respectively. For the period September 20, 2021 (acquisition date) through September 31, 2021, RemoteMore generated consolidated amounts of approximately $19,000~~ ~~of revenues and incurred approximately $53,000~~ ~~of operating costs, for a loss before income taxes of approximately $34,000~~.
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~~RemoteMore was incorporated in December 2020~~Expo Experts’ accounts and ~~did not begin~~ operations ~~until on or about July 1, 2021. From January 1, 2021, through the acquisition date of September 20, 2021, revenues and expenses would~~ have been ~~deemed immaterial to~~reflected in the ~~Company’s consolidated financial statements.~~PDN Network for segment reporting purposes (see 14. Segment Information).
~~In February 2022, in connection with the September 2021 acquisition of the~~ ~~45.62%~~ ~~interest in RemoteMore USA, Inc., and as a component of the aforementioned $500,000~~ ~~still to be paid, the Company issued~~ ~~279,720~~ ~~shares of its common stock, with a value of $400,000, to the co-founders of RemoteMore. The Company still retains the option to purchase up to an additional~~ ~~20%~~ ~~interest in RemoteMore for the remaining approximately $100,000~~.
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.

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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.
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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 ~~condensed~~ consolidated statements of operations.
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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 ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, the Company recorded approximately ~~11.5%~~9.7% and ~~10.2%~~11.2% 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 ~~September~~June 30, ~~2022.~~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 $~~1,679,000~~2,110,000 are included in current deferred revenues, on the ~~condensed~~ consolidated balance sheets as of ~~September~~June 30, ~~2022.~~2023. For the ~~period~~six months ended ~~September~~June 30, ~~2022,~~2023, we recognized revenue associated with contract liabilities of approximately $~~1,315,000~~1,184,000 that were included in the contract liabilities balance at the beginning of the period.
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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
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The following table summarizes the activity related to the Company’s allowance for credit losses:
Schedule of Allowance for Credit Loss Activity

June 30,
2023
December 31,
2022

Balance, beginning of period $ 102,515 $ 247,190
Provision for credit losses 6,924 (144,675 )
Write-offs
(6,092
) -
Recoveries - -
Balance, end of period $ 103,347 $ 102,515
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
September 30, 2022 December 31, 2021 June 30, 2023 December 31, 2022
Capitalized cost:
Balance, beginning of period $ 43,038 $ 25,867 $ 64,499 $ 43,038
Additional capitalized cost 17,085 49,970 61,200 45,196
Provision for amortization (15,593 ) (32,799 ) (23,828 ) (23,735 )
Balance, end of period $ 44,530 $ 43,038 $ 101,871 $ 64,499

For the three months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, amortization expense was approximately $~~6,100~~12,900 and $~~9,500~~4,600, and was approximately $~~15,600~~23,250 and $~~28,400~~9,000 for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, and is recorded in depreciation and amortization expense in the accompanying statements of operations.

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7. Intangible Assets

Intangible assets, net was as follows:
Schedule of Intangible Assets

Useful Lives

Gross
Carrying
Accumulated Net
Carrying Useful Lives Gross
Carrying Accumulated Net Carrying
September 30, 2022 (Years) Amount Amortization Amount
June 30, 2023 (Years) Amount Amortization Amount
Long-lived intangible assets:
Sales Process 10 $ 2,130,956 $ (1,978,541 ) $ 152,415 10 $ 2,130,956 $ (2,035,697 ) $ 95,259
Paid Member Relationships 5 803,472 (803,472 ) - 5 803,472 (803,472 ) -
Member Lists 5 8,086,181 (8,086,181 ) - 5 8,186,181 (8,102,848 ) 83,333
Developed Technology 3 648,000 (648,000 ) - 3 648,000 (648,000 ) -
Trade Name/Trademarks 4 442,500 (440,833 ) 1,667 4 442,500 (441,458 ) 1,042
Contracts acquired in RemoteMore acquisition 3-12 months 935,683 (935,683 ) -
Contracts and events acquired in acquisitions 3 - 12 months 1,377,083 (1,131,583 ) 245,500
13,046,792 (12,892,710 ) 154,082 13,588,192 (13,163,058 ) 425,134
Indefinite-lived intangible assets:
Trade name 90,400 90,400
Intangible assets, net $ 244,482 $ 515,534

Useful Lives Gross
Carrying Accumulated Net
Carrying
December 31, 2021 (Years) Amount Amortization Amount
Long-lived intangible assets: ��
Sales Process 10 $ 2,130,956 $ (1,921,386 ) $ 209,570
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 (440,208 ) 2,292
Contracts acquired in RemoteMore acquisition 3-12 months 935,683 (269,664 ) 666,019
13,046,792 (12,168,911 ) 877,881
Indefinite-lived intangible assets:
Trade name 90,400
Intangible assets, net $ 968,281
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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 ~~September~~June 30, ~~2022,~~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 $ 300,687
2024 91,114
2025 33,333
Net Carrying Amount $ 425,134

Year ended December 31,
Remaining of 2022 $ 19,260
2023 77,041
2024 57,781
Net Carrying Amount $ 154,082
For the three months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, amortization expense was approximately $~~225,000~~131,000 and $~~19,000~~225,000, and for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 amortization expense was approximately $~~724,000~~251,000 and $~~57,000~~500,000, and is recorded in depreciation and amortization expense in the accompanying ~~condensed consolidated~~ statements of operations.
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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~~863,392 shares of its common stock to Seller in a private placement (the “Consideration Shares”). The Consideration Shares were valued at ~~$1,350,000~~$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~~SPA. The shares of KCL are recorded in the ~~condensed~~ consolidated balance sheet as ~~long-term investments.~~‘other assets’.
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 ~~December 31, 2022.~~
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.

The Company leases 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. Interest is the lessor of (i) 4 percent per annum above the then-current Base Rate, and (ii) the maximum rate permitted by applicable requirements as defined in the lease agreement. As of ~~September~~June 30, ~~2022,~~2023, right of use assets and related lease obligations remaining were $~~381,311~~332,493 and $~~463,595~~406,110, as recorded on the Company’s ~~condensed~~ consolidated balance sheets.
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Other - PDN China’s bank account with a balance of approximately $195,000, at ~~September~~June 30, ~~2022,~~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. ~~While the COVID-19 pandemic has caused delays to the litigation, it is expected that these delays will decrease as the disruption caused by the pandemic subsides.~~

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.

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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%~~51% of the outstanding shares of ~~Common Stock,~~common stock, determined on a fully-diluted ~~basis, after giving effect to the consummation of the transactions contemplated by the Purchase Agreement.~~basis.

At the closing of the CFL ~~Transaction,~~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 ~~September~~June 30, ~~2022,~~2023, CFL beneficially holds shares of the Company’s outstanding ~~Common Stock~~common stock equal to approximately ~~27.9%~~23.4%. 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, between the range of 1.5 to 1 and 5 to 1 (the “Split Ratio”), depending upon which ratio is deemed necessary and desirable to achieve a minimum ‎share price of at least $1.00per share in the market trading price of the Common Stock. On January 3, 2023, the board of directors of the Company (the “Board”) fixed the Split Ratio at 2 to 1. The Reverse Stock Split was effected as of January 5, 2023. As a result of the 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 to1,000,000shares 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 ~~September~~June 30, ~~2022,~~2023, the Company had ~~18,409,281~~10,983,640 shares of common stock outstanding.

In ~~February 2022,~~January 2023, in connection with the ~~September 2021~~ acquisition of ~~the~~ ~~45.62%~~ ~~interest in RemoteMore USA, Inc., and as a component of the $500,000~~ ~~to be paid within one year,~~Expo Experts, the Company issued ~~279,720~~99,339 shares of its common stock, with a value of $~~400,000~~200,000, to the co-founders of ~~RemoteMore~~Expo Experts (see Note 4 – Business Combinations).

In ~~September 2022,~~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 ~~acquisition~~purchase by Ms. Gu of a 9% ~~interest in Koala Crypto Limited the Company issued~~ ~~1,726,784~~333,181 shares of ~~its~~ common stock ~~to Seller in~~of the Company at a ~~private placement (the “Consideration Shares”). The Consideration Shares were valued at~~price of approximately $~~1,350,000~~2.10 ~~(see Note 8 – Long-term Investments)~~per share for aggregate gross proceeds of $700,000.

~~Stock Buyback Plan~~ ~~– The~~In June 2023, the Company entered into a stock purchase agreement with Tumim Stone Capital LLC (“Investor”). Under the terms and subject to the conditions of the stock purchase agreement, the Company has ~~a share repurchase program (“Stock Buyback Plan”) under which it~~the right, but not the obligation, to sell to the Investor, and the Investor is ~~authorized~~obligated to purchase, up to $~~2.0~~12,775,000 ~~million~~‎ ‎ worth of ~~its outstanding~~newly issued shares (the “Purchase Shares”) of the Company’s common ~~shares. The timing~~‎stock, subject to certain limitations and ~~amount~~the satisfaction (or, where permissible, the waiver) of ~~any shares repurchased under~~ the Stock Buyback Plan will depend on a variety of factors, including price, corporate and regulatory requirements, capital availability and other market conditions. The Stock Purchase Plan may be suspended or discontinued at any time without prior notice. Repurchases may also be made under a plan meetingconditions set forth in the ~~requirements of Rule 10b5-1 under~~stock purchase agreement. Pursuant to the ~~Securities Exchange Act of 1934, which would permit shares to be repurchased when~~stock purchase agreement, the Company ~~might otherwise be precluded from doing so under insider trading laws. Any repurchased shares will be available for use in connection with its stock plans~~issued and ~~for other corporate purposes. No shares have been or will be knowingly purchased from Company insiders or their affiliates. Since inception~~sold 469,925 Purchase Shares (the “Initial Purchase Shares”) to the Investor, at a price of $4.256 per share (representing the average official closing price of the Common Stock ~~Buyback Plan through September 30, 2022,~~on The Nasdaq Capital Market (“Nasdaq”) for the five consecutive trading days ending on the trading day immediately prior to the date of the stock purchase agreement), for aggregate gross proceeds to the Company ~~has purchased~~ of $~~579,884~~2,000,000, in an initial purchase (the “Initial Purchase”). Pursuant to the terms of the stock purchase agreement, as consideration for the Investor’s commitment to purchase shares of ~~its~~ common stock at the Company’s direction from time to time, upon the terms and subject to the conditions and limitations set forth in the Purchase Agreement, upon execution of the stock purchase agreement on June 30, 2023, the Company issued to the Investor 176,222 shares ~~for~~of common stock (the “Commitment Shares”), valued at $4.256 per share (the same per share value as each Initial Purchase Share sold to the Investor in the Initial Purchase), or a total ~~of approximately~~aggregate value equal to $~~515,000~~750,000 ~~at an average cost of approximately $0.89~~ ~~per share (excluding commissions). Transactions occurred in open market purchases and pursuant to a trading plan under Rule 10b5-1. At September 30, 2022,~~for the ~~Company has approximately $1,485,000~~ ~~repurchase authority remaining under the current Stock Buyback Plan.~~Commitment Shares.
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 iswas ~~1,500,000~~750,000 shares.

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On April 11, 2023, the Board of Directors adopteda new equity incentive plan, the Professional Diversity Network, Inc. 2023 Equity Compensation Plan (the “2023 Equity Compensation Plan”). The 2023 Equity Compensation Plan was approved by the Company’s stockholders on June 15, 2023. The 2023 Equity Compensation Plan supersedes and replaces 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 ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021:~~2022:
Schedule of Stock Option Activity
Weighted Weighted
Average Average
Weighted Remaining Weighted Remaining
Average Contractual Aggregate Average Contractual Aggregate
Number of Exercise Life Intrinsic Number of Exercise Life Intrinsic
Options Price (in Years) Value Options Price (in Years) Value
Outstanding - January 1, 2022 66,126 $ 4.52 7.8 $ -
Outstanding - January 1, 2023 33,063 $ 9.04 6.8 $ -
Granted - - -       - - - -
Exercised - - - - - - -
Forfeited - - - - - - -
Outstanding - September 30 2022 66,126 $ 4.52 7.0 $ -
Outstanding - June 30, 2023 33,063 $ 9.04 6.2 $ -

Exercisable at September 30, 2022 46,126 $ 5.57 6.3 $ -
Exercisable at June 30, 2023 28,063 $ 9.91 6.0 $ -

Weighted
Average
Weighted Remaining
Average Contractual Aggregate
Number of Exercise Life Intrinsic
Options Price (in Years) Value
Outstanding - January 1, 2021 66,126 $ 5.24 8.3 $        -
Granted 30,000 2.10 9.7
Exercised - - -
Forfeited (30,000 ) 3.69 -
Outstanding - September 30 2021 66,126 $ 4.52 8.6 $ -

Exercisable at September 30, 2021 36,126 $ 6.53 6.6 $ -
~~Total unrecognized stock-based compensation expense related to unvested stock options at September 30, 2022 was approximately $18,500~~ ~~and is expected to be recognized through the second quarter of 2024.~~
~~Warrants~~
~~As of September 30, 2022 and December 31, 2021, there were~~ no ~~warrants outstanding or exercisable.~~
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~~Restricted Stock Units~~
~~As of September 30, 2022 and 2021, the following is a summary of restricted stock unit activity:~~
~~Schedule of Restricted Stock Award Activity~~
~~Number of~~
~~Shares~~
~~Outstanding - January 1, 2022~~ ~~159,525~~
~~Granted~~ ~~341,874~~
~~Forfeited~~ ~~(27,646~~ )
~~Vested~~ ~~(335,525~~ )
~~Outstanding - September 30, 2022~~ ~~138,228~~
~~Number of~~
~~Shares~~
~~Outstanding - January 1, 2021~~ ~~233,875~~
~~Granted~~ ~~59,525~~
~~Forfeited~~ -
~~Vested~~ ~~(133,875~~ )
~~Outstanding - September 30, 2021~~ ~~159,525~~
~~During the period ended September 30, 2022, the Company granted~~ ~~27,646~~ restricted stock units (“RSUs”) to a newly appointed non-employee director as partial compensation for his service as a director. The aggregate grant date fair value of the combined awards amounted to approximately $~~25,000. The RSU awards to the board members fully vest on the one-year anniversary after the date of grant. Also during the period ended September 30, 2022,~~ ~~27,646~~ ~~RSUs were forfeited due to a departure of a non-employee director.~~
~~In June 2022, the Company granted~~ ~~138,228~~ ~~RSUs to non-employee directors as partial compensation for their service as a director. The aggregate grant date fair value of the combined awards amounted to approximately $125,000~~. ~~The RSU award to board members fully vest on the one-year anniversary after the date of grant. The Company also granted~~ ~~176,000~~ ~~RSU’s to certain officers and managers with immediate vesting. The aggregate grant date fair value of the combined awards amounted to approximately $159,000~~.
~~During the period ended September 30, 2020, the Company granted~~ ~~300,000~~ ~~RSUs to the Company’s Chief Executive Officer.~~ The RSU award grant to the CEO vests 1/3 on the grant date and the remaining 2/3 vested equally on the annual grant date anniversary of the award over the remaining two years with the final vesting occurring in the period ended September 30, 2022~~. The aggregate grant date fair value of the combined awards amounted to approximately $1,107,000~~.
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 - June 30, 2022 33,063 $ 9.04 7.2 $ -

Exercisable at June 30, 2022 23,063 $ 11.14 6.5 $ -

The Company recorded non-cash stock-based compensation expense of approximately $~~439,655~~5,000 and $~~435,915~~5,000 as a component of general and administrative expenses in the accompanying consolidated statements of operations for the ~~nine~~six months ended ~~September~~June 30, 2023 and 2022, respectively, pertaining to granting of stock option awards.
Total unrecognized stock-based compensation expense related to unvested stock options at June 30, 2023 was approximately $10,400and ~~2021,~~is expected to be recognized through the second quarter of 2024.
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Restricted Stock Units
As of June 30, 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 30,490
Forfeited -
Vested (69,114 )
Outstanding – June 30, 2023 30,490
Number of
Shares
Outstanding - January 1, 2022 79,763
Granted 170,937
Forfeited (13,823 )
Vested (167,763 )
Outstanding – June 30, 2022 69,114
During the period ended June 30, 2023, the Company granted 30,490 total restricted stock units for a value of $125,000 to the members of the Board of Directors per their compensation agreements. The shares will vest one year from the grant date of June 15, 2023.
The Company recorded non-cash stock-based compensation expense of approximately $58,000 and $400,000 as a component of general and administrative expenses in the accompanying consolidated statements of operations for the six months ended June 30, 2023 and 2022, respectively, pertaining to granting of restricted stock awards.

Total unrecognized stock-based compensation expense related to 30,490unvested restricted stock units at ~~September~~June 30, ~~2022~~2023 was approximately $~~84,000~~125,000 and is expected to be fully recognized ~~through~~by the second quarter of 2024.
In July 2023, the Company granted 120,000 restricted stock units to Mr. He, Chief Executive Officer of the Company, as part of his employment agreement entered into July 18, 2023.The shares will vest as follows: 1/3 immediately ‎upon grant, 1/3 on the first anniversary of the employment agreement, and the final 1/3 on the ‎second anniversary of the employment agreement; provided, however, that Mr. He must remain ‎continuously employed by the Company and/or its affiliates through the applicable ‎vesting date.

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 ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, the Company recorded income tax ~~benefit~~expense of $~~25,479~~950 and $~~1,724~~15,547, respectively. For the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, the Company recorded a benefit for income tax of $($~~35,720~~9,923) and $($~~18,767~~10,241). The ~~increase~~decrease in income tax benefit during the current three-month ~~and nine-month periods,~~period, as compared to the same periods in the prior year, was primarily due to ~~an increase~~a decrease in discrete tax items and changes in the Company’s net operating losses.
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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 ~~September~~June 30, ~~2022.~~2023. The valuation allowance at ~~September~~June 30, ~~2022~~2023 was approximately $~~9,721,000~~10,568,000. The net change in the valuation allowance during the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 was an increase of approximately $~~120,000~~590,000.
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14. Segment Information

The Company operates in the following segments: (i) PDN Network, (ii) NAPW Network, and (iii) ~~RemoteMore (beginning in September 2021) and (iv) Corporate Overhead.~~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 ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021~~2022 and results of operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021:~~2022:
Schedule of Segment Information
Network Network RemoteMore Overhead Consolidated
Three Months Ended
September 30, 2022 Three Months Ended June 30, 2023
PDN NAPW Corporate PDN NAPW Corporate
Network Network RemoteMore Overhead Consolidated Network Network RemoteMore Overhead Consolidated
Membership fees and related services $ - $ 152,462 $ - $ - $ 152,462 $ - $ 136,235 $ - $ - $ 136,235
Recruitment services 1,165,213 - - - 1,165,213 1,076,023 - - - 1,076,023
Contracted software development - - 757,492 - 757,492 - - 603,444 - 603,444
Consumer advertising and marketing solutions 39,328 - - - 39,328 25,523 - - - 25,523
Total revenues 1,204,541 152,462 757,492 - 2,114,495 1,101,546 136,235 603,444 - 1,841,225
Income (loss) from continuing operations (77,907 ) (261,132 ) (266,161 ) (505,436 ) (1,110,636 ) (454,402 ) (133,179 ) (80,737 ) (762,947 ) (1,431,265 )
Depreciation and amortization 7,475 19,597 205,676 - 232,748 127,207 19,606 346 - 147,159
Income tax expense (benefit) (1,895 ) (10,410 ) - (13,174 ) (25,479 ) 1,484
906
-
(1,440
) 950
Net income (loss) from continuing operations (74,971 ) (250,689 ) (277,318 ) (492,262 ) (1,095,240 ) (455,429 ) (134,085 ) (80,697 ) (761,507 ) (1,431,718 )

As of
September 30, 2022 As of June 30, 2023
Goodwill $ 339,451 $ - $ 935,334 $ - $ 1,274,785 $ 465,752 $ - $ 952,001 $ - $ 1,417,753
Intangibles assets, net 90,400 152,415 1,667 - 244,482 419,233 95,259 1,042 - 515,534
Assets from continuing operations 6,577,544 504,675 (216,457 ) - 6,865,762 8,576,760 153,673 (483,592 ) - 8,246,841

Network NAPW Network RemoteMore Overhead Consolidated
Three Months Ended
September 30, 2021 Three Months Ended June 30, 2022
PDN NAPW Corporate PDN NAPW Corporate
Network
Network
RemoteMore Overhead Consolidated Network Network RemoteMore Overhead Consolidated
Membership fees and related services $ - $ 240,048 $ - $ - $ 240,048 $ - $ 161,435 $ - $ - $ 161,435
Recruitment services 1,368,440 - - - 1,368,440 1,341,031 - - - 1,341,031
Contracted software development - - 19,010 - 19,010 - - 647,868 - 647,868
Consumer advertising and marketing solutions 55,517 - - - 55,517 45,173 - - - 45,173
Total revenues 1,423,957 240,048 19,010 - 1,683,015 1,386,204 161,435 647,868 - 2,195,507
Income (loss) from continuing operations 692,356 (167,696 ) (34,488 ) (582,674 ) (92,502 ) 177,773 726,222 (275,443 ) (655,605 ) (27,053 )
Depreciation and amortization 5,875 23,793 - - 29,668 6,892 19,527 205,618 - 232,037
Income tax (benefit) expense 7,406 (2,276 ) - (6,854 ) (1,724 )
Net loss from continuing operations 687,343 (165,421 ) (34,488 ) (575,820 ) (88,385 )
Income tax expense (benefit) 8,791 18,658 - (11,902 ) 15,547
Net income (loss) from continuing operations 170,239 707,577 (287,050 ) (643,703 ) (52,937 )

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
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As of December 31, 2021
Goodwill $ 339,451 $ - $ 935,334 $ - $ 1,274,785
Intangibles assets, net 90,400 209,570 668,311 - 968,281
Assets from continuing operations 7,596,499 684,881 501,198 - 8,782,578

Six Months Ended June 30, 2023
PDN NAPW Corporate
Network Network RemoteMore Overhead Consolidated
Membership fees and related services $ - $ 265,158 $ - $ - $ 265,158
Recruitment services 2,179,418 - - - 2,179,418
Contracted software development - - 1,301,710 - 1,301,710
Consumer advertising and marketing solutions 50,148 - - - 50,148
Total revenues 2,229,566 265,158 1,301,710 - 3,796,434
Income (loss) from continuing operations (809,034 ) (380,245 ) (185,621 ) (1,183,145 ) (2,558,045 )
Depreciation and amortization 239,967 39,273 693 - 279,933
Income tax expense (benefit) (1,596 ) (2,665 ) 850 (6,512 ) (9,923 )
Net income (loss) from continuing operations (804,155 ) (377,527 ) (182,726 ) (1,176,633 ) (2,541,041 )

Network Network RemoteMore Overhead Consolidated
Nine Months Ended September 30, 2022
PDN NAPW Corporate
Network Network RemoteMore Overhead Consolidated
Membership fees and related services $ - $ 509,906 $ - $ - $ 509,906
Recruitment services 3,839,608 - - - 3,839,608
Contracted software development - - 1,882,452 - 1,882,452
Consumer advertising and marketing solutions 130,916 - - - 130,916
Total revenues 3,970,524 509,906 1,882,452 - 6,362,882
Income (loss) from continuing operations 372,156 257,213 (919,883 ) (1,763,388 ) (2,053,902 )
Depreciation and amortization 20,589 58,556 666,912 - 746,057
Income tax expense (benefit) 15,983 (4,769 ) - (46,934) (35,720 )
Net income (loss) from continuing operations 361,489 262,192 (944,928 ) (1,716,454 ) (2,037,701 )
Network Other RemoteMore Overhead Consolidated
Nine Months Ended September 30, 2021 Six Months Ended June 30, 2022
PDN Corporate PDN NAPW Corporate
Network Other RemoteMore Overhead Consolidated Network Network RemoteMore Overhead Consolidated
Membership fees and related services $ - $ 764,470 $ - $ - $ 764,470 $ - $ 357,444 $ - $ - $ 357,444
Recruitment services 3,695,205 - - - 3,695,205 2,674,395 - - - 2,674,395
Contracted software development - - 19,010 - 19,010 - - 1,124,960 - 1,124,960
Consumer advertising and marketing solutions 149,347 - - - 149,347 91,588 - - - 91,588
Total revenues 3,844,552 764,470 19,010 - 4,628,032 2,765,983 357,444 1,124,960 - 4,248,387
Income (loss) from continuing operations 1,298,391 (585,575 ) (34,488 ) (2,135,833 ) (1,457,507 ) 450,063 518,345 (653,722 ) (1,257,952 ) (943,266 )
Depreciation and amortization 9,472 78,879 - - 88,351 13,114 38,959 461,236 - 513,309
Income tax expense (benefit) 16,837 (8,011 ) - (27,593 ) (18,767 ) 17,878 5,641 - (33,760 ) (10,241 )
Net income (loss) from continuing operations 1,286,681 (577,565 ) (34,488 ) (2,108,240 ) (1,433,612 ) 436,460 512,881 (667,610 ) (1,224,192 ) (942,461 )

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 ~~condensed~~ consolidated financial ~~statements.~~statements other than those disclosed in Note 12 Stock-Based Compensation.

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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 ~~condensed~~ consolidated financial statements and the notes thereto, and the audited consolidated financial statements and notes thereto included in our ~~2021~~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 ~~2021~~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, ~~Disabled,~~persons with disabilities, Military Professionals, and Lesbian, Gay, Bisexual and Transgender (LGBTQ+). persons, 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 ~~software~~ 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.

~~Impact~~In the second quarter of ~~COVID-19~~fiscal 2023, we made some strategic changes in the Company that we feel will position ourselves for a stronger second half of 2023 and into fiscal 2024.

The COVID-19 pandemic has negatively impacted the global economy, disrupted consumer spending and global supply chains and created significant volatility and disruption of financial markets. The COVID-19 pandemic impacted our ability to host in-person events associated with our NAPW Network and we had to use alternative methods such as virtual events to conduct our events. ~~In October 2022, the NAPW network held a hybrid event that consisted of both in-person and virtual participants. In 2023, the NAPW network plans on continuing to hold hybrid events, where applicable.~~
The extent of the impact of the COVID-19 pandemic, including our ability to execute our business strategies as planned, will depend on future developments, including the duration and severity of the pandemic, which are highly uncertain and cannot be predicted, and may have an adverse effect on our business and financial performance.
● We created an internal marketing department, utilizing employees from NAPW and PDN that had marketing backgrounds and experience, that will focus on our organic growth, digital marketing, and other efforts in further matching job seekers with the employment needs of our clients.
● We restructured the NAPW business segment by reducing the NAPW staff by 50% and replacing certain technology contracts with lower cost alternatives, or removing them altogether, thus resulting in the ability to keep the current revenue stream with a much smaller staff and reduced overhead.
●
We restructured certain marketing and technology contracts with vendors to provide us with assets that should yield better profitability.

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In response to mandates and recommendations from federal, state and local authorities, as well as decisions we have made to protect the health and safety of our employees with respect to the COVID-19 pandemic, we temporarily closed our offices and had our employees work remotely. We reopened our offices on April 4, 2022, with a hybrid work schedule. We may face more closure requirements and other operation restrictions for prolonged periods of time due to, among other factors, evolving and stringent public health directives, quarantine policies, social distancing measures, or other governmental restrictions, which could have a further material impact on our sales and profits. The COVID-19 pandemic could also adversely affect our liquidity and ability to access the capital markets. Uncertainty regarding the duration of the COVID-19 pandemic may adversely impact our ability to raise additional capital, or require additional capital, or require additional reductions in capital expenditures that are otherwise needed to implement our strategies.
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.

Nine Months Ended September 30, Six Months Ended June 30,
2022 2021 2023 2022
Revenues:
Membership fees and related services 8.0 % 16.4 % 7.0 % 8.4 %
Recruitment services 60.3 % 79.9 % 57.4 % 62.9 %
Contracted software development 29.6 % 0.5 % 34.3 % 26.5 %
Consumer advertising and marketing solutions 2.1 % 3.2 % 1.3 % 2.2 %
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 ~~at approximately 100~~ 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, and access to live in-person events.~~chapters. The most comprehensive level, the Influencer, provides all the aforementioned benefits plus ~~admission to exclusive “live” events and~~ expanded opportunities for marketing and promotion, including the creation and distribution of a press release, which is ~~prepared by professional writers and~~ 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. ~~They may purchase up to two plaques at that time.~~
~~Recruitment Services~~. We provide recruitment services through PDN Network to medium and large employers seeking to diversify their employment ranks. Our recruitment services include recruitment advertising, job postings, contingent search and hiring, and career fairs. 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.~~

Contracted Software Development. RemoteMore generates revenue by providing contracted programmers to assist customers with their software solutions through customized software development.
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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.

Nine Months Ended September 30, Six Months Ended June 30,
2022 2021 2023 2022
Cost of revenues:
PDN Network 37.2 % 86.1 % 26.0 % 35.8 %
NAPW Network 7.4 % 13.9 % 6.9 % 7.9 %
RemoteMore 55.4 % 0.0 % 67.1 % 56.3 %
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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
September 30
Change Change Three Months Ended June 30 Change Change
2022 2021 (Dollars) (Percent) 2023 2022 (Dollars) (Percent)
(in thousands) (in thousands)
Revenues:
Membership fees and related services $ 153 $ 241 $ (88 ) (36.5 )% $ 136 $ 161 $ (25 ) (15.5 )%
Recruitment services 1,166 1,368 (202 ) (14.8 )% 1,076 1,341 (265 ) (19.8 )%
Contracted software development 757 19 738 3884.2 % 604 648 (44 ) (6.8 )%
Consumer advertising and marketing solutions 39 55 (16 ) (29.1 )% 25 45 (20 ) (44.4 )%
Total revenues $ 2,115 $ 1,683 $ 432 25.7 % $ 1,841 $ 2,195 $ (354 ) (16.1 )%

Total revenues for the three months ended ~~September~~June 30, ~~2022 increased~~2023 decreased approximately ~~$432,000,~~$354,000, or ~~25.7%,~~16.1 percent, to approximately ~~$2,115,000~~$1,841,000 from approximately ~~$1,683,000~~ $2,195,000 during the same period in the prior year. The ~~increase~~decrease was predominately attributable to ~~approximately $738,000 of contracted software development related to RemoteMore, as compared to the same period in the prior year. Partially offsetting the increase were decreases in the period~~a reduction in recruitment services revenues of approximately ~~$202,000~~$265,000, a reduction in contracted software development of approximately $44,000, and an approximate ~~$88,000~~$25,000 decrease in membership fees and related services revenues, as compared to the same period in the prior year. Partially offsetting the decrease were approximately $65,000 of event revenue from the recently acquired Expo Experts for which there was no comparable revenue in the same period of the prior year.

Nine Months Ended
September 30
Change Change
2022 2021 (Dollars) (Percent)
(in thousands)
Revenues:
Membership fees and related services $ 510 $ 765 $ (255 ) (33.3 )%
Recruitment services 3,840 3,695 145 3.9 %
Contracted software development 1,882 19 1,863 9805.3 %
Consumer advertising and marketing solutions 131 149 (18 ) (12.1 )%
Total revenues $ 6,363 $ 4,628 $ 1,735 37.5 %
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Six Months Ended June 30 Change Change
2023 2022 (Dollars) (Percent)
(in thousands)
Revenues:
Membership fees and related services $ 265 $ 357 $ (92 ) (25.8 )%
Recruitment services 2,179 2,674 (495 ) (18.5 )%
Contracted software development 1,302 1,125 177 15.7 %
Consumer advertising and marketing solutions 50 92 (42 ) (45.7 )%
Total revenues $ 3,796 $ 4,248 $ (452 ) (10.6 )%

Total revenues for the ~~nine~~six months ended ~~September~~June 30, ~~2022 increased~~2023 decreased approximately ~~$1,735,000,~~$452,000, or ~~37.5%,~~10.6 percent, to approximately ~~$6,363,000~~$3,796,000 from approximately ~~$4,628,000~~ $4,248,000 during the same period in the prior year. The ~~increase~~decrease was predominately attributable to ~~an approximate $1,863,000 of contracted software development related to RemoteMore, as compared to the same period in the prior year. Also contributing to the increase in the period was an increase~~a reduction in recruitment services revenues of approximately ~~$145,000, partially offset by~~$495,000 and an approximate ~~$255,000~~$92,000 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 $177,000 of contracted software development related to RemoteMore, as compared to the same period in the prior year, and approximately $147,000 of event revenue from the recently acquired Expo Experts for which there was no comparable revenue in the same period of the prior year.
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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 September 30, Change Change Three Months Ended June 30, Change Change
2022 2021 (Dollars) (Percent) 2023 2022 (Dollars) (Percent)
(in thousands) (in thousands)
PDN Network $ 1,206 $ 1,424 $ (218 ) (15.3 )% $ 1,101 $ 1,386 $ (285 ) (20.5 )%
NAPW Network 152 240 (88 ) (36.7 )% 136 161 (25 ) (15.5 )%
RemoteMore 757 19 738 3884.2 % 604 648 (44 ) (6.8 )%
Total revenues $ 2,115 $ 1,683 $ 432 25.7 % $ 1,841 $ 2,195 $ (354 ) (16.1 )%

During the three months ended ~~September~~June 30, ~~2022,~~2023, our PDN Network generated approximately ~~$1,206,000~~$1,101,000 in revenues compared to approximately ~~$1,424,000~~$1,386,000 in revenues during the three months ended ~~September~~June 30, ~~2021,~~2022, a decrease of approximately ~~$218,000~~$285,000 or ~~15.3~~20.5 percent. The decrease in revenues was primarily driven by the continued softening in client hiring due to the macroeconomic environment change stemming from the latter half of 2022 and continuing in the second quarter of 2023. Offsetting the decrease was an increase in event revenues of ~~approximately $117,000 due~~$65,000 related to Expo Experts operations for which there ~~being 2 fewer local and 1 fewer national events as compared to~~was no comparable activity in the same period inof the prior ~~year, and approximately $104,000 decline in other diversity recruitment initiatives by our clients.~~year.

During the three months ended ~~September~~June 30, ~~2022,~~2023, NAPW Network revenues were approximately ~~$152,000,~~$136,000, compared to revenues of approximately ~~$240,000~~$161,000 during the same period in the prior year, a decrease of approximately ~~$88,000~~$25,000 or ~~36.7~~15.5 percent. The decrease in revenues was primarily due to an approximate $75,000 decrease in renewal membership revenue and approximately $30,000 in new member revenue, as compared to the same period in the prior year. We believe that the membership services that we provide to our customers ~~continues~~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.~~economy, and prior to that the effect of COVID-19, as many in-person events were cancelled. In-person local chapter events have begun to resume in the second quarter of fiscal 2023.

During the three months ended ~~September~~June 30, ~~2022,~~2023, RemoteMore revenue was approximately ~~$757,000,~~$604,000, compared to revenues of approximately ~~$19,000~~$648,000 during the same period in the prior year, a decrease of approximately $44,000, or 6.8 percent.
Six Months Ended June 30, Change Change
2023 2022 (Dollars) (Percent)
(in thousands)
PDN Network $ 2,229 $ 2,766 $ (537 ) (19.4 )%
NAPW Network 265 357 (92 ) (25.8 )%
RemoteMore 1,302 1,125 177 15.7 %
Total revenues $ 3,796 $ 4,248 $ (452 ) (10.6 )%
During the six months ended June 30, 2023, our PDN Network generated approximately $2,229,000 in revenues compared to approximately $2,766,000 in revenues during the six months ended June 30, 2022, a decrease of approximately $537,000 or 19.4 percent. The decrease in revenues was primarily driven by the continuing softening in client hiring due to the macroeconomic environment change stemming from the latter half of 2022, and continued in the second quarter of 2023. Offsetting the decrease was an increase in event revenues of $147,000 related to Expo Experts operations for which there was no comparable activity in the same period of the prior year.
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During the six months ended June 30, 2023, NAPW Network revenues were approximately $265,000, compared to revenues of approximately $357,000 during the same period in the prior year, a decrease of approximately $92,000 or 25.8 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 the current economy, and prior to that the effect of COVID-19, as many in-person events were cancelled. In-person local chapter events have begun to resume in the second quarter of fiscal 2023.
During the six months ended June 30, 2023, RemoteMore revenue was approximately $1,302,000, compared to revenues of approximately $1,125,000 during the same period in the prior year, an increase of approximately $738,000. This is due to the current period having a full three months of operations versus the same period in 2021 which only had 10 days of operations from the acquisition date of September 20, 2021.
Nine Months Ended September 30, Change Change
2022 2021 (Dollars) (Percent)
(in thousands)
PDN Network $ 3,971 $ 3,845 $ 126 3.3 %
NAPW Network 510 764 (254 ) (33.2 )%
RemoteMore 1,882 19 1,863 9805.3 %
Total revenues $ 6,363 $ 4,628 $ 1,735 37.5 %
During the nine months ended September 30, 2022, our PDN Network generated approximately $3,971,000 in revenues compared to approximately $3,845,000 in revenues during the nine months ended September 30, 2021, an increase of approximately $126,000$177,000, or ~~3.3~~15.7 percent. ~~The increase in revenues was primarily driven by job placement commissions of approximately $163,000, slightly offset by the diversity recruitment initiatives of our clients of approximately $37,000.~~
During the nine months ended September 30, 2022, NAPW Network revenues were approximately $510,000, compared to revenues of approximately $764,000 during the same period in the prior year, a decrease of approximately $254,000 or 33.2 percent. The decrease in revenues was primarily due to an approximate $204,000 decrease in renewal membership revenue and an approximate decrease of $68,000 in new member revenue, as compared to the same period in the prior year. Partially offsetting the decrease was approximately $18,000 related to other revenue.
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During the nine months ended September 30, 2022, RemoteMore revenue was approximately $1,882,000, compared to revenues of approximately $19,000 during the same period in the prior year, an increase of approximately $1,863,000. This is due to the current period having a full nine months of operations versus the same period in 2021 which only had 10 days of operations from the acquisition date of September 20, 2021.

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 September 30, Change Change Three Months Ended June 30, Change Change
2022 2021 (Dollars) (Percent) 2023 2022 (Dollars) (Percent)
(in thousands) (in thousands)
Cost and expenses:
Cost of revenues $ 1,229 $ 347 $ 882 254.2 % $ 765 $ 932 $ (167 ) (17.8 )%
Sales and marketing 760 526 234 44.5 % 1,116 700 416 59.4 %
General and administrative 1,003 873 130 15.0 % 1,244 359 885 246.5 %
Depreciation and amortization 233 29 204 703.4 % 147 232 (85 ) (36.6 )%
Total pre-tax cost and expenses: $ 3,225 $ 1,775 $ 1,450 81.8 % $ 3,272 $ 2,223 $ 1,049 47.2 %

Nine Months Ended
September 30,
Change Change Six Months Ended June 30, Change Change
2022 2021 (Dollars) (Percent) 2023 2022 (Dollars) (Percent)
(in thousands) (in thousands)
Cost and expenses:
Cost of revenues $ 3,023 $ 868 $ 2,155 248.3 % $ 1,840 $ 1,794 $ 46 2.6 %
Sales and marketing 2,179 1,826 353 19.3 % 1,937 1,419 518 36.6 %
General and administrative 2,469 3,303 (834 ) (25.2 )% 2,297 1,466 831 56.7 %
Depreciation and amortization 746 88 658 747.7 % 280 513 (233 ) (45.4 )%
Total pre-tax cost and expenses: $ 8,417 $ 6,085 $ 2,332 38.3 %
Total cost and expenses: $ 6,354 $ 5,192 $ 1,162 22.4 %
Cost of revenues: Cost of revenues during the three months ended ~~September~~June 30, ~~2022~~2023 was approximately ~~$1,229,000,~~$765,000, a decrease of approximately $167,000, or 17.8 percent, from approximately $932,000 during the same period of the prior year. The decrease was predominately due to approximately $109,000 of reduced third-party computer services, approximately $38,000 in salaries and related benefits, and approximately $40,000 of other costs of revenues. Partially offsetting the decrease were approximately $21,000 of contracted software development costs related to RemoteMore, as compared to the same period of the prior year.
Cost of revenues during the six months ended June 30, 2023 was approximately $1,840,000, an increase of approximately ~~$882,000,~~$46,000, or ~~254.2~~2.6 percent, from approximately ~~$347,000~~$1,794,000 during the same period of the prior year. The increase was predominately attributed to an increase of approximately ~~$666,000~~$206,000 of contracted software development costs related to RemoteMore, ~~for which there was no material comparable activity in~~and approximately $73,000 of other costs of revenue, as compared to the same period of the prior year. ~~Also contributing to~~Partially offsetting the increase was ~~approximately $216,000 of costs as~~ a ~~direct result of increased revenues.~~
~~Cost of revenues during the nine months ended September 30, 2022 was approximately $3,023,000, an increase~~reduction in third-party computer services of approximately ~~$2,155,000, or 248.3 percent, from approximately $868,000 during~~$233,000 which were recorded sales and marketing in the current period as compared to the same period ofin the prior year. The increase was predominately attributed to approximately $1,675,000 of contracted software development costs related to RemoteMore, for which there was no material comparable activity in the same period of the prior year. Also contributing to the increase was approximately $480,000 of costs as a direct result of increased revenues.

Sales and marketing expense: Sales and marketing expense during the three months ended ~~September~~June 30, ~~2022~~2023 was approximately ~~$760,000,~~$1,116,000, an increase of approximately ~~$234,000,~~$416,000, or ~~44.5~~59.4 percent, from ~~$526,000~~$700,000 during the same period in the prior year. The increase was predominately attributed to approximately $165,000 of third-party computer services that were recorded in cost of revenues in the same period of the prior year, approximately $62,000 of charges related to RemoteMore sales and marketing efforts, and approximately $62,000 of other costs related to sales and marketing. Also contributing to the increase were approximately $77,000 of payroll related costs due to the onboarding of Expo Experts in fiscal 2023, and approximately $50,000 of payroll related costs due to the aforementioned creation of our new marketing department, for which there were no comparable charges in the same period of the prior year.
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Sales and marketing expense during the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 was approximately ~~$2,179,000,~~$1,937,000, an increase of approximately ~~$353,000,~~$518,000, or ~~19.3~~36.6 percent, from ~~$1,826,000~~$1,419,000 during the same period in the prior year. The increase was predominately attributed to approximately $165,000 of third-party computer services that were recorded in cost of revenues in the same period of the prior year, approximately $62,000 of charges related to RemoteMore sales and marketing efforts, and approximately $65,000 of other costs related to sales and marketing. Also contributing to the increase were approximately $150,000 of payroll related costs due to the onboarding of Expo Experts in fiscal 2023, and approximately $77,000 payroll related costs due to the aforementioned creation of our new marketing department, for which there were no comparable charges in the same period of the prior year.

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General and administrative expense: General and administrative expenses increased by approximately ~~$130,000,~~$885,000, or ~~15.0~~246.5 percent, to approximately ~~$1,003,000~~$1,244,000 during the three months ended ~~September~~June 30, ~~2022,~~2023, as compared to approximately $359,000 the same period in the prior year. The increase was predominately due to expenses related to RemoteMore of approximately $79,000, $58,000 in mergers and acquisition expenses, bad debt expense of $48,000 and property rent costs of $26,000, and various other purchased services of approximately $17,000, as compared to the same period in the prior year. Offsetting the increase were decreases in share-based compensation of approximately $92,000, and credit card fees of approximately $22,000, primarily due to a change in credit card processors.
General and administrative expenses decreased by approximately $834,000, or 25.2 percent, to approximately $2,469,000 during the nine months ended September 30, 2022, as compared to the same period in the prior year. The decrease was predominately due to settlement of litigation resulting in a one-time, non-cash gain of approximately ~~$908,000, a result of reductions of comparable payroll related costs of approximately $260,000, of which approximately $58,000 related to discretionary incentive payments made~~$909,000 in the prior year for which there was no comparable transaction in the current year. Also contributing to the increase, as compared to the ~~current~~same period in the prior year, were approximately $139,000 of financing expenses and ~~$54,000~~approximately $92,000 of legal expenses primarily related to ~~credit card fees, primarily~~the aforementioned equity transaction, $56,000 of other general and administrative charges, and $77,000 of third-party computer services that were recorded in cost of revenues in the same period of the prior year. Offsetting the increase were decreases in discretionary share-based compensation of approximately $251,000 and other purchased services of approximately $137,000, as compared to the same period in the prior year.
General and administrative expenses increased by approximately $831,000, or 56.7 percent, to approximately $2,297,000 during the six months ended June 30, 2023, as compared to approximately $1,466,000 the same period in the prior year. The increase was predominately due to the settlement of litigation resulting in a ~~change~~one-time, non-cash gain of approximately $909,000 in ~~credit card processors.~~the prior year for which there was no comparable transaction in the current year. Also contributing to the ~~decrease~~increase, as compared to the same period in the prior year, were ~~reductions in other~~approximately $139,000 of financing expenses and approximately $92,000 of legal expenses ~~and litigation charges of $193,000. Offsetting the reduction in expenses were increases in charges~~primarily related to ~~RemoteMore~~the aforementioned equity transaction, $60,000 of ~~approximately $340,000, property rent costs of approximately $79,000, various~~ other general and administrative ~~expenses~~charges, and $77,000 of ~~$85,000,~~third-party computer services that were recorded in cost of revenues in the same period of the prior year. Offsetting the increase were decreases in discretionary share-based compensation of approximately $342,000 and ~~accounting expenses~~other purchased services of ~~$77,000.~~approximately $104,000, as compared to the same period in the prior year.

Depreciation and amortization expense: Depreciation and amortization expense during the three months ended ~~September~~June 30, ~~2022~~2023 was approximately ~~$233,000, an increase~~$147,000, a decrease of approximately ~~$204,000,~~$85,000, compared to approximately ~~$29,000~~$232,000 during the same period in the prior year. The ~~increase~~decrease was primarily attributable to approximately $205,000 of amortization expense related to RemoteMore’s intangible assets and assets and other 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, partially offset by~~year.
Depreciation and amortization expense during the six months ended June 30, 2023 was approximately $280,000, a decrease of approximately $233,000, compared to approximately $513,000 during the same period in the prior year. The decrease was primarily attributable to approximately $461,000 of amortization expense related to RemoteMore’s intangible assets and assets and intangible assets reaching the end of their useful ~~lives.~~
~~Depreciation and~~lives, partially offset by amortization expense ~~during the nine months ended September 30, 2022 was approximately $746,000, an increase~~ of approximately ~~$658,000, compared to approximately $88,000 during the same period in the prior year. The increase was primarily attributable to approximately $667,000 of amortization expense~~$213,000 related to ~~RemoteMore’s~~Expo Experts’ intangible assets for which there were no comparable charges in the same period of the prior year ~~partially offset by assets and intangible assets reaching the end of their useful lives.~~

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 September 30, Change Change Three Months Ended June 30, Change Change
2022 2021 (Dollars) (Percent) 2023 2022 (Dollars) (Percent)
(in thousands) (in thousands)
PDN Network $ 1,282 732 550 75.1 % $ 1,556 1,209 347 28.8 %
NAPW Network 414 408 6 1.5 % 269 (565 ) 834 147.7 %
RemoteMore 1,024 52 972 1869.2 % 684 923 (239 ) (25.9 )%
Corporate Overhead 505 583 (78 ) (13.4 )% 763 656 107 16.3 %
Total costs and expenses: $ 3,225 $ 1,775 $ 1,450 81.7 % $ 3,272 $ 2,223 $ 1,049 47.2 %
Six Months Ended June 30, Change Change
2023 2022 (Dollars) (Percent)
(in thousands)
PDN Network $ 3,037 2,316 721 31.1 %
NAPW Network 645 (161 ) 806 500.9 %
RemoteMore 1,487 1,779 (292 ) (16.4 )%
Corporate Overhead 1,185 1,258 (73 ) (5.8 )%
Total costs and expenses: $ 6,354 $ 5,192 $ 1,162 22.4 %
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Nine Months Ended September 30, Change Change
2022 2021 (Dollars) (Percent)
(in thousands)
PDN Network $ 3,599 2,546 1,053 41.3 %
NAPW Network 253 1,350 (1,097 ) (81.3 )%
RemoteMore 2,802 53 2,749 5186.8 %
Corporate Overhead 1,763 2,136 (373 ) (17.5 )%
Total costs and expenses: $ 8,417 $ 6,085 $ 2,332 38.3 %

For the three months ended ~~September~~June 30, ~~2022,~~2023, costs and expenses related to our PDN Network segment increased by approximately ~~$550,000,~~$347,000, or ~~75.1%,~~28.8 percent, as compared to the same period in the prior year. The increase is primarily as a result of increases of approximately ~~$246,000 of sales and marketing costs, general and administrative and other costs of approximately $202,000, and approximately $102,000~~$276,000 related to ~~costs~~Expo Experts for which there were no comparable expenses in the same period of ~~revenues,~~the prior year. Also, contributing to the period increase as compared to the same period of the prior were approximately $106,000 of salary and benefits related costs, and $56,000 related to marketing expenses. Partially offsetting the increase was a decrease in discretionary bonus charges of approximately $89,000 occurring in the period of the prior ~~year.~~year, which there were no comparable charges in the current period.

For the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, costs and expenses related to our PDN Network segment increased by approximately ~~$1,052,000,~~$721,000, or ~~41.3%,~~31.1 percent, as compared to the same period in the prior year. The increase is primarily as a result of increases of approximately ~~$418,000~~$537,000 related to Expo Experts for which there were no comparable expenses in the same period of ~~sales~~the prior year. Also, primarily contributing to the period increase as compared to the same period of the prior were approximately $186,000 of salary and benefits related costs, and $70,000 related to marketing expenses. Partially offsetting the increase was a decrease in discretionary bonus charges of approximately $89,000 occurring in the period of the prior year, which there were no comparable charges in the current period.
For the three months ended June 30, 2023, costs ~~driving~~and expenses related to the ~~aforementioned~~NAPW Network increased ~~revenues, general and administrative and other~~by approximately $834,000, or 147.7 percent. The increase is predominately due to settlement of litigation resulting in a one-time, non-cash gain of approximately $909,000 in the prior year for which there was no comparable transaction in the current period. Partially offsetting the increase was a decrease in payroll related costs of approximately ~~$412,000,~~$53,000 and costs of approximately ~~$206,000~~$22,000 as a result of the aforementioned restructuring of the NAPW business unit.
For the six months ended June 30, 2023, costs and expenses related to the NAPW Network increased by approximately $806,000, or 500.9 percent. The increase is predominately due to settlement of litigation resulting in a one-time, non-cash gain of approximately $909,000 in the prior year for which there was no comparable transaction in the current period. Partially offsetting the increase was a decrease in payroll related costs of ~~revenues~~approximately $22,000 and costs of approximately $81,000 as a result of the aforementioned restructuring of the NAPW business unit.
For the three months ended June 30, 2023, cost and expenses related to RemoteMore decreased by approximately $239,000, a decrease of approximately 25.9 percent, as compared to the same period in the prior year, predominately consisting of decreases in amortization expenses of approximately $205,000, other purchased services of approximately $29,000, and legal expenses of approximately $19,000. Partially offsetting the decrease was an increase in contractor costs of approximately $21,000, and other operating costs of approximately $7,000, as compared to the same period of the prior year.
For the six months ended June 30, 2023, cost and expenses related to RemoteMore decreased by approximately $292,000, a decrease of approximately 16.4 percent, as compared to the same period in the prior year, predominately consisting of decreases in amortization expenses of approximately $461,000, and legal expenses of approximately $59,000. Partially offsetting the decrease was an increase in contractor costs of approximately $205,000, and other operating costs of approximately $23,000, as compared to the same period of the prior year.
For the three months ended June 30, 2023, costs and expenses related to Corporate Overhead increased by approximately $107,000, or 16.3 percent, as compared to the same period in the prior year. The increase is predominately a result of approximately $139,000 of financing costs and $120,000 of legal expenses, substantially as a result of the aforementioned equity transaction, payroll related costs of approximately $76,000, and other charges of approximately $23,000. Partially offsetting the increase was a reduction in share-based compensation costs of approximately $251,000, as compared to the same period in the prior year.

For the ~~three~~six months ended ~~September~~June 30, 2022, costs and expenses related to the NAPW Network increased by approximately $6,000, or 1.5 percent. The increase is primarily as result of approximately $33,000 of sales and marketing costs and approximately $29,000 related to costs of revenues, as compared to the same period in the prior year. Substantially offsetting the increase was a decrease in general and administrative and other costs of approximately $51,000.
For the nine months ended September 30, 2022, costs and expenses related to the NAPW Network decreased by approximately $1,097,000, or 81.3 percent. The decrease in the period is predominately due to settlement of litigation resulting in a one-time, non-cash gain of approximately $908,000 and reductions of approximately $234,000 of payroll related costs, predominately as a result of cost containment initiatives implemented in the prior year. Partially offsetting the decrease were increases of approximately $104,000 in costs of revenues due to increased conference expenses and member benefits in an effort to increase future revenues, and approximately $61,000 in sales and marketing costs, as compared to the same period in the prior year.
For the three months ended September 30, 2022, cost and expenses related to RemoteMore was approximately $1,024,000, an increase of approximately $972,000, as compared to the same period in the prior year, predominately consisting of contractor costs of approximately $666,000, amortization of intangibles of approximately $205,000, and other operating costs of approximately $150,000, as compared to the same period of the prior year.
For the nine months ended September 30, 2022, cost and expenses related to RemoteMore was approximately $2,802,000, an increase of approximately $2,749,000, as compared to the same period in the prior year, predominately consisting of contractor costs of approximately $1,675,000, amortization of intangibles of approximately $667,000, and other operating costs of approximately $460,000, as compared to the same period of the prior year.
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~~For the three months ended September 30, 2022,~~2023, costs and expenses related to Corporate Overhead decreased by approximately ~~$77,000,~~$73,000, or ~~13.2~~5.8 percent, as compared to the same period in the prior year. The reduction is primarily as a result of decreases in ~~legal costs of approximately $43,000, stock-based~~share-based compensation costs of approximately ~~$92,000,~~$342,000, accounting costs of approximately $65,000, and other ~~miscellaneous state taxes and filing fees by~~costs of approximately ~~$45,000.~~$42,000. Partially offsetting the reductions ~~were mergers~~was an increase in approximately $137,000 of financing costs and ~~acquisitions costs~~$128,000 of ~~$58,000,~~legal expenses, substantially as a result of the aforementioned equity transaction, and payroll related costs of approximately ~~$32,000, and other various costs of approximately $13,000,~~$111,000 as compared to the same period in the prior year.

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For the nine months ended September 30, 2022, costs and expenses related to Corporate Overhead decreased by approximately $373,000, or 17.5 percent, as compared to the same period in the prior year. The reduction is primarily as a result of decreases in legal expenses of approximately $178,000, payroll related costs by approximately $101,000, of which $57,000 related to discretionary incentive payments made in the prior year for which there were no comparable charges in the current period, and other miscellaneous state taxes and filing fees by approximately $191,000. Partially offsetting the reductions were professional and other services of approximately $77,000, and other various costs of approximately $20,000, as compared to the same period in the prior year.
Income Tax Benefit

Three Months Ended
September 30, Change Change
2022 2021 (Dollars) (Percent)
(in thousands)
Income tax expense (benefit) $ (26 ) $ (2 ) $ (24 ) 1200.0 %
Three Months Ended June 30 Change Change
2023 2022 (Dollars) (Percent)
(in thousands)
Income tax expense (benefit) $ 1 $ 16 $ (15 ) (93.9 )%

Nine Months Ended
September 30, Change Change
2022 2021 (Dollars) (Percent)
(in thousands)
Income tax expense (benefit) $ (36 ) $ (19 ) $ (17 ) 89.5 %
Six Months Ended June 30, Change Change
2023 2022 (Dollars) (Percent)
(in thousands)
Income tax expense (benefit) $ (10 ) $ (10 ) $ 0 (3.1 )%

During the three months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, we recorded income tax benefits of approximately ~~$26,000~~$1,000 and ~~$2,000.~~$16,000. The ~~increase~~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.

During the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, we recorded income tax benefits of approximately ~~$36,000~~$10,000 and ~~$19,000.~~$10,000. The ~~increase in~~ income tax benefit ~~during~~remained consistent for the ~~current period was primarily due to changes in discrete tax items and in the Company’s net operating losses.~~periods presented.

Net loss from Continuing Operations, Net of Tax

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 September 30, Change Change
2022 2021 (Dollars) (Percent)
(in thousands)
PDN Network $ (75 ) 688 (763 ) (110.9 )%
NAPW Network (251 ) (166 ) (85 ) (51.2 )%
RemoteMore (277 ) (34 ) (243 ) (714.7 )%
Corporate Overhead (492 ) (576 ) 84 14.6 %
Consolidated net loss from continuing operations $ (1,095 ) $ (88 ) $ (1,007 ) (1144.3 )%
Three Months Ended June 30, Change Change
2023 2022 (Dollars) (Percent)
(in thousands)
PDN Network $ (455 ) 170 (625 ) (367.6 )%
NAPW Network (134 ) 708 (842 ) (119.0 )%
RemoteMore (81 ) (287 ) 206 71.8 %
Corporate Overhead (762 ) (643 ) (119 ) (18.1 )%
Consolidated net loss from continuing operations, net of tax $ (1,432 ) $ (52 ) $ (1,380 ) (2554.8 )%

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Nine Months Ended September 30, Change Change
2022 2021 (Dollars) (Percent)
(in thousands)
PDN Network $ 361 1,287 (926 ) (72.0 )%
NAPW Network 262 (578 ) 840 145.3 %
RemoteMore (945 ) (34 ) (911 ) 2679.4 %
Corporate Overhead (1,716 ) (2,108 ) 392 18.6 %
Consolidated net loss from continuing operations $ (2,038 ) $ (1,433 ) $ (605 ) (42.2 )%
Six Months Ended June 30, Change Change
2023 2022 (Dollars) (Percent)
(in thousands)
PDN Network $ (804 ) 436 (1,240 ) (284.4 )%
NAPW Network (378 ) 513 (891 ) (173.5 )%
RemoteMore (183 ) (668 ) 485 72.6 %
Corporate Overhead (1,176 ) (1,224 ) 48 3.9 %
Consolidated net loss from continuing operations, net of tax $ (2,541 ) $ (943 ) $ (1,598 ) (169.5 )%

Consolidated Net Loss from Continuing ~~Operations.~~Operations, Net of Tax. As the result of the factors discussed above, during the three months ended ~~September~~June 30, ~~2022,~~2023, we incurred a net loss from continuing operations of approximately $1,432,000, an increase in the net loss of approximately $1,380,000, compared to a net loss of approximately $52,000 during the three months ended June 30, 2022. During the six months ended June 30, 2023, we incurred a net loss of approximately ~~$1,095,000~~$2,541,000 from continuing operations, an increase in the net loss of approximately ~~$1,007,000 or 1144.3 percent,~~$1,598,000, compared to a net loss of approximately $88,000 during the three months ended September 30, 2021. During the nine months ended September 30, 2022, we incurred a net loss of approximately $2,038,000 from continuing operations, an increase in the net loss of approximately $605,000 or 42.2 percent, compared to a net loss of approximately $1,433,000 $943,000 during the same period in the prior ~~year.~~year.
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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~~operations 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 and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021:~~2022:

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
(in thousands) (in thousands)
Revenues $ - $ - - -

General, administrative and other expenses
(13 ) (11 ) (42 ) (72 )
Loss from discontinued operations before income tax (13 ) (11 ) (42 ) (72 )
Income tax expense (benefit) - - - -
Net loss from discontinued operations $ (13 ) $ (11 ) (42 ) (72 )
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Three Months Ended June 30, Six Months Ended June 30,
2023 2022 2023 2022
(in thousands) (in thousands)
Revenues $ - $ -
$
-
$
-

Cost of Sales - - - -
Depreciation and amortization - - - -
Sales and marketing - - - -
General and administrative 6 11 18 29
Non-operating expense - - - -
Loss from discontinued operations before income tax (6 ) (11 ) (18 ) (29 )
Income tax expense (benefit) - - - -
Net loss from discontinued operations $ (6 ) $ (11 )
$
(18 )
$
(29 )

Liquidity and Capital Resources

The following table summarizes our liquidity and capital resources as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021:~~2022:

September 30, 2022 December 31, 2021 June 30, 2023 December 31, 2022
(in thousands) (in thousands)
Cash and cash equivalents $ 1,463 $ 3,403 $ 2,207 $ 1,237
Working capital (deficiency) $ (351 ) $ 418
Working deficiency from continuing operations $ (226 ) $ (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 ~~September~~June 30, ~~2022,~~2023, we had cash and cash equivalents of ~~$1,462,958~~$2,207,000 compared to cash and cash equivalents of $~~3,402,697~~ $1,237,000 at December 31, ~~2021.~~2022. We had an accumulated deficit of ~~$(97,351,520)~~$100,864,047 at ~~September~~June 30, ~~2022. During the nine months ended September 30, 2022,~~2023.
In March 2023, we ~~generated~~entered into a ~~net loss from continuing operations~~stock purchase agreement with Ms. Yiran Gu, a former investor of ~~$(2,037,701). During the nine months ended September 30, 2022,~~ the Company ~~used cash~~and a citizen of the People’s Republic of China, in ~~continuing operations~~connection with the purchase by Ms. Gu of ~~$1,393,734.~~333,181 shares of our common stock at a price of approximately $2.10 per share for aggregate gross proceeds of $700,000.
In June 2023, we entered into a stock purchase agreement with Tumim Stone Capital LLC (“Investor”). Under the terms and subject to the conditions of the stock purchase agreement, we have the right, but not the obligation, to sell to the Investor, and the Investor is obligated to purchase, up to $12,775,000‎ ‎ worth of newly issued shares (the “Purchase Shares”) of our common ‎stock, subject to certain limitations and the satisfaction (or, where permissible, the waiver) of the conditions set forth in the stock purchase agreement. Pursuant to the stock purchase agreement, we issued and sold 469,925 Purchase Shares (the “Initial Purchase Shares”) to the Investor, at a price of $4.256 per share (representing the average official closing price of the common stock on The Nasdaq Capital Market (“Nasdaq”) for the five consecutive trading days ending on the trading day immediately prior to the date of the stock purchase agreement), for aggregate gross proceeds to the Company of $2,000,000, in an initial purchase (the “Initial Purchase”). Pursuant to the terms of the stock purchase agreement, as consideration for the Investor’s commitment to purchase shares of common stock at our direction from time to time, subject to the conditions and limitations set forth in the stock purchase agreement, upon execution of the stock purchase agreement on June 30, 2023, we issued to the Investor 176,222 shares of common stock (the “Commitment Shares”), valued at $4.256 per share (the same per share value as each Initial Purchase Share sold to the Investor in the Initial Purchase), or a total aggregate value equal to $750,000 for the Commitment Shares.

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 negative impact COVID-19, the global economic impacts of the Russian invasion of Ukraine and~~ 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 ~~condensed~~ consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.
32

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 ~~September~~June 30, ~~2022~~2023 and cash flow from operations ~~should~~may be sufficient to meet our working capital requirements for the fiscal year ending December 31, ~~2022,~~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.~~stock, or issue capital in relation to the aforementioned line of equity. There can be no assurances that our business plans and actions will be successful, that we will generate anticipated revenues, or that unforeseen circumstances ~~similar to COVID-19~~ 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.

33
Nine Months Ended September 30, Six Months Ended June 30,
2022 2021 2023 2022
Cash provided by (used in) continued operations (in thousands) (in thousands)
Operating activities $ (1,394 ) $ (1,160 ) $ (878 ) $ (570 )
Investing activities (31 ) (1,279 ) (822 ) (7 )
Financing activities (515 ) 4,445 2,700 (387 )
Effect of exchange rate fluctuations on cash and cash equivalents 6 2 1 1
Cash provided by (used in) discontinued operations (6 ) (33 ) (31 ) -
Net increase (decrease) in cash and cash equivalents $ (1,940 ) $ 1,975 $ 970 $ (963 )

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 ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~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 ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, was approximately ~~$1,394,000.~~$878,000. We had a net loss from continuing operations of approximately ~~$2,038,000~~$2,541,000 during the ~~nine~~six months ended ~~September~~June 30, 2023, which included stock-based compensation expense of approximately $63,000, depreciation and amortization expense of approximately $281,000, allowance for credit losses of approximately $1,000, and noncash lease expense of $46,000, which was partially offset by deferred tax benefit of approximately $10,000. Changes in operating assets and liabilities provided approximately $1,282,000 of cash during the three months ended June 30, 2023, consisting primarily of decreases in accounts receivable, prepaid expenses, and lease liability, partially offset by increases in accounts payable, accrued expenses and deferred revenues.
Net cash used in operating activities from continuing operations during the six months ended June 30, 2022, was approximately $570,000. We had a net loss from continuing operations of approximately $942,000 during the six months ended June 30, 2022, which included a non-cash litigation settlement reserve of approximately $909,000, stock-based compensation expense of approximately ~~$440,000,~~$405,000, depreciation and amortization expense of approximately ~~$746,000,~~$513,000, which was partially offset by deferred tax benefit of approximately ~~$36,000~~$10,000, and ~~amortization~~non cash lease expense of ~~right-of-use assets of approximately $8,000.~~$46,000. We received ~~$350,000~~$190,000 in cash resulting in a decrease of our Merchant Reserve. Changes in operating assets and liabilities ~~provided~~used approximately ~~$60,000~~$228,000 of cash during the ~~nine~~six months ended ~~September~~June 30, 2022, consisting primarily of decreases in accounts receivable, accounts payable, ~~and~~ accrued expenses, lease liability, and deferred revenues, partially offset by ~~increases~~an increase in prepaid ~~expenses and deferred revenues.~~
Net cash used in operating activities from continuing operations during the nine months ended September 30, 2021, was approximately $1,160,000. We had a net loss of approximately $1,435,000 during the nine months ended September 30, 2021, which included a stock-based compensation expense of approximately $436,000, depreciation of amortization expense of $88,000 and amortization of right-of-use assets of $69,000, which was partially offset by deferred tax benefit of approximately $17,000. Changes in operating assets and liabilities used approximately $755,000 of cash during the nine months ended September 30, 2021, consisting primarily of increases in accounts receivable, accounts payable, deferred revenue and accrued expenses, partially offset by decreases in deferred revenue.expenses.

Net Cash Used in Investing Activities

Net cash used in investing activities from continuing operations during the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, was approximately ~~$31,000,~~$822,000, which consisted of $400,000 related to the acquisition of Expo Experts, $352,000 related to additional investment in RemoteMore, and $70,000 related to investments in developed technology and computer equipment purchases.

Net cash used in investing activities from continuing operations during the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, was ~~$1,279,000,~~approximately $7,000, which consisted of ~~payments for investment deposits of $60,000~~investments in developed technology and ~~$21,000 related to~~ computer equipment purchases.

Net Cash Provided by Financing Activities

Net cash provided in financing activities from continuing operations during the six months ended June 30, 2023 was approximately $2,700,000 representing the proceeds from the sale of restricted stock.
Net cash used in financing activities from continuing operations during the ~~nine~~six months ended ~~September~~June 30, 2022, was approximately ~~$515,000~~$387,000 which consisted of the reacquisition of previously issued common stock as a result of the stock buyback plan.
34
~~Net cash provided by financing activities from continuing operations during the nine months ended September 30, 2021 was $4,445,000, which reflected proceeds from the sale of 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.

33
The ~~adjustments~~following table provides a reconciliation of net loss from continuing operations to Adjusted EBITDA for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021 relate to stock-based compensation, litigation settlement reserves, depreciation~~2023 and ~~amortization, interest and other income and income tax expense (benefit).~~2022, the most directly comparable GAAP measure reported in our consolidated financial statements:

The adjustments for the three and nine months ended September 30, 2022 relate to stock-based compensation, litigation settlement reserves, loss attributable to noncontrolling interest, depreciation and amortization, interest and other income and income tax expense (benefit).
Three Months Ended June 30,
2023 2022
(in thousands)
Loss from Continuing Operations $ (1,432 ) $ (53 )
Stock-based compensation 30 281
Litigation settlement reserve - (925 )
Loss attributable to noncontrolling interest 25 155
Depreciation and amortization 147 232
Other (expense) income, net 0 (1 )
Income tax expense (benefit) 1 16
Adjusted EBITDA $ (1,229 ) $ (295 )

Three Months Ended September 30, Six Months Ended June 30,
2022 2021 2023 2022
(in thousands) (in thousands)
Loss from Continuing Operations $ (1,095 ) $ (88 ) $ (2,541 ) $ (943 )
Stock-based compensation 34 127 63 405
Litigation settlement reserve - (909 )
Loss attributable to noncontrolling interest 149 19 77 359
Depreciation and amortization 233 30 280 513
Other (expense) income, net (1 ) (2 ) (7 ) (4 )
Income tax expense (benefit) (25 ) (2 ) (10 ) (10 )
Adjusted EBITDA $ (705 ) $ 84 $ (2,138 ) $ (589 )
Nine Months Ended September 30,
2022 2021
(in thousands)
Loss from Continuing Operations $ (2,038 ) $ (1,434 )
Stock-based compensation 440 436
Litigation settlement reserve (909 ) 75
Loss attributable to noncontrolling interest 508 19
Depreciation and amortization 746 88
Other (expense) income, net (5 ) (5 )
Income tax benefit (36 ) (19 )
Adjusted EBITDA $ (1,294 ) $ (840 )
35
Off-Balance Sheet Arrangements

Since inception, we have not engaged in any off-balance sheet activities ~~as defined~~ 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 ~~condensed~~ 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 ~~condensed~~ 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 ~~condensed~~ 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 ~~condensed~~ 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 ~~condensed~~ consolidated financial statements.

34
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.
36

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 ~~condensed~~ consolidated statements of comprehensive loss.
35

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.
37

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 ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, we recorded approximately ~~11.5%~~9.7% and ~~10.2%~~11.2% 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 ~~September~~June 30, ~~2022,~~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 ~~September~~June 30, ~~2022.~~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 ~~third~~second quarter of fiscal ~~2022,~~2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

3836

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. ~~While the COVID-19 pandemic has caused delays to the litigation, it is expected that these delays will decrease as the disruption caused by the pandemic subsides.~~

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 ~~2021~~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.
39

ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plans or programs Maximum number of shares (or approximate dollar value of shares) that may yet be purchased under the plans or programs (in thousands)
July 1, 2022— July 31, 2022
Stock buyback program (1) 17,207 $ 0.81 17,207 $ 1,603
August 1, 2022 — August 31, 2022
Stock buyback program (1) 90,629 $ 0.80 90,629 $ 1,531
September 1, 2022 — September 30, 2022
Stock buyback program (1) 54,053 $ 0.79 54,053 $ 1,485
Not applicable.
~~(1)~~ We have a share repurchase program (“Stock Buyback Plan”) under which we are authorized to purchase up to $2.0 million of our outstanding common shares. The timing and amount of any shares repurchased under the Stock Buyback Plan will depend on a variety of factors, including price, corporate and regulatory requirements, capital availability and other market conditions. The Stock Buyback Plan may be suspended or discontinued at any time without prior notice. No shares have been or will be knowingly purchased from Company insiders or their affiliates.
We purchased 579,884 shares of our common stock during the nine-month period ended September 30, 2022, at an average cost of approximately $0.89 per share (excluding commissions), for a total of approximately $515,000. These transactions occurred in open market purchases and pursuant to a trading plan under Rule 10b5-1. At September 30, 2022, we had approximately $1,485,000 repurchase authority remaining under the current Stock Buyback Plan.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURE

Not applicable.

ITEM 5. OTHER INFORMATION

None.

4037

ITEM 6. EXHIBITS

10.1 ~~Stock~~ Purchase Agreement, dated ~~September 27, 2022~~June 30, 2023 between Professional Diversity Network, Inc. and ~~Koala Malta Limited~~Tumim Stone Capital LLC (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed ~~September~~June 30, ~~2022)~~2023).
~~10.2~~ Shareholders’ Agreement, dated September 27, 2022, among Professional Diversity Network, Inc., Koala Malta Limited and Koala Crypto Limited (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed September 30, 2022).
~~10.3~~ ~~Charge over Shares, dated September 27, 2022, relating to Koala Crypto Limited (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed September 30, 2022).~~
~~10.4~~ ~~Guarantee and Indemnity, dated September 27, 2022, by Koala Capital Limited (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed September 30, 2022).~~
31.1 Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a) or Rule 15d- 14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2 Certification of Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a) or Rule 15d- 14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1 Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS Inline XBRL Instance Document
101.SCH Inline XBRL Taxonomy Extension Schema Document
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)

4138

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: ~~November~~August 14, ~~2022~~2023 By: /s/ Larry Aichler
Name: Larry Aichler
Title: Chief Financial Officer

4239

	2022			2021			2022			2021
	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Revenues:
Membership fees and related services	$	152,462		$	240,048			509,906			764,470
Recruitment services		1,165,213			1,368,440			3,839,608			3,695,205
Product sales and other		757,492			19,010			1,882,452			19,010
Consumer advertising and marketing solutions		39,328			55,517			130,916			149,347
Total revenues		2,114,495			1,683,015			6,362,882			4,628,032

Costs and expenses:
Cost of revenues		1,228,542			346,525			3,022,657			867,726
Sales and marketing		759,885			525,820			2,179,136			1,826,319
General and administrative		1,003,956			873,504			2,468,934			3,303,143
Depreciation and amortization		232,748			29,668			746,057			88,351
Total costs and expenses		3,225,131			1,775,517			8,416,784			6,085,539

Loss from continuing operations		(1,110,636	)		(92,502	)		(2,053,902	)		(1,457,507	)

Other income (expense)
Interest and other income		(10,083	)		2,393			(19,519	)		5,128
Other income (expense), net		(10,083	)		2,393			(19,519	)		5,128

Loss before income tax expense (benefit)		(1,120,719	)		(90,109	)		(2,073,421	)		(1,452,379	)
Income tax expense (benefit)		(25,479	)		(1,724	)		(35,720	)		(18,767	)
Loss from continuing operations, net of tax		(1,095,240	)		(88,385	)		(2,037,701	)		(1,433,612	)
Loss from discontinued operations		(13,319	)		(10,714	)		(42,213	)		(71,800	)
Net loss including non-controlling interests	$	(1,108,559	)	$	(99,099	)		(2,079,914	)		(1,505,412	)
Net loss attributable to non-controlling interests		149,059			18,537			508,212			18,537
Net loss attributable to Professional Diversity Network, Inc.	$	(959,500	)	$	(80,562	)		(1,571,702	)		(1,486,875	)

Other comprehensive loss, net of tax:
Net loss attributable to Professional Diversity Network, Inc.	$	(959,500	)	$	(80,562	)		(1,571,702	)		(1,486,875	)
Foreign currency translation adjustments		(10,787	)		(799	)		(21,169	)		(289,452	)
Comprehensive loss, net of tax	$	(970,287	)	$	(81,361	)		(1,592,871	)		(1,776,327	)

Loss per share attributable to Professional Diversity Network, Inc., basic and diluted:
Continuing operations	$	(0.07	)	$	(0.01	)		(0.13	)		(0.10	)
Discontinued operations	$	-		$	-			-			(0.01	)
Net loss attributable to Professional Diversity Network, Inc.	$	(0.07	)	$	(0.01	)		(0.13	)		(0.11	)

Weighted average shares outstanding:
Basic and diluted		16,922,988			15,115,167			16,390,563			13,830,777

															Accumulated
					Additional										Other			Noncontrolling			Total
	Common Stock				Paid in		Accumulated			Treasury Stock					Comprehensive			Interests in			Stockholders’
	Shares		Amount		Capital		Deficit			Shares		Amount			Income (Loss)			Subsidiary			Equity
Balance at January 1, 2022		16,067,252	$	160,673	$	98,440,172	$	(95,779,818	)		1,048	$	(37,117	)	$	6,565		$	317,429		$	3,107,905

Issuance of common stock		2,006,504		20,065		1,729,935		-			-		-			-			-			1,750,000
Share-based compensation		335,525		3,355		436,300		-			-		-			-			-			439,655
Stock Buyback Plan		-		-		-		-			579,884		(515,445	)		-			-			(515,445	)
Translation adjustments		-		-		-		-			-		-			(21,169	)					(21,169	)
Net loss		-		-		-		(1,571,702	)		-		-			-			(508,212	)		(2,079,914	)
Balance at September 30, 2022		18,409,281	$	184,093	$	100,606,407	$	(97,351,520	)		580,932	$	(552,562	)	$	(14,604	)	$	(190,783	)		2,681,031

	2023			2022			2023			2022
	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Revenues:
Membership fees and related services	$	136,235		$	161,435			265,158			357,444
Recruitment services		1,076,023			1,341,031			2,179,418			2,674,395
Contracted software development		603,444			647,868			1,301,710			1,124,960
Consumer advertising and marketing solutions		25,523			45,173			50,148			91,588
Total revenues		1,841,225			2,195,507			3,796,434			4,248,387

Costs and expenses:
Cost of revenues		765,241			932,443			1,839,722			1,794,115
Sales and marketing		1,116,085			700,622			1,937,588			1,419,251
General and administrative		1,244,005			357,458			2,297,236			1,464,978
Depreciation and amortization		147,159			232,037			279,933			513,309
Total costs and expenses		3,272,490			2,222,560			6,354,479			5,191,653

Loss from continuing operations		(1,431,265	)		(27,053	)		(2,558,045	)		(943,266	)

Other income (expense)
Interest expense		-			-			-			-
Interest and other income		497			(10,337	)		7,081			(9,436	)
Other income (expense), net		497			(10,337	)		7,081			(9,436	)

Loss before income tax expense (benefit)		(1,430,768	)		(37,390	)		(2,550,964	)		(952,702	)
Income tax expense (benefit)		950			15,547			(9,923	)		(10,241	)
Loss from continuing operations, net of tax		(1,431,718	)		(52,937	)		(2,541,041	)		(942,461	)
Loss from discontinued operations		(6,078	)		(10,602	)		(17,808	)		(28,894	)
Net loss including non-controlling interests	$	(1,437,796	)	$	(63,539	)		(2,558,849	)		(971,355	)
Net loss attributable to non-controlling interests		25,216			154,602			77,342			359,153
Net income (loss) attributable to Professional Diversity Network, Inc.	$	(1,412,580	)	$	91,063			(2,481,507	)		(612,202	)

Other comprehensive loss, net of tax:
Net income (loss) attributable to Professional Diversity Network, Inc.	$	(1,412,580	)	$	91,063			(2,481,507	)		(612,202	)
Foreign currency translation adjustments		(9,437	)		(11,282	)		(6,868	)		(10,382	)
Comprehensive loss, net of tax	$	(1,422,017	)	$	79,781			(2,488,375	)		(622,584	)

Basic and diluted loss per share:
Continuing operations	$	(0.14	)	$	(0.01	)		(0.25	)		(0.12	)
Discontinued operations	$	(0.00	)	$	(0.00	)		(0.00	)		(0.00	)
Net loss per share	$	(0.14	)	$	(0.01	)		(0.25	)		(0.12	)

Weighted-average outstanding shares used in computing net loss per common share:
Basic and diluted	$	10,387,359		$	8,202,793			10,149,410			8,103,557

	●	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

	2023		2022
	As of June 30,
	2023		2022

Stock options		28,063		23,063
Unvested restricted stock		30,488		69,114
Total dilutive securities		58,551		92,177

	2022		2021
	As of September 30,
	2022		2021

Warrants to purchase common stock		-		125,000
Stock options		46,126		26,126
Unvested restricted stock		138,228		159,524
Total dilutive securities		184,354		310,650


Goodwill	$	935,334	$	126,301
Intangible assets		427,999		541,400
Deferred revenue				(67,701	)
Business combination total	$	1,363,333	$	600,000

●	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.

	June 30, 2023			December 31, 2022

Balance, beginning of period	$	102,515		$	247,190
Provision for credit losses		6,924			(144,675	)
Write-offs		(6,092	)		-
Recoveries		-			-
Balance, end of period	$	103,347		$	102,515

	September 30, 2022			December 31, 2021			June 30, 2023			December 31, 2022
Capitalized cost:
Balance, beginning of period	$	43,038		$	25,867		$	64,499		$	43,038
Additional capitalized cost		17,085			49,970			61,200			45,196
Provision for amortization		(15,593	)		(32,799	)		(23,828	)		(23,735	)
Balance, end of period	$	44,530		$	43,038		$	101,871		$	64,499

	Useful Lives		Gross Carrying		Accumulated			Net Carrying		Useful Lives		Gross Carrying		Accumulated			Net Carrying
September 30, 2022	(Years)		Amount		Amortization			Amount
June 30, 2023										(Years)		Amount		Amortization			Amount
Long-lived intangible assets:
Sales Process		10	$	2,130,956	$	(1,978,541	)	$	152,415		10	$	2,130,956	$	(2,035,697	)	$	95,259
Paid Member Relationships		5		803,472		(803,472	)		-		5		803,472		(803,472	)		-
Member Lists		5		8,086,181		(8,086,181	)		-		5		8,186,181		(8,102,848	)		83,333
Developed Technology		3		648,000		(648,000	)		-		3		648,000		(648,000	)		-
Trade Name/Trademarks		4		442,500		(440,833	)		1,667		4		442,500		(441,458	)		1,042
Contracts acquired in RemoteMore acquisition		3-12 months		935,683		(935,683	)		-
Contracts and events acquired in acquisitions											3 - 12 months		1,377,083		(1,131,583	)		245,500
				13,046,792		(12,892,710	)		154,082				13,588,192		(13,163,058	)		425,134
Indefinite-lived intangible assets:
Trade name									90,400									90,400
Intangible assets, net								$	244,482								$	515,534


Year ended December 31,
Remaining of 2023	$	300,687
2024		91,114
2025		33,333
Net Carrying Amount	$	425,134

Year ended December 31,
Remaining of 2022	$	19,260
2023		77,041
2024		57,781
Net Carrying Amount	$	154,082

					Weighted								Weighted
					Average								Average
			Weighted		Remaining						Weighted		Remaining
			Average		Contractual		Aggregate				Average		Contractual		Aggregate
	Number of		Exercise		Life		Intrinsic		Number of		Exercise		Life		Intrinsic
	Options		Price		(in Years)		Value		Options		Price		(in Years)		Value
Outstanding - January 1, 2022		66,126	$	4.52		7.8	$	-
Outstanding - January 1, 2023										33,063	$	9.04		6.8	$	-
Granted		-		-		-		-		-		-		-
Exercised		-		-		-		-		-		-		-
Forfeited		-		-		-		-		-		-		-
Outstanding - September 30 2022		66,126	$	4.52		7.0	$	-
Outstanding - June 30, 2023										33,063	$	9.04		6.2	$	-

Exercisable at September 30, 2022		46,126	$	5.57		6.3	$	-
Exercisable at June 30, 2023										28,063	$	9.91		6.0	$	-

	~~Number of~~
	~~Shares~~
~~Outstanding - January 1, 2022~~		~~159,525~~
~~Granted~~		~~341,874~~
~~Forfeited~~		~~(27,646~~	)
~~Vested~~		~~(335,525~~	)
~~Outstanding - September 30, 2022~~		~~138,228~~

	~~Number of~~
	~~Shares~~
~~Outstanding - January 1, 2021~~		~~233,875~~
~~Granted~~		~~59,525~~
~~Forfeited~~		-
~~Vested~~		~~(133,875~~	)
~~Outstanding - September 30, 2021~~		~~159,525~~

	Network			Network			RemoteMore			Overhead			Consolidated
	Three Months Ended September 30, 2022															Three Months Ended June 30, 2023
	PDN			NAPW						Corporate						PDN			NAPW						Corporate
	Network			Network			RemoteMore			Overhead			Consolidated			Network			Network			RemoteMore			Overhead			Consolidated
Membership fees and related services	$	-		$	152,462		$	-		$	-		$	152,462		$	-		$	136,235		$	-		$	-		$	136,235
Recruitment services		1,165,213			-			-			-			1,165,213			1,076,023			-			-			-			1,076,023
Contracted software development		-			-			757,492			-			757,492			-			-			603,444			-			603,444
Consumer advertising and marketing solutions		39,328			-			-			-			39,328			25,523			-			-			-			25,523
Total revenues		1,204,541			152,462			757,492			-			2,114,495			1,101,546			136,235			603,444			-			1,841,225
Income (loss) from continuing operations		(77,907	)		(261,132	)		(266,161	)		(505,436	)		(1,110,636	)		(454,402	)		(133,179	)		(80,737	)		(762,947	)		(1,431,265	)
Depreciation and amortization		7,475			19,597			205,676			-			232,748			127,207			19,606			346			-			147,159
Income tax expense (benefit)		(1,895	)		(10,410	)		-			(13,174	)		(25,479	)		1,484			906			-			(1,440	)		950
Net income (loss) from continuing operations		(74,971	)		(250,689	)		(277,318	)		(492,262	)		(1,095,240	)		(455,429	)		(134,085	)		(80,697	)		(761,507	)		(1,431,718	)


	As of September 30, 2022											As of June 30, 2023
Goodwill	$	339,451	$	-	$	935,334		$	-	$	1,274,785	$	465,752	$	-	$	952,001		$	-	$	1,417,753
Intangibles assets, net		90,400		152,415		1,667			-		244,482		419,233		95,259		1,042			-		515,534
Assets from continuing operations		6,577,544		504,675		(216,457	)		-		6,865,762		8,576,760		153,673		(483,592	)		-		8,246,841

	Network		NAPW Network			RemoteMore			Overhead			Consolidated
	Three Months Ended September 30, 2021														Three Months Ended June 30, 2022
	PDN		NAPW						Corporate						PDN		NAPW					Corporate
	Network		Network			RemoteMore			Overhead			Consolidated			Network		Network		RemoteMore			Overhead			Consolidated
Membership fees and related services	$	-	$	240,048		$	-		$	-		$	240,048		$	-	$	161,435	$	-		$	-		$	161,435
Recruitment services		1,368,440		-			-			-			1,368,440			1,341,031		-		-			-			1,341,031
Contracted software development		-		-			19,010			-			19,010			-		-		647,868			-			647,868
Consumer advertising and marketing solutions		55,517		-			-			-			55,517			45,173		-		-			-			45,173
Total revenues		1,423,957		240,048			19,010			-			1,683,015			1,386,204		161,435		647,868			-			2,195,507
Income (loss) from continuing operations		692,356		(167,696	)		(34,488	)		(582,674	)		(92,502	)		177,773		726,222		(275,443	)		(655,605	)		(27,053	)
Depreciation and amortization		5,875		23,793			-			-			29,668			6,892		19,527		205,618			-			232,037
Income tax (benefit) expense		7,406		(2,276	)		-			(6,854	)		(1,724	)
Net loss from continuing operations		687,343		(165,421	)		(34,488	)		(575,820	)		(88,385	)
Income tax expense (benefit)																8,791		18,658		-			(11,902	)		15,547
Net income (loss) from continuing operations																170,239		707,577		(287,050	)		(643,703	)		(52,937	)


	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

	As of December 31, 2021
Goodwill	$	339,451	$	-	$	935,334	$	-	$	1,274,785
Intangibles assets, net		90,400		209,570		668,311		-		968,281
Assets from continuing operations		7,596,499		684,881		501,198		-		8,782,578


	Six Months Ended June 30, 2023
	PDN			NAPW						Corporate
	Network			Network			RemoteMore			Overhead			Consolidated
Membership fees and related services	$	-		$	265,158		$	-		$	-		$	265,158
Recruitment services		2,179,418			-			-			-			2,179,418
Contracted software development		-			-			1,301,710			-			1,301,710
Consumer advertising and marketing solutions		50,148			-			-			-			50,148
Total revenues		2,229,566			265,158			1,301,710			-			3,796,434
Income (loss) from continuing operations		(809,034	)		(380,245	)		(185,621	)		(1,183,145	)		(2,558,045	)
Depreciation and amortization		239,967			39,273			693			-			279,933
Income tax expense (benefit)		(1,596	)		(2,665	)		850			(6,512	)		(9,923	)
Net income (loss) from continuing operations		(804,155	)		(377,527	)		(182,726	)		(1,176,633	)		(2,541,041	)

	●	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.

	●	We created an internal marketing department, utilizing employees from NAPW and PDN that had marketing backgrounds and experience, that will focus on our organic growth, digital marketing, and other efforts in further matching job seekers with the employment needs of our clients.

	●	We restructured the NAPW business segment by reducing the NAPW staff by 50% and replacing certain technology contracts with lower cost alternatives, or removing them altogether, thus resulting in the ability to keep the current revenue stream with a much smaller staff and reduced overhead.

	●	We restructured certain marketing and technology contracts with vendors to provide us with assets that should yield better profitability.

	Nine Months Ended September 30,						Six Months Ended June 30,
	2022			2021			2023			2022
Revenues:
Membership fees and related services		8.0	%		16.4	%		7.0	%		8.4	%
Recruitment services		60.3	%		79.9	%		57.4	%		62.9	%
Contracted software development		29.6	%		0.5	%		34.3	%		26.5	%
Consumer advertising and marketing solutions		2.1	%		3.2	%		1.3	%		2.2	%

	Three Months Ended September 30				Change			Change			Three Months Ended June 30				Change			Change
	2022		2021		(Dollars)			(Percent)			2023		2022		(Dollars)			(Percent)
	(in thousands)										(in thousands)
Revenues:
Membership fees and related services	$	153	$	241	$	(88	)		(36.5	)%	$	136	$	161	$	(25	)		(15.5	)%
Recruitment services		1,166		1,368		(202	)		(14.8	)%		1,076		1,341		(265	)		(19.8	)%
Contracted software development		757		19		738			3884.2	%		604		648		(44	)		(6.8	)%
Consumer advertising and marketing solutions		39		55		(16	)		(29.1	)%		25		45		(20	)		(44.4	)%
Total revenues	$	2,115	$	1,683	$	432			25.7	%	$	1,841	$	2,195	$	(354	)		(16.1	)%

	Nine Months Ended September 30				Change			Change
	2022		2021		(Dollars)			(Percent)
	(in thousands)
Revenues:
Membership fees and related services	$	510	$	765	$	(255	)		(33.3	)%
Recruitment services		3,840		3,695		145			3.9	%
Contracted software development		1,882		19		1,863			9805.3	%
Consumer advertising and marketing solutions		131		149		(18	)		(12.1	)%
Total revenues	$	6,363	$	4,628	$	1,735			37.5	%

	Six Months Ended June 30				Change			Change
	2023		2022		(Dollars)			(Percent)
	(in thousands)
Revenues:
Membership fees and related services	$	265	$	357	$	(92	)		(25.8	)%
Recruitment services		2,179		2,674		(495	)		(18.5	)%
Contracted software development		1,302		1,125		177			15.7	%
Consumer advertising and marketing solutions		50		92		(42	)		(45.7	)%
Total revenues	$	3,796	$	4,248	$	(452	)		(10.6	)%

	Three Months Ended September 30,				Change			Change			Three Months Ended June 30,				Change			Change
	2022		2021		(Dollars)			(Percent)			2023		2022		(Dollars)			(Percent)
	(in thousands)										(in thousands)
PDN Network	$	1,206	$	1,424	$	(218	)		(15.3	)%	$	1,101	$	1,386	$	(285	)		(20.5	)%
NAPW Network		152		240		(88	)		(36.7	)%		136		161		(25	)		(15.5	)%
RemoteMore		757		19		738			3884.2	%		604		648		(44	)		(6.8	)%
Total revenues	$	2,115	$	1,683	$	432			25.7	%	$	1,841	$	2,195	$	(354	)		(16.1	)%

	Nine Months Ended September 30,				Change			Change			Six Months Ended June 30,				Change			Change
	2022		2021		(Dollars)			(Percent)			2023		2022		(Dollars)			(Percent)
	(in thousands)										(in thousands)
Cost and expenses:
Cost of revenues	$	3,023	$	868	$	2,155			248.3	%	$	1,840	$	1,794	$	46			2.6	%
Sales and marketing		2,179		1,826		353			19.3	%		1,937		1,419		518			36.6	%
General and administrative		2,469		3,303		(834	)		(25.2	)%		2,297		1,466		831			56.7	%
Depreciation and amortization		746		88		658			747.7	%		280		513		(233	)		(45.4	)%
Total pre-tax cost and expenses:	$	8,417	$	6,085	$	2,332			38.3	%
Total cost and expenses:											$	6,354	$	5,192	$	1,162			22.4	%